Wondering where B.C.’s housing hot spots will be over the next few years?
Surrey residents are living in what experts say is the Lower Mainland’s hottest real-estate market.
Communities such as Clayton Heights, Cloverdale and Fleetwood are hot and expected to stay hot in the near future as buyers seek affordable housing near family-friendly services.
Other areas expected to see brisk demand from buyers over the next few years are Burnaby’s Brentwood, the Tri-Cities and Fraser Valley communities of Langley, Maple Ridge, Pitt Meadows and Abbotsford.
In Vancouver, urbanites who prize city living are pushing up demand in the Main Street, Outer Hastings and East Vancouver’s Cedar Cottage neighbourhoods, says Tsur Somerville, director of the University of B.C.’s Centre for Urban Economics and Real Estate.
FRASER VALLEY ON THE RISE
Homebuyers seeking affordable houses will arrive in two waves into the Fraser Valley, says Don R. Campbell, senior analyst with the Real Estate Investment Network.
Abbotsford may not seem an obvious hot-spot-to-be but Campbell says it has great potential, with ample residential, industrial and agricultural land.
“Five years from now, when people discover Abbotsford, they’ll go, ‘Why didn’t you tell me sooner’? Campbell says.
“It’s basic human nature. We all love to wait until something is right in front of us, or past us.”
Not to be overlooked is the positive price impact of the Evergreen Line on communities in Burnaby, Coquitlam, Port Moody and Port Coquitlam that are near stations to be built, he says.
Among the neighbourhoods that should see a price boost from the new SkyTrain line are Sullivan Heights, Keswick Park, Caribou, Brookmere Park, Harbour Chines, northern Chineside, Chineside, Cassin, Eagle Ridge, Harbour Village and Meadowbrook, predicts the Real Estate Investment Network.
Residents of Glen Park, Sheila Barrett Park and Dacre Park who live within 800 metres of the planned Lincoln Station in Coquitlam “can anticipate a 10 to 20 per cent premium in their values,” the network predicts.
Cameron Muir, chief economist with the B.C. Real Estate Association, says he wishes he had a dollar for each time someone asked him which areas of the Lower Mainland are under-valued.
Muir says he doesn’t have enough data to predict popularity or price acceleration.
But he does suggest watching areas such as Richmond, where immigrants, especially from Asia, will continue to buy.
“Richmond is something to keep an eye on in terms of valuation,” Muir says.
“Immigrants typically locate where other ex-pats are and that’s why you’ll likely see additional demand there.”
Campbell is all for buying homes strategically — where prices are likely to outperform the average — but advises people against buying more house than they need or will be able afford when interest rates rise.
Buyers must also accept that real-estate markets rise, fall and plateau, he says.
“A market will always clean itself up. That can be cleaning up just by plateauing.
“If you bought a place and it stayed the same value for 10 years, would you be OK with that?”
SKYTRAIN A BIG ATTRACTION
“Gentrification or new developments can change people’s perceptions in ways that make some areas ‘hotter’ than others,” Somerville says.
Homeowners near a SkyTrain station or a new stop on the Evergreen Line that is now under construction will get the best of both worlds: high demand and faster-than-average price climbs, experts say.
But the first doesn’t necessarily translate into the second in the land-constrained Lower Mainland, real-estate watchers say.
Communities where demand is high may find price increases tempered if there are relatively large chunks of undeveloped land in the area.
And areas where demand is cooler — such as Vancouver’s West Side and West Vancouver — may see faster price appreciation because they’re “built out” — you can’t squash more houses in there.
“There’s a difference between where demand will go versus where price gains will be the highest because of things such as land constraints,” says Bryan Yu, regional economist with Central 1 Credit Union.
Using land for multi-family developments also maintains an area’s affordability for buyers, Yu says. But condo price appreciation will generally be less than it is for detached properties as condos comprise an increasing share of the Lower Mainland’s housing mix, Yu says.
“Prices of ground-oriented properties in the long term are expected to rise at a stronger pace than for condominiums,” Yu says.
SURREY NO. 1
Lower Mainland communities claim five spots on the Real Estate Investment Network’s latest list of Top 10 B.C. investment towns: Surrey ranks as No. 1, followed by Maple Ridge and Pitt Meadows tied at No. 2, Abbotsford at No. 6, Chilliwack at No. 8 and Langley at No. 10.
Homebuyers seeking affordable houses will arrive in two waves into the Fraser Valley, says Don R. Campbell, senior analyst with the Real Estate Investment Network.
The first wave of demand is washing over Surrey, Maple Ridge and Pitt Meadows. Surrey alone is expected to become home to an estimated 250,000 more people over the next three decades.
Campbell calls Surrey a “beautiful market” for first- and second-time homebuyers with its mix of multi-family projects, affordable older homes, a growing city centre, rising employment and shorter commutes to Vancouver, thanks to the new Port Mann Bridge.
“We’re going to see the largest growth in housing demand in Surrey,” Campbell says.
“Companies are getting a lot more comfortable with building manufacturing plants, which will attract people to live and work in Surrey and bring more stability to the housing market.”
Neighbourhoods near Surrey’s SkyTrain stations — Scott Road, Surrey Central, Gateway and King George — should see higher-than-average price increases over the next five years, Campbell says.
Studies show that homes within 800 metres of a transit station grow in value 12 to 15 per cent faster than equivalent homes outside this zone, Campbell says.
“Conversely, if the market slows or drops, the properties in these zones drop less and at a slower rate,” Campbell says.
Kelvin Neufeld, managing broker with Sutton Premier Realty in Surrey, says Cloverdale, Fleetwood, Clayton Heights and South Surrey are trending upwards in demand and price, especially for single-family homes.
The second wave of demand is already lapping at Langley, Abbotsford and even Chilliwack.
It will intensify over the next few years as buyers take advantage of the Lower Mainland’s improved bridge and highway infrastructure to access affordable areas., Campbell says.
LOOK TO THE NORTH
Surrey may be B.C.’s hottest spot for overall real-estate activity but it’s far from the only game in town. Areas of Northern B.C., riding an energy resource boom, are also expected to post high demand for real estate.
The north accounts for three of the Real Estate Investment Network’sTop 10 B.C. investment towns. Fort St. John is No. 3, followed by Dawson Creek at No. 4 and Prince George in ninth spot.
Kelowna and Kamloops also place in the network’s Top 10 real estate picks, making half of the hottest spots outside of the Lower Mainland.
As B.C.’s oil-and-gas capital, Fort St. John is attracting people in droves because of high wages and the relative ease of finding work, the network says.
“The major demand for housing in the region is currently rental product but as the labour market in the region matures, we expect this demand to shift to single-family, owner-occupied housing,” the network says. “The city’s current fundamentals echo Fort McMurray, Alberta, 10-15 years ago.”
Kitimat’s housing market has been red hot as buyers snap up houses in anticipation of LNG projects becoming a reality. The average house price in Kitimat soared 70 per cent in March from the same month a year ago, the B.C. Real Estate Association reports.
But Don R. Campbell, senior analyst with the Real Estate Investment Network, says housebuyers should exercise caution if they buy a property solely on the basis of proposed LNG plants.
“From a strategic buyer’s point of view, I don’t want to see announcements or proposals. I want to wait until I see shovels in the ground and then I would buy a property,” Campbell says. If you don’t wait, you’re putting yourself at risk.”
Cameron Muir, chief economist with the B.C. Real Estate Association, says markets such as the Okanagan have been in the doldrums for the past few years but are showing signs of renewed strength.
“Consumers sense that a kind of bottom to the (Okanagan) market has been reached,” Muir says. “Strength in the Alberta economy and Alberta housing market is helping to drive housing investment back into British Columbia. That’s helping the Okanagan. The Kootenays will benefit as well.”
But people kicking the tires of recreational property in the Okanagan and on Vancouver Island should not look forward to big price jumps, says Yu.
“Recreational markets in the southern Interior and on the Island are forecast to observe sub-one-per-cent growth through 2015,” Yu says. “Larger urban markets like Victoria and Kelowna will likely fare only slightly better.”
REAL ESTATE FACTS
The average price for existing homes in B.C. will grow by 0.9 per cent this year to $542,500 and by 0.8 per cent next year to $547,100, according to Canada Mortgage and Housing Corp.
Existing home sales across the province should reach 76,000 this year, up 4.2 per cent from 72,936 last year. Sales should grow by 1.7 per cent next year to 77,300, according to CMHC.
The average MLS price for Metro Vancouver is expected to rise by 1.1 per cent this year to $776,000, and by 0.9 per cent next year to $782,700, CMHC says.
The number of resales in the area is expected to rise by 3.5 per cent this year and slip five per cent next.
Central 1 Credit Union predicts the median resale price for multi-family dwellings in Metro Vancouver will rise about one per cent this year, and two to three per cent a year in 2015-2016. The median price for detached homes in the area will rise two per cent this year and about four per cent in 2015-2016, Central 1 forecasts.
Housing starts in B.C. will be about 27,300 units this year and will exceed 30,000 units from 2015 onward, Central 1 says.
