Fredericton housing market to favour sellers in 2021, prices expected to rise 3-4%
The Fredericton housing market is expected to sit in seller’s market territory in 2021 due to a lack of inventory, which has been a common trend across many Canadian housing markets, which have prices trend upward in 2020. Indeed, the average selling price of detached homes in Fredericton increased to $211,023 in 2020 (Jan. 1 – Oct. 31), up from $196,606 in 2019 (Jan. 1 – Dec. 31). Meanwhile, the average price of condominiums in the region reached $168,478 in 2020 (Jan. 1 – Oct. 31) down from $172,412 in 2019 (Jan. 1 – Dec. 31). However, condo prices are expected to pull ahead once 2020 full-year data has been reported. With housing supply expected to be a continuing challenge next year, the RE/MAX outlook for Fredericton residential real estate in 2021 is an increase in average price of 3 to 4%, to approximately $196,391 across all property types.
With that said, COVID-19 is expected to have an impact on activity and supply levels. The number of home sales in the region is expected to increase 5% in 2021, pending stabilization of infection rates and a possible vaccine, prompting more people to list their homes for sale, adding a much-needed boost to supply levels. If this indeed transpires, the market may shift toward more balanced territory. Inventory levels are expected to stay at around two to three months in 2021.
COVID-19 has prompted a shift in consumer demand, toward larger properties and homes with more square footage.
As is common under seller’s market conditions, Fredericton homebuyers have been more willing to compromise in order to secure a home.
Out-of-town buyers have been the main market driver in 2020, with condominium properties and detached homes experiencing the greatest demand, with 2020 year-to-date home sales (Jan. 1 – Oct. 31) in each of these categories just shy of full-year sales in 2019. However, all property types have been moving quickly in 2020, including “tiny homes.”
First-time homebuyers in Fredericton are typically young couples seeking single-detached homes in the range of $170,000 to $210,000. First-time buyers experienced some challenges getting into the market in 2020, including low inventory, rising prices and the overarching impacts of COVID-19. Move-up buyers in Fredericton, who are typically families, have also been challenged by low inventory and inflated prices. However, some relief could be in store, with interest rates expected to sit at historic lows, and more supply expected to come on stream in 2021.
The local condo market is being primarily driven by single homebuyers and young couples. As is the case across all property types, there is currently a shortage of condo properties for sale.
Fredericton’s hottest neighbourhoods
Fredericton’s top-selling neighbourhoods in 2020 were Killarney (Liberty and Lakeside Estates), Brookside West (North Side) and Downtown, based on the number of transactions. In 2021, a slight shift is expected, with high demand for Killarney, Downtown and the Hill Area. This is being attributed to high demand for single family homes, which are common in the downtown core and close to the university.
Fredericton new-home construction
New construction is being added to Fredericton’s “stretched” housing supply. New homes are increasing in price, due to the higher cost of construction materials and the shortage of homes putting pressure on prices. New construction is expected to continue adding much-needed supply in the area, however the rate of new construction is still too low to meet current demand.
Canadian housing market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
52% of Canadians believe real estate will remain one of the best investment options in 2021
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”
The Fredericton housing market saw real estate activity come to a nearly complete halt in mid-March, but “pandemic pause” proved to be short-lived and it wasn’t long before home sales began to pick up again toward the end of April and moving into May, according to the RE/MAX Fall Market Outlook Report.
May 2020 home sales in Fredericton surpassed month-over-month and year-over-year levels, illustrating what many predicted would be a delayed start to the traditionally busy spring market. Indeed, the busy month of May continued into June, as sellers began to regain confidence and comfort in hosting showings in their homes, with strict safety protocols still in place.
Moving into the fall and based on recent activity, Fredericton home prices are expected to maintain their current value and remain stable. Homebuyers and sellers engaging in the local real estate market have maintained optimism that they will see a return to some sense of normalcy within the next year. In light of recent activity and positive consumer sentiments, RE/MAX anticipates a 2.5% increase in average residential sales in Fredericton, New Brunswick for the remainder of 2020.
Atlantic Real Estate Market Trends
Atlantic Canada regions reporting low case counts of COVID-19, such as Halifax, Charlottetown and Saint John saw reduced market activity in March, however the decline was less pronounced than that experienced by some Ontario and Western Canada markets. Halifax, Atlantic Canada’s biggest housing market, continues to experience a shortage in listing inventory that characterized the region before the pandemic. The shortage has prompted an uptick in average residential sale price, with a 10% increase anticipated for the remainder of the year. Activity in Atlantic Canada was back to pre-COVID-19 levels by May 2020, and like many sellers’ markets in Canada, multiple offer scenarios continue to happen in these regions.
Atlantic Real Estate Market Trends
Regions across the Atlantic region reporting low case counts of COVID-19, such as Halifax, Charlottetown and Saint John saw reduced market activity in March, however the decline was less pronounced than that experienced by some Ontario and Western Canada markets. Activity in Atlantic Canada was back to pre-COVID-19 levels by May 2020, and like many sellers’ markets in Canada, multiple offer scenarios continue to happen in these regions.
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group. Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell. “The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
48% of Canadians would like to live closer to green spaces
48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
33% of Canadians would like more square footage in their home and have realized they need more space
44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
Lydia McNutt is an award-winning editor, with more than two decades of experience specializing in Canadian real estate. At RE/MAX, Lydia is responsible for developing consumer-facing content while promoting the RE/MAX brand through housing market reports and market news, as featured on the RE/MAX Canada blog and social media channels. Lydia has been published nationally on topics ranging from real estate, architecture, decor and design, to finance, business, technology, entertainment and lifestyle. When she’s not head-down at her writing desk, Lydia is busy “momming” in Oakville, Ontario, where she lives with her husband, two kids and their chocolate lab, Betty. Email Lydia at firstname.lastname@example.org