A Historical Perspective of the Fraser Valley Housing Market

The level of uncertainty in the early days of the coronavirus pandemic negatively impacted housing inventory and prices, including in the Fraser Valley real estate market.

It might seem surprising today, but residential property sales had slumped in the first several months of the once-in-a-century public health crisis. They did not pick up steam until several months into the pandemic. Of course, once there was renewed demand, the Fraser Valley housing sector endured the worst supply shortage in 40 years.

According to data compiled by the Fraser Valley Real Estate Board (FVREB), the sales-to-active listings ratio peaked at 92 per cent during the pandemic, with the market becoming extremely volatile. This measure references the percentage of available listings that have been sold. The higher the percentage, the larger the portion of the available listings that have been sold.

Compared to other regions of Canada, the housing market in Fraser Valley managed to hold quite well during the pandemic, and prices of single-family homes, townhouses, and apartment units increased throughout the second quarter of 2020. However, statistics from the local real estate association highlight that home listings in April 2020 fell by 58 per cent compared to the same month in 2019 (pre-pandemic).

What About Fraser Valley Now?

Fast forward to the present, and the Fraser Valley housing market continues to favour sellers, with prices increasing significantly in the number of people looking to move from Vancouver to Fraser Valley. The properties most in demand were single-detached homes for the move-up buyers. The average selling price in Fraser Valley increased by nearly seven per cent in 2020 and by close to two per cent in 2021. The benchmark price for a single-family detached home rose 1.6 per cent year-over-year in August to above $1.5 million.

One of the brightest spots of the Fraser Valley real estate market was luxury housing. While prices were lower before the pandemic, they skyrocketed during the boom as more families wanted larger homes since they had greater purchasing power amid historically low interest rates. This resulted in the luxury housing market becoming more active during the pandemic. The hottest neighbours in Fraser Valley during the pandemic were Surrey, Chilliwack, and Abbotsford, with Chilliwack seeing more first-time homebuyers than before the pandemic. This trend continued in 2021.

Since the Bank of Canada started raising interest rates in the spring of 2021, homebuying activity in Fraser Valley has slowed. In addition to higher borrowing costs, rampant price inflation has also weighed on consumers. Last year, Fraser Valley home sales tumbled by more than 36 per cent, while listings were also lower in 2022 compared to the previous year.

So far this year, Fraser Valley housing prices have recorded modest gains, including in the first quarter of 2023. This positive bump was observed following a year of a downward trend, so it was welcomed news for homeowners. Moreover, the two-month respite by the central bank, which kept mortgage rates in check, resulted in robust sales activity.

Looking ahead, a wide array of Indicators suggests a positive outlook for this region, and the housing market is expected to regain stability from both the demand and supply sides. For example, during the first quarter of 2023, single-family detached homes sold within 36 days, townhomes exchanged hands within 33 days, and apartments were taken off the market in 32 days. Plus, other trends are forming are continuing, like the move-up and move-over buyer activity, which is expected to persist in the post-pandemic era in this region. Market analysts note that similar trends are being observed in other Canadian real estate markets.

But ultimately, the housing supply shortage is expected to be the headline heading into 2024.

A Glimpse of Fraser Valley’s Future

Overall, Fraser Valley’s housing market indicates both progress and uncertainty, especially considering the path of interest rates by the Bank of Canada.

The market has shown signs of improvement, but the effects of the institution’s rate hikes are still being felt. Remember, monetary policy operates with a lag, so the current five per cent target rate is still travelling throughout the national economy. That said, despite its re-acceleration this summer, inflation has stabilized, and the fact that central bank chief Tiff Macklen did not pull the trigger on a rate hike in September is a positive sign.

But the message emanating from Ottawa is that interest rates could go up again, manufacturing an environment of uncertainty for buyers and sellers.

Meanwhile, June 2023 indicates a glimpse of growth in Fraser Valley with a significant surge in single-family home sales, with a 77-per-cent increase compared to the previous year. However, the average price of a single-family home advanced by a little more than two per cent in June compared to the same time a year ago.

At the same time, affordability challenges continue to be an issue and could be exacerbated if the Bank of Canada raises interest rates again this year. Supply in Fraser Valley is relatively stable compared to other regions in the country but lower this year than last year. Suffice it to say, these are the narratives for the British Columbia region in the home stretch of 2023.