A sneak peak into our upcoming Fifth Dimension report, written by our President & CEO, Mr. W. Scott Brown.
This past quarter of marks the beginning of the seventh year since we began producing and sharing our first edition of the multifamily report on the Metro Vancouver market report that has come to be known as the Fifth Dimension. Of course, over the years we made a number of projections that did not materialize and we owned up to them each quarter. We have also had our share of accurate predictions.
Our aim in producing this complimentary report each quarter remains true: to stimulate dialogue and promote positive action in our industry. Of course, to ensure the supporting data is objectively collected and presented we collaborate with highly regarded Urban Analytics (UA) a leading provider of advisory services on the new multifamily home market. UA has been tracking the new multi-family home market in Metropolitan Vancouver since 1994 and has been a vital contributor to this report since its inception.
In collaboration with UA, for the past 24 quarters we have been diligently tracking the market for new high rise and low rise condominiums and townhomes in each unique market area throughout the Lower Mainland. Each quarter In addition to the comprehensive analysis of the multifamily residential real market in Metropolitan Vancouver we provide additional observations, insights, interpretations and market projections. By last count over 7,000+ industry stakeholders receive our updates.
During the process of creating the report for the First Quarter of 2016 I reflected back on our first few editions and chronicled a number of the projections and insights from that time. The poignant points include:
The closing of the gap with other desirable communities throughout the world with respect to downtown (and luxury market) pricing as evidenced by price appreciation. One statistic we actively track in this report is what we like to call the “Active Sales Range”. This refers the price per square foot range that 75 percent of recent sales occurred within. We also call this the “sweet spot”. At that the Active Sales Range for high profile markets was: Vancouver Downtown - $650 to $700; Vancouver West- $625 to $675; Richmond - $525 to 575 and Burnaby - $475-525. The ranges have appreciated to: Vancouver Downtown - $660 to $1,200; Vancouver West- $650 to $905; Richmond - $550 to $615. What is more impressive is this occurrence in concurrent with a near doubling of annual absorptions (2010 compared to 2015). doubled.
The emerging and sustained influence of the growing Chinese community on the market especially with respect to pricing/values and absorptions in Vancouver Downtown, Vancouver West, Richmond and Burnaby. This important group is now influencing multifamily values in Surrey City Centre and is projected to exert the same the influence on the South Surrey/White Rock condominium and townhome market that it has had on single family homes values in this seaside locale.
The continued media coverage re: the affordability challenge in more Vancouver centric markets at the expense of speaking to:
a) the relative affordability of the markets in the Fraser Valley
b) the increased desirability / livability of these communities and
c) the growing percentage of overall sales these markets now represent and the broad selection of product offered.
For instance, today 60 to 70 of all townhomes sales occur in these markets.
In addition, in a recent quarter Surrey City Centre quietly represented the third most active high rise market trailing only Vancouver West and Burnaby/New Westminster. It is worth noting that Surrey’s active sale range for high rise condominiums has jumped from $350 to 400 in 2010 to and recently estimated $440 to $500 today. We also estimate that one in every new three low rise condominiums in the Metro area occurs in the Fraser Valley markets which includes Maple Ridge, Pitt Meadows, Langley, Surrey, White Rock and Delta.
In our very first editions we began to “bang the Fraser Valley drum” based largely on our belief of a ripple effect occurring from escalated values downtown. We also projected that at some point we would see vibrancy in outer markets such as Squamish and Abbotsford. This has transpired and as a result starting with our first edition in 2016 we will now be tracking and reporting on the Abbotsford market. By the way, according to a recent speech by Don Campbell of the Real Estate Investment Network (REIN) at a UDI Event Abbotsford is now the best community to invest in throughout BC. Well, we didn’t go that far in our projections but we are happy to be doing business there.
My re-reading also surfaced a “sea change” in the general tone of the conversations we were having from “caution” and “concern” about the depth of demand to “optimism” and “concerns” about the lack of supply. Readers will recall in our last edition of the Fifth Dimension we questioned why more supply was not encouraged / expedited as a means to easing affordability concerns.
The lack of supply can be eased by encouraging greater cooperation and collaboration with the municipalities who essentially control what gets approved and sold. Inefficiencies in process and/or under resourcing here costs everyone. To that end, the Canadian Taxpayers Federation – a non-partisan, not for profit advocacy organization dedicated to lower taxes – is investigating affordability and the effect taxation and bureaucratic red tape are having on today’s consumer. In particular, they believe regulatory delay costs along with escalating development charges and community amenity charges act as another form of taxation, driving up housing costs and choking supply.
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To learn more about the Canadian Taxpayers Federation visit their website taxpayer.com