The Prince Edward Island real estate market has been on fire throughout the coronavirus pandemic, be it detached homes in Charlottetown or cottages in New Glasglow. PEI and broader Atlantic Canada housing market trends over the 2020 spring season were initially surprising to many industry analysts, particularly when many were anticipating a COVID-induced slowdown. But the last 18 months have been one of the strongest economic and real estate environments for the region in several decades.
Whether it is evolving home-buying trends or ultra-low borrowing costs, the Prince Edward Island housing sector has benefited in a myriad of ways. The critical question is: can the province sustain the momentum, or will it start showing signs of slowing down in tandem with the rest of the Canadian real estate market?
What is Happening in the Prince Edward Island Real Estate Market?
According to the Prince Edward Island Real Estate Association, residential sales tumbled to an annualised rate of 27.7 per cent in July, totaling 191 units. However, in the first seven months of 2021, housing transactions ballooned 36.3 per cent year-over-year to a record 1,403 units. Property sales were 15.3 per cent below the historic five-year average and 4.4 per cent below the 10-year average for this time of the year.
But while sales have started cooling down, prices are continuing to reach all-time highs. In July, the average price of residential properties surged 33.6 per cent from July 2020 to $369,838. Year-to-date, the average price for a home sold in the Prince Edward Island real estate market advanced 26.4 per cent to $337,148.
In the second quarter of this year, the east coast province’s municipalities enjoyed incredible sales and price growth compared to the April-to-June period of last year:
Charlottetown (Single Detached Homes)
- Residential Sales: +45% to 116 units
- Price: +18.3% to $392,00
- Residential Sales: +36.8% to 26
- Price: +19.4% to $376,250
- Residential Sales: +107.9% to 79
- Price: +88.9% to $290,000
North and South Shore
- Residential Sales: +45.1% to 103
- Price: +40% to $315,000
- Residential Sales: +66.7% to 55
- Price: +29.8% to $479,000
- Residential Sales: +52.8% to 81
- Price: +24.7% to $270,500
- Residential Sales: +27% to 47
- Price: +40.2% to $230,000
Like the Atlantic Canada housing market and the broader national real estate sector, supply has become a focal point, particularly when forecasting the industry’s performance in the months to come. The association’s data highlight that the number of new listings was unchanged in July, sitting at 350, while active residential listings dropped 8.5 per cent year-over-year to a 15-year low of 691 units at the end of July.
Overall, new listings were only 1.2 per cent above the five-year average and active listings were 31.9 per cent below the five-year average.
Moreover, months of inventory, a measurement of the number of months it would take to exhaust current housing stocks at the present rate of sales activity, was 3.6 in July. This was surprisingly up from 2.9 months, recorded the same month a year ago. But it is still below the long-run average of 8.7 months for the month of July.
Although new supply is trickling in to the Prince Edward Island real estate market, the numbers have slowed based on year-over-year statistic, according to the Canada Mortgage and Housing Corporation (CMHC). In June, housing starts climbed 102, down from 162 in June 2020. In the first six months of 2021, housing starts totaled 338, down from 416 in the first half of last year.
What’s Next for the PEI Real Estate Market?
Canadian real estate agents and other market analysts are unsure what the next few months will bring for young families and professionals who took advantage of remote work opportunities and chose to relocate far from the country’s urban hubs. Now that Canada is slowly emerging from the depths of the coronavirus pandemic as vaccination rates increase, offices are reopening their doors and welcoming employees back into the workplace. Does this mean a Toronto family that relocated to PEI will need to return to the Big Smoke? Time will tell.
If this were the case, housing demand in the eastern seaboard may decline in the months ahead, which could be good news for non-homeowners looking to enter the market, as prices may start to dip. That said, there are too many other variables in the real estate equation to predict anything with certainly, including the Bank of Canada’s (BoC) moves on interest rates, the increased mortgage stress test, and perhaps even the possible fourth wave of the coronavirus pandemic. Still, if PEI – which had endured a degree of economic stagnation for the last several years – can survive a once-in-a-century global health crisis, it is arguably resilient enough to take on these other hurdles and maintain much of the momentum it has built over the past 18 months.