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Vancouver’s Suburbs Hitting Peak Bidding Wars

Steve Saretsky -

As Vancouver’s housing market reached dizzying heights in early 2016 many buyers were forced further out into the suburbs of the Fraser Valley. Detached houses in the suburbs exploded into multiple offers, and like clockwork, as Vancouver detached homes cooled so too did the Fraser Valley. It appears to be a follow the leader scenario, with the condo market now following a similar pattern.

Vancouver condos hit a record high average sales price over $1M this past month. This continues to push buyers further and further east, as buyers squeeze each other out for the remaining bit of affordability.

As of January, inventory in the Fraser Valley plunged to decade lows amid buyers desperately bidding up the remaining housing stock. This has sent prices surging to new highs, with the average sales price showing a 31% increase year over year and the median sales price jumping an eye watering 45%.

Bidding wars appear to be growing stronger, as many buyers rush to beat expiring rate holds and rising interest rates. In January, 53% of Fraser Valley condos sold over the asking price, just off an all time high of 59% in December.

Fraser valley sales above asking
Percentage of Fraser Valley Condos sold over asking price.

Meanwhile, speculators have been gifted with incredible liquidity as the median days on market falls to just 8 days. This has pushed the number of condos being flipped within a 12 month window to new heights. Condos flipped within a 12 month period made up 7% of condo sales in January.

Fraser Valley condos flipped
Fraser Valley condos flipped by month.

As valuations push new extremes in the condo market, it remains to be seen where the threshold lies before buyers simply surrender to further price increases.

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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