LOOKING BACK & AHEAD

What in the world is going on? When we released our first ever issue of this report we certainly did not imagine 7,655 new home sales in one quarter and in the Fourth Quarter at that. Nor did we foresee 26,291 new homes for a year surpassing the prior record set four years ago by more than 10 percent. The “summer like no other” despite a Delta variant, has been surpassed by “a blizzard of sales” a top an Omicron blanket.

Looking Back

How do we follow two consecutive quarters of 6,000+ units sold? We suggested a slight moderation of sales but not much. Turns out, we were wrong by 1,655 sales. We projected 90 days ago that the year-end total would hit a pinnacle of 24,000 homes and 26,000+ seemed moderately improbable. Wrong again. We did expect High Rise sales to set the pace again and anticipated a bump in Low Rise sales as well as steady Townhome sales. Hey, we got that spot on. We also stated not to expect any relief from current costing and pricing trends which remains the case for now.

In addition, we mentioned that throughout 2022, High Rise sales would resume its place as the top selling product type year to date. Last quarter clinched that title with more than half of 7,655 sales of the whopping 13,124 occurring as the year came to a close. High Rise sales were up 260 percent from 2020 when the best seller title went to Townhomes. We concluded by stating that when 2021 is said and done, suburbs would represent the largest share of market ever recorded. As our friends at Zonda noted, 98 percent of the 2,299 released units in the Valley were absorbed in the past 90 days. Meanwhile, the Fraser Valley Real Estate Board reported the highest recorded number of pre-owned sales in its 100 year history. This is clearly not our parent’s suburban market anymore. Looking Ahead

As we enter the “Year of the Tiger” our collaborative teams at Fifth Avenue and our partner organization BakerWest, continue an internal dialogue asking:

Given current inflation levels, how much will interest rates be adjusted throughout 2022? How many times? By how much each time?

There is a general tendency for interest rates and the rate of inflation to have an inverse relationship. The need to stimulate the economy given the pandemic suppressed interest rates and forced savings. Given the demand for homes and the limited supply, we are experiencing inflation. The Government may also once again have concerns about Canadian’s debt load. With all this in mind, do we foresee interest rates increasing once or several times throughout 2022? What impact will that have on the market?

On the heels of a prior peak year - 2017, a number of Government interventions quelled demand significantly in 2018 and 2019 with the latter annual absorptions being nearly two thirds less than what we project for 2021. Given the record sales and low supply especially in pre-owned, will other interest rate increases be focused on demand suppression? We certainly appreciated a recent comment by the Minister for Housing David Eby with respect to true downside of NIMNBYism? What other actions will be done to accelerate the time it takes to get more supply to market?

Speaking of politics, 2022 is a municipal election year. Mark Saturday, October 15th in your calendars now. Last time around, there was quite the upheaval. Should we expect more of the same? How many areas will make pro or anti development a rally cry? How many municipalities will tout change based on the local Government Act removing the default requirement for local Governments to hold public hearings for zoning bylaw amendments that are consistent with the official community plan? How many will promise to delegate decisions on minor development variance permits to staff? Amendments will update the Local Government Act to remove the default requirement for local Governments to hold public hearings for zoning bylaw amendments that are consistent with the official community plan. This will then enable local Governments to delegate decisions on minor development variance permits to staff. The big question is – which municipality(ies) will lead the way here?

If you have a view you would like to share and/or questions you would like to discuss please contact scott@fifthave.ca.