Fraser Valley September from AY. How the Fraser Valley land market is reacting
The Fraser Valley development land market woke up from its Summer nap with a marked increase in offer activity and inbound inquiries for development land, particularly in the latter half of the month. It is safe to attribute at least a portion of this increased activity to the return from Summer vacations but September’s string of good news (Bank of Canada rate cut, inflation falling to the target 2%, a US Fed rate cut and meaningful changes announced for mortgage rules) has the development community putting pen to paper again, with more optimism than we have seen in some time. Underwriting is cautious and extended deal terms continue to be the path to success in deal negotiations but there is action again. A welcomed shift following an anemic Summer lull.
The strongest demand is coming from developers and builders looking for medium-sized townhouse sites, for their lower risk profile and shorter overall project timelines. There is also a perception that future supply of townhomes will be limited in many core markets due to much of the townhome land becoming condo land at the hand of OCP updates or new transit-oriented area (TOA) legislation.
That, combined with a persistently difficult lending environment for land, has created an opportunity for better prices and terms for developers capable of making moves on the alternate segments of the land market like land with longer development timelines or sites of greater scale. There is simply far less competition chasing those categories of land.