January 2023 – Fraser Valley Real Estate Market Snapshot

The third quarter of 2022 appears to have marked the market bottom, as sales in the final quarter of 2022 and January 2023 were unexpectedly high. Although yearly sales absorptions are still down significantly, the gains in Q4 2022 and January 2023 compared to Q3 are seen as positive.

This is especially noteworthy as these gains occurred during two additional interest rate hikes by the Bank of Canada, with interest rates reaching 450 basis points at the time of the report. This suggests that the market is showing signs of improvement or stabilization as we enter 2023.

Developers with unique and strategically located sites in under-supplied areas are still experiencing success, while caution is still advised in over-supplied areas where consumers have more options and time to make decisions. In these areas, the property offering the best value tends to win the sale, as seen in the successful launches of new projects across Metro Vancouver during the last quarter of 2022 and January 2023.

Abbotsford saw a successful launch of a master plan community by AB Wall, High Street Village, which includes the first of several condo buildings and the first phase of townhomes. The entire 77-unit condo building was sold out at the first release, leading to the release of the second building in mid-December to meet consumer demand. Half of the townhomes released at High Street Village were also sold, demonstrating the success of a unique product in an undersupplied area during a slowdown in other areas.

Additionally, areas that experienced a significant sales dip and even price reductions, such as Willoughby in Langley, appear to have rebounded in the last quarter with noticeable sales growth in most townhome communities. This indicates that the market is stabilizing across the board, as it adjusts to the changing conditions faced by home buyers. This is not limited to a few communities in under-supplied areas, but across multiple areas. This provides confidence in the outlook for the rest of 2023. The Bank of Canada’s hint at a “rate pause” for the first quarter of 2023 adds to the potential for further market stability and buyer confidence. Eliminating this fear factor will support sustained buying activity and maintain demand.

The recent increase in absorptions in the real estate market might be attributed to the new laws that went into effect this month. The three-day cooling-off period has been introduced, but it is unlikely to impact the new home industry as they already have a seven-day right of rescission for home buyers under REDMA. Additionally, the three-day period is not enough time for tasks such as booking a home inspection or arranging financing, which are covered by subject clauses and typically take a week or two. The ban on foreign ownership across Canada is questionable, considering statistics show that foreign ownership was less than 1.5% of all home sales during the buying frenzy of 2021. This ban may be viewed as a vote-buying move by the government, as it makes it harder for Canadian first-time home buyers to enter the market while removing restrictions for those with more financial resources. The market had already been correcting itself over the last three quarters of 2022 before these recent government interventions aimed at slowing it down through bureaucracy and added costs for entry-level Canadian buyers.