Vancouver prices drive property buyers east

Affordability, land supply help Fraser Valley outpace Greater Vancouver

Jorda Maisey, a realtor with Re/Max Little Oak Realty and Fraser Valley Real Estate Board president: growth in the region’s housing market is “balanced” | Chung Chow

Fraser Valley real estate sales have been at record levels for the past six months.

According to the Fraser Valley Real Estate Board (FVREB), there were 1,727 sales in September, an increase of 22% compared with 1,419 sales during September 2014. Last month’s sales were on par with September 2005 and second to September’s all-time high for sales in 1992.

Fraser Valley real estate sales are now growing faster than elsewhere in the Real Estate Board of Greater Vancouver’s (REBGV) jurisdiction, which includes Whistler, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Coquitlam, Coquitlam, New Westminster, Pitt Meadows and Maple Ridge.

The REBGV recorded 3,345 residential property sales in Vancouver in September, a 14.5% increase compared with the 2,922 sales recorded in September 2014, and a 0.5% decrease compared with the 3,362 sales in August 2015. Last month’s sales were still 32.9% above the 10-year sales average for the month.

Jorda Maisey, a realtor with Re/Max Little Oak Realty and the FVREB’s president, said the growth she’s seen in the Fraser Valley has been good for the region’s municipalities – and is sustainable.

“I would say that it’s balanced,” Maisey said. “People are very positive about the future of the Fraser Valley; there are definitely good communities building.”

Maisey added that there are pockets in the Fraser Valley that are hot seller’s markets now, especially Cloverdale, where 52% of the properties on the detached-home market sold in September.

Townhome sales were even brisker, with 60% of the properties being sold in September, putting pressure on a rapidly dwindling land base.

“Overall, from a realtor’s perspective, we have to closely monitor the new inventory and act fast if it’s the right home for our buyers, because it is stressful for buyers depending on what they’re looking for,” Maisey said.

John Barbisan, a Surrey-based realtor with Sutton Premier Realty, said the market has changed substantially over the past year.

“For example, a first-time buyer looking at condo opportunities in Surrey City Centre last month had a choice of more than 400 units to choose from at benchmark prices, 7% less than what they were a year ago. A buyer looking for a single-family detached home in Guildford had a selection of 24 homes to choose from at prices 13% higher than they were one year ago. You can clearly see the different challenges and opportunities, depending on where and what you’re buying or selling.”

Tsur Somerville, an associate professor for the University of British Columbia’s Centre for Urban Economics and Real Estate, said the Fraser Valley over the past decade has had a growth rate about half that of Vancouver, but that has changed as valley land beckons buyers seeking lower prices.

The benchmark home price index for a single-family detached home within the REBGV’s jurisdiction sits at $722,300, up 13.7% over the past year and 27.7% over the past five years. Within the FVREB’s jurisdiction, it’s $639,500, up 12.3% from a year ago and 25.2% over the past five years.

Somerville said there are a number of reasons why buyers are moving east.

“In the Fraser Valley you can actually build single-family housing. So there’s a new supply of single-family housing, that’s No. 1. No. 2 is the really high-end [properties] tend to be in the core of our metropolitan areas. So unlike some places like Calgary where you have some high-end places not near the centre, the farther out is still more affordable here.”

Andrey Pavlov, a professor of finance at Simon Fraser University’s Beedie School of Business, said mindsets might be starting to change when it comes to desired living areas, especially in the Lower Mainland where transportation infrastructure is “particularly poor when compared to most other metropolitan areas of similar size.

He added that people all over North America have a strong desire to move back into metropolitan area centres.

“With infrastructure failing, commute times make it impossible to live too far from work. More importantly, people are moving to densely populated centres because of the amenities they offer: restaurants, coffee shops, entertainment, cultural events. To consume those, one really needs to be in a downtown setting, irrespective of commuting time.”

But statistics still favour the suburban areas when it comes to overall population growth.

Surrey is the Lower Mainland’s fastest-growing city, followed by Coquitlam, New Westminister, Pitt Meadows and Langley, according to Statistics Canada.

Somerville said he’s not sure what the future holds for the Lower Mainland’s real estate market, but he doesn’t see any danger signs pointing to a marketplace price bubble.

“I’d say in general the things that I see with a bubble are sales turnover, pre-sales that people are flipping, excess of supply of capital, overbuilding. Those things are really hard to see here. And so that doesn’t mean that prices aren’t out of line, but I think there’s a difference between saying prices are higher than they should [be], or in a bubble.”