Bringing People Home, Peerage Partners, Real Estate News
We are pleased to present this Spring edition of the Fifth Dimension. This analysis reviews the number of new home sales and new developments for the First quarter of 2022 by region across Greater Vancouver and the Fraser Valley.
Fifth Avenue Real Estate Marketing Limited (Fifth Avenue) specializes in new multifamily home sales and marketing in suburban markets of Metro Vancouver and throughout the Fraser Valley. Fifth Avenue is a proud partner with Peerage Realty Partners, a network of premium real estate service providers throughout North America. To service the other primary markets of British Columbia, our related entities include Central Vancouver focused BakerWest Real Estate Incorporated, Okanagan based EPIC Real Estate Solutions Incorporated; and Vancouver Island based Island Realm Real Estate Incorporated. Collectively, our brokerages possess leadership experience helping developers bring the best new multifamily residential communities to life in each market, by local experts that live and work in these unique communities.
The supporting data for this report is objectively collected and presented by renowned and renamed Zonda Urban (formerly Urban Analytics) a leading provider of advisory services on the new multifamily home market and a vital contributor to this report since 2010.
The First Quarter of 2022 continued to break new home sales records across the board with 6,323 sales recorded. However, like any pendulum over the quarter the market slowed unusually as of late and swung in the opposing direction creating initial signs of potential downward pressure on prices when compared to the same period last year. That being said, what we are experiencing is comparable to driving at 140 km/hour and then slowing down for a curve in the road to 80 km/hour. Suddenly everything feels very slow even though you are still moving very fast.
Numerous factors are attributed to these changes within our local markets, and that proverbial curve in the road we have slowed down for is now more representative of a winding road with multiple swerves. This includes the civil unrest in Europe, rising interest rates with two increases in the First Quarter of 2022 already (and more to come), and inflation resulting in rising construction costs. Meanwhile, the last threads of the Covid-19 restrictions have been mostly removed during this season, whatever the rest of 2022 may have in store for us, with all factors it feels more like what one might call normal.
With boarders now opening up after two years of Covid-19 keeping them closed, the welcoming arrival of Ukrainian refugees, and the continued local Canadian market (that was the cause of the record breaking 2021 real estate market across Canada and in the Fraser Valley), there is still strong demand for homes in BC, albeit at a slower pace than the last year. It is still a seller’s market. Demand is still clearly outweighing the current supply; however, we are starting to move towards more of an equilibrium. This could change once immigration is fully open and we see any effects on the market from purchasing in a safe country like Canada to call their new home. However, it may be difficult to add to the supply at the same rate as this new and expected demand unless local municipalities can increase the approval pace of new home permits, and thus the rate of new supply to the market.
Sales have slowed moderately; prices continue to remain the same and increase due to rising costs associated with inflation and municipal costs. Because of these facts prices are not expected to drop or change, but rather remain where they are and perhaps continue to increase at a slower pace to help keep up with the rising costs of construction. Construction costs rising are a result of labour costs to pay living wages and material costs such as lumber and concrete. Lumber has tripled in price over 2021 as one example. This means there really is no room to lower prices on new supply, however developers may start taking more time to reach their pre-sale requirements. This means selling out in weeks or months, instead of hours or days as we saw over 2021 and this First Quarter of 2022.
Given this reality, more British Columbians are projected to continue to abandon the big city life in favour of more affordable neighbourhoods and housing types, while maintaining their big-city jobs with remote work contracts. Smaller areas across the province continue to benefit from this shift, with increases not just in the Fraser Valley, but in the Okanagan and on Vancouver Island alike.
In predicting the market for the remainder of this year, there will definitely be fluctuation, swinging back and forth due to increases in demand and decreases in supply. In addition to the expected and yet to be known exterior factors, such as further interest rate increases throughout the year, possible stress test increases by the federal government, etc. We expect the market to remain relatively stable for the remainder of 2022.
Home Buying, Real Estate News, Your Next Home