The boom in the Nova Scotia real estate market – and the broader Atlantic Canada housing sector – has been remarkable throughout the coronavirus pandemic. Over the last year, it has been a buying frenzy as out-of-town, work-from-home professionals scoop up limited inventories, driving up prices that are shattering records. After years of lacklustre growth, a population decline and a stagnant economy, this could be the moment that Nova Scotia has been waiting for.
As has been the case even before the COVID-19 public health crisis, major urban centres such as Toronto and Vancouver captured headlines for their monumental growth in the Canadian real estate market. But Robert Hogue, a senior economist at Royal Bank of Canada, says soaring home prices have now become a “small town issue.”
“Typically housing markets are really kind of working in isolation relative to other parts of the country, this time it’s all synchronized, very hot everywhere,” he said in an interview with CTV News. “This is no longer just a big city kind of Toronto, Vancouver story, this is a small town issue now.”
With lots of talk about bubbles and vulnerability, can eastern Canada sustain the momentum? Since the Bank of Canada (BoC) has kept its historically low interest rates on hold and the demand remains strong amid a population explosion, the record growth in Atlantic Canada might still have some more legs.
Record Growth in Real Estate Markets Across Nova Scotia in 2021
According to the Nova Scotia Association of REALTORS® (NSAR), residential sales surged 31.9 per cent year-over-year in February, totalling 1,045 units. This is a new sales record for the month of February, which has been held since February 2012.
Home prices have also climbed to a record high. The average price advanced at an annualized pace of 30.4 per cent to an all-time high of $340,096. Year-to-date, which industry observers say is more comprehensive, saw a 28.6-per-cent jump to an average of $332,000.
With supply continuing to be a critical factor in this market, experts are honing in on crucial metrics, such as listings and months of inventory.
NSAR data revealed that new residential listings tumbled 5.8 per cent from the same time a year ago, to 1,101 units. Active residential listings plummeted 45.4 per cent, falling to a three-decade low.
Months of inventory were cut in half, coming in at 2.3, down from 5.5 months last year. This is also below the long-run average of 10.9 months for this time of the year.
Plus, housing starts are less than what they were in 2020 for this time of year. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts hit 263 in February, down from 569 in 2020. Completions did increase, rising from 197 in February 2020 to 435 in February 2021.
Nova Scotia’s Population Climbs
For years, Atlantic Canada residents have left the east behind in search for greener pastures. Those days have come to an end, and the population exodus has effectively reversed! New Nova Scotia Department of Finance and Treasury Board data show that the province’s population hit an all-time high of 979,449. The boom was driven by significant increases in the second and fourth quarters of 2020: 5,602 and 2,620, respectively. The two provinces most people are migrating from over the last 12 months? Ontario and Alberta.
Overall, officials say that the province has witnessed a substantial decline in the number of people who are leaving Nova Scotia to settle elsewhere in Canada.
Experts warn that it is challenging to determine if this growth will continue in the post-coronavirus world. Will professionals stay in Nova Scotia once offices reopen in Toronto? Or will these new residents contribute to the economic revitalization of Atlantic Canada? Whatever happens, the population boom is a key contributor to the current red-hot Nova Scotia real estate market.
Optimistic Forecasts or Negative Projections for Nova Scotia Real Estate?
In a recent report, Canada Mortgage and Housing Corporation’s senior economics analyst, Kelvin Ndoro, warned that the Halifax housing market is “highly vulnerable” right now, alluding to three red flags: overheating, overvaluation and price acceleration. Ndoro cited the increase of people moving to Nova Scotia for new opportunities, taking their real estate profits from the big cities to smaller communities.
But it is not all coronavirus-induced, the CMHC warned. According to the report, this trend surfaced even before the COVID-19 pandemic.
“So maybe COVID-19 might have exacerbated that transition from people moving from other provinces to Nova Scotia, but it’s a trend that we’ve been seeing for a few years,” he added.
Still, the current conditions could leave new homebuyers saddled with mortgages that exceed the latest value for their home, the CMHC predicted. The RE/MAX outlook for Halifax real estate forecasted an eight-per-cent boost in average price to approximately $399,892 across all property types, driven by young couples, move-up and out-of-town buyers.
The Future of Atlantic Canada Real Estate is Bright!
The future of Atlantic Canada is bright. Policymakers – pre- and post-crisis – have been making investments across Nova Scotia, Prince Edward Island, Newfoundland and Labrador, and New Brunswick. With immense capital inflows, a hot housing market, a successful fight against the highly infectious respiratory illness, and attractive communities to live and work in, Canada’s east coast may be sliding into a new, more prosperous era.