During the coronavirus pandemic, the Atlantic Canada real estate market boom has been one of the greatest success stories. This was a region that had for years endured a stagnant population and a faltering economy. Fast-forward to the present. The Maritime provinces are enjoying incredible growth, and financial analysts are bullish on the region’s future. Let’s explore the latest data and trends happening in the Fredericton real estate market.
While housing prices are still climbing in New Brunswick and Nova Scotia, demand appears to be cooling. Whether this will lead to a slowdown in pricing gains or not remains to be seen. Looking ahead to the second half of 2021 and heading into 2022, it seems that the regional housing market is taking a bit of a breather. With many factors coming into play, it’s possible that Fredericton real estate could also start to ease in the coming months.
We’re taking a deep dive into the recent numbers coming out of the Fredericton real estate market over the dog days of summer to better understand what we can expect as we turn the corner into the fall season.
Trends Unfolding in the Fredericton Real Estate Market
According to the Real Estate Board of Fredericton, residential sales tumbled at an annualized rate of 12.5 per cent in July, totaling 279 units. Year-to-date, home transactions advanced 34.1 per cent in the first seven months of 2021 from the same time a year ago, coming in at a record 2,009 units.
On a historical basis, Fredericton real estate sales in July were 4.1 per cent below the five-year average, but 14.4 per cent above the ten-year average.
Prices remained solid over the summer buying and selling season in the Fredericton housing market. The MLS® Home Price Index (HPI), which is believed to be more accurate than average or median measurements, increased 26.7 per cent year-over-year to $237,900. Average prices also gained 15.1 per cent to $248,723, while the year-to-date average price surged 23.3 per cent to $257,520.
Both single-family homes and condominium units recorded price jumps of 26.7 per cent and 24.6 per cent, respectively.
Now, here lies the $237,900 question: what about supply? According to the city’s real estate association, the number of new residential listings jumped 3.8 per cent to 382, the highest figure for the month of July in about five years. On the other hand, active residential listings tumbled 12.9 per cent to 602 units from July 2020, which is the lowest number if more than 20 years.
Moreover, new listings were 5.5 per cent above the five-year average, while active listings were 44.6 per cent below the five-year average.
Months of inventory, which is the number of months it would take to exhaust the current level of housing stocks at the present rate of sales activity, were unchanged at 2.2. This is below the long-run July average of 6.8 months.
But the latest Canada Mortgage and Housing Corporation (CMHC) data reveled the number of housing starts to be substantially higher in June from the previous year, increasing from 48 to 125. Year-to-date, housing starts have totaled 414, up from 153 in the first six months of 2020. This increasing supply is good news for those hoping for this tight market (and skyrocketing prices) to ease a little.
A Booming Commercial Real Estate Market in Fredericton, and Beyond?
Based on this data, gains appear to be moderating. But the future is bright for the overall real estate market, including commercial space. Demand for office space is rising in Fredericton, as well as Halifax, Moncton and Charlottetown. This signals that the economy is bouncing back, and companies could begin to establish or relocate operations to this part of the country. This would have a spillover effect by renewing out-of-town or out-of-province demand. Indeed, with housing stocks continuing to be tight for the foreseeable future, any added pressure would lead to higher home prices in Fredericton and neighbouring municipalities and provinces.
Looking Ahead to 2022
Housing market conditions could change drastically over the next 12 to 18 months. With the Bank of Canada (BoC) hinting at rising interest rates in the next year and immigration returning to pre-pandemic levels, there are many factors at play that will impact both the Fredericton real estate market and the broader national housing sector. The Canadian economy is ready to fire on all cylinders, but a blend of variants, slumping energy prices, and monetary policy tapering could reverse the impressive comeback that is anticipated.
For now, at least, the Fredericton housing market remains strong and in-demand, and while prices remain a deterrent for young, first-time-homebuyers, the local Fredericton economy is enjoying the spillover effect of a red-hot real estate market!
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