The Abbotsford-Mission area is quietly shifting toward becoming a city of apartments, following the trend of denser municipalities. Meanwhile, construction of detached houses is expected to slump.
The first eight months of 2013 saw 234 new apartment rental units begin construction – the highest figure in 20 years, according to the latest Housing Market Outlook by the Canada Mortgage and Housing Corporation (CMHC). The spur in construction of multi-family dwellings in the next year will push the total number of property constructions above the 15-year average, CMHC predicts.
Lower land prices in Abbotsford-Mission compared with Vancouver, Surrey and Langley have boosted this growth. Demand is also significantly higher for new rental units than older ones. Residents in Abbotsford-Mission are also younger on average, which has pushed up sales of first-time homeowner properties like condominiums.
The slow growth in new jobs in Abbotsford-Mission combined with a young population will delay some people looking to purchase a home, in turn raising rental rates. CMHC predicts the average one-bedroom apartment will rent for $695 in 2014, up from $661 in 2012.
Meanwhile, the overall housing market continues to recover in uneven lurches. The average price for a detached home in Abbotsford increased slightly, from $437,006 in Oct. 2012 to $447,746 one year later. Average prices for townhouses and apartments dropped in that period by a few percentage points, according to the Oct. 2013 statistics from the Fraser Valley Real Estate Board (FVREB).
In Mission, the average price of a detached home fell seven per cent from $381,020 in Oct. 2012 to $354,914 in Oct. 2013. Sales of townhouses and apartments in Mission were too few to determine a reliable average price change.
“We’ve had a great summer and good early fall, but it’s important to remind everyone of the context. The last four months of 2012 were amongst the slowest for our real estate market in the last 15 years,” said FVREB president Ron Todson in a press release. “What we’re witnessing is a return to a balanced residential market indicated by prices remaining unchanged or down slightly compared to a year ago, stable inventory levels and the average length of time to sell a home is about two months.”
Across the Fraser Valley, CMHC predicts that single detached homes will become scarcer on the market as constructions slow, pushing up the average home price in the coming year. The agency predicts that the average price of a home in the Valley will be $485,000 for 2013, and reach $500,000 in 2014.
CMHC expects mortgage rates to rise steadily, to between 3.25 and 3.75 per cent in 2014. This is higher than the 2012 average rate of 3.17, but low by historical standards.
Buyers continue looking at Abbotsford, Mission, and Langley with increasing interest. These regions are expected to account for a greater portion of housing sales in the Fraser Valley, as sales in Surrey continue to decline.
“Based on CMHC’s forecast, I’m very optimistic about the future of Abbotsford and Mission,” said Todson.
He noted that between 55 and 60 per cent of all home sales in the Fraser Valley are single family detached, and that Abbotsford and Mission have the most affordable single family homes in the region.
When it comes to future development expansion, Todson pointed out that Abbotsford has more room for growth compared to its Langley neighbours because 68 per cent of its land is in the Agricultural Land Reserve. In the Langleys, that figure is 75 per cent.
FVREB characterizes the Fraser Valley market as balanced between buyers and sellers.