Halifax Homes Lost $100K Of Value In Three Months And The Decline Isn’t Over
HALIFAX—House prices in Halifax have fallen for three straight months, leaving the average home price in the city nearly $100,000 lower than it was at its April peak.
As the Bank Of Canada continues to fight inflation with higher interest rates, the city’s housing market will likely cool even more.
James Dwyer, FRI, is a realtor with Engel & Völkers in Nova Scotia.
He tells Huddle the wild days of bidding wars and offers of $100,000 over asking price are ending in Halifax as both buyers and sellers adjust their expectations.
According to numbers Dwyer provided from the Nova Scotia Real Estate Association (NSAR), the average price for a Halifax home went down for the third month in a row in July. It now sits at $489,500, which is nearly $100,000 lower than the April high of around $580,000.
As sale prices drop, the wild overbidding that characterized the Halifax market over the first half of the year is also ending.
Dwyer says the average sale price is now almost identical to the average list price. That’s compared to earlier this year when the average sale price was 125 percent of the average list price.
With these trends in mind, Dwyer predicts the city’s housing market will stabilize by the end of this year and move into a “new normal” this spring.
So what will that “new normal” be for housing prices in the city? Dwyer says there are a couple of things happening in the market right now that will have to play out before we can know.
Dwyer says the recent Bank of Canada interest rate hikes have driven a lot of institutional investors out of the market.
When interest rates were at rock bottom and borrowing money was cheap, big “institutional investors” were scooping up all kinds of properties to pad their portfolios. And that was taking Nova Scotia homes off the market.
But once the Bank of Canada raised its benchmark interest rate and borrowing became more costly, those big players “immediately stopped buying.”
“So, you’re taking out a chunk of the [buyers] market. The question is, how much of the market was it?” Dwyer asks.
Meanwhile, Dwyer says interest rate hikes are also affecting many of the out-of-province buyers that have been out-bidding locals for the last two years.
Throughout the pandemic, southern Ontarians were selling their homes for seven figures and using the capital to buy more affordable property on the east coast.
But now, with a historic price correction happening in the GTA, those people are beginning to look once again for homes in their region. International buyers are also taking a step back from the Nova Scotia market as their economies suffer through inflation and rising interest rates.
All this, Dwyer says, means Halifax is returning to a more “localized market” with fewer outside influences and more control for local buyers. As that happens, he expects home prices will keep falling for the rest of the year.
The big question left to be answered, however, is how low can prices go.
Different economists give different estimates, but most predict home prices will fall by somewhere around 10 percent in Nova Scotia. Dwyer thinks it could be even more significant.
According to the latest public statistics from the NSAR, single-family homes in the province were 27 percent more valuable in June 2022 than they were in June of 2021.
Dwyer says all of that value could be wiped out by the end of the year.
“We all knew that the first half of this year would be bananas [but] I’m pretty confident that all the growth we saw at the start of this year will get wiped out,” he says.
However, he points out that homes in the province have gained decades worth of value over just a few years, so anyone who sells is “still bankrolling a boatload of cash.”
Even if home values plummet substantially, Dwyer says “the floor of housing is forever raised” and prices will probably never come close to pre-pandemic levels.
Trevor Nichols is the associate editor of Huddle, based in Halifax. Send him your feedback and story ideas: [email protected].
John D
August 15, 2022 @ 12:45 am
I don’t quite see a reason why prices in Halifax would not return to their pre-pandemic levels. 10% decline after what was likely over 100% increase for the pas 2 years is nothing. With interest rates up and cost of food and gas up, but salaries not up, I just do bit see how these prices would be sustained by local buyers. The prices would fall to at least pre pandemic levels, unless lots of rich folks decide to move in /but why would they come to Halifax/. The only question is how soon would the process fall.