2017 Real Estate Market. How will higher interest rates affect real estate in 2018?

The predictions for 2017 were mostly centered around the idea that sales would decline throughout the year and that would result in a drop in prices. That didn’t happen. Prices did drop in many areas during the fall of 2016 (largely a result of the foreign buyer’s tax) but the market began to recover early in 2017. Overall sales transactions for 2017 were just below transactions for 2016, making 2017 the second busiest year on record for the Fraser Valley and the third busiest year for the Vancouver area, in the past 10 years. Overall, prices increased throughout the Vancouver area and Fraser Valley.

Fraser Valley Numbers:

HPI® Benchmark Price Activity

  • Single Family Detached: At $976,400, the Benchmark price for a single family detached home in the Valley increased 14.2 per cent compared to December 2016.
  • Townhomes: At $513,100, the Benchmark price for a townhouse in the Valley increased 23 per cent compared to December 2016.
  • Apartments: At $388,600, the Benchmark price for an apartment in the Valley increased 40.5 per cent compared to December 2016.

Greater Vancouver Numbers:

HPI® Benchmark Price Activity

  • Single Family Detached: At $1,605,000 the Benchmark price for a single family detached home in the Greater Vancouver area has increased 7.9 per cent compared to December 2016.
  • Townhomes: At $803,700, the Benchmark price for a townhouse in the Greater Vancouver area increased 18.5 per cent compared to December 2016.
  • Apartments: At $655,400, the Benchmark price for an apartment in the Greater Vancouver area increased 25.9 per cent compared to December 2016.

All areas and all property types in the Fraser Valley (except detached homes in South Surrey) remained in a sellers market for the month of December. With unusually low inventory and strong economic numbers, the assumption would be for the real estate market to continue in a sellers market however, the new mortgage rules are now in effect and the Bank of Canada just increased the prime lending rate to 1.25 percent, up from 1 percent. These two factors may contribute to a decrease in demand but that is unknown at this time. If the economy continues to grow, we may not see much of a change for 2018.


The Bank of Canada Governor, Stephen Poloz, is uncertain if interest rates will go up again this year. That decision will be based on economic data. “One of the most important (issues) is with the level of debt we have today, compared to what we had 10 years ago. We are absolutely certain the economy will prove to be more sensitive to higher interest rates than in the past,” Poloz added.


Buyer’s Best Bets:

Prices for detached homes in Surrey have remained stable over the past six months. Panorama Ridge and Fleetwood both have good inventory levels and are experiencing balanced markets.

It is a good time to sell right now. Contact me for information on preparing your home for sale.