Before the coronavirus pandemic, saving for a down payment was hard – especially if first-time homebuyers lived in a major urban centre such as Toronto, Vancouver or Montreal. However, on the other side of the COVID-19 public health crisis, rising housing prices have made it more difficult for many young Canadians to achieve the dream of home ownership. This challenge is not confined to city dwellers, either, but is occurring across the entire Canadian real estate market as small towns, suburbs and rural communities experience record sales activity and price growth. Indeed, many Canadians are anxious about missing out on their first home due to an inadequate down payment, including concerns about once-affordable Atlantic Canada real estate markets.
In fact, the Maritimes could continue to see record-breaking growth in the entire region. Tad Mangwengwende, a senior analyst with Canada Mortgage and Housing Corporation (CMHC), contends that the Halifax real estate market, for example, could continue to soar on the other side of the pandemic. In fact, easing public health restrictions could add fuel to a housing market that is already on fire.
“That’s in a period where we didn’t have international students, we didn’t have international migrants, so when we look at what happens in a more normal environment, when those people come, they will again need to be housed somewhere,” he said in an interview with CBC radio. “We’ve had higher interprovincial migration, we have elevated levels of intraprovincial migration — so we still have people moving from rural to urban areas — and we also have higher retention rates for immigrants.”
Put simply, the housing affordability issue will intensify in Atlantic Canada. Are prices really that high on the nation’s east coast? Here is how the housing sector performed at the end of the busy spring season.
A Peek at the Atlantic Canada Real Estate Market in May
New Brunswick (May | YoY)
- Residential Sales: +72.5 per cent to 1,349 units
- Benchmark Price: +30.2 per cent to $242,100
Newfoundland and Labrador (May | YoY)
- Residential Sales: +156.6 per cent to 502 units
- Benchmark Price: +9.8 per cent to $300,600
Nova Scotia (May | YoY)
- Residential Sales: +65.3 per cent to 1,499 units
- Average Price: +23.58 per cent to $363,330
Prince Edward Island (May | YoY)
- Residential Sales: +50.4 per cent to 200 units
- Average Price: +25.2 per cent to $334,178
In all four provinces, it was the same situation: the number of new listings climbed by double digits, active residential listings fell below their five- and 10-year averages, and the months of inventory were substantially down from the same time a year ago. But housing starts continued to rise in Atlantic Canada during the month of May, (CMHC) data shows.
- New Brunswick: 560
- Newfoundland and Labrador: 67
- Nova Scotia: 672
- Prince Edward Island: 106
Atlantic Canada Real Estate Pricing Out First-Time Homebuyers
For out-of-province homebuyers who have sold their properties for a significant profit, they have the equity to drive up the price of detached and semi-detached homes in places like Halifax, Charlottetown or St. John’s and surrounding areas.
Yet many young couples and families earning a decent salary are challenged in saving up the down payment required to buy in a community where they grew up or attended school. Before the pandemic, many people recognized the unaffordability of living in or around city centres, choosing to move further afield to buy a home within their budgets. But perhaps the concept of “drive until you qualify” may not be possible anymore.
Atlantic Canada used to be one of the most affordable places to live in Canada. However, this changed in the months following the first wave of the coronavirus. Bidding wars, bully offers and blind bidding are commonplace in local real estate markets across the region. With inventory at multi-decade lows, population growth soaring, demand spiking and interest rates historically low, a broad array of factors are compounding the present situation.
While this might be welcome news for the economies in this part of the country, especially after years of stagnation, it is a challenge for longtime residents who have dreamed of home ownership in Atlantic Canada.