Atlantic Canada came off a frigid winter, but things are now heating up in more ways than one, as the eastern region heads into a red-hot summer housing market. The St. John’s real estate market is an example of just how hot Atlantic Canada housing is right now. But the question is: can Newfoundland and Labrador’s capital sustain this momentum?
Perhaps the greater Atlantic Canada real estate market is an indicator of future activity in St. John’s. Activity has soared over the last 12 months, driven by strengthening demand from both local and out-of-province homebuyers. The problem? Not enough supply to satisfy a level of demand not seen in decades. All of eastern Canada is enduring a housing boom, joining broader sales activity and valuation growth witnessed across the country.
The Hottest Spring on Record for St. John’s Real Estate
According to the Newfoundland and Labrador Association of REALTORS®, residential sales in St. John’s soared 115.8 per cent year-over-year in April, topping the province’s previous 101.9-per-cent increase in housing transactions. Single-detached properties ballooned at an annualized rate of 86 per cent.
St. John’s real estate prices popped, with the overall MLS® HPI composite benchmark price – which is considered to be more accurate than median and average measurements – advancing 3.2 per cent to $267,200 in April. Various property types recorded different performances to kick off the second quarter:
- Single-Family Homes: +4% to $270,400
- Townhouse or Row Units: +2.4% to $262,600
- Condo apartments: -6.1% to $225,500
Overall, the average price of homes sold in St. John’s surged 12.2 per cent to $264,675.
Can the entire provincial real estate market cool down? Consider this: the dollar value of all home sales in April skyrocketed 131.4 per cent to $130 million. This is a new all-time high for the month of April. But relief could be coming in the form of additional and modest supply.
Is New Supply Coming to the St. John’s Real Estate Market?
Real estate markets across Newfoundland and Labrador have grappled with inventory shortages over the past few months. The months of housing stocks totalled 8.1 at the end of April, down from 16.1 months at the same time a year ago. The long-run average is nearly 15 months for this time of the year. This is considered an important metric because it measures the number of months it would take to sell today’s supplies at the current rate of sales activity.
But listings data is bringing optimism to real estate agents and homebuyers alike. New listings spiked 176 per cent to 1,151 in April, the largest number for the month of April in the province’s history. This is also 22.6 per cent above the five-year average and 24.5 per cent above the 10-year average.
Active residential listings rose 3.8 per cent to 3,984 units at the end of April. However, active listings were still 9.5 per cent below the five-year average and 3.2 per cent below the 10-year average.
According to Canada Mortgage and Housing Corporation (CMHC), housing starts ballooned to 34 unit starts in the St. John’s real estate market in April, up from just seven at the same time a year ago. Year-to-date, there have been nearly 100 new residential construction projects kicked off in the city. Meanwhile, completions hit 39 and total absorptions climbed to 44.
Atlantic Canada might boast some of the most glorious sights and sounds in all of the Great White North, making it an attractive place to lay roots. This is one factor contributing to the region’s population boom unseen in decades. But with the coronavirus pandemic winding down, can the likes of Newfoundland and Labrador and Nova Scotia maintain this momentum of demand?
Will Atlantic Canada Real Estate Market Continue to Boom?
The Newfoundland and Labrador government recently launched a national advertising campaign to attract white-collar professionals who might be stuck working from home in their 700-square-foot condominiums in Toronto and Vancouver. Immigration, Population Growth, and Skills Minister Gerry Byrne believes the $100,000 public investment is a good one because those workers are unlikely to return to the physical workplace, suggesting that they might want to enjoy remote work on a sun-soaked coastline in a tight-knit community.
Experts say that it is critical that the province first get a handle on its living standards, such as schools, hospitals, infrastructure, and – most important for telecommuters – Internet connectivity. But it is unclear what will happen once most of the country is vaccinated, and the COVID-19 public health crisis fades into the background. Will companies encourage workers back into offices, or will they permanently adopt a remote-work policy?
Time will tell.
Until then, Newfoundland and Labrador hopes to sustain the real estate momentum for its municipalities. Is it achievable? Compared to the rest of the country, and even with its enormous growth, St. John’s and the rest of the province remain significantly more affordable for homebuyers than the Ontario real estate market or the British Columbia housing sector. With the Bank of Canada (BoC) holding steady on historically low interest rates and out-of-province homebuyers expected to work from the kitchen counter, the region could still burn red-hot, even in the middle of those famous freezing winters.