Everyone is well aware of the great reshuffling throughout the pandemic. People migrated away from the city, opting for more space and privacy while they worked from home. Everyone rushed out to the suburbs. Similar to the toilet paper crisis at the onset of the pandemic, housing inventory in the burbs was swiftly plucked bare. Recent housing data just released for January shows the extent of the mania.
Of all the homes sold in the Fraser Valley this January, 1247 homes to be exact, a total of 70% of them sold above the asking price. This was a new high for the valley, surpassing the previous boom in 2016/17. Bidding wars have resulted in a rapid rise in prices, particularly for detached houses. Since the start of the pandemic, March 2020, the typical price of a house in the Fraser Valley has inflated by $581,000. What was once considered home to the middle class has morphed into a speculative mania where the benchmark price of a house sits at $1.569M. Giddy up!
Let’s dissect this a bit further, shall we. Since the start of the pandemic, from March 2020 to January 2022, house prices have inflated as follows:
– Abbotsford by 67% or $552,000
– Langley by 60% or $615,000
– Surrey by 58% or $594,000
– North Delta by 57% or $527,000
As you can imagine, once house prices get bid out of reach, buyers settle for the next best thing, a townhouse. Townhouse prices in the Fraser Valley have inflated 37% over the past twelve months, and are officially up a whopping $247,000 since the onset of the pandemic. Pretty big move considering prices were essentially flat from 2008-2015.
But wait, it gets better. Condo prices are now ripping too, officially up 31% from last year or $138,000 since the onset of the pandemic. I think we can all agree it is not the foreigners bidding up Langley condos. Yes, this time is different, we have nobody to blame but ourselves. Armed with cheap credit and a sea of liquidity, locals have taken it upon themselves to inflate the suburbs to new heights.
But what happens when the narrative shifts from pandemic to endemic? Per BC’s Premier, John Horgan this past week, “As we come to this place over the next couple of weeks to maybe moving to endemic rather than pandemic we need to reimagine the tools for us as citizens and governments.”
It might be time to short the suburbs and go long the city. The downtown condo market is already roaring back to life, perhaps a sign of things to come.
Three Things I’m Watching:
1. Detached house prices in the suburbs are up $581,000 since the start of the pandemic. (Source: REBGV)
2. In the Fraser Valley, over 70% of all homes sold above the asking price in January. (Source: REBGV, Steve Saretsky)
3. Who’s bidding up Langley condos? (Source: REBGV)