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.
Who’s driving the Fredericton housing market?
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:
Additional report findings include:
- 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.”