Commercial Property Update For the Fraser Valley

Residential Property Market Update for the Fraser Valley

It’s no secret that property values and sales activity are down in the Fraser Valley residential market. Housing price trends continue to move downward with the average price of a home across all property types in the Fraser Valley at $930,000, down 27% from the market’s peak value of $1,282,979 in February of 2022. Detached housing prices have seen the largest declines, with townhomes trailing closely behind and condos holding their prices. This is in line with the market trends during the pandemic where the Fraser Valley saw the largest increases in detached housing prices with townhome and condo price increases trailing behind.

Average Price of Detached Houses in Fraser Valley

The average price of a detached house in the Fraser Valley is $1,390,187, down 28% from $1,927,356 in February 2022.

Average Price of Townhomes in Fraser Valley

The average price of a townhome in the Fraser Valley is $738,458 down 25% from $989,525 in February 2022.

Average Price of Condos in the Fraser Valley

The average price of a condo in the Fraser Valley is $469,019 down 19% from $609,188 in February 2022.

New Home Prices for Condos, Townhomes and Houses in Langley, Surrey and the Fraser Valley

Housing construction prices will remain high as a result of increased interest rates, high labour costs and disruptions in the supply chain. Construction cost escalation has the potential to drive housing higher and reduce housing starts. 30% of developers have plans to increase dwelling unit sale prices to deal with interest rate increases, while 49% plan to reduce the number of new projects planned.  

Office Space Availability for Langley, Surrey and the Fraser Valley

Office rental prices have remained flat with a vacancy rate of 10.4% for Q4 of 2022, up from 9.5% in Q4 of 2021. This increase is as a result of an increase in supply arising from a number of new completions for office space in the Greater Vancouver area. As of Q4, 2022 45.3% of new office construction is available for lease or sale and of the total inventory available 35% of the supply is sub-let space

Vacancy is expected to decline as employers increase mandates requesting employees come back to the office. Currently there is an influx of employees returning to the office for 3 day workweeks. The downside risk if the number of layoffs in the tech centre. 

“Being in the office and having accidental meetings with co-workers increases innovation and workplace satisfaction.”

Investment Property Activity and Sales in Langley, Surrey and the Fraser Valley

Investment activity is relatively flat compared to a year ago. Momentum going into 2023 is flat where we expect to see activity return to pre-pandemic levels. People are taking on negative leverage with the idea that rents will be increasing over the next two years.

Cap rates are expected to remain relatively flat. We’ve already seen increases in the retail and office front, so it’s expected to level off. 

Overall 2023 sales are expected to decline slightly from 2022’s highs. The interest rate increases will put a drag on the condo markets as first time buyers get knocked out of the market due to the OSFI changes coming up later in the year. 

There are still opportunities in this market. Rental inventory is still at record lows and with the ban on foreign investment, there will be rental demand for entry level condos to accommodate the international student and newcomers to the area. The market is remains in a low inventory scenario. It doesn’t take much in terms of surge in demand to cause price growth. If we get a recession then we could see price declines.

Trends in Cap Rates for Canada