The prices of detached homes in the Fraser Valley are going up, and at a significant pace – the average sale price is up 32% year over year. Multi-family pricing, on the other hand, has been nearly flat for the last decade. This is creating a staggering price gap between detached homes and townhomes. In 2012, a detached home could be purchased in The Fraser Valley for an average of $230,000 more than a townhome, that gap has since grown to over half a million dollars. The really staggering price gap is in South Surrey, where the price difference between a single family home and a townhome is twice as big, at over$1,000,000.
This gap is pricing many families out of the detached home market and driving an increase in demand for townhomes which, subsequently, is driving an increase in demand for townhome land. The increase in demand for good townhome land requires developers to be both creative and incredibly mindful of how they program a site. The site program, particularly the unit size and mix, can make the difference between a development project appearing financially viable on paper and having to pass on a great opportunity. While building out the proforma, it is not always accurate to use recent average selling prices per square foot, as this does not take into account that smaller units or unique product types tend to sell for a significant premium. Taking the extra time to thoughtfully analyze the revenue can make buyers far more competitive on land purchases, even at today’s narrow margins.