Halifax’s ‘Unsustainable’ Housing Market Is Slowing Down. What Does That Mean For Prices?
HALIFAX — Homes in Halifax have been selling at a blistering rate for most of the past year, with prices smashing records.
Now, new data from the Canadian Real Estate Association suggests the market is starting to slow down. As that happens, the organization says home prices in the city will stop going up as fast as they have been. But they won’t stop rising altogether.
For now, however, the most recent monthly housing reports still show home prices in Halifax rising at a staggering rate.
Teranet and The National Bank’s House Price Index shows prices jumped in the city by more than four percent in the one-month period between April and May. The Nova Scotia Association of Realtors, meanwhile, says the average price of a home in Halifax-Dartmouth rose 60 percent over the last year. These days, the average home in the city is selling for more than $465,000.
These kinds of price increases started a few months into the pandemic. But now, the new Canadian Real Estate Association data suggests the market is starting to settle.
CREA’s quarterly forecast still predicts a big jump in the number of homes sold this year (more than 16,000, which would be 17 percent more than last year). But the organization says sales volume will drop in 2022, continuing a trend that’s already started as more Canadian get their Covid-19 vaccines.
With herd immunity approaching, CREA says, “the urgency with which so many sought out housing over the last year appears to be fading and the market is settling down, albeit from a very high starting point.”
In 2022, the organization is predicting 15,508 homes will sell in the province. That would mean a six percent decline from the year before.
Matt Honsberger is the president of Royal LePage Atlantic. He says CREA’s predictions make sense given the current state of the housing market.
“What I think CREA is saying is the degree of growth in Halifax and Atlantic Canada… it’s just unsustainable over a multi-year period,” he says.
Honsberger says even though there are all kinds of houses on the market right now, there are even more buyers and inventory is at an all-time low.
This has created a wild supply-and-demand imbalance that has led to bidding wars that are driving up prices. He says fewer sales would be “healthy” for the Halifax market.
Despite the looming slowdown in Halifax’s housing market, however, Honsberger has bad news for first-time homebuyers hoping for a market crash: prices probably aren’t going down.
“I think what we’ve done was established a new price point for housing in Halifax,” he says. “So the price point for an entry-level home might have been in the $250,000 to $300,000 range before. Now, those prices have all been driven up into the high three-hundreds and low four-hundreds.”
He says this will likely be the “new norm” in Halifax.
Honsberger thinks that when the market slows down prices will continue to rise, just at a more reasonable rate than they have been for the past year.
Even CREA, which is predicting a market slowdown, doesn’t think prices will stop climbing.
This year, the organization pegs the average price of a home in Nova Scotia at about $350,000 (a whopping 20 percent increase from the year before). In 2022, it’s predicting average prices of about $369,000, which is a year-over-year increase of 2.9 percent.
Honsberger says he doesn’t see a big market crash coming in Halifax either, largely because the things that tend to drive the market will still be happening here.
“I know the things that we look at the most closely, the things that support the fundamentals of the market are population growth and availability of employment,” he says. “Both of those two factors right now suggest that there’s a lot of sound underlying economic strength behind what’s happening in Atlantic Canada.”
However, Honsberger, CREA, NSAR, and pretty much anyone trying to predict the housing market all say it’s nearly impossible to do right now.
No one knows exactly what kinds of housing people will want post-pandemic, whether employees will flock back to the office or stay home, and how those things will affect laws and policy.
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