Market Update August 2022: Townhouses in Greater Vancouver

Hi everyone, I’m James Garbutt and I’m Denny Dumas and this is the Garbutt Dumas Real Estate podcast.

Monica: Let’s talk about townhouses, guys. Townhomes. Townhomes are the new detached house.

James: For a lot of people. Yeah, makes sense.

Monica: Yeah, it’s usually the first stop for a growing family. It’s more affordable of course than detached, lower maintenance. Townhomes are definitely a hot commodity in many of the markets that we work in.

James: And that’s why we’re gonna give you a market update on what’s going on with townhouses around Greater Vancouver. And to be specific townhouse, historically is kind of like a row house in a way although there is a new term for row houses that have breached off from that house. So townhouse is kind of like you know, you have a skinny house to a shared walls with neighbors on both sides. However, they can also be stretched into stacked townhomes where you have neighbors below you and you and in some cases, a townhouse is basically a condo with an exterior door. So there is a wide range of what a townhouse is classified as but I think for, help paint that picture for most of what we’re talking about. If it’s a newer: townhouse, think of like a wood frame, skinny structure with parking on the bottom, maybe it’s 10 and parking, if it’s a little bit older, might be a little bit bigger, but we’re not necessarily talking about townhouses that are, you know one bedroom 600 square foot ground floor. We’re talking about the more traditional what, what a first family home might look like for many people.

Monica: You know, a lot of people head out to the suburbs to buy their first townhome. Townhomes in the city are expensive. Townhomes in Vancouver are pricey, they’re small, they usually don’t have a garage. So a lot of people head out to you know some of our market areas Port Moody, Surrey, Coquitlam, New West and townhomes have really held their value in these areas. We saw a lot of really exciting price points in places like Port Moody and New West when it came to townhomes in the last two years. That really hasn’t changed when you look at you know a blanketed general townhouse statement across Vancouver you’re seeing areas like Surrey that have 393 active listings right now, after townhouse listings, averaging 67 days on market. And then you looking at little areas like Port Moody and there’s 30 active listings. You look in New West, there’s 24 active listings. That’s a huge difference.

James: We need to acknowledge a few things about townhouses. They’re not abundant in all areas. And we’re, I guess, the timestamp this we’re talking in August 2022 . And part of the reason why we think it’s a good time to talk about townhouses is they’ve been one of the hottest products of this last crazy market cycle. And now as interest rates rise, and the market is shifting and slowing, townhouses have a great argument to be the most resilient product type, you know, they’re not in a lot of cities that are say closer to Vancouver, Greater Vancouver area. There’s a shortage of supply and when you look at the pre-sales options, there’s more tower pre-sales close to the city than there are townhouse pre-sales so there’s just not a lot of supply coming either. So and there’s more families coming so when you look at the dynamic of population trends and more families coming to the market. A townhouse is the only option for a lot of people that need a three bedroom. Going into a detached home is much more money. And oftentimes you get a better layout and a 1500 square foot townhouse and you can have an old 2000 square foot home so it makes sense for a lot of people. But areas like Port Moody are doing something very different than areas like Surrey. And there’s certain areas that are genuinely short on supply with no light at the end of the tunnel of that supply, loosening and other areas where there’s a lot of supply available and a lot of supply coming.

Monica: Right. It’s really interesting when you look at the bones of the reason for success in townhomes in the last few years and James like nailed it when he said there’s, there’s lots of condos coming there’s hardly any townhomes coming and it’s just the footprint right. So on the same amount of space that you could build eight townhomes you can build a low rise, you know four story with 150 residents. So it’s, it’s just footprint and we’re, we are running out of townhomes and we can’t build them fast enough. But a really interesting stat to look at when you look at detached homes and condos. List price versus sale price. There’s a huge disparity right now that things are selling under asking in many cases if they’re not, you know priced with integrity, but if you look at average list price for a townhome let’s just say, Port Moody for example. Average list price is $1,000,060 average sale price right now is $1,000,057.

James: Yeah, yeah, I saw the same. I looked at the same stat. Yeah. And I think basically that means that on average, the listings that are selling are selling for pretty much 100% of their list price. And this is in the market shift. Market rates have gone up. I mean, it could get a little worse before it gets better. But maybe it dips to a 99% list, maybe 98% You know 98% is when the list price is when the sale price is on average 98% of list price that to me is like a Vancouver balanced market. And and this data is saying that even in this environment August 2022 a townhouse in Port Moody although it is more of a buyers market than before, it is nearly a seller’s market.

Monica: It’s pretty neutral, if not leaning towards yeah…

James: It’s still skewed to the sellers by data.

Monica: It, it for sure is and we’re talking about like average 10 days on market for a lot of these places. The ones that have been sitting on the market a bit longer, they’re averaging around 30 days on market, but that’s still very much a comfortable, healthy market stat to be on the market for 30 days, right.

James: I looked up an example of a Port Moody sale that just happened because it’s good to get like the last 30 days and what’s going on to get the and this is in your zone and there was a unit in 2000 Panorama up in Heritage Woods, Port Moody that just sold for $1,000,029. It was 14,165 square feet and was a two bedroom. Two bedroom. So I think that two and a half baths. But that million 29 might have been $150,000 more in the peak of luck of February. So it’s come off in the neighborhood of call it 12, 13% compared to then which kind of reflects like I think lending has gotten much more expensive that kind of reflects that but in some other areas like Surrey and I’m sorry, Surrey is a broad area. Let’s go back.

Monica: Yeah, Surrey’s big.

James: I have in some areas of story there’s a much more dramatic change. You know, we we sold a listing and Fleetwood and the place that we sold, sold for just under $750,000. It was a two bedroom as well. Two bedroom townhouse newer around 1,300 square feet. And in February, it would have gotten approximately 15% more it would have gone for around $875. But in the, that’s February 2022. So what is that, six months ago? It’s been down 15% since six months ago, but if you look at the February 2021 it was $600,000. So from February 2021 to February 2022. It went up 45%. And then it’s just checked back to 15%. So we’re still even though our prices yes, we’re not seeing February prices. We are still seeing when you look at data from a year ago. Most of these are up and the only thing that, I that I feel that the data is not showing yet as a Fleetwood townhouse is likely to correct more, if the months ahead continue on this pattern of slowing and interest rates continue to rise and a Port Moody townhouse purely due to the supply.

Monica: Supply is always the biggest thing. It’s the bones of what this all boils down to right? I mean, New West and Port Moody are known for having like practically no townhomes, New West worse than Port Moody. There’s no townhouses in New West.

James: Queensborough is loaded with townhomes for the area but I I would say north of the river there’s probably 120 townhouses in New West that aren’t age restricted. And when I started in the business, there’s like 70. And 59 of them are Victoria Hill and well, there’s 8 more Victoria Hill, but they have an astronomical strata fee. Oh no, there’s actually Victoria Hill has filled out there’s probably 90 of Victoria now. So there yeah, there’s not a lot of townhouses in New West. There’s a lot of townhouses in say Burnaby East, but also we tend to find there’s not a lot of action from our business going there. There’s not a lot of I think our clientele is typically drawn to New West or Port Moody, but not necessarily Burnaby East. 

Monica: The important thing of you know, when we talk about the townhouse story is these families that typically buy townhomes. They have a little bit of extra cash in their pockets because they’re almost able to buy a detached house. They’re almost like they, they they usually have come from maybe one or two condos. They build up some equity. They’re ready to get into a family home. So they’ve got equity. They you know, they’re usually you know, our buyers of townhomes are usually in their 30s to mid 40s. So they have some history behind them, but they can’t afford a $2 million house. So usually, there’s a quite a big disparity in, in the products that’s available versus the cash that someone’s holding.

James: Totally. And it’s, it’s been a, I guess the people that are buying townhomes are usually upgrading. So I guess let’s you know, acknowledging the, how many people in a down market are going to eat that supply of 309? 393. So 393 to 390. Surrey a big place. Odds are that inventory is going to build up over the months ahead. You know, we’re in August. There’s less listings that come in July. September is going to bring more listings in so, I don’t know where I’m going with this but the, the supply in areas like Fleetwood and just south Surrey, North Surrey, it’s likely to build beyond the sales eating it up. A common formula because we sold one townhouse recently that and this kind of just highlights a typical roller coaster price. Let’s call it a 20 year old Townhome. It’s irrelevant. It’s so let’s say today’s August value is a million dollars. Last August, last August it was the $800,000 this February it was $1.2. And so, in this is a real common equation. You can plug in a different price point but it’s been a roller coaster, but it went from $800,000 to $1.2, in six, seven months and then it checked that half of that game. And that’s kind of what I’m seeing is a consistent theme in areas like Surrey or probably Maple Ridge and Pitt Meadows where there’s more townhouses available. It’s more of a generic product. That’s kind of the roller coaster they’ve been on.

Monica: The roller coaster is a little bit more steep in areas that have had further climb and further to fall. Right. Right. And then you look at really established areas like East Vancouver. There’s only you know, 94 active listings. East Van’s a little bit bigger than some of these other areas that we’ve mentioned not, not as big as Surrey, but you know, East Vancouver’s got 94 active listings, averaging 55 days on market. There’s 47 sales in the last eight weeks, which is not bad. That listing, listing price average is 1.142. So $1,142,000 and average sale price is $1,155,000.

James: So the average sale price is higher than the average list price. Yeah. So when a client says how much do you typically get off the list price in East Van in the last 60 days, nothing.

Monica: Nothing. You’re paying $15,000 more.

James: This, you know, I could see East Van being one of the strongest markets over the next, say six months or whatever this storm we’re about to enter or currently in, takes in and it didn’t reap as many gains as other markets during the last COVID bump. And even when I looked at my past market cycles of say 2008 / 2009, East Van was the most bulletproof.

Monica: It’s the most predictable I think.

James: So there’s just so much demand for it. There’s and maybe that’s changed a little bit in recent history. But I don’t, when I think moving forward, I think a lot of people that move further out, they’re gonna want to move back in and East Van is short on supply. And a lot of those townhouses are getting smaller and smaller in the new supply. So yeah.

Monica: I mean, if you really look like if you really dive deep and look at East Vancouver and look at the products that are sitting on the market, the townhomes that are on the market, there’s one $3 million townhouse. There’s several 2 million plus townhomes. All of those are the ones that are just kind of sitting there on the market. Some newer products so it’s a really a big variety of what you’re gonna get in East Vancouver. But the traditional townhomes like you’re talking about where you you know, you might have one or two parking you sharing two walls there’s no one living above or below you kind of thing. Those ones are selling they’re still selling. Apparently they’re selling for $13,000 over asking in some cases.

James: I’m sure there’s some buyers that are just excited to see this market that are ready to buy the next one that comes up. So stronger markets over the last 60 days. This is August, Port Moody, your example of the average sale that took place was nearly 100% of the list price. And in East Van it was a little over 100% of list price, call it 100 and a half percent.

Monica: Barely two weeks on market, average.

James: To this market. So those are not signs of a downward trending market looking backwards. And so I guess the important thing to mention here is interest rates could bump up a little more this year. Doesn’t mean that all products are moving the same. If another one or 2% of rate hikes come it’s hopefully it gets corrected the other way shortly after. But areas where there’s more listings like Surrey are going to be far more effected than areas like East van Port Moody.

Monica: I think it’s you know, a really interesting area to look at is Coquitlam. Coquitlam is a really big established city they traditionally have a pretty strong market. You know they’ve had 48 townhome sales in the last eight weeks that’s pretty good. Their, their average list price is $1,000,031 and average sale price is $1,000,008. Still not bad, like that’s still a pretty, it’s a pretty squeaky margin when you’re when you look at it at large. You know, so many people right now are wanting $50,000 off asking for a lot of stress. You know, and here you’re only looking at about a $20,000 difference from list price to sale price, and I think that that’s a pretty interesting stat. 71 active listings and that’s you know, Coquitlam does have new townhomes coming they’ve got you know, they approve stuff in Coquitlam. They approve things in Coquitlam. They’ve got new townhomes coming and those ones still sell average 43 days on market so it’s a little bit more than you know a place like Port Moody only 30, New West only 24 average days on market for a townhome. So those markets are smaller. You know what we see obviously is supply and demand. More supply in Coquitlam, more supply in Surrey but still strong, still pretty strong in terms of sale price.

James: I have a little example Coquitlam sale that just happened. So one of the most recent townhouse sales and in Coquitlam was at 1210 Falcon Drive. It is a three bedroom 2,125 square foot place, a little bit older, and it’s sold for $1.18 million and that’s about $555 a square foot. So that, that’s a good size structure close to Port Moody not on the Port Moody side of Coquitlam

Monica: It’s right on the border.

James: Right on the border and there’s not a lot of data of sales like ,this isn’t a complex where they sales happen every other month. So there wasn’t any February sale to gauge it with but it likely would have gone north like this went for $1.18 million it likely would have sold for over $1.2 in February. But looking backwards in two years ago, it was $800,000. And so it seen a 47.5% and this is a recent couple of weeks ago sale that is seen a 47.5% bump in the last two years.

Monica: This is an old complex I mean there’s no garage, there’s a one car, carport .

James: But I think it’s important to acknowledge I think in demand for townhouses has pushed up the price per square foot of older townhomes quite a bit. You know, people need the space.

Monica: The size, yeah.

James: And in some areas over there, it’s a land play too, but not a lot. Not a lot of people are thinking about that. But there’s developers knocking on the door of some of these older townhomes where, you know, your, your townhome might be worth we’re calling $900,000 as a townhome, but as a development land assembly it might be $1.2

Monica: To get slightly sidetracked for one second just because we’re talking about this townhouse on Falcon in Coquitlam. It is right on the border of Port Moody. And man do developers look at the border of Coquitlam and Port Moody. Port Moody doesn’t like to approve anything.

James: It’s an election year that might change.

Monica: Council if you’re listening it’s all your fault.

James: Step it up.

Monica: But they look to the border of Coquitlam and Port Moody man all of those homes have been scooped up by the developers they’re all and that, that townhouse complex is definitely one of them. It’s all kind of the strip of Coquitlam that backs up to Coronation Park. That will be exciting to watch.

James: Not that I, you know, I always struggle with the “Where should I buy?” Is this going to be the spot and it’s hard for me to say Falcon drive is going to outperform I don’t know Glenbrook North in New West. But it is nice knowing that Falcon Drive is going to be on the edge of an absolute massive future developer community. And in the interim, you have a larger space, bigger townhouse and more land under that townhouse too. So, I pulled some stats that came from the recent Real Estate Board stats package. And just to give you an idea of like, what changes happen on a macro level for greater Vancouver. And so the July sales that took place for townhouses in Greater Vancouver were 43.3% down from the previous July. Now last July was crazy. It was a hot market. And so there was it was well above the 10 year average last July, but this year, it’s checked significantly. The sales are 35% below the 10 year average. And just for a long period of time I think I talked about in previous podcasts. We were on a 18 month to two year run where every month was above the tenure average and that shifted a couple of months ago, and now we’re significantly below. So our sales are low. There’s less sales happening. I think we need to acknowledge that that doesn’t mean that less people want to move. It just means that less people are moving.

Monica: It’s rates. It’s just rates focus, right?

James: So all I’m saying that because don’t wait for the market conditions to 100% change because everyone is going to think the same. Maybe whether it’s this fall or early next year. I think those are going to be two great windows to consider buying a place.

Monica: We never recommend playing the market ever. We never recommend trying to crystal ball and predict the market that’s just not our jam at all. But don’t be, don’t, don’t be the same person you were last year. Don’t fall for it. Don’t wait for everyone else to get excited about real estate and then you decide to be excited about it. Be smart.

James: Take advantage of smart uncertain times.

Monica: You’re smart you’re listening to real estate podcasts guys.

James: I might be repeating myself here but the active, the sales to active listing ratio in July for townhouse is 20% across Greater Vancouver which is a balanced market but it is really close to a seller’s market statistically and that’s kind of what we’re talking about townhouses because it’s a resilient, desirable product right now. And a lot of the markets we work in when you look at the bench price townhouse data of how much it has appreciated in the last 12 months. Burnaby up 18%, New West up 21%, Port Moody up 23%, North Van up 19% ,Vancouver East up 16%. I think if we look at the next 12 months, I think Vancouver East is probably going to be the winner on that list whether it’s up or at least down. We’ll see. But the, yeah, in July 686 new townhouse listings came to the market and 304 sales took place. So even though there is existing inventory prior to that, it’s, it’s, it’s not call it, Fall of 2008 or bottom of January 2009 data this is a far better market in the last 60 days or, or July then that was. Doesn’t mean that it will be next month or the month after but right now, townhouses are kind of holding their own.

Monica: They are and I really like I’ve always believed in townhomes. I tell them all the time I think townhomes are a really, really safe purchase they’re affordable. Anything that’s, that’s more affordable just means less risk right off the bat and the fact that there’s just low supply and no sign of that changing.

James: I think the opportunities here are that take advantage of the next motivated seller in the neighborhood that you’re looking for. Port Moody has a lot of great townhouse options. I can’t help but think that if an end unit came up and the seller was motivated, why wait? You know if the right unit in the complex came up. And the other thought I have is if in the Fraser Valley where there’s more supply there’s more opportunity there there might be better deals to come but one, one opportunity if you find a pre-sale development where you from a developer that’s realistic on prices and adjust their prices but say this Fall there’s, there’s an opportunity to buy a new pre-sale townhouse, but it’s closing in two years.

Monica: I’m really into that idea. If rates…

James: Well you get ideally Fall prices, and ideally two years from now mortgage rates, so you’re not going to be at the burden of a five plus percent mortgage rate hopefully and. and you might get the advantage of getting a product at discounted prices but also not paying a premium on mortgage payments when it closes. Anyway, that’s it for townhouses.

Monica: That’s it. Townhouses!