The Fraser Valley Real Estate Board’s housing market stats for the month of September have all signs pointing towards another wild fall market, as we watch prices rise, inventory drop and demand indicators shift to highlight just how many home buyers are chasing each new listing on the market.
The increases in HPI Benchmark prices are relentless. September saw another 1.1% to 1.9% increase depending on home type. The most notable changes are the 2.5% increase in the Benchmark price of a condo in Abbotsford, 2.3% increase in the average townhome in South Surrey and a massive 2.9% increase in the average detached home in Langley.
Average days on market fell to levels experienced only one other time in the past decade, during the frenzy of 2016-2017. Similarly, sale price as a percent of original list price is way beyond what we saw in that same 2016-2017 period, with the average townhome now selling at 103% of the original list price, a detached home at 102.2% and a condo at 99.8%. In September of 2016 and 2017, sale prices barely cracked 100%.
The number of sales declined slightly month-over-month in September which is not abnormal for the tail end of the summer lull but, in the current environment, this could be misleading, causing some to think the market is slowing when it’s not. This becomes apparent when the sales figures are viewed in conjunction with persistent increases in benchmark prices and strengthening demand indicators (falling days on market, rising sale price as a percent of list price). We can attribute at least some of the decline in sales to the restricted supply – new listings in September were only 86% of the 10 year average and we have the same quantity of active listings as we did 30 years ago, while the region’s population has doubled over the same time period.
What does this mean for the development land market in the Fraser Valley?
The land market in the Fraser Valley took off like a rocket again mid-September as the industry returned from summer vacation. Multiple offers, little to no due diligence time and relatively quick completions are becoming the norm again for any readily developable residential site.
Developer confidence in the residential home market remains high as we continue to post record low levels of inventory, outstanding absorption at new project launches and continued price increases.
Consequently, land values are on the rise and rising fast enough that the gut-check values (price per acre, per door, per buildable) look asinine but I would encourage you to run the proforma. The conversation coming up the past few weeks is some version of “that asking price is outrageous but surprisingly, the numbers pencil out” (often with far more colourful language). End product revenue is climbing and making room for rising land values, so I encourage you not to get hung up on yesterday’s land prices, especially if you need another site.
Check out our curated summary of the Fraser Valley Real Estate Board’s September stats in infographics below.
View the Fraser Valley Real Estate Board’s entire stats package for September 2021 here.
This representation is based in whole or in part on data generated by the Fraser Valley Real Estate Board which assumes no responsibility for its accuracy.