Fraser Valley Set For Strong Household Growth

Monday, June 23rd, 2014

Elizabeth Wilson

When you cross the bridge, forget what you know.”

Colin Scott of Fifth Avenue Marketing tells his developer clients to drop their city-slicker attitudes when they come to the Fraser Valley.

Speaking to the Urban Development Institute Fraser Valley chapter June 19, Scott said that even though the Fraser Valley is often lumped in with the Vancouver real estate market, it’s a different beast entirely and needs to be considered on its own.

Stretching south of the river from Delta through Surrey and Langley to Abbotsford, and north of the river from Pitt Meadows to Mission, the Fraser Valley is an economic powerhouse, home to the fastest-growing communities in BC. Surrey itself is a “second city,” a half-million-person urban centre. Even excluding Surrey, the Fraser Valley ranks 10th in size relative to Canada’s census metropolitan areas, according to the event moderator, urban designer Bob Ransford.

And the pace of growth is showing no signs of slowing. Around 8,000 new households came to the Fraser Valley in 2013, according to event panelist Sarena Teakles of Canada Mortgage and Housing Corporation (CMHC). She said that this steady level of approximately 2 per cent year-over-year growth is expected to continue for the foreseeable future, with an average of 8,780 new households predicted to come into the region every year for the next five years.

She added, “The really big areas for growth will be Ridge Meadows [Maple Ridge and Pitt Meadows], Langley and Abbotsford. On average we’ll see about 1,050 households going to Ridge Meadows, 1,700 in Langley and 1,200 in Abbotsford, each of the next five years.

“Surrey is not going to see the largest rate of increase, but because it’s the largest sector and the most ethnically diverse, it will see about 2,800 new households.”

She gave home prices as a key reason for that growth.

Any house hunter knows that homes are far more affordable in the Valley. New or resale, house, townhouse or condo, you get more home for less money. For instance, the benchmark price for an average resale house in Greater Vancouver is $966,500, compared with $566,400 in the Fraser Valley Real Estate Board region.

While Greater Vancouver prices have spiralled up, prices in the Valley have remained flat since 2009. Part of the reason is that supply currently outstrips demand. Teakles said that although there were 8,000 new households in 2013, only 5,624 new homes were built in the Valley that year, as unabsorbed homes filled the gap in demand. She told that as households grow over the next five years, housing starts will inevitably rise to the same annual levels as the surplus is rapidly used up.

Another reason for the low prices is that the Fraser Valley has not had the same pressure from investors as Vancouver. People buy homes to live in.

And what they’re buying is townhouses — 60 to 70 per cent of all townhomes sold in the Lower Mainland are sold in the Fraser Valley.

Attached to Townhomes

“We believe that the townhome is the new de facto single family home for this generation,” said Scott. They want fences, they don’t mind side-by-side garages, but they really do not aspire to having a detached home and a large yard. Home ownership between $300,000 and $500,000 for a townhome is acceptable to them, provided that townhome is well appointed and well designed.”

In fact, the popularity of townhomes is affecting condo sales, he said. “About 25 per cent of the standing inventory in Metro Vancouver in condominiums is in Surrey and Langley, and one of the big reasons is that townhouse prices have become so attractive that the hardest thing to market right now is probably a two-bedroom wood frame apartment between 800 and 900 square feet, because I can get a 1200-square-foot townhouse for $249,000 or $269,000.

“We used to see first-time buyers [buying a condo] as a couple, getting married, getting pregnant and moving out with a baby screaming in about one year. Now what they’re doing is they’re buying into that townhome and staying there for seven or eight years.”

High-rise condos are a particularly tough sell in the Fraser Valley, unless they’re close to transit. Only 5 to 15 per cent of Lower Mainland condo sales are in the Valley.

“We always caution our clients not to assume that the buyers want Yaletown in Langley. They don’t,” says Scott.

“The Fraser Valley behaviours and values are a lot more similar to other centres in Canada – Saskatoon, Calgary etc. – than they can be to downtown Vancouver. Especially with the emergence of Vancouver proper as an Asian city more than a multicultural city. Whereas Surrey and the Fraser Valley are more multicultural – probably a more accurate reflection of the face of Canada.

“Prospective home buyers in the Fraser Valley are less impressed with downtown Vancouver than everybody thinks.”

CMHC’s Teakles agrees. “The first thing that comes to mind for me is quality of life,” she said. “I like having the convenience of the big city, but I don’t like to live in it.”

© 2014 Real Estate Weekly

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