The Fifth Dimension Report - Winter 2023 Edition

WELCOME TO THE FIFTH DIMENSION

With the new year fully upon us we bring you this final installment for 2023 of Fifth Avenue Real Estate Marketing Limited’s (Fifth Avenue) Fifth Dimension. As a service to our industry, we offer this definitive guide on the new multifamily home market in Metro Vancouver each and season year-round.

For more than four decades Fifth Avenue has been a leading full service, suburban and Fraser Valley market-focused residential real estate sales and development marketing. We are a partner of Peerage Realty Partners whose BC network also includes Okanagan based Epic Real Estate Solutions Inc. and Vancouver based BakerWest Real Estate Incorporated, in addition to strategic partnerships with Vancouver Island based DFH 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 Zonda Urban, a leading provider of advisory services on the new Multifamily home market and a vital contributor to this report since 2010.

The Fraser Valley has long been a sought-after region for real estate investment and homeownership due to its stunning landscapes, thriving economy, and proximity to Vancouver. However, recent developments related to a year of interest rates hikes, the extension of a foreign buyers ban, and the implementation of short-term rental restrictions have significantly influenced the housing market in this region.

Leading up to 2023, interest rates have played a pivotal role in shaping the affordability and demand for new construction homes in Metro Vancouver and the Fraser Valley. The historically low interest rates observed during this period allowed potential buyers to secure mortgages at affordable rates, fueling an increase in housing sales. However, as interest rates increased throughout 2022 and 2023, more

and more buyers have been priced out of the market or into a smaller product type than they could afford previously.

The newly announced extension of the foreign buyer’s ban is now in effect until January 1, 2027. Originally put into place in 2022 for 2 years with the aim to cool housing prices and increase affordability for local buyers has had little to no effect on the market overall. This is of no surprise, in 2021 when there was no ban on foreign buyers, it was the hottest market British Columbia had experienced with foreign buyers being less than 1.5% during this period. Of this very low and insignificant portion of buyers in the market, a large majority of these buyers were found to be spouses of a Canadian resident, which the ban failed to take into account, leading to both buyers being denied the ability to go on title as a family.

Our local Provincial government in British Columbia has intervened to address the longstanding issue of inadequate affordable rental supply. They are implementing a new ban on short-term rentals in cities with populations exceeding 10,000 or those adjacent to such cities. This ban will take effect on May 1, 2024. Mandating what homeowners can and cannot do with their own properties like this may help a few communities in the lower mainland, but could be detrimental to the rest of the province. For example, the city of Penticton is a summer town where most business rely on the summer tourism income to survive for the rest of the year. There are limited hotels and motels that are unable to support the demand and very few camp grounds. The elimination of short-term rentals in areas like this could result in reduced tourism revenue for businesses throughout the city, making it more challenging for them to sustain themselves throughout the year. Additionally, it might exacerbate the housing issue as businesses face the risk of closure, potentially impacting the local housing market negatively. In larger more populated cities in the lower mainland such as Maple Ridge or Coquitlam where there are few hotels. Where will visitors stay

when these hotels reach capacity and there is no longer opportunities for short term rentals? Perhaps that land earmarked for future homes will be purchased by hotel chains instead to take advantage of the new demand that this ban may create?

Upon examining the data from the last quarter of 2023, the ambiguity surrounding these matters becomes evident in communities that have maintained a yellow light status, experiencing ongoing declines in sales. In instances like Ridge Meadows, where sales have decreased despite the introduction of new projects adding inventory to the market, the transition from a green light to a yellow light is notable. Other areas where supply has been and continues to be low and can offer the best price points have remained as a green light or even moved to a green light such as Burnaby/New Westminster market and Surrey Central/ North Delta markets.

We are excited to announce that we will have a new format for our Fifth Dimension coming out with the statistics for the first quarter of 2024. Stay tuned to view our exciting new layout and even more in depth articles to help you navigate today’s complicated market.

Jamie Squires

Jamie Squires

President & Managing Broker

Fifth Avenue Real Estate Marketing LTD.

Jamie@fifthave.ca