An Update on the Halifax Housing Market

Over the last few years, the Halifax housing market has witnessed a meteoric ascent in home prices. In the home stretch of 2024, has the situation stabilized? And, now that the Bank of Canada (BoC) is starting to lower interest rates, will it become more affordable to buy a home in the Halifax real estate market?

Many first-time homebuyers looking to enter the housing market in a major urban centre that is undoubtedly growing are hoping so. And some of the data support affordability is improving. But it remains to be seen how long this will be the case. But for how much longer will this be the case?

Indeed, a lot has changed in the Atlantic Canada real estate market over the last few years. What was once a depressed housing sector has quickly transformed into a prime real estate market in Canada. Of course, the momentum and potential might all depend on the economy as well as monetary policy. Can Halifax eventually rival other big cities in the Canadian real estate market?

Surprisingly, it might not depend on residential real estate but rather the commercial real estate market.

An Update on the Halifax Housing Market

New real estate association data show that home sales in the Halifax housing market ballooned while home prices edged up in July.

According to the Nova Scotia Association of Realtors (NSAR), home sales surged more than 14 per cent year-over-year, totalling 543 units. On a year-to-date basis, transactions have increased nearly seven per cent, with close to 3,200 homes changing hands.

The residential average price rose by 0.5 per cent to $571,983. In the first seven months of 2024, NSAR says, it climbed more than three per cent to $582,902.

But how does this compare to the rest of the province?

In the Nova Scotia real estate market, the number of homes sold soared by more than 12 per cent to 1,150 units. Additionally, the average price of homes sold advanced by an annualized pace of 4.4 per cent to $454,376. Supply is beginning to improve across the province, with new residential listings climbing 20 per cent compared to the same time a year ago. Active listings also soared more than 34 per cent year-over-year. Both metrics are above the five-year average.

Will Commercial Real Estate Hurt Halifax?

With the influx of capital and population over the last few years, city officials took advantage of the situation by creating more development in Halifax. From better infrastructure to redevelopment, Halifax wanted to not only retain the increased number of people and businesses but also attract even more households and companies to the Maritime city.

However, there was something that some experts did not anticipate: The decline of the commercial real estate market. Commercial real estate markets worldwide are enduring significant stress. Canada – and Nova Scotia – is no exception.

A recent CRE Industry Conditions and Sentiment Survey conducted by Altus Group for the second quarter suggested that the office sector is poised to be the worst performer.

“CRE expectations appear to be stabilizing, despite several challenges remaining in the near-term outlook,” said Omar Eltorai, director of research at Altus Group, in a statement. “As CRE values continue to adjust to what survey participants perceive as ‘fairly priced’ and transaction appetite remains high, it seems we may be nearing the bottom of the recent market downturn.”

From higher interest rates to changes in the office model, the CRE sector is facing a series of hurdles.

Moreover, being a port city, Halifax possesses a key advantage over many of its Canadian counterparts. Since the global supply chain is being reconfigured, there has been a renewed focus on Atlantic Canada. So, not only could Halifax witness a resuscitation of its office environment, but it could be a crucial hub for shipping, distribution, and warehousing.

A key consequence of the CRE market has been the growing number of vacancies, whether in Atlantic Canada or the major urban centres. In response to the persistent housing crunch, Halifax officials have been assessing measures to convert old offices into new apartments.

In the fall of 2023, Halifax took advantage of the federal Housing Accelerator Fund by launching a pilot program to allocate that funding to transform many downtown office buildings into housing. While city hall is still combing through the details, one city councillor told CBC News this past spring that even “a couple of million” of the $79 million in federal housing money would be enough to fund a few pilot conversions.

“We don’t have an office crisis; we have a housing crisis. It seems like a smart thing to do to convert empty office spaces into residential that will be full as soon as it’s done,” said Coun. Waye Mason in an interview with the media outlet.

“We would, of course, love to see far more federal and provincial investment in affordable housing; we need thousands of affordable housing units. But we also need to see these conversions and because it can be so expensive to convert commercial, that might not be the right place to put the affordable housing.”

But will this bode well for the Halifax real estate market and the Nova Scotia housing sector?

Some local experts, like the Halifax Chamber of Commerce, argue for the need to advocate a work-hybrid approach. The entity noted that offices maintaining a centralized location where employees are working three to four would bolster the local economy by millions of dollars.

Patrick Sullivan, president and CEO of the Halifax Chamber of Commerce, thinks this could boost spending in the downtown core by as much as $4 million.

“Downtowns are the core of our economy, particularly Halifax’s economy,” he said in an interview with Global News last year. “We’d like (workers) to come downtown three to four days a week, frankly, to spend more money. To spend more money on restaurants and in shops. Anything to stimulate that downtown economy.”

For a city attempting to transform into a key economic hub in Atlantic Canada, officials may need to craft a plan to resuscitate the downtown core so the rest of the Halifax economy, including the real estate market, can maintain the momentum of the last few years.