FIFTH DIMENSION THE. Third Quarter A comprehensive analysis of the multifamily real estate market in Metropolitan Vancouver.

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1 THE FIFTH DIMENSION Third Quarter 2017 A comprehensive analysis of the multifamily real estate market in Metropolitan Vancouver November 2017 DATA PROVIDED BY:

2 WELCOME TO THE FIFTH DIMENSION The arrival of shorter days and cooler weather means it s time for the fall edition of Fifth Avenue Real Estate Marketing Limited s, The Fifth Dimension. Fifth Avenue is a full service, residential real estate sales and project marketing organization with over 37 years of experience. It is our pleasure to supply you with this complimentary edition To ensure the supporting data for this Third Quarter 2017 edition is objectively collected and presented, we collaborate with highly regarded Urban Analytics (UA), a leading provider of advisory services on the new multifamily home market. UA has been tracking the new multifamily home market in Metropolitan Vancouver since 1994 and has been a vital contributor to this report since its inception in the First Quarter of Recently we helped my in-laws sell their single family home. They will now be seeking transitional housing until together we re-locate/they move in with my wife and I. Fortunately for me, I won the lottery when it comes to in-laws. I look forward to the transition and having them live with us. Why the transition you ask? We need to find a suitable location and that means moving east of our neighbourhood. This is not something we want to do while our youngest son is in high school. High school has enough challenges without being up rooted. As many of you know up until 2009 despite living in Vancouver my project marketing work was primarily international. When I started working exclusively in Metro Vancouver it certainly wasn t easy. I likened the market and industry here to high school. Everyone knew each other well and started school together and I was the awkward Grade 10 transfer student. It took time for me to get over the new kid stigma and gain credibility here. This surprised me as in other markets globally it seemed relatively easy to gain favor and secure new assignments.. One of the first people who took me under his wing and helped me get connected was Michael Ferreria, Principal of Urban Analytics (UA). I will always be grateful to Michael, his business partner Jon Bennest and their team at UA for their assistance and partnership. We started our working relationship together back in 2009 and this relationship continues today. Over the past several years Bosa Properties and Fifth Avenue have enjoyed the opportunity to co-sponsor Michael s annual address at a fall session of the Urban Development Institute (UDI). This year was no different. Michael always delivers an objective, informative and entertaining presentation. This year's October 19th speech on was appropriately entitled The New Normal. In his introduction Michael shared a sentiment many of us hold. He stated that he could not remember a more interesting time in the Metro Vancouver market. He cited the combination of a number of concurrent factors such as great economic conditions; an immense transfer and movement of wealth from local boomers to their kids and from off shore; and relatively favorable borrowing terms leading to tremendous demand for multifamily homes. In fact, more demand than there are homes. He also commented on the fact there has been little to no acknowledgment of the supply issue from those with the power to affect supply. This brings us to the rapid increase in new multifamily home pricing that has occurred in the past few years and in the most recent quarter in particular. I remember quoting in an early edition of this report that a number of markets would soon see average prices in excess of $1,000 per square foot. People laughed at the new kid. Today, as Michael highlighted, this is no laughing matter. Prices downtown have increased to $2,500 to $3,000 per square foot, $1,000 per square foot in Brentwood and over $750 per square foot in Surrey City Centre. How many of us predicted this? In the woodframe condominium sector, Surrey is up 56 percent, Port Coquitlam is up 63 percent and Richmond is up 43 percent. Finally, in the sector, Richmond is up 61 percent, South Surrey/White Rock is up 32 percent and Maple Ridge is up 30 percent. These examples were just part of his push for a serious, concerted and collaborative approach to addressing supply. He also cited the emergence of assignments as an indicator of the lack of supply and as another market force inflating prices and challenging affordability. Michael then segued into a discussion about rising interest rates and the most recent government intervention aimed at cooling the market while addressing concerns about increasing levels of consumer debt. To date, interest rates have had little to no impact on demand. However, the application of "stress testing" to all mortgages, whether high ratio or not, is certain to impact consumers buying power if not demand. He commented how each quarter-point increase the interest rate is likely to create a two percent drop in buying power. Simply put, the new qualifications will further erode purchasers buying power by 16 to 20 percent. This likely to impact the first-time buyer and younger move up buyers, who you think we d all want to help the most. Furthermore, their challenge to buy may result in rental rate escalation despite whispers of government imposed rent controls. Michael concluded by discussing his views on what is going to happen next. He stated that he did not think we can sustain the rate at which condominium prices have been rising forever. However, barring some unforeseen world event like we saw in 2008, Michael did not predict a major correction in He also explored what a major correction would be today. With price increases of 50 percent in the past two years, even if prices drop by 20 or 30 percent we re still ahead of two years ago. To be clear, Michael does not see a crash ahead. He does see a leveling off of demand and prices that ll be caused primarily by buyer fatigue and some pushback against the higher prices we re seeing today. Regardless, Michael concluded that we need to approve a greater number of new projects more quickly to increase competition and reduce buyer urgency and fear of missing out. With the exception of a few municipalities, there seems to be little acknowledgment that supply is even an issue. Many at the municipal level maintain demand is the issue we should be addressing. Wasn t that what tighter mortgage rules and the foreign buyer's tax was supposed to do? How are those working for us so far? By the way, it s not unheard of for a municipal politician to acknowledge supply as an issue. Michael cited a recent quote from San Francisco s Mayor Edwin M. Lee, I issued an executive directive to speed up the time it to takes to increase (the number of homes) by increasing collaboration, transparency and accountability among city departments and improving our partnership with private organisations. He has challenged everyone to cut the approval time in half. How come we don t hear anything like that here? He also shared the uncertainty around what the NDP and Greens will come up with regarding a housing policy. News is forthcoming shortly. Depending on how aggressive they decide to be, this could be the one we should be most worried about. Once again over 4,000 new multifamily homes were sold this past quarter. This brings the year to date total to the second highest level since we started this report. Prices are rising yet multifamily homes continue to absorb. It is likely that when all is said and done 2017 will be the next best sales year in our industry. In Michael s words while we may encounter a few challenges in the early months of 2018, we know this industry is resilient. As we have all done before we will find a way to adjust to the new normal. I agree Regards, As Michael stated, In the past, we would've looked at what was happening and said, This is crazy this can t keep going. Or can it? Perhaps, we are simply experiencing the new normal. Micheal cited a number of compelling examples of price escalation. In the sector, Metrotown is up 57 percent, the Cambie Corridor is up 43 percent and Burquitlam is up 39 percent. W. SCOTT BROWN PRESIDENT & CEO FIFTH AVENUE REAL ESTATE MARKETING LTD. SCOTT@FIFTHAVE.CA PAGE 1

3 TABLE OF CONTENTS Welcome to the Fifth Dimension...1 Overall Market Summary... 3 Market Summaries Vancouver Downtown... 4 Vancouver West... 5 Vancouver East...6 Richmond & South Delta...7 Burnaby & New Westminster...8 North Shore: North & West Vancouver...9 Tri-Cities: Coquitlam, Port Coquitlam, Port Moody...10 Ridge Meadows: Maple Ridge & Pitt Meadows...11 Surrey Central & North Delta...12 South Surrey & White Rock...13 Cloverdale & Langley...14 Abbotsford Looking Back and Ahead Research Methodology...17 PAGE 2

4 OVERALL MARKET SUMMARY In this third edition of the Fifth Dimension for 2017, our data collection and analysis partner Urban Analytics (UA) shares its unique perspective on the unseasonably active Summer quarter including overall market performance year to date and what to expect in the upcoming quarter with respect to Metro Vancouver s multifamily residential real estate market. Q3 New Home Market Metro Vancouver s new multifamily home market continued to remain in a frenzied status throughout the Third Quarter of An overall total of 4,102 new multifamily home sales were reported in the Third Quarter. This sales total was up 38 percent from the same quarter last year and established a new high for Third Quarters over the past ten years. Strong sales activity resulted in a further decline in released and unsold inventory levels throughout the region. There were only 1,812 released and unsold new multifamily units available in Metro Vancouver at the end of the Third Quarter; this is down 28 percent compared to the same quarter last year and down 71 percent compared to the eight-year average. There were only 84 completed and unsold new multifamily homes available to purchase at the end of the Third Quarter, which is up slightly from last quarter but is still down 92 percent from the five-year average. Sales activity in the sector was particularly impressive. There were 2,224 sales recorded in the Third Quarter, which is up 26 percent from the same quarter last year and also up slightly compared to the same quarter in Notable sales activity was reported at the following recently launched projects In Burnaby Townline s Sussex, Polygon s Vittorio, Millennium s Etoile 1, Thind s Lumina Waterfall and Intergulf s Terraces at the Peak. These projects accounted for 1,155 Third Quarter sales. In Richmond Yuanheng s ViewStar reported 96 sales in the Third Quarter. Other notable successes in the Third Quarter include launches at Marcon s Mirabel (Downtown Vancouver), Onni s The Grande (Port Moody), Townline s The Parker (Vancouver West), Polygon s Currents at Water s Edge (Vancouver East) and Landmark Premier Properties Foster Martin (White Rock). A number of new project launches allowed the sector to set a new eight-year record for the Third Quarter sales. The 1,248 sales recorded in the Third Quarter were an increase of 17 percent from last quarter and twice the amount as the same quarter last year. The total of 310 released and unsold units available at the end of the Third Quarter was down 40 percent compared to the same quarter last year and once again establishes a five year low for this product type. Notable sales activity occurred at recently launched projects Polygon s Trafalgar Square 2 (Richmond), Polygon s Taluswood (North Vancouver), Quantum Properties Montrose Square (Port Coquitlam), Maple Leaf Homes Delta Gardens (North Delta), Tangerine Development s The Guildford (Surrey) and Creada Holdings The Civic (Langley). sector performance was reasonably strong with 630 sales reported in the Third Quarter. Overall new sales were up seven percent from the same quarter last year but were down 18 percent compared to the same quarter in There were 442 new released and unsold units at the end of the Third Quarter, which is down 30 percent from last quarter and is down 11 percent compared to the same quarter last year. Notable sales activity occurred at Anthem Properties Clayton Walk and Fleetwood Rise (Clayton and Fleetwood), Oris and Dava s Parc Riviera Mews (Richmond), and Grandsun Investment s La Verna (Richmond) Q3 Re-sale Market A total of 3,613 newer multifamily homes resold in the Third Quarter of This figure is down 19 percent since last quarter but is up 19 percent compared to the same quarter last year. Every sector achieved an increase in sales compared to the same quarter last year. Resales of, and product increased by 37, 24, and 43 percent respectively. Total active listings increased by four percent compared to the same quarter last year. This is due to a 30 percent increase in active listings for s. However, active listings for both Low and product remained similar compared to the same quarter last year. Q3 Observation and Opinions Strong sales activity in the and sectors of the new home market have been attributed to a growing number of investors buying into pre-sale condominium developments. Pre-sale developments that offer longer construction completion timelines are most preferred for investors as they allow for a longer timeframe for price appreciation. The combination of diminished inventory levels and increased end user and investor demand has resulted in instant project sell-outs and all new pricing highs for new condominium product across the region. Rapid price appreciation in such a short timeframe has also resulted in a growing number of investors assigning their units prior to construction completion While the sector was reasonably strong in the Third Quarter, some projects featuring larger units and subsequently higher overall price points have not been experiencing the same degree of sales activity as condominium projects, this product form exclusively caters to end-user buyers. It will be interesting to see how much the upcoming Bank of Canada mortgage stress test regulations will impact the end user purchaser in early 2018, especially on larger product. Significant projects anticipated to launch in the Fourth Quarter of 2017 include: Downtown Vancouver Grosvenor s The Pacific and Asia Standard s Landmark; in Vancouver West Polygon s Residences at Nobel Park, Tria Homes 8888 Osler and Pennyfarthing s Basalt; in Vancouver East Wesgroup s Avalon 3, Create Properties Second & Main, and Chard Development s Elenore on Fifth; in Burnaby Millennium s Etoile West and Thind Properties Lumina Starling; in North Vancouver Pennyfarthing s The Creston and Guildford Brook s Evolv35; in Port Moody Bold s Edgestone; in Richmond Landa Global s Cascade City; in Surrey/ White Rock Marcon s Semiah, Lakewood s Headwaters Club and Zenterra s Soho II; in Central Surrey/North Delta PCI s King George Hub; in Langley/Cloverdale Vesta Properties Lattice 2; and in South Delta Aquilini Development s Pelican Cove Phase 2. Third Quarter Resale Activity New Home Market YTD Comparison YTD 2015 Sales YTD 2016 Sales YTD 2017 Sales % Change from ,821 8,725 6,531-25% 3,117 3,934 3,555-10% s 2,546 3,274 2,576-21% Total 12,484 15,933 12,662-21% New Home Aggregates Q s Total Total Sales 1,376 1,227 1,010 3, ,964 s Total Total Q Sales 2,224 1, ,102 Total Inventory 1, ,812 Standing Inventory Total # of Projects PAGE 3

5 VANCOUVER - DOWNTOWN The Vancouver Downtown market continues to hold a Green Light rating for new development as total sales increased significantly during the quarter. The rise in sales and unsold inventory can be attributed to the launch of two new projects in the quarter. These projects accounted for 108 out of the 122 total sales in the quarter. Given no new projects were launched in the previous quarter, projects launched in the third quarter of 2017 recorded strong absorptions. Of the total unsold inventory in the market, 47 percent of the homes are at 1335 Howe by Onni Group and 31 percent of homes are at the recently launched Mirabel by Marcon. Two new projects are anticipated to come to market in the Fourth Quarter of 2017: The Pacific by Grosvenor and Landmark on Robson by Asia Standard America Group. Marcon s Mirabel in the West End launched during the quarter and recorded 98 sales of the 137 released units PortLiving brought its 20-unit Terrace House project to market near the end of the quarter and sold 10 homes 1335 Howe by Onni Group reported 13 new sales in the quarter and the project now has 77 total homes remaining Onni Group sold one of the final two homes at its Charleson project No new sales were recorded at 8x on the Park by Brenhill Development, Alberni by Westbank, The Smithe by Boffo Development, and The Arc by Concord Pacific $1,500 - $2, Months of supply have declined by 0.1 to 1.2 from the same quarter last year The average price per square foot is $1,125: up $176 compared to the same quarter last year Total listings have decreased by 16 percent to 81, year-over-year The average price per square foot for 1 and 2 bedroom units have increased by $177 and $236, respectively, since the third quarter of last year MLS Resale Statistics (product 10 years of age or less) # % DOM % $1, $568,000 - $990,000 Average Price Average Price $685,480 $1,135 $946,266 $1,061 PAGE 4

6 VANCOUVER - WEST The Vancouver West market retains a Green Light rating as absorption of remaining available product remains strong in all sectors. sales accounted for 94 percent of total new multifamily sales in this quarter. sales remained the same with only four unsold units available at the end of quarter. The sector experienced a 50 percent decrease in sales relative to the previous quarter due to limited new product brought to market. product saw a 52 percent increase in sales after the launch of two new projects - The Parker by Townline Homes and Cambie Sixty Two by GD Omni Investments. All product types experienced a decrease in unsold inventory with product seeing the largest drop in inventory at 54 percent compared to the previous quarter. Alabaster Homes Yukon Residences recorded the most sales in the quarter with three units. The developer made no new changes to pricing with the current blended average at $1,222 per square foot Unsold woodframe condominium inventory dropped to four units at the end of quarter with all four homes located at Adera s Virtuoso development at UBC The Parker by Townline Homes reported all 47 units sold in the third quarter; This project achieved an overall average sale value of $1,301 per square foot GD Omni Investments is reporting 25 of 25 units sold at Cambie Sixty Two, which launched in the quarter at an overall blended average of $1,270 per square foot Seven new concrete condominium projects are anticipated to launch in the fourth quarter including Second + Main by Create Properties, Reside by Marcon, and Basalt by Pennyfarthing $1,100 - $1, $850 - $ $1,000 - $1,100 MLS Resale Statistics (product 10 years of age or less) Year-over-year months of supply have decreased for both units and s (by 0.4 and 0.1, respectively) Months of supply for units have increased by 1.1 compared to the same quarter last year Average per square foot sales values have increased by $154 for, $138 for, and $121 for product year-over-year Compared to the same quarter last year, total listings have decreased from 121 to 106, and the number of resales has decreased to 167 to 184 The average days on market for all product types have remained relatively similar to the same quarter in average square foot values have increased by $124 and $154 for one and two bedroom units since the third quarter in 2016 average square foot values have increased by $170 and $158 for one and two bedroom units since the same quarter in 2016 # % DOM % $1, $591,000 - $1,080, % $ $610,000 - $1,045, % $1, $945,000 - $1,168,000 Average Price Average Price $691,383 $1,125 $1,015,698 $1,114 $653,444 $968 $876,841 $962 $1,061,600 $988 $1,093,000 $981 PAGE 5

7 VANCOUVER - EAST The Vancouver East sub-market retains its Green Light rating as strong absorptions were seen across product types over the quarter. Although sales have decreased for High and units, and s compared to last quarter, this is primarily due to a decreasing supply of multifamily product. and unsold inventory of High and condominiums has increased relative to last quarter. However, this supply is primarily due to projects that launched near the end of Q3-2017: 15 of 16 units are at PortLiving s Midtown Central and 33 of 45 units are at Polygon s Currents at Water s Edge (East Building). Overall released and unsold inventory remains low at a total of 62 units. supply and sales remained significantly low as only one project was actively selling in Q (16 Brownstones by Epix Development). Currents at Waters Edge, West and East, by Polygon were launched in Fraserview near the end of the quarter, contributing to 65 percent of sales These averaged a reported $981 and $957 per square foot, respectively At an estimated sales value of $1250 per square foot, Joyce by Westbank had 9 units reported unsold at the end of the quarter Two projects launched during the quarter: The Crest (Forrester Development) and Midtown Central (PortLiving) at an estimated average of $1,045 and $1,000 per square foot, respectively Together, these contributed to 87 percent of Low Rise sales in the third quarter of 2017 The remaining units at VIC49 (JRXL Developments) and Slocan Park (Vanwell Homes) were reported sold out at the end of the quarter. Only one project was actively selling this quarter: 16 Brownstones (Epix Development) with one unit reported unsold $800 - $1, $750 - $1, $815 - $975 Total listings have remained similar to the same quarter in 2016, while total resales have increased 23 percent to 167 The average days on market for s have more than doubled year-over-year (from 18 to 48 days) The average days on market for High and Low Rise product have remained similar to last year (between 20 to 26 days) Compared to the same quarter last year, average per square foot sale values of High and Low Rise units have increased by $180 and $156, respectively sales values have increased by $35 per square foot over the same period MLS Resale Statistics (product 10 years of age or less) # % DOM % $ $480,000 - $909, % $ $495,000 - $705, % $ $886,000 - $1,165,000 Average Price Average Price $584,609 $1,010 $803,634 $948 $536,204 $874 $738,577 $839 $1,001,111 $850 $1,038,050 $812 PAGE 6

8 RICHMOND & SOUTH DELTA The Richmond/South Delta market receives a Green Light rating as overall sales increased for High and condominiums. Although sales have decreased this quarter, absorptions remained strong with four new projects accounting for 114 sales of 169 additional units brought to market. sales fell by 62 percent this quarter as only one project was brought to market: View Star (Bldg J & A) by Yuanheng. This project accounted for 45 percent of all sales during the quarter. released and unsold inventory increased by 17 percent as four projects were brought to market. Yuanheng brought the second and third buildings of View Star to market (buildings J & A) at an estimated $976 per square foot, selling 96 of 158 released units Aspac s 2 River Green Phase II contributed to 32 percent of sales in the quarter: 248 of 287 units are reported sold to date at an estimated average of $980 per square foot Two projects launched in the quarter: The Roderick (Platform) and Trafalgar Square Phase 2 (Polygon) Trafalgar Square Phase Two had 5 of 135 units reported remaining by the end of the quarter, averaging an estimated $761 per square foot Four projects were brought to market during the quarter: Jasmine at the Gardens (Townline), Parc Riviera Mews (Dava Developments), La Verna (Grandsun Investment & Trading Co.) and The Grand Garden (Zhang s Cubic Estates Holdings); Overall, these projects averaged $743 per square foot $700 - $ $675 - $ $500 - $765 Total listings have increased 24 percent to 332 while resales have increased 60 percent to 475, year-over-year Months of supply have decreased for s (by 0.1) and s (by 0.6), and increased for (by 0.7) relative to the same quarter in 2016 Average price per square foot values for all product types have increased compared to the same quarter last year: by $142 for s, $121 for s, and $100 for s The average days on market for s have decreased from 52 to 27, year-over-year The average price for a 2 bedroom unit in a and has risen over $100,000 compared to the same quarter last year: up $112,571 and $101,239, respectively The average price per square foot for both a one and two bedroom unit in both High and s has increased by more than $100 compared to the third quarter last year MLS Resale Statistics (product 10 years of age or less) # % DOM % $ $455,000 - $813, % $ $448,800 - $688, % $ $805,000 - $1,079,900 Average Price Average Price $491,666 $799 $714,316 $776 $440,876 $695 $602,067 $683 $619,967 $551 $912,114 $669 PAGE 7

9 BURNABY & NEW WESTMINSTER The Green Light rating remains for the Burnaby/New Westminster market as demand continued for all product types evidenced by a diminishing unsold inventory. Overall sales were led by a 230 percent increase in concrete condominium sales due to the launch of five s: Townline s Sussex, Thind Properties Lumina (Waterfall), Polygon s Vittorio, Millenium Development s Etoile (East Tower) and Intergulf s Terraces at the Peak. Combined these projects contributed 90 percent of concrete sales. Although sales declined 7 percent over the prior quarter, unsold inventory declined 42 percent to 26 units, which is a record low since Quarterly sales increased 16 percent while unsold inventory declined 51 percent. Ultimately, overall unsold inventory decreased 26 percent compared to last quarter, claiming the lowest levels since In Metrotown: Townline s Sussex achieved the highest absorption and blended average, selling 318 of 321 units at $1,093 per square foot while Polygon s Vittorio reported the second highest blended average of $1,075 per square foot In Brentwood: Thind Properties Lumina (Waterfall) reported second highest absorptions selling 282 of 289 units at $964 per square foot while Millenium Development s Etoile (East Tower) reported 198 of 223 units sold at $970 per square foot At Burnaby Mountain, Intergulf s Terraces at the Peak reported 114 of 117 units sold, achieving $730 per square foot In New Westminster, Porte Development s Capitol sold out at the end of the quarter achieving $677 per square foot while Irving Living by Altima launched in September, achieving $683 per square foot Four s are expected to launch next quarter: Millenium Development s Etoile (West Tower) (175 units), Thind Properties Lumina (Starling) (221 units), Amacon s Juneau (147 units) and Concord Pacific s Brentwood Hillside East (500 units) 21 1, $680 - $ $675 - $ $510 - $600 Total resales have increased by 26 percent (to 517) and listings have fallen 19 percent (to 216) compared to the same quarter last year Average product values have increased by $156 and $123 since the same quarter in 2016, for High Rise and condominiums, respectively Average square foot values for s have decreased by $17 per square foot for the same time frame The average price of a one bed in a High and has increased $159 per square foot compared to the same quarter last year The average price increase of a two bed unit in a High and increased by $182 and $122 per square foot, respectively compared to last year MLS Resale Statistics (product 10 years of age or less) # % DOM % $ $460,000 - $888, % $ $418,000 - $699, % $ $649,000 - $1,029,900 Average Price Average Price $597,526 $823 $736,211 $807 $432,676 $700 $580,088 $669 $666,863 $615 $836,024 $623 PAGE 8

10 NORTH SHORE The North Shore market retains a Green Light due to strong demand for available housing in all product types. The Low Rise sector saw strong absorptions with a 59 percent increase in sales compared to the previous quarter. Additionally, 63 percent of total sales are attributed to the launches of three condominiums: Polygon Homes Taluswood North and Taluswood South, and Qualex-Landmark s Green (Building I). and product sales dropped due to the lack of new project launches in the quarter. Only had an increase in unsold inventory which is a result of three new project launches and zero remaining units reported in the previous quarter. year-to-date sales are 67 percent lower than the same period in 2016, much of which is due to the lack of new launches in this market. Qualex-Landmark s Green (Building I) reported all 57 units sold in the quarter achieving a blended average sales value of $842 per square foot; the remaining two buildings at Green will be launched early in the fourth quarter. Taluswood South reported 28 units sold in the quarter and is achieving the highest woodframe condominium values in this market at a blended average of $871 per square foot Bosa Development s Residences at Lynn Valley Phase Three reported the highest concrete condominium absorption in the quarter with 17 sales. The project is achieving a blended average sale value of $903 per square foot projects scheduled to launch in the fourth quarter include Evolv35 by Guildford Brook Estates, Edgemont Walk by Boffo Properties, and Seymour Village Phase Three by Aquilini Development $850 - $2, $700 - $ $650 - $1000 Both total listings and resales have increased compared to the same quarter last year: listings are up 41 percent to 76, and resales are up 77 percent to 147 Months of supply have increased for both Low Rises and s: up 0.4 and 0.5 from the same quarter last year The supply of units over the same time frame has decreased 0.3 months to 1.9 The average price per square foot values for High Rise units and s have increased 18 percent compared to this time last year: up $47 and $110, respectively The average price per square foot of units has increased similarly (20 percent) over the same time frame: up $138 The average one bedroom unit in a has passed the $1000 per square foot mark, to $1,008 # % DOM % $ $595,000 - $985, % $ $547,000 - $841, % $ $780,000 - $1,185,000 Average Price Average Price $632,255 $1,008 $909,458 $958 $535,030 $818 $746,522 $824 $927,800 $738 $1,157,629 $668 PAGE 9

11 TRI-CITIES The Tri-Cities sub-market retains its Green Light as the trend of strong demand and low supply continues. Note that overall sales are down 33 percent compared to last quarter due primarily from the depletion of condominiums available to purchase. This follows the near sell out of 567 Clarke + Como last quarter while one project launched this quarter. sales have increased by 36 percent from last quarter with the launch and near sell-out of Quantum Properties Montrose Square (Building A & B). Quarterly sales dwindled to eight, with no concurrent project launches. The majority of remaining inventory is concentrated in relatively few projects: 58 percent of supply is at Whisper (Gardenia Homes), 59 percent of supply is in Montrose Square (Quantum Properties), and 90 percent of supply is at The Grande (Onni). One launched in Q3-2017: The Grande by Onni in Coquitlam s Suter Brook Village; 128 of 206 units are reported sold at an estimated average of $895 per square foot Nine units are reported remaining at Marcon s 567 Clarke + Como which has averaged an estimated $811 per square foot Two woodframe projects launched in Port Coquitlam this quarter: Downtowne Pointe by Pacific New Homes ($545 per square foot) and Montrose Square, Buildings A & B ($587 per square foot) by Quantum Properties In under two weeks of sales launch, Quantum Properties reported 170 of 208 released units sold Aragon s Platform is reported to have sold 83 of 98 released units at an estimated average of $710 per square foot No projects were reported sold out in the Tri- Cities during the quarter $800 - $ $500 - $ $495 - $550 MLS Resale Statistics (product 10 years of age or less) Total listings have remained fairly constant versus the same quarter last year (up from 192 to 201) whereas resales have increased 26 percent to 450 Compared to the same quarter last year, only the supply of s has gone up (0.9 months) The average per square foot values for every product type has risen since this time last year: $131 for s, $136 for s, and $60 for s The largest relative increase in average per square foot values since this time last year was for a one bedroom unit (up 34 percent; or just over $102,000) Compared to last year at this time, the largest average price increase was for three bedroom s: $122,386 # % DOM % $ $440,000 - $700, % $ $408,000 - $619, % $ $600,000 - $904,900 Average Price Average Price $455,042 $747 $623,674 $674 $411,644 $610 $548,528 $594 $617,609 $515 $780,429 $519 PAGE 10

12 RIDGE MEADOWS The Ridge-Meadows market continues to hold a Green Light rating as and sales experienced strong absorptions during the quarter. Overall sales decreased compared to last quarter as no new projects were brought to market; of the 84 s available for sale, 48 were sold during the quarter. Despite two new projects launched during the quarter, available inventory reduced to a significantly low level demonstrating robust demand for this product type. Year-to-date woodframe sales were up 86 percent compared to the same period in This can be attributed to four new projects launched in 2017, a significant increase from the one project brought to market in the previous year. Year- to-date sales were relatively similar between 2016 and 2017, as the same number of projects were brought to market each year. Emerson by Whitetail Homes launched in the quarter reporting all 69 homes sold in one day Brickwater was launched by Falcon Homes reporting all 39 units sold Nordel construction released and sold 24 homes in phase 1 of its Ridgemont project. Bella Vista released 14 new homes in phase 2 of its Cottonwood Ridge project near the end of the quarter and no sales were recorded. Nature s Walk by Onni Group reported 20 new sales in the third quarter Quarry Rock Development sold 4 of the final 5 homes at its Kanaka Hill project One new sale was recorded at Orion by Belmont Group and 13 homes remain available for sale The final home at Falcon House by Falcon Homes was sold during the quarter TJM Construction is anticipated to launch its 18-unit project Willow during next quarter $350 - $ $300 - $350 The total number of listings and resales are down from the same quarter last year: 31 percent and 3 percent, respectively The average per square foot values for and s have risen by the relative same amount (19 and 18 percent) and are up $65 and $54, respectively # % DOM % $ $315,000 - $450, % $ $275,000- $440, % $ $512,000 - $645,000 The average price of a unit has risen between 20 to 22 percent since this time last year: average one bedroom at $189,192 and two bedroom at $402,319 The average price of a three bedroom has decreased relative to this time last year: down five percent to $573,545 Average Price Average Price $301,750 $493 $479,133 $483 $289,192 $422 $402,319 $393 $489,643 $406 $573,545 $363 PAGE 11

13 SURREY CENTRAL & NORTH DELTA The Surrey Central/North Delta market continues to receive a Green Light due to consistent demand in all sectors marked by little supply alongside project sell-outs. Both sales and unsold inventory for rank third lowest levels since 2010 while absorptions remain high due to the launch of Concord Pacific s Park Boulevard last quarter with 419 units, now at 93 percent sold. Of the remaining two s, one sold out and the other reported 3 units remaining. Similarly, absorption was strong as two launches brought 200 units of supply to the existing 19 on the market. While three projects sold their last unit, unsold inventory was up at the end of the quarter due to the launch of Anthem Properties Fleetwood Rise and Westcorp s Chelsea Gate in August with phased releases further into the quarter. Civic Plaza by Century Group sold out, reporting an average per square foot of $700+ on the last 50 sales. Had this project launched in 2017 vs it could have averaged above $800 per square foot In North Delta, Maple Leaf Homes launched Delta Gardens reporting 102 of 122 woodframe units sold at an estimated $500 per square foot Tangerine Development s, The Guildford launched in Surrey selling 76 of 78 units seeking an average of $515 per square foot Anthem Properties Fleetwood Rise released 94 units throughout the second half of the quarter reporting 59 units sold at an estimated $422 per square foot King George Hub by PCI Developments will launch 434 units in October and BMG Group anticipates launching Thomas, a 30 unit project, in late fourth quarter $525 - $ $450 - $ $350 - $425 Total listings and resales are up compared to the same quarter last year: 263 up to 305 listings, and 347 up to 532 resales of all product forms has fallen year-overyear: down 0.2 months for s, 0.4 months for s, and 0.3 for s # % DOM % $ $271,000 - $460, % $ $250,000 - $427, % $ $520,000 - $680,000 Sales were distributed relatively evenly across product types this quarter The average per square foot values have increased by $172 and $123 for High and s over the year, while that for s have increased by $67 The average days on market have dropped significantly for High and units since this time last year: down 57 and 168 percent, respectively Average Price Average Price $314,651 $581 $437,219 $578 $282,786 $458 $385,076 $433 $505,155 $399 $592,418 $399 The average one bedroom unit is up 45 percent to $581 per square foot, and the average two bedroom unit is up 43 percent to $458 per square foot PAGE 12

14 SOUTH SURREY AND WHITE ROCK The South Surrey/White Rock market continues to receive a Green Light as absorptions showed consistent for all sectors over the quarter. While no new s launched, both sales and unsold inventory declined relative to the previous quarter as the 11 projects launched last quarter were absorbed into the market. Nine of 13 projects in the Grandview Heights neighborhood reported overall larger square foot plans unsold at the end of the quarter. The remaining four projects in the King George neighborhood reported 10 percent of released inventory remained. Relative to the previous quarter, a 72 percent decline in unsold inventory outpaced a 19 percent decline in sales for projects. Foster Martin by Landmark Premier Properties is the second to launch in the last two years, adding 218 units of supply and reporting consistent absorptions. Foster Martin by Landmark Premier Properties reported record high overall averages for this market: the Foster at $995 per square foot and the Martin at $1062 per square foot Texor Homes launched Beachborough selling 43 of 51 woodframe units. This project is seeking an average sales value of $600 per square foot Streetside Development s, South Point Walk Two, recorded 33 new sales. The blended average increased $43 over the quarter to $471 per square foot 11 of 13 projects are selling above $400 per square foot Lakewood Development anticipates launching 88 woodframe units at Headwater s Club in October Four projects are expected to launch in the fourth quarter: SOHO II by Zenterra, Imperial by TM Crest Homes, Berkley Village by Ikonik Homes and Crescendo s by Isle of Mann $930 - $ $450 - $ $380 - $430 Both total listings and resales have increased relative to the same quarter last year: by 55 and 50 percent The supply of High and product has decreased since this time last year (by 0.8 and 0.2 months, respectively) The supply of s has increased by 0.8 months over the same period MLS Resale Statistics (product 10 years of age or less) # % DOM % $ $320,000 - $1,005, % $ $363,000 - $589, % $ $548,000 - $899,900 The average per square foot values for units and s have increased relative to the same quarter in 2016: by $87 and $55. Over the same period, the average per square foot value of a unit has remained relatively similar (increase of only $6 per square foot) The average days on market for units have almost halved year-over-year, to an average of 30 days from 58 The largest relative increase in per square foot values was for a one bedroom unit: up 28 percent to $528 per square foot year-over-year Average Price Average Price $493,978 $696 $770,458 $707 $367,620 $528 $491,480 $527 $542,265 $434 $642,493 $432 PAGE 13

15 CLOVERDALE & LANGLEY The Langley/Cloverdale market retains a Green Light rating due to strong absorption of available product in both the Low Rise and sector. Compared to the last quarter, total sales of new multifamily home product have decreased by 55 percent. This is the result of eight less actively selling projects on the market. Anthem Properties Clayton Walk was the only project to launch in the quarter in this-market. As a result there was a 32 percent drop in unsold inventory. Woodframe condominium product continues to be absorbed as quickly as it is released. Sandhill Development s Elements Phase VI and Creada Holdings The Civic recorded strong absorptions after launching in the quarter. The majority of purchasers have been investors and first time buyers. Anthem Properties Clayton Walk reported the highest absorption with 41 units sold. The project is achieving a blended average of $392 per square foot Harvest at Bose Farm by Platinum Group reported strong absorptions with 22 units sold. The project is achieving an overall sales value of $376 per square foot Elements Phase VI by Sandhill Development reported 34 units sold in the quarter without the benefit of a sales centre and is achieving the highest woodframe selling prices in this market at an average of $462 per square foot The Civic by Creada Holdings reported 78 of 88 units sold in the third quarter. The project is achieving an overall average sales value of $422 per square foot The remaining 50 units of released and unsold inventory mark the second lowest quarterly level over the past seven years $400 - $ $315 - $400 MLS Resale Statistics (product 10 years of age or less) Total listings have increased six percent, while resales have increased 26 percent year-over-year Relative to this time period last year, the supply of product has decreased by 0.6 months while supply has increased by 0.2 months The average per square foot values for both Low Rises and s have increased by $101 and $64 relative to the same quarter last year The average days on market for both and units has remained relatively similar year-over-year, at just under 20 days The largest relative increase in per square foot value was for one bedroom units which are up 28 percent year-over-year, to $464 per square foot The average three bedroom Townhouse unit has increase just over $100,000 compared to the same quarter last year # % DOM % $ $282,500 - $444, % $ $495,000 - $674,000 Average Price Average Price $302,945 $464 $407,075 $448 $506,148 $408 $581,484 $390 PAGE 14

16 ABBOTSFORD The Abbotsford market retains a Green Light rating as demand for all product types proved healthy over the quarter. Despite a drop in overall sales from last quarter due to no new projects brought to market, absorption levels remained strong. Sales were reported for 32 of 65 units, 31 of 43 units, and 5 of 27 units. The lack of new product directly contributed to the fall of available inventory which now sits at unhealthy levels. The sector expects to continue recording healthy absorptions next quarter as Onni Group and Diverse Properties anticipate releasing a new phase of homes at Allwood Place and Parallel North, respectively. A woodframe project by Wiebe Group and Diverse Properties is anticipated to complete within the next 6 months; however, the developers haven t confirmed whether the homes will be stratified and sold or occupied as market rental units Mill District by Heinrichs Development reported 25 sales and 7 homes remaining available for sale. Diverse Properties sold 21 of the 24 available homes at its Parallel North project. Residences at Gateway by Boulevard Group reported 6 new sales with 5 homes remaining at the end of the quarter. Five new sales were reported at Mahogany by Quantum Properties and there remain 22 homes available for sale. Onni Group sold nine new homes at its Allwood Place project $ $370 - $ $300 - $375 MLS Resale Statistics (product 10 years of age or less) Compared to the same quarter last year, total listings are down 20 percent, while total resales have increased 58 percent Over the same period, the supply of units has decreased significantly (by 1.8 months) The average days on market for units has halved since the same quarter last year The average price per square foot of and s are up $88 and $98 year-over-year The largest relative increase in per square foot value year-over-year was for one bedroom Low Rise units (up 42 percent to $350 per square foot) The average unit has increased in price by just over $87,000 for a two bedroom unit and up $83,000 for a three bedroom unit year-over-year # % DOM % $ $217,000 -$340, % $ $439,000 - $515,000 Average Price Average Price $235,133 $350 $314,569 $337 $438,057 $356 $483,046 $334 PAGE 15

17 LOOKING BACK AND AHEAD The projected hot summer market certainly came to pass. New multifamily sales results surpassed the 4,000+ homes for the first time in a Third Quarter, setting a 10 year high. Furthermore, the most recent quarter is the second consecutive quarter to surpass this peak performance indicator. Are we in for another quarter like this one? Looking Back At the conclusion of the Fifth Dimension last quarter we anticipated an active summer market but left our prognostication short of projecting the 10 year high that transpired. More specifically, we projected Third Quarter sales in 2017 to surpass the 2016 mark by 10 percent or more. The actual increase was 38 percent. No wonder many of our colleagues in the industry commented on the summer that wasn t from a slowdown, rest, vacation perspective. Folks were b-u-s-y! Based on sustained demand and the projected lineup of new releases for the fall, we did state that we expected 2017 to surpass the 16,000+ units sold mark. This will make this year the next best year for sales in the last 10 years. Given the momentum established in the Third Quarter, this projection is highly probable now. At that time, we did share a view that there was insufficient supply to surpass the 20,000 unit sold mark reached in We hold to that view. Of course, those of us who keep banging the we need more supply drum are often accused of being the child who cried wolf. How do we argue the continued lack of supply isn t an issue when you consider what we didn t project: in quarter, rapid price appreciation in the condominium sector. As of the end of the Third Quarter, nearly half of all market areas that comprise Metro Vancouver now have a top end of the active sales range for product (the highest price within the range of prices at which 75 percent of recent sales occurred) greater than $1,000 per square foot. In contrast, a year ago this figure was a quarter and the year before that just an eighth. Even more to the point, there are now just 4 out the key 12 market areas we monitor that have a top end of the active sales range for product less than $500 per square foot. At the same time, supply levels keep setting record lows. Is there anyway supply can't be a contributing factor to price escalation/inflation? Looking Ahead It is coming to the end of the honeymoon period for the new NDP government. I wonder if much of our industry still feels as uncertain as I do with respect to what to expect in the coming year from the government. Despite the aforementioned price escalation, the condominium market supply levels remain down as projected and development remains a sustained green light rated opportunity in all market areas throughout Metro Vancouver. We do expect a 4,000+ quarter. Unlike in years past where developers have often opted to defer a late year launch to the first quarter of the coming year we expect the opposite. Market conditions being what they are and given the uncertainty with respect to the mortgage stress testing and further government intervention in the coming year, we expect developers to do whatever it takes to, as they say where I grew up, make hay while the sun shines. We expect buyers to do likewise in advance of the New Year. So... What is on our minds as the days shorten and the holiday season approaches? There are a number of questions that are top of mind at Fifth Avenue. These include: What effect will the new consumer financing "rules of the road" have on the start to 2018? Last year cold and snowy weather dampened the start of the year and was largely to blame for breaking the yearlong consecutive 4,000+ units sold per quarter streak. Will there be a cold front this year? Could it be with respect to mortgage qualifications? How sustainable is the investment demand for pre-sale condominiums? This year Fifth Avenue will sell approximately 3,000 new multifamily homes. Given the markets we concentrate on, the majority of the homes we offer are bought by end-users. In 2010 in one speech about the Fraser Valley, I likened the investor to Elvis and cautioned that he had left the building. The King is clearly back in Port Coquitlam, Ridge Meadows, Surrey, White Rock and Langley. What is driving this interest this time? Certainly relative affordability has part to play? But how sustainable is this demand? How much higher will prices go? I cannot recall a quarter with this escalation in pricing. Pricing new offerings almost requires one to suspend recent memory and more traditional ways of rationalizing pricing. Without sounding pessimistic, we do caution our existing and prospective clients to have a backup plan if aggressive pricing is not accepted by the market or conditions change. We certainly spend more time talking and thinking about inelasticity/elasticity of demand and pricing thresholds than we do simply talking price per square foot. The question we ask most: "How much higher will these go?" If you have a view you would like to share and/or questions you would like to discuss please contact scott@fifthave.ca. There is plenty of rhetoric expected. Here s hoping for more consultation with industry stakeholders prior to implementation. The Liberals didn t exactly get passing grades on collaboration and communication, i.e., HST, Foreign Buyer Tax, etc. I wonder if the NDP will try to do better. PAGE 16