W. Scott Brown
For many, the arrival of each year new is met with a certain sense of hope. I certainly feel that way.
Since I was about 18 years old, at the end of each year I have taken time to reflect on the year that was and contemplate the year to come. I welcome the fresh start that each year represents, and while I am not one to make resolutions, I do tend to establish my direction or approach for the coming year. I especially like to think about new habits I wish to see manifest. I also focus on a theme throughout the year, allowing it shape how I grow, learn, and change. For instance, last year’s theme was “Jubilee”. A “Jubilee” year is a year at the end of a key cycle or cycles, which is believed to be the 50 th year. It ironically had a special impact on the ownership and management of land in the Ancient World. According to ancient writings, promises and debts would be forgiven and the mercies of God would be particularly manifested in a “Jubilee” year. It seemed an appropriate theme after all, because in 2016 I turned 50.
Now that I am starting a new cycle, I chose the word “One” for my 2017 theme. This word means priority. I am curious to see what I learn as I practice this theme throughout 2017. Perhaps you are wondering what 2017 will bring for you, or what theme it may take on? Some would refer to the past year as “Eventful”. I think the word for 2017 may very well be “Healthy”.
Of course, this is the time of year I am more frequently asked for market predictions. So I thought I’d share my views once again.
Due in part to the B.C. Liberal Government’s recently announced first-time buyer down payment assistance initiative, we expect a quick start to the year for new multifamily sales. Of course, affordability challenges will continue to drive many home shoppers to suburban markets including areas such as Surrey and Langley. In 2017 the market will see multifamily product become acceptable to a growing number of consumers. I especially expect consumer demand for multifamily product priced under $750,000 to be strong through this quick start. This demand, combined with the ongoing challenge of limited supply, may result in another season of price appreciation. This could be expected in the First Quarter and Second Quarter of the coming year, but not likely at the same magnitude experienced in the Second Quarter of 2016.
This time of year is when public annual reports are released on the market and authorities on our market release their outlooks for the year ahead. It is also the time of year when everyone who owns property receives their annual tax assessment. Given the heated market activity and price escalation of the first half of 2016, many homeowners are facing a tax increase in the New Year. Sadly, this comes at the same time as many consumers receive their January credit card bill reflecting all those seasonal purchases.
At Fifth Avenue, we have started work on our own comprehensive year-end report on the multifamily market. Early polling on the final quarter of 2016 indicates a more positive result than the 3,004 new sales posted in the somewhat tumultuous Third Quarter of 2016. The year total is projected to be greater than 19,000 units or a +9 percent increase over the prior year, which means it will be establishing a new high. This is quite surprising given that the current reports on the annual sales figure for re-sales/MLS sales indicate a 5.6% drop from 2015. That being said, the number of pre-owned MLS homes sold across Metro Vancouver was still the third highest on record after 2015 and 2005.
Simply put, new multifamily product is performing well, even in uncertain times. This trend is expected to continue throughout 2017. We do think that the annual sales total for 2017 may not surpass the high water mark posted in 2016. That being said, we expect 2017 to see another 15,000+ new multifamily homes sold. This will result in the coming year to be one of the best years in the past decade. Then again sales could surpass this year’s record levels if interest rates and lending policies remain relatively stable, and developmental approvals occur on more expedited basis. We also foresee the new multifamily market outperforming the MLS market on a percentage basis, and representing a growing percentage of overall sales in 2017. Now that’s hopeful.
Happy New Year!
W. Scott Brown
President & CEO