Demand Outstripping Supply in NB Real Estate

The NB real estate has been booming over the last couple of years, propelled by interprovincial migration, historically low interest rates and shrinking inventories.

Although sales activity has eased year-over-year, residential property transactions remain above historical averages, according to the New Brunswick Real Estate Association (NBREA). In January, home sales tumbled at an annualized rate of 6.5 per cent, totalling 621 units. Nearly every New Brunswick housing segment experienced a decline, with the exception of the North and Valley Regions, which advanced 39.4 per cent. Saint John and Moncton fell 12.8 per cent and 14.6 per cent, respectively. Fredericton declined 20.6 per cent year-over-year.

But residential sales sat 14.8 per cent above the five-year average and 38.3 per cent above the 10-year average for the month of January.

Prices enjoyed substantial gains, with the composite benchmark price surging 32 per cent year-over-year to $275,000. All residential property types trended higher to kick off 2022:

• Single-Family: +32% to $277,200
• Townhome / Row: +37.3% to $182,100
• Apartment: +22.2 per cent to $219,300

The overall average sale price for homes sold in January increased 28.5 per cent to $261,587.

The NB real estate market has been booming, largely due to the supply-demand imbalance. New listings dropped 20.8 per cent, totalling 609 units. Active residential listings fell 42 per cent to 1,443 units.

New listings were 28.3 per cent below the five-year average, while active listings were 59.6 per cent below the five-year average for this time of the year.

Moreover, months of inventory, which measure the number of months it would take to exhaust current housing inventory at the present rate of sales activity, tumbled to 2.3.

Local housing experts are monitoring new housing construction trends that have remained relatively stagnant, according to data from Canada Mortgage and Housing Corporation (CMHC). Housing starts totalled 94 in January, unchanged from the same time a year ago. Despite the lacklustre figures, reports suggest that homes cannot be built fast enough in specific parts of New Brunswick to satisfy demand.

Is New Brunswick a Good Place to Live?       

Considering the immense level of demand provincewide, New Brunswick is considered by many a good place to live.

The Shediac region of the province is witnessing never-before-seen demand, perhaps symbolic of the enormous growth seen throughout Atlantic Canada. Although it is a seasonal cottage community, families are searching for permanent housing oppo­­rtunities in the coastal town.

Speaking in an interview with Global News, Mayor Roger Caissie said that it is easy to spot construction activities and advertisements for new real estate everywhere across the town.

“We used to get around $12 to $15 in permits. In 2018, new record, $25 million,” he told the news outlet. “We equalled the $25 million in 2020, at the start of the pandemic. 2021, by the end of October, we’d surpassed that by leaps and bounds; we hit $54 million.”

Moving forward, there will be even more land to offer property developers. Next year, Pointe-du-Chêne, Scoudouc, and Shediac Cape – neighbouring municipalities – will become part of Shediac.

What’s more, the mayor revealed changes are coming to the community, too, because Shediac is seeing more businesses operating year-round instead of merely seasonal.­ Even the infrastructure will receive an upgrade as sewage system overflows would be redone on Main Street.

Will New Brunswick Growth Slow Down?

While many want to see the good times roll on forever, there will be many factors that industry observers will be monitoring that could weigh on growth in both Atlantic Canada and the rest of Canada.

The Bank of Canada (BoC) has already raised its interest rate, and with inflation at a multi-decade high, more increases are expected this year. This could weigh on borrowing costs and impact over-leveraged households or house-rich but cash-poor individuals.

One of the chief reasons that small towns, rural communities, and cottage markets have been enjoying meteoric growth had been the trend of more young professionals and families moving away from major urban centers and finding more affordable and larger residential properties. With many businesses adopting remote work options, people had the freedom to work anywhere they wished. Now that Canada is moving on from the coronavirus pandemic, offices are calling their employees back to work. Could this affect housing prices and demand in Atlantic Canada?

But some housing estimates are confident that the New Brunswick real estate market will do fine this year.

The 2022 Canadian Housing Market Outlook report from RE/MAX Canada suggests that the three main municipalities in the province will see notable growth:

Moncton

• Sale Price Estimate: +20% to $332,734,80
• Sales Estimate: +20%

Saint John

• Sale Price Estimate: +7.5% to $276,885.60
• Sales Estimate: +5%

Fredericton

• Sale Price Estimate: +5% to $268,722.30
• Sales Estimate: +10%

Sources:

• NBREA
• Global News
• CMHC