Housing crisis pushed rents to new highs in 2023

The prices of houses across much of the Fraser Valley decreased or remained level in 2023. But the price of housing—the amount most people pay for their home—did not.

New owners are facing higher mortgages. So too are those who have stayed in one place and sat out the housing shuffle. And for those who don’t own, a new report this week underscored the massive rise in rents over the past year.

The Fraser Valley’s housing market finally took a step back last year when it came to prices.

Across the region, house prices either held steady or declined.

In Langley, which, as the westernmost Fraser Valley community, often sets the tone for the rest of the region, homes sold for about one percent less in December 2023 than in the previous year, according to figures from the Fraser Valley Real Estate Board. And although Langley benchmark prices only inched downard, the median price plunged, suggesting that of those homes being sold, a significant majority were priced lower than the $1.4 million average.

(The benchmark price relates to what a real estate algorithm considers a typical home in any one community.)

Those figures suggest downward pressure on home prices—as does the sheer number of sales. The total number of home sales in the FVREB area—which runs from Surrey to Abbotsford/Mission—finished the year 23% below the 10-year average. In the Chilliwack and District Real Estate Board (CADREB) area sales were down by 28%.

In Chilliwack, home prices actually rose by about 6% over the entirety of 2023. But the last six months tell another tale. Chilliwack home prices often lag those of larger communities to the west. And while house prices in Chilliwack rose substantially over the first six months of last year, CADREB numbers show they lost much of those gains over the back half of the year.

Yet few seem optimistic an era of affordable homes is upon us.

The prices themselves have remained far above what is considered natural. One analysis suggests that the average home price is now 141% above what a median household can afford. And mortgage rate hikes mean the cost to actually own a home has increased, even as their value has not over the last year. That’s especially true for owners who have stayed in one place and avoided buying a more expensive home, only to see their bills rise when their mortgages come up for renewal..

The rent

Then there is the rental market.

Once a year, the Canadian Mortgage and Housing Corporation (CMHC) releases a report on rents across the country. That report went out Wednesday and showed a massive increase in rental prices in British Columbia.

Over the span of just 12 months, the average cost to rent a newly vacant two-bedroom unit rose by a stunning 33% across Metro Vancouver, which includes Langley. (The figures referred to here don’t include the prices of units where the renters haven’t changed. Rents on such units are controlled by the government. This coming year, for instance, the government has set a maximum rent increase of 3.5%. But when a unit becomes vacant, an owner can charge what the market can bear.) Accurate year-over-year figures for the Fraser Valley aren’t available, but are likely to show a similar trend.

And the rental challenges go far beyond the Lower Mainland.

Across all of British Columbia, the rent on vacant units increased by an average of 31% while Canada, as a whole, saw rents climb 24% on turned-over units. And all in a single year.

The figures illustrate why the federal and provincial governments have become particularly focused on building new units and increasing the supply of homes even as house prices themselves stop increasing.

Two linked markets

Corey Schreder, a broker and owner at Royal LePage Wolstencroft Realty in Langley, said the increases in rents are causing some to start looking to buy a place.

Schreder said the condo market—and specifically units priced between $400,000 and $600,000—is the strongest segment of the housing sector. And he said many buyers of such units—including his last three clients—are first-time homeowners who had been renting or living with parents.

Of course, not all rental units are in apartment buildings.

Schreder said behaviours and attitudes toward secondary suites are changing—both among homeowners and municipalities themselves.

Many people who want to buy and live in a house, Schreder said, require a secondary suite that they can rent out. Often that is to make their own finances work, but occasionally a suite is also needed to satisfy mortgage requirements. Schreder said the high rental prices are leading more people to decide that the occasional hassle of being a landlord is worth the potential revenue from renting out a downstairs unit.

“Because of the increasing rents, you’re seeing more people kind of sway the way of ‘You know, I will deal with tenants,’” he said. “Money talks.”

Meanwhile, Schreder said that the two Langley municipalities have appeared to be more accepting of secondary suites that don’t have all the necessary paperwork.

In previous years, bylaw officers would keep a close eye out for advertisements for unauthorized rental suites. But whether because of staffing constraints or because of a new attitude towards the desperate need for housing units, the two municipalities have backed off those efforts, Schreder said.

The province has introduced new rules and laws intended to further increase the supply of rental suites—and prohibit municipalities from restricting them in many areas. The hope is that relaxing rules will make it easier for homeowners to rent out units and that more housing supply will help bring down prices.

What can you rent in the Fraser Valley?

The CMHC report suggests the price of a two-bedroom unit in Abbotsford or Mission now exceeds $2,000. And it turns out that price might be relatively low in today’s market.

A survey of local rental units turned up a range of prices for two-bedroom units. And even small apartments in old buildings will set you back a considerable sum in the central valley.

In Abbotsford, at the cheap end of the spectrum, a one-bedroom 750-square-foot apartment in the 42-year-old Sunridge Apartment building on George Ferguson Way costs just under $1,500 to rent. If you’re looking for a larger apartment, another central Abbotsford apartment has one for rent for $1,650—but that’s also in a building that will celebrate its 60th birthday next year.

Newer or larger units come at considerably higher costs. A two-bedroom, two-bathroom 850-square-foot unit in a new building in the Townline Hill Westerleigh development runs about $2,300 a month. A new family-sized three-bedroom townhouse in Allwood Place, meanwhile, will cost you $2,900 a month.

Prices in Langley are generally a little higher, while those east of Abbotsford are a little cheaper, as is typical for the Fraser Valley housing market. But everywhere has seen dramatic increases the last two years.

In Chilliwack, you could get a one-bedroom apartment in a newer building for $1,050 a couple years ago. Today, a one-bedroom unit in a brand new building in Sardis, next to Major Leagues 2 pub, is renting for about $1,500.

The substation

There’s one apartment for rent with fewer comparables.

You can rent a two-bedroom suite in the famous Sumas Substation, a 108-year-old refurbished historic building that the owner has been trying to sell for years. The substation has been the subject of various you-could-own-this-building news stories over the years and today you can rent the gaudy main floor of the building for $6,000 a month. But if you don’t have $72,000 to spend on a rental home this year, the building has a much-smaller, much-less-fancy two-bedroom suite It can be rented for $1,875 a month.

At least for now. As with any rental, the occupant’s housing can be turned upside down if their building sells. And the substation is still up for sale, with the owners having slashed its price several times. The substation, once listed for $5 million, can now be bought for $3 million.