One word comes to mind as a descriptor for the Chilliwack real estate market: scorching hot. A housing shortage is gripping Chilliwack, leading to red-hot conditions in this Fraser Valley town. What was once a quiet country escape has quickly transformed into one of the hottest areas in the British Columbia real estate market, thanks to a blend of historically low interest rates and growing demand over the last 18 months. If these trends persist in the final quarter of 2021, this could be Chilliwack’s hottest real estate year yet.
But is this hyperbole, or do the data support this supposition? Take a look for yourself: soaring sales activity, double-digit price growth, and extremely tight supply. Can the Chilliwack housing market sustain this momentum?
Why is the Chilliwack Real Estate Market “Scorching Hot?”
According to the Chilliwack & District Real Estate Board (CADREB), residential sales tumbled 13 per cent year-over-year in August, with 346 units sold. Year-to-date home sales skyrocketed 75.4 per cent, suggesting that the market may have peaked and could be starting to ease.
Looking at the long-term performance of the Chilliwack real estate market for the month of August, home sales were 13 per cent above the five-year average, and 26.7 per cent above the decade average.
Price growth remains in the double digits, according to the local association. The MLS® Home Price Index (HPI), which is considered to be a more accurate measurement than median or average, soared at an annualized rate of 31.3 per cent in August, to $719,700. With that being said, the average price of residential properties sold in the final full month of summer advanced 21.3 per cent year-over-year to $710,238.
Here is a look at how the different property categories across the local market performed based on the benchmark price gauges:
- Single-family homes: +34.1% to $836,700
- Townhouse / row units: +27.7% to $574,300
- Apartments: +27% to $369,000
While supply is tight across the broader Canadian housing market, Chilliwack real estate inventory is extremely low. The number of new residential listings coming on stream plunged 31.9 per cent to just 341 units at the end of August – the lowest reading in more than five years. Active listings plummeted 48.5 per cent to 535, which is also the lowest level in more than three decades. Historically, active listings were 44.7 per cent below the five-year average, and new listings were 15.9 per cent below the five-year average.
Months of inventory, which measures the time it would take to liquidate current inventory at the present rate of sales activity, was 1.5 months – down from the 2.6 months at the end of August 2020. It was also well below the long-run average of 5.3 months for this time of the year.
“Home sales might have been down from last year’s exceptional record, but still came in just two sales shy of tying for the third-best August ever,” said Andrew Verschuur, President of the Chilliwack and District Real Estate Board, in a news release. “New listings declined by substantially more than sales, which means that overall supply levels are still heading downward to new record lows. With fewer properties on the market to choose from than ever before, it’s no surprise that market tightness is keeping price gains for single family homes north of 30 per cent year-over-year and above 25 per cent for townhomes and apartments.”
Despite the multi-year stockpile lows, new home construction has been rising, according to Canada Mortgage and Housing Corporation (CMHC). In August, there were just 49 starts, up from 43 last year. Year-to-date, housing starts have totalled 968, up from 533 in the first eight months of 2020.
Will the Chilliwack Real Estate Market Continue to Grow?
If current trends continue, the Chilliwack housing market may remain above long-run average levels into 2022. The provincial economy is poised for growth over the next 12 to 18 months, and certain conditions should continue to support further housing price growth: rising migration flows, near-zero interest rates and limited stock.
“Even if sales come back down to long-run average levels, total listings would need to nearly double to bring markets back into balance,” noted the British Columbia Real Estate Association (BCREA) in an interview with The Chilliwack Progress. “Prices are under significant upward pressure due to extremely tight market conditions, while buyer preferences are still tilted toward extra space and larger homes. As a result, the average price in 2021 is on track to post a second consecutive year of double-digit gains. We are forecasting the provincial average price to rise 16.6 per cent to $911,300 this year, followed by a 2.9 per cent gain next year to $937,300.”
The Chilliwack real estate market has more room for growth, continuing to defy long-term trends. But it could be an exciting time for the western municipality over the next several months. The year 2021 was an incredible time for Chilliwack. Can Chilliwack replicate these numbers in 2022? The odds thus far, are good.