The real estate market in Vancouver’s once red-hot suburbs has cooled in the past six months, as life returns to normal in the “big” city.
In Vancouver’s suburbs -- places like North Vancouver, Burnaby, Coquitlam, Port Coquitlam, Surrey, and Langley -- the real estate market has dialled back the drama when it comes to both frenzy and prices.
According to data from the Real Estate Board of Greater Vancouver (REBGV), prices began to cool in Vancouver’s suburbs in the past six months after reaching record-breaking highs since the onset of the pandemic.
“There has been a substantial change in the market in regards to everything from market sentiment, to listing prices and offer strategies, and the overall number of homes on the market,” says British Columbia (BC)-based realtor Alex Dunbar. “All of this has led to a more balanced market although we are still a ways from a buyer’s market. However, certain subareas are starting to get pretty close to those numbers in regards to sales-to-active listings ratio, which is the number we look at to give us this an indication of the type of market we're in. This is determined by taking the current number of sales for a given period of time divided by the current new listings for a given period.”
Once a given, Dunbar says that suburban bidding wars are for the most part a thing of the past and that subjects have returned to almost all offers. “Buyers now hold the majority of the power and ability to negotiate,” says Dunbar. “Far fewer homes are being listed a week prior to taking offers at a price lower than the sellers are expecting to get and these days, most homes are being priced at or close to what sellers want right from the start and offers are being taken as they come. Buyers no longer want to compete and they have enough options out there that they can avoid these situations most of the time.”
Vancouver and Langley-based mortgage professional Alex McFadyen agrees that there’s been a shift in BC’s real estate market. “We are seeing less multiple offers and frenzy on properties, although with the right property and location, we are stilling seeing listings, there are a lot less of these conversations happening and certainly more financing conditions and subjects on most properties outside of the ‘hot’ properties,” says McFadyen.
Dunbar highlights that the most substantial price decreases have been in the most suburban cities in the lower mainland which conversely had the most drastic relative price increases. “For instance, places like Chilliwack and Abbotsford were up 97% and 83% respectively from the start of the pandemic (March 2020) until the peak in February 2022,” says Dunbar. “This is where we've seen the biggest slow down with it becoming less and less drastic and we head further west towards Vancouver.”
The Golden Ears Bridge, connecting Maple Ridge to Langley. Long exposure at night, reflecting into Fraser River. Beautiful British Columbia, Canada.
Dunbar says he’s also seeing a compression of the market based on property type. “What I mean by that is that the relative price comparisons between condos, townhomes and detached homes got extended to the point that it was becoming more and more unrealistic for homeowners to climb the property ladder and make that jump to the next property type with an emphasis on the gap between townhomes and detached homes,” says Dunbar. “However, we are now seeing the biggest declines in detached homes followed by townhomes and then condos. For context, in the Fraser Valley these numbers were a -13.7% change in price for detached, -10.7% for townhomes and -7.6% for condos.”
Additionally, Dunbar points to how prices in the valley (east of the Fraser River) have also closed the gap significantly when compared to those part of the Greater Vancouver Real Estate Board (west of the Fraser River). “So, what was once a more attractive option due to affordability, being able to get have more space, and the ability to work from home, are no longer as prominent -- especially with other factors such as more people being asked to return to the office, at least on a part time basis,” says Dunbar. “With prices for pre-construction condos in places like Surrey hitting prices over $1200/sq ft and Langley close to $1100/sq ft, the numbers are making less and less sense when compared to those of Vancouver and the cities nearby.”
Naturally -- as in other parts of the country -- climbing interest rates have played a role in the cooling of BC’s market. McFadyen, however, says he hasn’t noticed a notable drop in mortgage-seeking clients. Not yet at least.
“Our applications are still very much in line with the same time last year, with a slight reduction in refinances and less ‘fringe’ inquiries; we're seeing more "serious" applicants now,” says McFadyen. “So, in turn, the numbers are down slightly but perhaps only 5-10% -- nowhere near as dramatic as being reported.”
With that said, McFadyen says that the next BOC (potential) increase will put a damper on lending, as it will most likely at that point start to impact qualification. “I would suggest a more balanced but less transaction heavy summer,” he says. “If interest rates to not increase by more than .75% I would anticipate a run up in the fall as more people are realizing the opportunities available to them in this more supply heavy market and as more home sellers decide NOT to sell with prices declining. This could equal a rising price environment by the end of the year. There are quite a few variables here though so we'll see!”
As for the return to normalcy, it’s unlikely that Vancouver’s suburbs will lose their appeal once the pandemic and its remote work culture become a distant memory. According to data from Sotheby's International Real Estate and the Mustel Group’s latest survey, nearly half of Vancouver's Generation Z residents say they plan to buy their first home outside of a major city, with 44% reporting they plan to purchase their first property in a suburb.
In the meantime, Dunbar says summer will likely show more of the same situation in Vancouver's suburbs.
“There is continued fear looming around more future interest rate hikes and many are sitting on the sidelines to see how things play out in the suburbs,” says Dunbar. “I think we've seen most of the ‘froth’ of the market come off the top already so I wouldn't expect as drastic of price drops as we've seen these past 2-3 months from the peak, but there is going to be continued balancing/slight downward pressure as we get closer to a balanced market. I don't think we've seen the full impact of the interest rate increases yet but that is something that each individual must weigh for themselves as future increases will also lead to decreased buying power. So, even if prices are to come down a little further, you may no longer be able to afford them.”
