Surrey Real Estate

Trends and Price Forecast

Surrey, BC


  • Surrey house prices have dropped close to $50k since peaking in 2018 and the benchmark house price dropped below $1 million. Surrey house prices recovered a over the past few months but with house prices dropping in other parts of the lower mainland this surge is likely short-lived.
  • Surrey condo prices are also down since their peak in 2018.
  • Higher-priced Lower Mainland markets like Downtown, the Westside, and West Vancouver have been hit hardest but the surrounding areas are all impacted.
  • There has been an increase in Surrey home purchases this Spring however it is still slower than prior years and there are many homes for sale.
  • As we enter the Summer months, some sellers will likely accept price concessions rather than wait to re-list next Spring.

Economists broadly agree that higher interest rates and tighter mortgage rules will have a larger, longer-lasting dampening effect on home sales than we previously thought. B.C. is also impacted by new registries designed to keep dirty money out of the market. As a result, foreign investment has shifted to Toronto and Ottawa. As well, there are now fears of Canada hitting a housing induced recession.

This article covers:

  • Where are prices headed?

  • Recent buyer trends

  • Should investors sell?

  • Is this a good time to buy?

1. Where are prices headed?

Over the past 10 years, the price of a Metro Vancouver house has doubled. That’s the equivalent of prices rising 7% every year while people’s incomes increased by an average of 1.5% over the same timeframe.

In the summer of 2016, Vancouver house prices tumbled after the introduction of a foreign buyer tax and subsequently recovered. The 2016 drop in prices was much steeper than the one seen today, and it raises a question about the degree of volatility in the market. If prices can jump $600,000 between 2014 and 2016, drop $100,000 in 2016 and then recover, could they drop by $400,000 between 2018 and 2020 before a recovery sets in? House prices in Cloverdale already dropped $60,000 from their 2018 peak so another bad year could bring house prices down to $900 thousand. A significant discount but still beyond the reach of most locals.

Cloverdale is not alone. Central and North Surrey houses also saw price drops since peaking. Prices have bounced up recently however given the continued price drops in the rest of Metro Vancouver, Surrey is likely to follow.

It is possible Surrey house prices are at hit a tipping point. This doesn’t mean you don’t buy a home for your family, but it does mean that you’re buying it for shelter and not as a low-risk investment. It also means you’re driving a hard bargain.

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Metro Vancouver condo prices also doubled over the same timeframe but in the past 10 years never experienced a downturn until last summer.

If you’re looking to buy or sell a home in the next three years, you’ll want to pay closer attention to recent trends. With fewer buyers in the market, sellers have begun to lower their expectations, and prices have dipped in recent months.

Since peaking in the Summer, condo prices have dropped in Surrey and that’s good news for first-time home buyers.

First-time buyers who earn $100,000 a year and have saved up $50,000 can afford a home priced around $425,000 so the run-of-the-mill Surrey condo is just within their reach. House prices are still well beyond the reach of most households and with prices now dropping, they are losing equity in their current homes. They would need a substantial gift from the “bank of mom and dad” to make up the difference.

Trending Toward Buyer’s Advantage

The markets for both houses and condos in Surrey are trending toward a position where buyers can negotiate discounts and incentives from sellers. This means more selection for home buyers, fewer bidding wars and less upward pressure on home prices.

The charts below show the market balance in Surrey the house market is balanced but recently trending toward a seller’s advantage.

The surrey condo market has historically been a lot tighter than the house market, but it has lately been flirting with a balanced market. A balanced market is generally considered healthy, yet as soon as the condo market balanced, prices began to drop. There is a risk that current condo prices are not sustainable in a healthy balanced market and a full-blown buyer’s market could lead to deep price discounts.

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2019 Surrey House Price Forecast

Different forecasters have different approaches. Some will only provide a provincial forecast, some a city one, while others forecast by type of dwelling within a city. The chart below depicts 6 forecasts from December 2017 to provide a broad picture of the market. These forecasts don’t differentiate between detached homes and apartments.

Metro Vancouver 2018 Home Price Forecast

The most optimistic forecast called for 6% price growth while the most conservative expects no price appreciation at all. No one predicted prices would drop but in Surrey they dropped by 7-11%.

Looking forward to 2019, we see most forecasters expect prices to drop.

Metro Vancouver 2019 Home Price Forecast

The brunt of 2019 price drops will likely be felt by higher priced properties (i.e., more expensive neighbourhoods and detached single family homes) as well as areas with low activity (e.g., Squamish and Port Moody).

Forecast Metro Vancouver House Price.JPG

Given the forecasts, the current market weakness, and the increased downward price pressure, prices will likely remain flat or drop for the next few months. As well, homebuyers and homeowners shouldn’t expect much price appreciation between now and the end of 2020.

2. Recent Trends - Buyers are scarce

2019 has started even slower than last year which implies we will see a buyers’ market by the end of the year. That means home buyers should drive a hard bargain and paying more than the list price should be almost unheard of.

The worst hit markets in Metro Vancouver include Richmond, the Vancouver Westside, and West Vancouver. We at Mortgage Sandbox interpret this to mean that foreign buyers and speculators are no longer placing money in the Metro Vancouver market. Scanning news outlets across Canada and reviewing realtor marketing materials, it becomes clear that any foreign money still coming to Canada seems to be directed toward Toronto, Ottawa and Montreal.

Although foreign direct investment helps Canada with the construction and house price boom, investors who treat housing as a commodity bring commodity-like price volatility (e.g., gold, oil, coffee) to housing which can be very disruptive for people who believe homes should be used primarily as shelter for the people who live and work in the local community.

Surrey house purchases are consistently trending below previous years and there are a record number of Surrey houses for sale.

The Surrey condo purchases are much lower this Spring than other years while there are more condos for sale than ever before. Usually the number of purchases slow down as we approach July so there is a very small window for sellers to find buyers for their homes.

Pre-sale Homes

You may not know this, but sales of brand-new homes (“Pre-sales”) are not included in the statistics published by the real estate boards. In Vancouver, pre-sales make up over 30% of the market, so that’s a pretty big information gap.

A recent report by MLA Advisory shows that developers used to sell a far higher proportion of pre-sales within one month, but this figure has been trending downwards. One could say that the market has moved from frenzied to disciplined. According to MLA Advisory, current pre-sale activity levels “reflect a more normalized pace of sales for the Lower Mainland.” Since developers often need to sell 70% of a project to secure the financing needed to break ground on a project, prospective buyers can look forward to seeing developers offer more competitive prices, incentives, and amenities.

Developer incentives can take the form of free storage lockers, parking spots, home décor store credits worth thousands, and nicer party rooms. Whatever it takes to help you decide faster, so they can begin building.

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Causes of the Slowdown

At Mortgage Sandbox, we break down our market analysis to five key factors: affordability, capital flows, government policy, supply and popular sentiment.

Five Factors Driving Home Prices

Five Factors Driving Home Prices


  • Canada may be headed into a recession: A recession would reduce employment and lead to forces home sales and that puts downward pressure on home prices. The Canadian economy shrank in December 2018 as a result of slowing home sales. In a terrible self-reinforcing problem, the economic slowdown could cause the housing market to slow further.

  • Reduced borrowing capacity has pushed out Family Homebuyers: Mortgage stress tests and rising interest rates have effectively reduced the maximum amount people can borrow by 20% while condo prices rose by 20%. Perhaps home prices have surpassed people’s ability to pay? In July, CMHC, the government agency charged with helping Canadians to achieve home ownership, reported that prices in Metro Vancouver “are higher than incomes, mortgage rates and other fundamentals can justify.”

  • Home prices outpaced people’s ability to buy: There are very few markets in Metro Vancouver with houses available for less than $1 million, but only 8% of income earning households in Surrey can afford a million-dollar home. Is it possible that the constrained supply has meant that only the top 8% wealthiest people in Surrey have been buying, and now that they’ve filled their boots, there’s no one left to buy at the current prices?

Metro Vancouver Affordability.jpg

Find out what you can afford with the new mortgage rules!

Capital Flows

A Synchronized Global Real Estate Market Correction has dampened Foreign Buyer activity: Home sales have slowed in Manhattan, Sydney, Stockholm, London, and the list goes on. Perhaps global real estate investors have lost their appetite? Has the Chinese government been successful in their campaign to prevent citizens from taking money out of the country? If there were a global real estate downturn, how would this impact Surrey?

If Surrey is simply caught up in a global real estate correction, then at least there is no one to blame for the turn in the market. If this is the case, then it means that Canadian policies and government intervention will be powerless to change the global flow of capital and investment, and that’s a scary thought.

Foreign direct real estate investment has left Surrey: Seeking better value in other cities because Metro Vancouver house prices are some of the highest in the world (i.e., foreign investors believe you should buy low and sell high). Evidence for this shift in investor interest is seen in the dramatic drop in Vancouver home purchases and simultaneous upswings of activity in Toronto, Montreal, and Ottawa.

Government Policy

All levels of government are coordinating to bring about a “soft landing”: Whether it’s federal mortgage, provincial foreign buyer taxes or local empty home taxes, the government will not rest until prices drop another 10 to 20%.

Some industry advocates blame the January 2018 stress test for causing a slowdown in the market but the slowdown began in 2016.


While fewer people are buying homes, the Metro Vancouver population continues to grow: There is still a chronic undersupply of housing. In fact, population growth has ballooned from ~30,000 people annually to ~65,000. As a result, we are left with an inherent contradiction. How can we accept so many more people but sell fewer homes? The problem is we didn’t build enough to satisfy the wealthy and the middle class, so the wealthy (and their bankrolled children) are the only ones buying homes.

In 2018 2,200 condos were bought in Surrey (down 46% from 2016) and 3,100 condos were under construction at the beginning of 2019. If the market is struggling to absorb existing stock then additional projects will put more downward pressure on prices. Those new homes will help alleviate the extreme supply shortage in Surrey but rental vacancy needs to reach 3% before Surrey can be considered to have enough supply, and vacancies are currently below 1%.

Popular Sentiment

A change in buyer sentiment has led to a Wait-and-see Strategy:  Another theory is that homebuyers can buy at today’s prices but are playing-it-cool until they see a turn in the market. Low sales volume means the prices of most recent homes are a less reliable indicator of where the market is headed. This is because prices set under heavy sales volume are more representative of the consensus of many buyers. Low volume implies that many buyers believe properties are mispriced and are sitting on the sidelines. Declining volume in a market with rising prices is usually a leading indicator that a price drop will follow.

Here are some recent headlines you may be interested in:

3. Should Investors Sell?

Forecasts are intelligent guesses, and when making investment decisions, we often focus on the most likely outcome. Prudent investors also consider for the worst-case and best-case scenario.

To benefit from the best-case scenario, a home buyer should talk to their mortgage broker about prioritizing flexible loan conditions. These allow you to get approved for more money, move quickly to close, and have lower fees, rather than focusing solely on rates. Every lender has very different lending rules, and most people underestimate how these impact:

  1. How much you can borrow.

  2. How easy it will be to meet all their conditions by the closing date.

  3. How quickly you can pay off your debt.

  4. The penalties and fees charged to pay-off the mortgage or move it to another lender.

To mitigate the risk of a worst-case scenario, try to buy a home at a price that allows financial breathing room, and plan to live in it for 5 to 10 years.

If you are investing to earn rental income rather than counting on price gains then your risk is lessened, but if you are not earning enough rental income to cover expenses then you should move with an abundance of caution.

CMHC, a Government of Canada Agency, predicts house prices will be flat or drop for the next two years. As well, in October 2018, there were 41,000 homes under construction in Metro Vancouver and due to be completed in 2019 and 2020. Just under 20,000 homes were bought in 2018. If a significant number of those homes under construction were pre-purchased with the intention to flip, they could overwhelm the market with supply.

From a seller’s perspective, likely now is a better time to sell than in two years.

4. Is This a Good Time to Buy?

Buyers of houses certainly have more negotiating power. So long as you aren’t taking on an uncomfortable amount of debt, and this is your “forever home,” 2019 will be a good time to buy, but 2020 may be even better.

At the end of the day, a home is a place to live more than it is an investment. If you feel you need a home to have the lifestyle you’ve always wanted, then now is the best time since 2008 to be a buyer. Just be sure to drive a hard bargain and keep in mind that prices will likely continue to drop after you buy your home. It’s impossible for everyone to perfectly time the peaks and troughs of the market.

We recommend also you also read this article on the current risks present in the real estate market.

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