St. John’s housing market to favour buyers in 2021, prices expected to decline 2-3%
The St. John’s housing market is in store for another buyer’s market in 2021, with lots of housing inventory available for buyers to choose from. The city has bucked the current trend in many housing markets nation-wide, which are experiencing a shortage of housing inventory. Despite St. John’s abundance of housing supply characterizing this buyer’s market, the average price rose in 2020. Single-detached homes increased to $298,651 in 2020 (Jan. 1 – Oct. 31), compared to $285,846 in 2019 (Jan. 1 – Dec. 31). Meanwhile, the average price of condominiums in the region increased to $239,902, up from $214,217 in 2019 (Jan. 1 – Dec. 31). The RE/MAX outlook for St. John’s residential real estate in 2021 is a decrease of 2% to 3% to approximately$285,027 across all property types.
Residential sales in 2021 are expected to lower than 2020 transactions, but on par with 2019 numbers. St. John’s Metro area currently has about nine months of inventory, down from 11 months in 2019. While the number of homes for sale has decreased in 2020 compared to past years, the downward trend is not expected to continue. Current supply levels are expected to continue or increase slightly in 2021. The number of days it took to sell a home decreased in 2020, however days on market are likely to maintain current levels or increase slightly in 2021.
First-time homebuyers are expected to drive housing demand in 2021, with two-storey detached homes being in highest demand. This is the most popular style of home in the St. John’s Metro area, offering additional living space and more appealing layouts. First-time homebuyers entering the St. John’s housing market are likely single buyers and young couples, seeking single-detached homes in the $250,000 to $350,000 price range. With mortgage rates at an all-time low, 2021 is expected to be more attractive for first-time homebuyers to enter the market. Sales in 2020 resulted in a lot of multiple offers and offers coming in over asking price, driving prices up. It’s likely that 2021 will be more in-line with 2019 market conditions, giving buyers the opportunity to stop and look without the added pressure.
Move-up homebuyers drove demand for luxury homes in St. John’s, typically prices from $650,000 and up. There was a greater demand for high-end homes in 2020 compared to past years, with many luxury properties selling the same day with multiple offers over asking price. This level of activity hasn’t been seen in St. John’s since before 2014, when the market began a steady decline, with average prices dropping 11% since 2014.
The St. John’s condominium market experienced a small “boom” in 2020. While there is not a large inventory of condos in the area, a number of condos did sell in a short period of time, indicating demand. In addition, there was a greater number of higher-end condos that sold in 2020 compared to 2019. It’s expected that retirees will continue to propel the condo segment forward in 2021.
Looking ahead, affordability will have the greatest impact on St. John’s real estate in 2021. It is unknown what the new year has in store and how the pandemic and its impacts will play out, so homebuyers are likely to be a bit more conscientious with regards to pricing.
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 St. John’s housing market has been resilient in the face of difficult circumstances, which have impacted real estate activity since the beginning of the year. Prior to the start of the pandemic, St. John’s and surrounding areas were hit with a massive snowstorm that led to a state of emergency, with businesses shutting down for more than a week. As the state of emergency was lifted at the end of January, St. John’s housing market activity skyrocketed and the high continued until the onset of COVID-19 in mid-March. While the pandemic prompted a market slow-down at the end of March and into April, it was a very different story in May and June, according to the RE/MAX Fall Market Outlook Report, which saw some properties selling in less than a day, with multiple offers and selling prices over asking. The St. John’s housing markethas not seen this type of action since 2012. Heading into fall, the market is expected to remain steady, with a 2% increase in average residential sale prices anticipated for the remainder of 2020.
Atlantic Real Estate Market Trends
Other regions across Atlantic Canada that reported low case counts of COVID-19, such as Halifax, Charlottetown and Saint John, also experienced reduced market activity in March, however the Atlantic decline was less pronounced than that experienced by some Ontario and Western Canada markets. Activity in the region returned to pre-COVID-19 levels by May 2020, and like many sellers’ markets in Canada, multiple offer scenarios continue to take place.
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.
Buyer’s market expected in 2020, prices to drop 2%
The St. John’s housing market will continue to favour buyers in 2020, according to the 2020 RE/MAX Housing Market Outlook Report. The sale price expectation for St. John’s Metro in 2020 is a decline of two per cent.
While the number of sales increased year over year, the average home price dropped 1.8 per cent from 2018 to 2019. Increased consumer confidence is bolstering the market after a multi-year decline, however buyer’s market conditions are expected to persist in 2020.
Affordability is always a topic of conversation, but the St. John’s housing market offers greater affordability than many other major cities across the Canada. Consumer confidence is expected to stabilize the market, particularly with the flurry of activity at the low end of the market and some offshore oil projects. However, an increasingly aging population, combined with migration to other parts of Canada, is bound to impact the St. John’s housing market at some point in the future.
Move-up and first-time buyers are expected to drive market activity in 2020, with the Galway subdivision expected to be in highest demand.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.
In Atlantic Canada, Halifax and Saint John have experienced solid price appreciation of six and five per cent, respectively. Affordability continues to attract many buyers in the region, most of whom are buying single-detached homes. At the same time, the region’s condominium market is being driven by retirees. Conversely, the market in St. John’s is expected to recover in 2020, with increased consumer confidence expected to stabilize the market. However, the city’s aging population and high rate of outbound migration is expected to have an impact on housing market activity at some point.
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