WELCOME TO THE FIFTH DIMENSION

In the last quarter, we observed that undersupplied neighbourhoods had better sales compared to oversupplied ones. The oversupplied neighbourhoods had a slower with higher constraints on prices due to the competitiveness of these neighbourhoods. Additionally, we discussed the recent Bank of Canada interest rate increase and indications that they may maintain rates in the first quarter of 2023.

This report is produced collaboratively by Fifth Avenue Real Estate Marketing Limited, a leading full service, suburban market-focused residential real estate sales and development marketing organization and our Central Vancouver based organization, BakerWest Real Estate Incorporated. BakerWest and Fifth Avenue are part of the Peerage Realty Partners network whose other BC interest include Sotheby’s International Canada and Okanagan-based Epic Real Estate Solutions Inc. We also enjoy strategic Vancouver Island Partnership with DFH Real Estate and Island Realm Real Estate. Together we cover British Columbia’s ever changing and expanding new home market.

The supporting data for this report is objectively collected and presented by renowned and renamed Zonda Urban (formerly Urban Analytics), a leading provider of advisory services on the new Multifamily home market and a vital contributor to this report since 2010.

Spring 2023 came in like a lion and left like a lamb as we jump from wet and cold weather to a hot and sunny 27 degrees Celsius. The rejuvenating aura of this time of year, adorned with blooming flowers and the redolence of freshly cut grass, fills us with renewed optimism for the burgeoning new home real estate markets in Metro Vancouver and Fraser Valley.

Within this evolving landscape, four areas have emerged as beacons of progress, showcasing remarkable improvements in the overall real estate market. Among them, Vancouver’s Northshore stands out, undergoing a remarkable transformation from a red light to a vibrant green light. This significant shift can be attributed to a remarkable 91% surge in sales absorptions during the first quarter of 2023 compared to the previous quarter, coupled with the introduction of new highrise developments that have expanded the available supply. While these two launches contributed to 70% of the first-quarter sales, it is noteworthy that absorption rates across all home product sectors, including townhomes and low-rise properties, have experienced substantial quarter-over-quarter growth.

Another noteworthy area that has experienced a remarkable turnaround is South Surrey/White Rock. This locale, transitioning from a cautious yellow light, now radiates a resplendent green light, symbolizing its resurgence. The surge in sales activity, surpassing threefold that of the previous quarter, can be attributed to a surge in townhome activity and a limited influx of new developments entering the market. Consequently, this has led to a scarcity of available condominiums in both the high and low-rise segments, underscoring the desirability and demand in this vibrant neighborhood.

These positive developments serve as a resounding testament to the indomitable spirit of the real estate market, showcasing its remarkable ability to adapt, thrive, and overcome challenges. By seizing growth opportunities, fostering community engagement, and capitalizing on the dynamic nature of the market, we empower ourselves to embrace a future brimming with infinite possibilities. Together, we forge a path towards prosperity, where aspirations find their rightful place in the vibrant tapestry of our communities.

The latest statistics from the first quarter bolster our previous discussions, underscoring the crucial interplay between supply and demand in specific neighborhoods. While certain areas may bear a cautionary red or yellow light rating, it is imperative to recognize that there are neighborhoods that warrant a resolute green light. This emphasizes the paramount importance of comprehending distinct market areas and demographics before embarking on any development endeavor. By conducting thorough research and analysis, we position ourselves to make informed decisions that contribute to the overall growth and vibrancy of our real estate landscape. As mentioned in our previous

Fifth Dimension report, the Bank of Canada (BOC) has maintained the rate at 4.50% since January, which has contributed to the increased market activity observed in the first quarter. Currently, there are two prevailing views regarding the future direction of interest rates. One view is that the BOC will maintain this rate pause until the end of 2023, with rates potentially going down in 2024. The other view is that rates may increase at least once more in 2023 before potentially starting to decrease again in 2024.

The rate of inflation, which is currently at 5.2%, much higher than the BOC’s desired 2%, will likely determine which view holds true. If the BOC holds or lowers the overnight rates, it will boost consumer confidence in the market. However, further rate increases could reduce the absorption rate gains seen in this quarter, as they will increase borrowing costs and limit potential buyers’ purchasing power. We will need to closely monitor inflation in the upcoming months and how the Bank of Canada responds to it. The BOC is scheduled to make its next rate announcement on June 7th, followed by another on July 12th. Be ready to celebrate or wallow away as these two announcements will set the tone for the summer Q3 market.

Regards, and all the best.

Jamie Squires

Jamie Squires President & Managing Broker Fifth Avenue Real Estate Marketing LTD. jamie@fifthave.ca