September 2021 – Fraser Valley Real Estate Market Snapshot
September’s Real Estate Statistics show that we are in a seller’s market still, with sales numbers down in each product type.
To help battle affordability and price increases from not only supply and demand but also the escalating cost of construction and development permitting across the valley, developers and architects are creating more and more efficient homes. It is now common to see two-bedroom condos under 700 sq.ft. Ensuring there is no wasted space in a home helps to increase the efficiency of the home and keep at a size that can be priced more affordably than larger units with wasted space (hallways are a great example of wasted unusable space being eliminated as much as possible).
The total available inventory numbers are also down, equating to a lower number of home sales across the board. This apparent lack of inventory is also highlighted by a significant increase in average home prices in all product types when comparing September to August. Unlike in June when this was increased pushing more entry-level buyers out of the market and ensuring those already in and with deep pockets remain unaffected as usual. This supply issue also directly attributes to the slow and painstaking municipal approval process which continues to be a leading factor affecting real estate prices and supply in British Columbia.
With the election reaching its close, those in the industry are hopeful that our new minority government will act on these issues, taking steps as was mentioned in last month’s report to hold local municipalities and cities accountable to timelines for approvals. It’s also important to note that another increase to the stress test will only limit the affordability for entry-level buyers entering the market and own their first home. On a more positive note, in July of 2021 CMHC did announce some relaxations to mortgage underwriting policies (matching Canada’s 2 other private mortgage insurers, Genworth and Canada Guaranty.) For consumers, this means the credit score required has been reduced from 680 to just 600. CMHC also recently increased the maximum allowable debt service ratios for a mortgage by increasing the gross debt service ratio (GDS) from 35% to 39% and the total debt service ratio (TDS) from 42% to 45%. This means your next mortgage can be up to 39% of a household’s gross income however the mortgage and all other combined debt cannot exceed 45% of a household’s total gross income. Every little bit counts when you’re buying a new home.
Since mid-2020 it has become very clear that the local real estate market increases were not due to foreign ownership in any capacity, perhaps it never really was, to begin with, or maybe it was simply a great headline for political posturing in British Columbia. Now almost 2 years later the market is right back to its typical performance, proving that Greater Vancouver and the Fraser Valley are desirable places to live and in-demand areas for Canadian homebuyers.
With limited land and opportunity to build and extremely slow municipal approval rates, home prices here will remain a contentious issue and across the industry businesses are finding sustainable and efficient ways to keep homes as affordable as possible This type of market activity is typically an investor’s paradise allowing them to enter different markets before prices have seen significant appreciation, allowing for equity to be drawn for future investment properties. The global economic crash of 2008 was the largest downturn BC Real Estate has ever experienced and the market was able to rebound to the same prices or higher within a year and a half. Real estate owners don’t need to worry as much about market shifts unless a market shift happens at a time you are forced to sell. Intelligent real estate owners will wait until the market is in their favour and sell at that time. We always need a place to live, but we don’t always have to sell and move unless the timing and market work in our favour.
For those looking at a great place to start your new home search, low-rise condominium and entry-level townhome developments in the Fraser Valley are a great investment opportunity with room for appreciation. Purchasing into a new development when they are first released for sale means there are no mortgage payments to make until completion. This gives investors plenty of time to find a renter for the space or make the decision to move in yourself. Typically, two years from time construction commences to completion, and construction usually starts three to six months after sales have started. This helps ensure that equity will most likely have been gained before completion helping expedite gains with no monthly payments for up to two and a half years.
For anyone looking for opportunities like this, check out Langley’s most charming and historic locations, and the FIRST Creekside masterplan village at Aldergrove Town Centre. Visit www.atcliving.com to register today and be among the first to discover what this new community has to offer as well as an opportunity to purchase.