The Fifth Dimension Report – Spring 2024 Edition

As we move through the season of Spring, we recognize its ability to make us reflect and refresh.

The Fraser Valley Real Estate Market: Challenges and Changes

The Fraser Valley has long been a sought-after region for real estate investment and homeownership due to its stunning landscapes, thriving economy, and proximity to Vancouver. However, recent developments have created significant uncertainty for the industry. Higher interest rates and new taxes, such as the anti-flipping tax, increased capital gains tax, and the ban on short-term rentals of privately owned properties, are impacting both buyers and sellers.

Impact of Economic Factors

Inflation remains high, and rumours of upcoming interest rate reductions continue to flourish. However, based on the current inflation rate, these reductions seem increasingly unlikely. Even if a reduction occurs, the potential decrease in borrowing costs would be negligible. While a small reduction might slightly boost buyer confidence, it won’t have a lasting impact on costs or prices.

Government Policies and Property Rights

Property owners are losing personal property rights over their properties because the government stopped building affordable housing in the late 80s and early 90s. To address this issue, the government is now implementing policies that take away the rights of hard-working and law-abiding citizens in an authoritarian manner. For example, new rules prioritize tenants over family for living accommodations and cap allowable rental rate increases to the point that proper maintenance becomes unaffordable. This has led, and will continue to lead, to more sales of rental units, reducing the number of available rental units in the long run.

Consequences of Rental Policies

Policies freezing rental rates while costs rise rapidly never lead to positive outcomes. Preventing rent increases between new tenants stops landlords from catching up with costs. This will force many rental owners to become “slumlords” or sell their units to avoid financial strain. Consequently, new rental units will become extremely expensive, and older, more affordable ones will disappear, exacerbating the rental shortage.

Tourism and Local Economies

Towns in our province that rely on tourism to support their local businesses will suffer immensely from the short-term rental ban. The hotel industry will benefit from this change, as it allows them to increase prices without alternatives for the public.

Uncertainty and Market Signals

Government interference has created uncertainty, leading to caution signals for about 70% of the Lower Mainland and Fraser Valley combined. Only four small pockets show positive indicators, but they should be watched closely due to the dynamic changes happening today.

As we close with this final issue, we urge you to do your research, study the history of BC, and ensure you vote and have your say in our next provincial elections this October.

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