Across the country, the real estate market boasted record-breaking numbers all summer long. From the Vancouver housing sector to the Fredericton real estate market, sales activity and prices popped, despite the COVID-19 pandemic lingering in the background. The industry has found the developments remarkable. Canada slipped into a recession and many companies were decimated, but the Canadian real estate market has remained solid during this chaotic time. It is a testament to the superb work of real estate agents, as well as the strength of the nation’s overall housing market.
Before the virus outbreak, New Brunswick was becoming one of many noteworthy real estate hot spots in the country. Although it faced a slump at the height of the pandemic, it has witnessed a remarkable recovery. Sharon Watts, executive officer for the Real Estate Board of the Fredericton Area (REFBA), recently described the state of the market as “like no other” the industry has seen before, since the COVID-19 restrictions were lifted by the province.
Whether it is pent-up demand or limited stocks, there are many factors contributing to the boom of the Fredericton real estate sector. Could these bullish factors sustain the market over the next few months?
What is Happening in the Fredericton Real Estate Market?
According to the REBFA, residential sales rose one per cent in July, the second-best July on record. The average price of homes sold surged 16.8 per cent to $218,760. In addition to growing demand in Fredericton, overall supply has trended downward for the last five years. Today, inventory sits at a 20-year low, and this could continue to decline, as recent real estate trends favour smaller cities and suburban or rural markets.
Fredericton has turned into a seller’s market as bidding wars have become commonplace within this city of about 60,000 people. Homebuyers are placing bids as high as $60,000 over the asking price.
“Activity in Atlantic Canada was back to pre-COVID-19 levels by May 2020, and like many sellers’ markets in Canada, multiple offer scenarios continue to happen in these regions,” the RE/MAX Fall Market Outlook Report stated.
Could this impressive feat be sustained for the remainder of 2020 – and beyond?
With low borrowing rates expected to remain in place for the foreseeable future, money has never been cheaper. The Bank of Canada (BoC) has reduced its five-year mortgage rate to below five per cent, and there is no reason to dismiss the idea that the central bank would lower it again.
During the pandemic, realtors have been relying on technology and digital tools to conduct transactions and work with their clients. Online documents, virtual tours and detailed web-based advertisements – real estate agents have used digital mechanisms to their advantage. This has allowed people from all over Canada to confidently purchase houses or condominiums in other places, even without seeing these properties in person.
Immigration is another factor that the industry is paying attention to. This year, immigration levels have cratered due to border restrictions and changes in travel. In June, more than 19,000 new permanent residents entered Canada, down from the more than 34,000 immigrants who were welcomed the same time a year ago.
This trend might have an impact on the Canadian real estate market, including Fredericton. The New Brunswick capital is also considered a college town that typically attracts a large number of international students. But while this may not affect the buying and selling of homes, it is disrupting the rental market.
Should this trend continue, developers might think twice about constructing rental units. But Fredericton locals are confident that this renewed demand for houses could be enough to encourage investors to bring new supply to the market.
Is Atlantic Canada the Next Major Housing Market?
Could Fredericton join the broader Atlantic Canada real estate boom? Whether it is the sizzling market of Halifax or St. John’s, cities across the Maritimes are witnessing better-than-expected sales activity and residential prices. Many of these cities are becoming appealing destinations for homeowners due to a renewed focus upon urban development initiatives and more affordable housing options. Plus, with rates as low as they are and remote work policies prevalent throughout the labour market, many are taking advantage of the opportunity and considering other cities and towns across the Great White North.
Once the coronavirus pandemic is safely behind us and society attempts to return to normal, the permanent shift could turn out to favour Fredericton and its neighbours on the east coast. Atlantic Canada may not just be a vacation hotspot for families from Toronto or Montreal. Prince Edward Island, Newfoundland, and Nova Scotia could soon become top destinations for Canadian (and international) homebuyers.