As house prices in Vancouver continue to soar to record-breaking levels, the real estate affordability crisis has now made its way to Surrey and the Fraser Valley.
In March the Fraser Valley Real Estate Board (FVREB) posted its highest sales figures since inception in 1921. It processed 3,006 sales, a 62% increase from March of 2015.
That trend continued through to June, which posted its highest sales on record for that month, even though it had eased off slightly compared with March.
The MLS benchmark price for a single-family detached home is now $861,600, a 41.3% increase compared to June of last year when it was $609,900.
The benchmark price for townhouses has also climbed, rising to $387,100, an increase of 27.9% compared to $302,600 in June of 2015.
Developers are already looking to capitalize on the growing need for affordable real estate across the Fraser Valley. Mosaic Homes is currently selling Guildhouse, an apartment development in the Guildford area of Surrey, which is relatively close to the King George Skytrain station and Highway 1. The new residential addition has one- and two-bedroom apartments and three- and four-bedroom townhomes for under $200,000.
The benchmark price for apartments in the Fraser Valley sits at $231,900, which is a 20.8% increase from last June when it was $191,900.
Geoff Duyker, senior vice-president of Mosaic Homes, said the project marks the first time the company has built apartments, and is a direct result of changing demographics.
“Historically we’ve built townhomes in Langley and Surrey but we see market dynamics really shifting,” Duyker said.
He added that available land to build townhome complexes in the Fraser Valley is becoming increasingly sparse, and that younger, first-time buyers across Metro Vancouver are now being priced out of single-family homes and townhomes in Surrey and other neighbouring communities.
A recent Royal Bank of Canada Housing Trends and Affordability report noted that in 2016’s first quarter, it cost 119.5% of the median household income to cover ownership costs associated with a single-detached home. This is up from 109% at the end of 2015. For all home types, including houses, condos and townhomes, it cost 87.6% of median income.
“There are realities and we can’t ignore that the price of housing is increasing and is increasing faster than incomes – and that is a fact,” Duyker said. “And so our response to that is people need homes, and our job is to help meet that need, and we’re looking at the market dynamics and saying let’s deliver homes that people can afford.”
Matt Morrow, a realtor with Re/Max who has been selling in the area since 2005, said this is part of a “trickle down” effect from homes and townhomes to the condo market.
“This demand has caused certain strata product to climb 20% in the last four to five months alone,” Morrow said. “Townhomes I was selling at the beginning of the year at $325,000 are now selling for $400,000 plus, and just yesterday I had five offers on a 20-year-old condo, which has been unheard of for that market.”
Morrow added that a lack of supply is driving buyers who are itching to get into the market, even at increased costs. “It just seems people want to get in, no matter what it is or what it takes.”
FVREB president Charles Wiebe said a cooling-off phase needs to happen for sales of townhomes and single-family homes.
“Demand is tremendous, still, for detached homes in our region,” Wiebe noted in a recent FVREB report. “But it’s encouraging to see that the upward pace of that demand is levelling off.
“However, we’re also seeing the ripple effects as consumers are looking to townhomes and apartments in record numbers. This year, so far, is the busiest those markets have ever been.”
For its Guildhouse project, Mosaic Homes is also banking on the yet-to-be-confirmed Surrey light-rail transit line that would run right through the area, as well as other planned city infrastructure projects. Duyker said the idea is to create a commercial residential hub at Guildford much like the transit-oriented Metrotown and the planned Brentwood towers in Burnaby. This cluster of amenities usually attracts people born in the last two decades of the 20th century, he noted.
“Surrey is growing and generally when you look at the demographics, it’s pulling young people,” he said. “And what we’re doing is providing housing that young people can afford. We are going to look to do more apartment projects.”
With files from
Glen Korstrom and Emma Crawford Hampel
