Relative Affordability Means Slower-Cooling N.B. Housing Markets
MONCTON – While summer has seen home prices across Canada dip, with a correction looming after the buying sprees and bidding wars of 2021 and early 2022, the decline has been far subtler in New Brunswick. There are a number of reasons for that.
One major factor behind sales and prices not cooling as dramatically in New Brunswick as hotter markets in the rest of Canada has to do with the price appeal for New Brunswick properties.
Ryan Davison, a realtor, director of the New Brunswick Real Estate Association, and manager with Re/Max Avante in Moncton, said that even with the recent full percentage point increase in interest rates implemented by the Bank of Canada, raising the cost of mortgaging a home, New Brunswick – and the Maritimes as a whole – are a more affordable place to buy a house than in markets like Vancouver and southern Ontario.
Davison said that for someone looking to buy a $1.2 or $1.3-million dollar house in Toronto, a one-percent interest rate hike makes a great deal of difference in what they can afford.
Meanwhile, that hike has less of an impact on some buying a property in New Brunswick, after selling property in Ontario.
“A one-percent difference hits harder on a million-dollar property than on a $400,000 house. If you have to qualify for a one-percent-higher rate in Ontario, it looks much more appealing to bring that buying power east and you can look at a similar property for $400,000,” Davidson said.
“Buyers coming from across the country are coming in with straight cash or largely cash purchases – and that fed our price appreciation.”
Marlene Erismann, a real estate agent with Exit Realty Associates, had a similar assessment. She noted that many baby boomers in larger cities are seeing opportunity in New Brunswick’s comparatively cheap real estate.
“The prices did fall in Toronto, but they’re still higher than they are here,” she said.
Erismann said smaller cities like Moncton and Fredericton are appealing to people in larger, more expensive centers.
“You have more security here, and it’s why prices are still higher in the outskirts – people are looking for more security,” Erismann said.
“Big cities become challenging with everything from the air quality to how much space you have. There’s criminality and there’s a whole lot more going on in larger cities, while we have more security in New Brunswick,” she added.
Davison said New Brunswick and the Maritimes as a whole were an undervalued real estate market versus the rest of Canada before the pandemic.
And when the pandemic came along, Davison and Erismann both noted that the proximity to nature, slower pace of life, and greater space found in New Brunswick and the Maritimes all played into the decision for many to move out east.
“For a long time, we were the most cost-effective place in the country to buy real estate and we just lost that title. It’s been quite a ride and we’ve seen incredible price appreciation in the value of our real estate and that took us to where we are,” he said.
When people started working from home in the early pandemic, they wanted “more bang for their buck,” Davison noted.
“Lifestyle was more important than other things and that opened up New Brunswick because that’s the life it has to offer,” Davison said.
“That got our ball rolling and I would say we gained ground pretty quickly, when you look at from where Covid started, up to the last two months.”
Davison said the popularity of Moncton and New Brunswick’s larger cities predated the pandemic on account of labour trends and the draw of larger centers and the opportunity they present.
“Moncton drew a decent number of people from rural communities because we had things like traditional industries shut down in other parts of the province,” Davison said, referring to events like the closure of the Woodstock Canada Bread plant – and loss of 70 jobs – in 2018 as an example of the forces that bring more people to cities in New Brunswick.
“When jobs are lost up north people were naturally driven to larger centers, so we have a lot more in-province migration historically.”
Davison said that the summer in New Brunswick is a time of “softer” market activity, with many on vacation.
“We won’t really know exactly what the rate hike will look like here for at least a couple of months,” she said.
Davison said many of his colleagues are finding buyers looking to get into the market during this “soft” period – buyers who’d been outbid and priced out earlier in 2022 and 2021.
“People who’ve grown tired or lost multiple offers are realizing now they can look at a house and pick one instead of just getting any house – and can get inspection conditions and financing conditions accepted, whereas before the hot market saw people going in and having their offers and condition not met.
Buyers are in a position where they at least have a bit of room to breathe.”
Erismann anticipates a stabilization of prices in the coming months, noting that while prices will decline, they’re not going to drop as low as they were before the pandemic.
“We’ve finally adapted a little more to the market of the rest of the world, since it was way down before the pandemic,” she said.
“In the past few months, we’ve been overpriced, to the point where people have to say, ‘No, this is not realistic any more.’ It’s stabilizing with the price reductions you can see every day.”
Sam Macdonald is a Huddle reporter in Moncton. Send him your feedback and story ideas at [email protected].