The Fifth Dimension Report – Fall 2023 Edition

There is no question that amid all this uncertainty that the market overall has seen a dip in sales activity over the third quarter of 2023 when compared to the previous quarter, a 28 percent decline). This is still in positive contrast to the overall compared to the same period in 2022. Sales this past summer and year-to-date sales are actually up 70 percent overall year-over-year. As we enter the concluding weeks of what will be the market story of 2023 one can not help recall the significant ebbs and flows to date. It has been a year very much about government intervention. From holding our breath over each interest rate announcement to date (with possibly one more to come before the end of the year), to taking aim at owners of short-term rental accommodations without a consideration of markets outside the primary metropolitan area to “naughty lists,” and new announcements with respect to local housing targets for each city, we are all weathering now blustery market conditions and winds of change.

The supporting data for this report is objectively collected and presented by renowned and renamed Zonda Urban, a leading provider of advisory services on the new Multifamily home market and a vital contributor to this report since 2010.

With the higher cost of borrowing for consumers today, it is worth noting that developments with the longest completion dates are achieving the highest sales activity.

Home buyers are banking on prices continuing to increase in the long run, and interest rates dropping prior to having to complete today’s real estate purchases. On the other hand, developments with standing inventory or inventory completing in under a year are struggling compared to those on the market completing in 2025 or later. In addition to the higher costs for consumers, the higher rates also mean higher construction costs for developers, making it near impossible for any real price movement in either direction at the moment. However, along with rising rates and ongoing efforts to combat inflation comes rising wages, rising transportation, and import costs. In addition, cities and municipalities also seem to be increasing their development cost charges and community amenity charges putting further pressure on pricing and discouraging new supply. This does not always seem to make any sense.

Due to all of these factors, purchasers and developers have continued to assess the market and are expected to hold off needed new home inventory until the numbers make sense for them to be able to move ahead again.

As we navigate the winds of Fall, we will have to wait and see where everything lands along with how our industry adapts over the final quarter of this year with the final chapter of this shifty 2023 market story setting the scene for new beginnings in 2024.

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.

Click here to Download the Fifth Dimension Report, a Comprehensive Analysis of the Multi-Family New Home Market throughout Metro Vancouver & the Fraser Valley