WELCOME TO THE FIFTH DIMENSION

In the previous quarter, we emphasized that some neighbourhoods were either over or under supplied. We stated that those neighbourhoods with unique and strategic sites in under-supplied areas could still be successful, whereas those in over-supplied areas should proceed with caution as consumers have more options and time to consider. This was proven in the final quarter with several successful new project launches across Metro Vancouver.

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, Baker West Real Estate Incorporated. Baker West and Fifth 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 partnerships 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 Multi-family home market and a vital contributor to this report since 2010.

The passing of one year and the arrival of the next creates hope. As we hop into this Year of the Rabbit we pause to celebrate our 14th year of creating this report. For more than 50 editions we have reviewed the numbers from the prior quarter of 2022. We provide a concise summary of trends and implications, with respect to the Multi-family real estate market throughout Metro Vancouver and the Fraser Valley.

In our latest report, we explored the diverse views on certainty and uncertainty. The discussion was prompted by the noticeable slowdown in absorption rates and the drop in prices in some areas. It appears that the summer and fall marked the bottom of the market as we observed surprising quarter-over-quarter sales growth. Although we are still down significantly from last year, the increase in sales in the fourth quarter compared to the previous quarter is a positive sign. Given that this occurred during two additional interest rate hikes by the Bank of Canada (BoC), with interest rates at 450 basis points at the time of the previous report, it is a significant indication of either market improvement or stabilization as we move into 2023.

As winter came upon us, there were new signs of hope in the market as the challenging year of 2022 ended. Despite two additional interest rate increases by the Bank of Canada, there were several new development sales launches and quarter-over-quarter increases in sales activity. A season usually associated with darkness and despair actually saw signs of stabilization and light.

Last issue we asked how certain or uncertain you were about the market and discussed that we had experienced a clear slow down and even a price decline in some neighbourhoods. It seems that Q3 was our bottom as we saw unexpected sales gains quarter to quarter. Year-to-year we are still down significantly; however, the gains seen in Q4 compared to Q3 are optimistic.

Recently, the Bank of Canada has indicated a potential pause in rate increases, which could result in greater market stability and higher consumer confidence. As we approach 2023, it’s crucial to maintain a balance between optimism and caution. Despite the current difficulties, which are still present but not as severe as the second and third quarters of 2022, there are signs that the worst may be behind us. Stability is a positive aspect as it provides more opportunities for market analysis and pre-sales. In addition, it allows developers and builders to design communities that cater to the current market conditions and meet the needs of both home buyers and the industry. Furthermore, areas that previously experienced a significant sales slowdown and price decreases, such as Willoughby in Langley, have seen a recovery in the fourth quarter with increased sales seen at most townhome communities. This suggests that we are seeing market stabilization across the board as both developments and home buyers have adapted to the new market conditions. This is not just a result of one-off success in under-supplied areas. This gives us confidence for the arrival of the 2023 market. As we move into 2023, we still need to be strategic and cautious. However, it seems the worst is now behind us with the light seen from this final quarter. Times are still harder than they were a year ago, but not as unfavorable as the second or third quarter of 2022 were. With more time to market and pre-sell than ever before, we have time to design sought after communities, with homes adapted to the current market conditions for home buyers and builders alike.

The BOC has hinted of a rate pause for the remainder of the first quarter of 2023, furthering the potential of increased market stability and consumer confidence. Eliminating this fear driver will only help maintain people’s ability to purchase and maintain demand.

The sign of Rabbit is a symbol of longevity, peace, and prosperity in Chinese culture. 2023 is predicted to be a year of hope. It has been a hopeful start to be sure.

All the best to you,

Jamie Squires

Jamie Squires

President & Managing Broker

Fifth Avenue Real Estate Marketing Ltd.

Jamie@fifthave.ca