Is there a pandemic occurring in Atlantic Canada? A look at the region’s housing data may convince any observer that Canada’s east coast was not experiencing a public health crisis. Despite the severity of COVID-19, the area has seen both its economy and the real estate sector grow to levels unseen before. The Newfoundland and Labrador real estate market finished 2020 on a high note, and it kicked off 2021 with the same gusto.
This particular housing market looked incredibly bleak in 2019, but the province, as well as the broader Atlantic Canada housing sector, enjoyed record-setting growth last year: sales surged 14.7 per cent annually and prices for single-family homes gained 6.5 per cent to $284,800.
According to Newfoundland and Labrador Association of REALTORS®, January residential sales surged 69.8 per cent year-over-year, a record high for the month of January. While St. John’s saw a 59.6-per-cent jump in transactions, the rest of the province posted a tremendous 74.5-per-cent spike in sales activity.
Prices, too, soared to all-time highs. The MLS® Home Price Index (HPI), which is considered to be more accurate than average or median price measurements, climbed 8.3 per cent in January from the same time a year ago, to $284,500. Single-family homes advanced 8.6 per cent year-over-year to $286,900, while townhouses picked up 3.7 per cent to $258,100.
As Bill Stirling, CEO of the Newfoundland and Labrador Association of Realtors, told CBC News last summer: “I’ve been in this role now for a little over five years and it’s the first time that I can feel some excitement and a little bit of a pulse in the marketplace.”
But can the province maintain this momentum throughout 2021?
How Will the Newfoundland & Labrador Real Estate Market Fare in the Months Ahead?
Because the enormous growth blindsided the Canadian real estate market over the last year, supply failed to keep up with demand, leading to intense bidding wars, housing shortages and sky-high valuations within local markets nation-wide. As a result, industry observers are pouring over some of the technical details, such as housing starts, listings data and months of inventory, in order to gauge how long current conditions could persist.
What do these numbers show for Newfoundland and Labrador?
According to Canada Mortgage and Housing Corporation (CMHC), housing starts slumped last year, sliding 20 per cent to 509, down from 637 in the previous year. Completions also tumbled 18 per cent to 571 last year, down from 697 in 2019. Comparable figures were seen in St. John’s, with housing starts slipping almost 13 per cent to 418 and completions falling 12.4 per cent to 466.
In January, new residential listings edged up 4.6 per cent year-over-year to 683, but active residential listings plunged 18.5 per cent to 3,194 units, which is the lowest level for the month of January in five years.
Months of inventory came in at 11.6 at the end of January 2021. This is down by more than half from the same time a year ago, when there were 24.2 months of inventory. The long-run average is 17.7 months for this time of year. Market analysts view this statistic as an important measurement for the housing market, since it estimates the number of months it would take to sell present inventories at the current rate of sales activity.
Despite the data, which points to supply shortages, the province’s capital is anticipated to be a buyer’s market throughout 2021. The RE/MAX St. John’s Housing Market Outlook (2021) forecasts a price decline of as much as three per cent to approximately $285,027 across all property types. First-time homebuyers are projected to drive the market, with two-storey detached houses bring the primary focus of homebuyers in the area.
Other aspects of the housing market are also expected to quietly enjoy a boom: luxury homes and condominiums. Luxury properties saw greater demand amid move-up homebuyers, while condos posted a mini “boom” last year, driven mostly by retirees.
More Growth Ahead for the Canadian Real Estate Market
Over the next 12 to 18 months, the usual factors will play a critical role in the real estate market – both in Newfoundland and Labrador and the rest of Canada. From ultra-low interest rates to the evolution of homebuyer trends, the housing industry across Canada could witness a transformation by the time the coronavirus pandemic is over. For years, the red-hot Canadian real estate sector was driven by only a few locations: Vancouver, Toronto, Montreal and Ottawa. With the shifts that have taken place over the past year, this immense real estate market growth has been enjoyed everywhere, from major urban centres to smaller rural communities, coast to coast.
Suffice it to say, Atlantic Canada’s post-pandemic prosperity is projected to keep raging, at least in the months ahead!