In the Fraser Valley, Surrey emerges as an area of potential growth despite facing the headwinds of rising interest rates and changing market dynamics. The city has moved through price appreciations and market corrections to head into the last month of the year with tentative hope for the year to come. 

Fraser Valley shows positive price appreciation year-over-year 

Despite the challenges posed by interest rates and shifting market conditions, all submarkets aside from Abbotsford in the Fraser Valley have experienced positive price appreciation for condominium product over the last year. However, that 7.7% increase year-over-year still has sales at 33.6% below the ten-year seasonal average of 1,461 sales for October. Since the first of two interest rate increases began in June 2023, buyers remained cautious, waiting to observe more stability before re-entering. As Fraser Valley inches closer to a buyer’s market, benchmark pricing has shifted to reflect these changes, falling for the third month in a row despite the overall increase from last year.  

Surrey stands out as an opportunity for growth 

Surrey, after experiencing a particularly pronounced rollercoaster ride, appears to be on its way back up. The market saw a 43.1% appreciation over 15 months between 2021 and 2022 when rates were at an all-time low. After that huge period of price appreciation, the market was in uncertain territory when the rate cycle began in early 2022. 

Now, despite those concerns, Surrey is on its way back up due to its affordable pricing, proximity to commercial services, and investor-oriented offerings, all of which have supported absorption and pricing. Although benchmark values are still 8.5% below their April 2022 peak, the significant appreciation in Surrey's market over 2021 and 2022 reflects growing demand from both investors and end-users alike. This has helped make Surrey one of the better-performing markets in the Fraser Valley so far this year, despite condo prices declining 3.3% over the past three months. 

“Recent market performance in Surrey mirrors what surrounding cities are experiencing – relatively flat prices and depressed sales volume compared to historical norms,” said Garde MacDonald, Director of Advisory at MLA Canada. “Despite this, the long-term outlook for Surrey remains strong, specifically in nodes that are seeing increased transit investment and office or education uses.” 

Condominium demand signals recovery in sight 

Market demand for condominiums in Surrey has improved as compared to the second half of 2022.  Resales witnessed a 13.7% increase in year-over-year sales activity but a 17.7% decrease from the ten-year average for October. The average sales seen between May and October 2023 have increased by 34.7% compared to the activity seen from November 2022 to April 2023. This signals a recovery in sales activity despite increased costs of borrowing. With an average sales-to-listings ratio of 22.6% over the past three months, the Surrey condo market remains a seller’s market but has begun to trend towards more of a balanced market this October with a sales-to-listing ratio of 19%. 

Benchmark condominium values decreased 0.8% over the last month from $539,500 to $535,100. Despite this monthly decrease, these values represent a 2.0% year-over-year increase and a 4.7% increase over the last three months. This brings October values to only 7.7% below the peak values seen in April 2022. Meanwhile, the year-to-year median price per square foot has experienced a 9.4% increase. 

There are seven actively selling concrete condominium projects in Surrey, bringing 2,594 units into the market of which 809 remain available. Only Sequoia by ML Emporio and Lucent by Landa Global launched this year with moderate success and relatively consistent sales absorptions in the first six months. Both projects have shown a notable increase in purchaser incentives as the most desirable homes are absorbed and the pool of prospective purchases has narrowed, an interesting trend to watch for homebuyers. We expect four towers to launch in the next year, which would bring an additional 1,303 units to the market. 

Nine actively selling wood frame developments are now in Surrey, bringing a total of 1,063 units into the market, of which 393 remain available. The last four project launches have demonstrated relatively strong absorptions, selling a quarter of their product within their first month of sales. Pura by Adera is now in phase two active sales, with 72 units remaining in the wood-frame condominium project at just under half sold. 

We expect an active 2024 in wood frame buildings. Amson Bloc by Amson Group will bring 121 modern 1, 2 and 3-bedroom condos to Surry, and Spera by Northwest Developments will add 233 amenity-rich units to the market.  

Townhomes move into a balanced market 

Originally outpacing all other submarkets within the Fraser Valley in terms of price appreciation between Q1 to the first month of Q3, those gains were more greatly impacted by the two consecutive interest rate hikes in June and July of 2023. In the three months following the rate increases, Surrey was the only submarket in the Fraser Valley to experience an HPI depreciation of 1.8% while other neighbourhoods continued to see modest growth. Despite these recent decreases, the heightened growth in the first half of this year has allowed Surrey to see the largest year-over-year increase at 6.2%, bringing it within 10.5% of the peak pricing the area saw in March 2022.  

In October, the Surrey townhome market slipped into a balanced market for the first time since December 2022 with a sales-to-listings ratio of 19.5%. While overall listings have remained elevated in the second half of the year, the number of new listings has been decreasing since May, likely impacted by market seasonality. Fewer new listings entering the market have allowed the absorption of existing active inventory. There are currently ten actively selling townhome developments in Surrey, making up a total of 763 homes, 497 of which have been sold. 2023 has not seen any townhome developments launched so far, and the fall is expected to continue as quiet. 

In six to eight years, projects starting right now in Surrey will be completed, ensuring strong appreciation for those who buy now. Today’s presale buyers have less to be concerned about regarding the month-to-month changes in the market when the long-term trends continue to support presale investment. 

For more information on Surrey’s performance, watch the latest Fraser Valley Presale Pulse, where Brittany Reimer and Suzana Goncalves share more details on what’s unfolding in the Fraser Valley.