Oct Land comment from AY How the Fraser Valley land market is reacting
Momentum continues to build in the residential land market in the Valley, and the outsized interest rate cut from the Bank of Canada in the latter half of the month certainly added to the optimism. We saw a further increase in offer volume and inbound inquiries for land, particularly for townhouse sites.
It’s worth pointing out, however, that while demand has increased for most types of development land and long-term market confidence is building, land values remain well below peak prices from two and a half years ago. If October’s surge in home sales is the beginning of a trend, we should see end product prices rise, supporting higher land values, but for the time being, there remains a significant gap between vendor price expectations and what developers/investors can afford to pay so the volume of completed transactions is growing quite slowly. Purchasing activity has increased, no doubt, but land values are sticky and will likely take some time to move especially given the understandably cautious purchasing behaviour we see – although that, too, is shifting as deal terms have already begun to compress.
Anecdotally, we have also seen many of the land listings that have been lingering on the market for months go under contract the past few weeks, and we are now hearing informal reports of increased traffic and sales at sales centres. Fingers crossed, the December interest rate announcement keeps the flywheel spinning.