Over the course of the last year or so, housing prices across the provinces of British Columbia, Ontario and Quebec have risen to never-before-seen levels, specifically in smaller cities and towns. Driven by the demand for more living space within less densely populated communities, as well as record-low interest rates increasing people’s purchasing power, real estate prices in these provinces have pushed many buyers out of the market. This is naturally leading many hopeful homebuyers toward more affordable areas, such as the New Brunswick housing market.
Across the province of New Brunswick, the major marketplaces, such as Northern and Valley Regions, Greater Moncton, Fredericton and Saint John, are all experiencing similar, soaring levels of demand and price growth. Below is an overview of the trends emerging across the eastern province, and projections for the months ahead.
New Brunswick Experiencing Unprecedented Market Activity
As one of the smaller provinces in Ontario, New Brunswick typically falls below the national average when it comes to real estate market activity. However, 2021 has been a year like no other. Mostly driven by prospective buyers from other provinces, and ultra-low interest rates, properties are being swept off the market at an outstanding rate.
This past month, the MLS System logged a total of 1,394 units sold in New Brunswick in April – more than double that of April 2020, with a 195.3% increase. Not only was this a huge year-over-year increase, but April 2021 was also 74% above the five-year average and 94.2% above the 10-year average, setting a new sales record for the month of April and setting the record for the highest month of all time.
The gain in unit sales was mirrored in the dollar volume of all home sales, which was $359.2 million in April 2021 – a gain of 317.3%. Largely driving this growth is the increased desire for recreational homes in New Brunswick.
Compared to 2019, the current average price of a recreational property in the province has more than doubled. The average price currently sits at $741,650 compared to $320,000 in 2019. This price surge in recreational property is driven by supply issues, according to Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “In today’s real estate landscape, with increased demand and ongoing supply issues putting pressure on prices and sparking bidding wars, industry professionalism is of utmost importance. Recreational markets across Canada are feeling the pressure, and without a solution to address supply issues, we are running out of affordable options for Canadians.”
This issue of tightening supply levels is not confined to the recreational market in New Brunswick, either. Residential listings in real estate markets across the province are far below last year’s numbers, and fall short of the five- and 10-year averages. At the end of April, active residential listings numbered 2,665 units; a significant reduction of 33.2% from the end of April 2020. Compared to the five- and 10-year averages, April 2021 listings were down 46.5% and 56.5%, respectively. This is the lowest number of active listings on the market in more than two decades.
This decline in inventory has had a drastic effect on the average sale price, which realized a steep advancement of 41.3% to a record high $257,649. While this is a record for New Brunswick, it is almost a third of the national average – a factor that is further fuelling the migration of out-of-province homebuyers to the New Brunswick market, as well as to other local markets across Canada’s East Coast.
What to Expect in the New Brunswick Housing Market?
A few weeks ago, during a scheduled announcement on April 21, the Bank of Canada announced that interest rates would remain at a low of 0.25%. It was announced that this rate would be maintained until the economy returns to normal and inflation is back to a standard 2%.
With interest rates remaining low, and housing prices expected to continue rising across Canada, it is projected that the New Brunswick real estate market will maintain its momentum of demand. As a result, expect to see property prices continue on an upward trajectory as the appeal of the East Coast heats up in tandem with the warming outdoor temperatures!