2024 Fraser Valley Housing Market Outlook

2024 Fraser Valley Housing Market Outlook

2023 was a surprising year in my opinion, with respect to the residential real estate market in the Fraser Valley and Metro Vancouver area. In spite of higher mortgage rates compared to years past, prices and activity largely held up well. I would characterize the housing market as stable and balanced, on the whole. The sharp price declines that many predicted would occur, due to deteroriating affordability, never meaningfully materialized.

Looking ahead to 2024 I have a few thoughts about what may evolve for Fraser Valley housing markets like North Delta, Surrey, South Surrey, Langley, Abbotsford and Mission.

1) More of the same. 2023 may represent the "new normal" for our local housing market for the foreseeable future. Perhaps a sideways market with nominal prices changes on either side of zero, year over year, wouldn't be surprising to me.

2) If mortgage rates have in fact peaked for this cycle, then we may see stable to somewhat lower mortgage rates in 2024. If this is the case, then buyers and sellers have more predictability when making buying or selling decisions. I think this mortgage rate environment backdrop leads to a steady or stable housing market, that is largely in balanced territory. That is to say neither sellers nor buyers will have a clear advantage.

3) Given the high cost of living due to the spike in inflation over the past couple of years, absent strong wage growth, it is difficult to see a housing market that will have large price increases. Affordability metrics have never been worse unfortunately, according to the Royal Bank of Canada.

RBC states in their latest housing affordability report:

Vancouver area – Worst-ever conditions take a serious toll

The already-dire situation got worse for buyers last quarter. A typical household needed to allocate a further 4.4 percentage points of its income to cover the costs of owning an average home at current prices and interest rates. In fact, the entire income of that (median) household wasn’t enough, as RBC’s aggregate affordability measure clocked in at an astounding 102.6%. The only viable option for most ordinary buyers remains a less expensive condo apartment though even this is a stretch for many. Home transaction activity is now cooling again after rebounding surprisingly this spring. And prices are coming off their summer’s peak. We think the downward drift could pick up velocity in the near term in the face of excessive unaffordability pressures.

4) Finally, given severe affordability pressures noted above, I believe that it will first be the condo apartment segment that picks up in activity and prices, once mortgage rates eventually come down. In turn, I think townhouses will follow as that is obviously the second most relative affordable segment for housing. 

Nobody can predict the future and my thoughts above are not to be considered investment advice. These are simply my ideas given the conditions that exist at the moment of writing this blog post. For the good of our local society, I really do hope 2024 will offer some affordability relief to prospective home buyers.

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