Surrey City real estate still hot

Possible interest rate hike and Bank of Canada’s warning that Canadian housing market could be overvalued unlikely to hurt strong local market, realtors say

Kelvin Neufeld in front of a single-detached home and new condo on 154th Street and 104th Avenue. The Surrey realtor believes falling oil prices and the drop in the Canadian dollar’s value could keep the Bank of Canada from raising interest rates | Chung Chow

It was another banner year for Surrey real estate, with  sales across the Fraser Valley up 16% in 2014. And local realtors think even a recent statement by the Bank of Canada and a possible rate hike, will have little effect.

In December the Bank of Canada said the Canadian housing market could be overheated by as much as 30%.

“Although there is considerable uncertainty around this question, various approaches – including our own – suggest that there is some risk that the housing market is overvalued, and our estimates fall in the 10 to 30% range,” Bank of Canada governor Stephen Poloz said in a written statement accompanying the release of the Bank’s biannual Financial System Review.

“That kind of blew me away,” said Kelvin Neufeld, a realtor who’s been selling in Surrey since the 1970s. “And especially with the way the market is going now, it’s still ramping up.”

Ray Werger, president of the Fraser Valley Real Estate Board, has been selling homes across the region for 22 years. He thinks the Bank of Canada’s statement doesn’t apply to Surrey.

“You hear these reports about overpriced,” Werger said. “I think what they’re looking at is downtown Toronto and downtown Vancouver. Other areas such as Surrey are very affordable right now.”

The Bank of Canada’s warning did nothing to deter sales even over the holidays as both Werger and Neufeld said they remained busy, unusual for this time of year. 

“We didn’t get a slowdown through Christmas at all,” Neufeld said. “My guys were writing deals on Christmas Day, believe it or not. We haven’t seen that in a while; there’s still a lot of demand for housing.”

Another concern is the possibility of rising interest rates.

Some forecasters are predicting the Bank of Canada will raise its overnight target rate sometime this year, possibly as much as 50 basis points, bring the rate to 1.5% from 1%. However, Neufeld thinks the current economic climate surrounding the drop in oil prices that’s hit Alberta extremely hard – already starting to cool that province’s sales – may hold up the rate hike.

And any rate hike would likely be incremental, “a quarter to three-quarters of a percentage point if it happens, I think,” Neufeld said.

In December, sales increased by 21% across the Fraser Valley from 890 in 2013 to 1,075 last month. New listings increased by 13% in December compared to 2013. Single-family detached home prices also rose in December by 4.3% compared to December 2013, to $573,100 from $549,500.

Surrey assessment statistics

Residential properties across Surrey and White Rock rose 4.85% in taxable value in 2014. BC Assessment released 2015 numbers for the entire province on January 2, and all property classes in the Surrey-White Rock area saw a jump in assessed value except farmland, which dropped 2.85%. Business properties had the largest increase at 5.98%, with major industry close behind at 5.91%. All property classes combined rose 4.98%.

The biggest residential property increase was in South Surrey, which also has the highest average assessment value at $716,000, rising from $672,000 in 2014. Brian Smith, acting deputy assessor for BC Assessment’s South Fraser region, said most of the city was in line with the provincial average, “except for South Surrey, which increased a little more than the rest of the province on average.”

“Newton saw the least increase in the area when it comes to Surrey,” Smith added.

The most expensive property in Surrey is 17146 20th Avenue ($14,844,000), located in South Surrey by The Shops at Morgan Crossing, east of Highway 99. The property is the 87th most valuable in the province and zoned as acreage.