Vacant New Brunswick land, half-built developments and empty building lots that have attracted no interest from buyers, in some cases for decades, are suddenly being swept up in the province’s sizzling real estate markets as Canadians continue to look east for property and a place to settle.
“I’ve been doing this for 20 years and I’ve never seen a market like this,” said Marcus Power, an agent with ReMax in Saint John.
“It’s absolutely crazy.”
Power is involved in selling garden homes and townhouses in a notorious Saint John development on Lancaster Avenue that was abandoned in the middle of construction in 2008 and spent most of the last decade as an eyesore.
Purchased by Moncton, N.B., builder Pierre Vautour in 2019, fixed up and rebranded “Fallsview Village” for its perch high above the city’s famed reversing rapids, the development has since become a pandemic hot property.
“People came out of the woodwork all of a sudden,” said Power.
Fallsview is now completely sold out, including four new units that still are under construction. Foundations for additional units are being poured next week.
“Before the pandemic, it was a little tough because we were getting over the stigma on that property sitting there for 10 years and nothing being done,” said Power.
Newcomers driving hot market
Residential real estate sales around New Brunswick set records last year, much of it driven by people moving into the province from elsewhere in Canada.
New Statistics Canada population estimates show New Brunswick had a gain of 1,426 people from other provinces in 2020, the fourth year in a row it attracted more people from elsewhere in Canada than it lost. Between October and December alone, the gain was 460, the largest net inflow of Canadians during those months since 1975. Three-quarters of that was people arriving from Ontario.
The provincial government’s property transfer tax was applied to an estimated $3.9 billion in real estate sales for the year, $1.1 billion more than budgeted. The buying spree has had a number of effects, including depleting the supply of houses for sale, and driving up prices.
According to the Canadian Real Estate Association, there were just 2,221 residential listings for purchase in New Brunswick at the end of February this year, 1,900 fewer than last February. Buyers are snapping up what is available faster than new sellers putting properties on the market.
Once-ignored properties now get attention
With people still coming to the province and a dwindling supply of houses to buy, there has been growing interest in alternatives, including vacant properties and failed older developments that have taken on a new appeal.
At the foot of Sea Street in Saint John, 14 lots with panoramic views of the Bay of Fundy that have been for sale with no takers since 2005 sold in a single transaction last month.
Kevin Harris, who owns the local Exit Realty franchise, formed a company with Vietnamese architect Nam Nguyen to build $359,000 garden homes on each lot. He said although locals showed little interest in the properties over the last 15 years, ocean views are prized by those moving to New Brunswick.
“We have already sold some of those homes,” said Harris. “People just want to understand, ‘We can have this view for this amount of money? Looking at the Bay of Fundy and this is the price?'”
Power said he used to handle six land sales a year, but is now doing that each quarter and most of that business involves buyers from away.
One group of Vancouver investors have bought more than 300 hectares of land in Saint John in two transactions over the last two months, including some undeveloped riverfront property just three kilometres upstream from the Reversing Falls.
Power said his land sales have been to Ontario and B.C.-based buyers.
He said some of those sales have been to people with plans to hold them as long-term investments, but some have been to developers interested in meeting the high demand for housing.
“Every time we list a house right now, we give people three days to come have a viewing and we are looking at offers on the third or fourth day,” Power said. “There are a few different investors looking to get into this market because we’re going to need homes.”
Canadian home prices on fire and policymakers using ‘squirt gun’
By Julie Gordon
OTTAWA (Reuters) -Buyers are turning up the heat on Canada‘s searing hot housing market, their frenzy leading to record sales, prices and starts, but in a budget unveiled on Monday the federal government did little to tamp down the fire.
The Teranet-National Bank Composite House Price Index showed home price gains accelerated 1.5% in March from February, data released on Tuesday showed.
The index was up 10.8% on the year, with a record 81% of the broader 32 markets surveyed posting annual gains above 10%. That far exceeds the last peak in 2017.
On Monday, Finance Minister Chrystia Freeland, presenting Canada‘s first budget in over two years, fleshed out a previously announced tax on foreigners parking money in Canadian homes, along with limited investments in affordable housing.
“The idea here is that homes are for Canadians to live in. They are not assets for parking offshore money,” Freeland told reporters.
For those watching, it was nowhere near enough.
“It’s like a squirt gun next to a towering inferno,” said Doug Porter, chief economist at BMO Capital Markets.
“We need to break the psychology that real estate is this can’t lose investment that only goes up,” he added. “Before this turns into a full-on bubble.”
March was a record month for new housing starts and home resale prices surged 31.6% year-over-year.
New Zealand, facing a similarly red hot market, introduced a raft of cooling measures including new taxes on investors and stricter lending rules.
And most measures that would cool the frenzy are up to the provinces and federal government who remain cautious as a third wave of COVID-19 rages.
Real estate agents say more listing are now coming to market, but they still see a massive long-term shortage. They expected more than the 35,000 units pledged in the budget.
“It’s not going to do much to intervene in the activity level we’re seeing now across the country,” said Christopher Alexander of RE/MAX Ontario-Atlantic.
(Reporting by Julie Gordon in OttawaEditing by David Gregorio and Alistair Bell)
Canada housing starts up 21.6% in March to new record – CMHC
By Julie Gordon
OTTAWA (Reuters) – Canadian housing starts rose 21.6% in March compared with the previous month, easily beating expectations and hitting a new record, data from the Canadian Mortgage and Housing Corporation showed on Monday.
The seasonally adjusted annualized rate of housing starts rose to 335,200 units in March, well ahead of analyst expectations for 250,000 units, and a new high for all months on record.
Much of the gain was on multiple urban starts, which jumped 33.8% to 222,358 units. Single-detached urban starts rose 3.6% to 78,615 units.
“The big acceleration came as weather was unseasonably warm in many parts of the country,” Royce Mendes, senior economist at CIBC Economics, said in a note.
Mendes added that new home construction will likely be a major contributor to overall GDP growth again in 2021, even as building activity cools off from the “torrid pace” of recent months.
Canada‘s average home selling price soared an eye-watering 31.6% year-over-year in March, hitting a new high as sales also climbed to a new all-time record, the Canadian Real Estate Association (CREA) said earlier this month.
A supply imbalance has been blamed for skyrocketing home prices through the pandemic, though new listings surged in March, which, coupled with strong starts, suggests a more balanced market could be coming.
“Red-hot demand for real estate propelled a record month for housing starts in March. While the market will need a long stretch of supply growth to have a meaningful effect on prices, the March numbers are a solid start,” said Shelly Kaushik, an economist with BMO Capital Markets in a note.
Canada‘s ruling Liberals are set to unveil their first full budget in two years on Monday, with billions in pandemic supports as COVID-19 infections skyrocket, a national daycare plan and new taxes on luxury goods.
(Reporting by Julie Gordon in Ottawa; Editing by Toby Chopra and Jonathan Oatis)
Canadian home sales, prices surge to new record in March
OTTAWA (Reuters) – Canadian home sales rose 5.2% in March from February, setting a new all-time record amid strong demand in markets across the country, the Canadian Real Estate Association said on Thursday.
The industry group said actual sales, not seasonally adjusted, rose 76.2% from a year earlier, while the group’s Home Price Index was up 20.1% from last March and up 3.1% from February.
The actual national average selling price hit a new record at C$716,828 ($572,821) in March, up 31.6% from a year earlier and rising 5.7% from February.
($1 = 1.2514 Canadian dollars)
(Reporting by Julie Gordon in Ottawa)
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