Twelve months ago, could anyone have envisioned that Atlantic Canada would be one of the hottest real estate markets in the country? Like everything else that transpired in 2020, this was not something anybody would have accurately predicted. Indeed, the Halifax real estate market has witnessed a transformation over the last year.
Since the beginning of the coronavirus public health crisis, Atlantic Canada has become one of the Great White North’s hottest real estate destinations. Following years of economic stagnation and emigration, Canadians have fallen in love again with Halifax, St. John’s and Charlottetown, which is translating into a red-hot housing sector.
Atlantic Canada has certainly been one of the top Canadian real estate news stories of 2020, with impressive home-buying activity and surging valuations. Whether first-time homebuyers, out-of-town buyers or move-up homeowners – the demand for housing on Canada’s east coast has never been this strong, leading to bidding wars and record-high prices across the region. All the indicators point to a repeat performance in 2021.
But is the region growing too strong, too fast? In other words, could a place like Halifax face a level of vulnerability that could threaten the real estate boom and the broader economy? This is the concern, according to one housing market report. And the situation could intensify in the coming months.
Halifax Real Estate Market Shifts Into ‘Moderate’ Vulnerability Rating
Canada Mortgage and Housing Corp. (CMHC) released its latest Housing Market Assessment (HMA). assessing the fundamentals of the real estate market, such as the amount of disposable income in a given city, population level and increase, interest rates and employment.
What did the CMHC’s HMA say about Nova Scotia’s capital?
According to the national housing agency, the Halifax housing market’s vulnerability was raised from “low” to “moderate,” suggesting that house prices are higher than levels supported by the industry’s fundamentals. Put simply, real estate prices are more than what people in the area can afford.
CMHC officials typically wait for two quarters in a year to upgrade risk, but the situation in Halifax has been brewing for quite some time, says CMHC senior analyst Kelvin Ndoro.
“Some of the vulnerabilities were already noticeable before the pandemic hit. We assess intensity and persistence as well. So it takes a while before we flag vulnerabilities, that is, when they have passed a certain threshold,” Ndoro told CBC News in a recent interview.
“I think what’s happening is, the pandemic has had uneven impacts on the population. So, it’s affecting different segments of the population disproportionately. Those people in the medium to higher income brackets, so to speak, have not necessarily been impacted as much by COVID. And given that the mortgage rates are so low, those people are able to take advantage of that and increase demand. So that’s why we’re seeing some of what we’re seeing.”
Does this mean Halifax’s vulnerability rating could be upgraded to “high” this year? If the same trends persist heading into the first and second quarters of 2021, it is quite possible. What does the data say?
Halifax Caps 2020 with Growth
According to the Nova Scotia Association of REALTORS®, residential sales in Halifax-Dartmouth surged 44 per cent year-over-year in December, and the average home price climbed 25.3 percent to $397,378. The more comprehensive annual price highlighted double-digit growth in Halifax, with sales advancing 12.8 per cent and prices increasing 14.6 per cent to $369,435.
And these numbers are comparable throughout Nova Scotia. In December, residential sales soared by a record 37.9 per cent, while average house prices rose 22.3 per cent to an all-time high of $319,726.
Will 2021 Be Another Big Year for Halifax Real Estate?
Halifax is a city that is going through tremendous development – both commercially and residentially. That said, the urban centre is experiencing low inventory levels while also seeing strengthening demand. As a result, according to the RE/MAX Halifax Housing Market Outlook (2021), real estate prices are forecast to rise eight per cent to about $399,892 across all property types this year.
Out-of-province homebuyers will drive demand over the next 12 months, with single-detached homes being the primary target for homebuyers. Within Halifax, the hottest neighbourhoods will be North End Halifax, Downtown Dartmouth and Spryfield.
Atlantic Canada could well be the next biggest housing market in the nation, and officials are taking notice of the sudden interest in the four provinces as they initiate development plans. When you factor in historically low interest rates and evolving consumer patterns, a place like Halifax is primed for incredible growth. Prices are still affordable compared to red-hot markets such as Toronto and Vancouver, and opportunities are beginning to bloom. Moreover, Nova Scotia or Prince Edward Island’s sights and sounds are unmatched anywhere else in the country, so the appeal of ocean-side, East Coast living is unlikely to wane anytime soon.