Moderated by Bob Ransford, Vice President of Development at Century Group, the afternoon’s expert panel voiced a consistent market sentiment with notes of a “plateau,” “steadiness,” and continued demand for more affordable homes while supply remains low.
Bryan Yu, Deputy Chief Economist at Central 1 Credit Union, shared a positive message of steadiness amidst recent shocks to the industry. Key take-aways from Yu included:
- The BC economy is strong, so a real estate market crash is unlikely; however, there may be a mild correction followed by steadiness for a couple years, particularly on the pricing front.
- The current lending environment is tighter than it has been in over 2 decades and the new mortgage rules cut buying power by 20-25%. The low mortgage rates of the past few years are a thing of the past and we should expect another rate increase this year and 4 more beginning later in 2019. Conversely, the drop in home sales has lenders competing for mortgage clients so increases will be minimal.
- The current home sales environment isn’t being driven by a recession. It’s being driven by the policy environment and the constraints on credit.
- 3% growth in prices is expected across Metro Vancouver over the next year, with single-family detached homes showing the weakest growth.
- A sub-1% vacancy rate means the rental market will remain strong, with no significant changes in sight.
Eric Bond, Principal Market Analysis at CMHC, delivered a perspective underlined by the economic fundamentals, supply and demand. The top notes from CMHC were:
- Surrey & Langley represent one-third of new household growth in Metro Vancouver.
- Sales of detached homes have returned to the 10 year average
- The boom in the sales-to-active listing ratios hit a wall in late 2017 and 2018 is now in an unbalanced situation. It’s still a strong seller’s market for homes under $750,000 but a buyer’s market for homes over $1,000,000. The impact of this is noticeable as most of the region’s current inventory is over $1,000,000.
- The price growth curve will not continue, particularly for apartments, which has been incredibly steep recently. Prices will hit a ceiling as they bump up against the prices of townhouses.
- There is no standing inventory in the Fraser Valley. There are 11,000 homes under construction in the Fraser Valley, a figure that is double that of 3 years ago. The incoming supply is not expected to greatly impact the market given how low supply currently is. This supply figure cannot be sustained in such a constrained labour market and when the time for approvals continues to increase.
Scott Brown, CEO of Fifth Ave Real Estate Marketing, also shared a positive view on the current market and path ahead as we adapt to a dynamic market. Highlights from Brown were:
- We are in a “very good and active market” that will continue through 2018 and 2019.
- Many consumers are done with the detached product type, opting for more affordable product types.
- Affordability, even in the Fraser Valley, is eroding as supply continues to be an issue.
- When planning a development project, be mindful of the unit mix as we will begin to see price compression while the blended average selling price per square foot appears to remain constant.
- We are in a paused market, similar to that of 2016 when the foreign buyer’s tax had many sitting on the sidelines curious how the government intervention would play out.
- 2019 will be steadier and “less expensive homes will continue to fly off the shelf.”
Thank you to UDI Fraser Valley for bringing everyone together for a great event. Check out the UDI website for upcoming events.