DATE

House lust

House Lust Hits the Burbs

Steve Saretsky -

Condo Prices and Multiple Offers Surge in the Suburbs

As the last bit of locals get squeezed out of the detached market the herd has reversed course, piling into the condo market. Supply zombies continue to claim a shortage of land and population increases as the driver behind historical price increases in Vancouver. But what about the Fraser Valley where there’s a plethora of land and thousands of new condo developments ready to be built at the drop of a hat?

Ironically, Fraser Valley condo prices have exploded more than any other area. Condos in Langley, Abbotsford and Surrey have increased by 25% or more year over year.

As per the MLS benchmark, condo prices in Langley have soared 33% year over year. In April 48% of condos sold over asking price, indicating house lust has reached epic proportions.

The irrational exuberance is even more glaring in Abbotsford where 36% of April condo sales went over asking price, and the benchmark price officially hit head scratching heights, increasing by 39% in one year.

And finally, Surrey condos, which have now gone vertical, up 27% year over year. Yes, a condo in Newton has officially become the best thing since sliced bread.

With gains like this, coupled with interest free loans from the BC Government and cheap credit at the cost of inflation it’s no wonder first timers and mom and pop investors are piling into multiple offers blindfolded. This won’t end well, but you might as well get up and dance while the music is still playing.

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The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

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The Saretsky Report. December 2022