The housing market in BC’s Fraser Valley region experienced skyrocketing demand and prices this year, but will the region continue to be a hotspot in the New Year?
In November 2017, the region saw a roughly 40 per cent year-over-year increase in home sales with a total of 1,743 units, according to the Fraser Valley Real Estate Board’s (FVREB) latest data release, published this month.
FVREB president Gopal Sahota says although “2016 was a hotter year, 2017 is on fire” with attached sales driving the market.
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“The attached homes, which are the multi-family [units] such as townhomes and condos, are in very strong demand as opposed to historical demand on detached homes,” says Sahota.
Last month, attached sales represented 53 per cent of all market activity.
Instead of buying pricey homes in Metro Vancouver, Sahota says buyers are opting for attached homes in Fraser Valley because of their more affordable prices.
The benchmark price of a condo in the Fraser Valley was $376,700 in November, a 36.6 per cent increase compared to a year ago. For a townhome, the benchmark price was $505,700, up 19 per cent compared to November 2016.
According to Sahota, the key reason for the Valley’s soaring demand is BC’s booming economy.
“The communities in the Fraser Valley are putting a lot more effort into creating jobs in this region and the growth and projections are quite high,” says Sahota.
And the FVREB president says strong demand could continue in 2018 as the economy continues to improve.
“Consumer confidence is strong out there and jobs are coming in. People feel more confident jumping into bigger ticket items like homes,” says Sahota.
However, there are potential red flags that could impact demand next year.
On January 1, the Office of the Superintendent of Financial Institutions’ (OSFI) new stress test will require all uninsured mortgage borrowers to qualify against the Bank of Canada’s five-year benchmark rate, or at their contract mortgage rate plus an additional two per cent.
Sahota says the mortgage rules will likely have an effect on slowing down the market. He adds that possible interest rate hikes next year could also be a headwind that impacts demand.
As for prices next year, Sahota says it’s a waiting game but prices will rely on the balance between supply and demand in the market.