Realtors: There’s a shortage of homes on the market in Atlantic Canada
Industry insiders suggest common trends deeply tied to the ongoing COVID-19 pandemic are emerging
Big cities across the country were expected to post declines in home prices, resales and construction, Canada Mortgage and House reported in July. In Atlantic Canada, a shortage of homes for resale may be pushing the real estate market in another direction.
Although there’s variance among major Atlantic Canadian municipalities when it comes to price changes for homes, industry insiders suggest common trends deeply tied to the ongoing COVID-19 pandemic are emerging. A Royal LePage House Price Survey released in July broke down house price figures for more than 60 major markets across Canada.
In Atlantic Canada the aggregate median price for homes in Charlottetown (3.5 per cent), Fredericton (1.3 per cent) and Halifax (2.2 per cent) experienced yearover-year increases for the second quarter. Quarterover-quarter, all three municipalities were relatively flat, with the median price for Halifax homes showing the most change with a 1.4 per cent increase compared to the first quarter of 2020. Nationally, a year-over-year change of 6.8 per cent was reported and a quarter-over-quarter increase of 1.9 per cent.
Year-over-year, median house prices were down in the second quarter for Moncton (-3.3 per cent), with change relatively flat for Saint John (-0.8 per cent) and St. John’s (0.2 per cent).
Industry representatives in Nova Scotia and Newfoundland and Labrador told SaltWire Network that there’s been a supply shortage for homes on the real estate market because of the pandemic.
“As we’ve seen the regulations tighten around social distancing and all of that stuff, we’ve seen buyers come back more quickly than sellers,” said Matthew Honsberger, broker and owner for Royal LePage Atlantic in Halifax. “That means there’s lots of demand and not much supply, and that’s causing prices to be pushed up. Multiple-offer scenarios.”
Glenn Larkin, a sales representative with Royal LePage Vision Realty in Mount Pearl, has witnessed a similar situation in the St. John’s metro area, adding the shortage in homes has helped some long-vacant properties find owners.
“When listings declined, buyers started to come out. … When people were allowed to move more freely, the market started acting up. Then interest rates took a little tumble, down to the lowest they’ve been in years. That helped stimulate the market.”
Larkin said activity picked up in late May and continued through June. He reckons there could be a number of contributing factors, with some couples and families living in close quarters during the pandemic realizing they need more space and workers in health care and other busy sectors making use of overtime pay to buy a home. A trend Honsberger and Larkin are noticing is increased interest in rural land. They attribute this to summer travel plans falling through for most people.
“It seems like recreational properties have seen a pretty significant uptick as well in terms of people saying, ‘I’m not going to be able to spend a lot of money on vacations.’ So, maybe it’s the time to buy a cottage, a bigger secondary property or a piece of land,” said Honsberger.
“People who haven’t gone to Florida, Jamaica or wherever they go have gone out and looked at buying a summer cottage,” Larkin said. “Smaller priced properties have increased in sales because of those reasons.”
HARD TO FORECAST
While Honsberger acknowledges the continued presence of the COVID-19 virus makes it difficult to accurately forecast, he does expect to see a further rebalancing of the real estate market as the supply of homes continues to increase. This would reduce the need for potential home buyers to compete against each other with aggressive offers and reduce the number of multiple-offer scenarios for homes.
Larkin is watching a number of variables that could play into the future of the real estate market in Newfoundland and Labrador. Those include government budgets, the end of mortgage and tax deferrals and government programs like salary subsidization for businesses and the Canada Emergency Response Benefit.
“When all of that comes due this fall, I’m a bit concerned that people are going to realize, ‘oh my, we spent too much of that CERB cheque, we spent too much of the rent cheque, of our tax cheque.’ And they’re going to realize ... ‘we’ve got some more debt here we didn’t realize we had.’”
When people were allowed to move more freely, the market started acting up.
Glenn Larkin Royal LePage Vision Realty