The Fifth Dimension Report – Winter 2023 Edition

Let’s hop into this Year of the Rabbit and review the numbers from the final quarter of 2022 with a concise summary of the completed fourth quarter of our Fifth Dimension Metro Vancouver & Fraser Valley report.

As winter came upon us, there were new signs of hope in the market during the final quarter of 2022, with several new development sales launches and quarter-over-quarter increases in sales activity, all despite two additional interest rate increases by the Bank of Canada. A season usually associated with darkness and despair actually saw signs of stabilization and light.

It seems that Q3 2022 was our market bottom as we saw unexpected sales gains over each quarter. Year-to-year, we are still down significantly, however, the gains seen in Q4 compared to Q3 are optimistic. Considering this happened during two additional interest rate increases by the BOC with interest rates at 450 basis points at the time of this report, this is a significant sign of market improvement or at least stabilization of the market as we move into 2023.

In the previous quarter, we emphasized in our Fifth Dimension report that some neighbourhoods were either over or under-supplied. We stated that those neighbourhoods with unique and strategic sites in under-supplied areas could still be successful, whereas those in over-supplied areas should proceed with caution as consumers have more options and time to consider. This was proven in the final quarter with several successful new project launches across Metro Vancouver.

The first of several condominium buildings, with 77 units, was released in November 2022 and sold out at the first launch. 50% of the Townhomes released in the first phase were also absorbed at Highstreet Village.

Let’s look at Abbotsford, a city with no prior supply projections in the hype of the 2021 market.  Abbotsford saw strong sales success in late-2022 with the launch of Highstreet Village, a master plan community by AB Wall. The first of several condominium buildings, with 77 units, was released in November 2022 and sold out at the first launch. 50% of the Townhomes released in the first phase were also absorbed at Highstreet Village. To meet consumer demand, a second building was brought to market in mid-December in this neighbourhood. This is a prime example of a unique product in an under-supplied area achieving success despite the slowdown of other areas at the time. As we entered 2023, sales have continued strong with over 180 total homes contracted since commencing sales in late November.

Furthermore, areas that previously experienced significant sales slowdowns and price decreases, such as Willoughby in Langley, have seen a recovery in the fourth quarter with increased sales seen at most townhome communities. This suggests that we are seeing market stabilization across the board as both developments and home buyers have adapted to the new market conditions. This is not just a result of one-off success in undersupplied areas. This gives us confidence for the arrival of the 2023 market.

With more time to market and pre-sell than ever before, we have time to design well-planned sought-after communities with homes adapted to the current market conditions for home buyers and builders alike.

The Bank of Canada has also hinted at a rate pause for the remainder of the first quarter of 2023, furthering the potential of increased market stability and consumer confidence. Eliminating this fear driver will only help maintain people’s ability to purchase and maintain demand.

We will still need to be strategic and cautious; however, it seems the worst is now behind us with the light seen from Q4 2022. Times are still harder than they were a year ago, but not as unfavourable as the previous quarter or second quarter of 2022 were. With more time to market and pre-sell than ever before, we have time to design well-planned sought-after communities with homes adapted to the current market conditions for home buyers and builders alike.

Please feel free to reach out with any questions you may have or to discuss potential sites you may be considering preparing for the market. The earlier marketing is introduced into the project development process, the more we can help guide and ensure the correct overall unit mix to achieve maximum sales and revenue results for each pocket of the Fraser Valley.