Since the pandemic, the real estate market has been booming, and eight months into 2021, sales performance shows no signs of waning. Similar to previous months, the demand for real estate was extremely high in August 2021.
This result was a surprise, given that the housing supply was on the other side of the extreme spectrum–it was at its lowest in four decades. According to the Fraser Valley Real Estate Board (FVREB), the last time inventory was this low was during the early 80s.
Given the huge supply and demand imbalance, the seller’s market remains stronger than ever. It has caused further increases in housing prices. A single-family detached home in Fraser Valley now costs about 50% higher than in the last five years. By the end of August 2021, inventory was only at 4,077, a 44.9% decline from August 2020.
August 2021 FVREB Statistics
FVREB recorded a total of 2,087 sales in August 2021, registering a 4% increase from the previous month and a 2.4% increase year-on-year. The number was said to be the second-highest ever made in August, with the first being back in August 2005.
Among property types, single-family detached homes performed the best, registering the highest increase in price. The benchmark prices for each property type for the month are summarized as follows:
- Single Family Detached Homes: $1,336,800 (1.3% increase from July 2021 and 31.1% year-on-year)
- Townhomes: $697,500 (1.3% increase from July 2021 and 23.7% increase year-on-year)
- Apartment: $498,800 (1% increase from July 2021 and 14.1% increase year-on-year)
Among the three, townhomes were the quickest to sell, taking an average of 19 days. Detached homes and apartments then averaged 29 days in the market before sale.
High Demand and Low Supply Cause Upward Pressure in Prices
The housing shortage persisted throughout August 2021, with only 2,107 new listings recorded in the month. This is a 13.3% decrease from July 2021 and a 36.3% decrease year-on-year, highlighting the alarming lack of supply.
According to Baldev Gill, CEO of the Board, measures from the British Columbia government did not help address the shortage issue. While policies like the foreign buyer’s tax and mortgage stress test aimed to increase housing affordability, the continuous low supply, coupled with the sustained high demand, only served to increase prices in the market.
The increase was seen particularly among single-family detached homes and townhomes. They registered an 11.3% and 1.2% year-on-year decrease in the number of properties sold, respectively, but recorded a higher benchmark price. Both were found to be most expensive in South Surrey & White Rock, with a benchmark price of $1,713,800 and $822,700 for detached homes and townhomes, respectively.
On the other hand, apartment sales rose by 42.2% year-on-year in August 2021 but also increased in price. Similar to the other properties, prices were highest in South Surrey & White Rock, with a benchmark price of $575,200.
Overall, the imbalance between extremely high demand and extremely low supply has caused an upward pressure on housing prices. Should this trend continue in the following months, homebuyers may struggle to keep up with rising prices. Given this, CEO Gill noted that the government must find a solution to correct the shortage.