The rise of Atlantic Canada in the fallout of the coronavirus pandemic has been one of the most remarkable storylines of the past year – notably, the St. John’s housing market. After years of stagnating economic conditions, a population exodus and limited opportunities for those who remained, Atlantic Canada has risen as one of the country’s hottest areas for housing. But as the Great White North gradually returns to a new state of post-pandemic normalcy, the question remains: can Newfoundland and Labrador, Prince Edward Island, and Nova Scotia sustain the momentum?
The St. John’s housing market is coming off a tremendous month that saw double-digit sales activity and increasing valuations. While the typical real estate trends are being felt in the provincial capital, the city is witnessing an economic renaissance, too. Aside from fiscal concerns, the province’s economy is on the road to recovery, with employment levels close to matching pre-pandemic levels. As long as provincial leaders stay the course, Atlantic Canada could become the land of opportunity, as one newspaper recently prognosticated.
The Financial Post also ran an enthusiastic piece, titled “Atlantic Canada is the next land of opportunity (even if the rest of Canada doesn’t know it yet).” It examined the various economic developments in the region, writing: “Call it a compelling, old-fashioned Atlantic Canada yarn, one not about what can’t be done, or hasn’t been done or never will get done, but one about what could potentially get done next.”
So, does St. John’s real estate reflect these lofty projection? So far, yes!
Significant Gains Recorded in St. John’s Housing Market
According to the Newfoundland and Labrador Association of REALTORS®, residential sales surged 26.6 per cent year-over-year in St. John’s in February, led by an annualized 69.6 per cent spike in single-detached home transactions.
Prices keep going up in the province’s capital. MLS® Home Price Index (HPI), which is considered to be more accurate than utilizing average or median price measurements, reported that composite benchmark price for homes advanced 2.6 per cent in February to $262,200. Single-family homes continue to dominate the municipal housing market, with the benchmark price rising three per cent to $264,900. The benchmark price for townhomes in St. John’s was little changed, rising 0.9 per cent to $261,500, while apartment prices edged down 2.4 per cent to $224,500.
The entire province continues to witness shrinking supply.
The months of inventory clocked in at 11.4, down from 17.3 months. This is considered to be an important metric since it measures the number of months it would take to sell current stocks at the present rate of sales activity.
The number of active residential listings plunged 17.9 per cent to 3,293 at the end of February, and new listings rose 0.7 per cent to 617.
As the RE/MAX St. John’s Housing Market Outlook (2021) suggested, the city’s real estate market is projected to favour buyers in 2021, citing ample housing stocks that would lower residential real estate prices by as much as three per cent to a little more than $285,000. Unlike other notable parts of the Canadian real estate market, St. John’s is continually adding to its housing stock, albeit in few numbers.
The Canada Mortgage and Housing Corp. (CMHC) monthly data found that home starts increased three per cent to 30 in January, up from 23 at the same time a year ago. But as the city and province welcome more people into the area from across the country, will the current state of supply be enough to match demand?
St. John’s, Newfoundland: Canada’s Unsung Hero!
If you comb through online content from before the COVID-19 outbreak, the headlines told a very different story when it comes to the Canadian economy and real estate market, and everything that happened before 2020 feels almost unrecognizable after living through a year of this public health crisis. However, one pre-pandemic story that piqued our interest was from CBC News: the public broadcaster reported a new Moody’s Analytics report that projected housing prices in St. John’s would rise by more than six per cent over the next few years and potentially lead the nation in growth. Moody’s director and head housing economist Andres Carbacho-Burgos cited low housing prices below the baseline and an improving labour market as reasons for growth. While no one could anticipate the once-in-a-century pandemic that was lurking around the corner, it seems as though St. John’s was already primed for an economic and real estate boom.
St. John’s has been an up-and-coming hotspot in the broader Canadian economy for the last couple of years, and the monumental shift in consumer behaviour triggered by the COVID-19 outbreak, only accelerated the ascent of the St. John’s market. Add historically low interest rates, and strengthening demand to the mix, and you have a red-hot real estate market primed for continued growth over 2021.