Bidding wars, homebuyers foregoing property inspections, and out-of-province purchasing: these are some of the dominant trends unfolding in the Nova Scotia real estate market. The Atlantic Canada housing market has become one of the hottest in the Great White North since the beginning of the COVID-19 pandemic. So far, all the metrics and data signals point to one thing: there is no slowing down the momentum of the Nova Scotia real estate market, as well as the markets of neighbouring provinces.
Sales activity is booming, prices are soaring, and forecasts suggest a continuation of this hot activity in tandem with the soaring outdoor temperatures.
Opinions on what may slow this historic growth are divergent, but it is clear that the province is in a seller’s market. And this might create an affordability crisis in Nova Scotia and the rest of Atlantic Canada.
So, how strong was the Nova Scotia real estate market kicking off the second quarter? Read on to learn more!
Nova Scotia Reports Some of the Highest Price Gains in Canada
Residential sales spiked 159.5 per cent year-over-year in April, totalling 1,731 units, according to new data from the Nova Scotia Association of Realtors (NSAR). This represented the best performance in the province’s history. Compared to historical trends, home sales were 57.2 per cent above the five-year average and 73.4 per cent above the ten-year average for the month of April.
So far this year, home sales have increased at an annualized rate of 74.4 per cent to an all-time high of 5,334 units.
On the pricing front, the average price of home sales executed in April 2021 advanced 39.5 per cent to a record high of $372,354. The year-to-date average price in 2021, which industry observers contend is more comprehensive, gained 32.2 per cent compared to the first four months of 2020.
Overall, the dollar value of all home sales soared 261.9 per cent to $644.9 million. This was also a new record for both the month of April and any month in history.
But what municipalities in Nova Scotia performed the best? Here is a monthly summary of residential sales and average residential price in local markets across the province:
- Residential Sales: 166% to 274
- Residential Average Price: 48.6% to $297,912
- Residential Sales: +235.3% to 114
- Residential Average Price: +66.8% to $244,554
- Residential Sales: +141.4% to 903
- Residential Average Price: +38.9% to $466,574
- Residential Sales: +145% to 49
- Residential Average Price: +42% to $257,530
Northern Nova Scotia
- Residential Sales: +179.5% to 218
- Residential Average Price: +44.4% to $225,706
- Residential Sales: +154.5% to 140
- Residential Average Price: +63.4% to $317,093
- Residential Sales: +1,000% to 33
- Residential Average Price: +79% to $236,888
As prices and sales activity continue to escalate, could the Nova Scotia real estate market experience some relief? The data suggest that supply is not coming in fast enough to meet soaring demand, indicating that relief may not surface in the months ahead.
Are Housing Conditions Still Tight?
The Nova Scotia real estate market remains tight, with listings and inventory levels coming into focus a year after the coronavirus pandemic triggered a record surge in the Canadian housing market.
The number of new listings advanced 174.8 per cent from the same time a year ago to 2,242. This was the biggest number of new listings added in the month of April since 2016. Moreover, new listings were more than 22 per cent above the five-year average and about 6% above the decade average.
Active residential listings fell to their lowest levels in the month of April in more than 30 years, tumbling 34.4 per cent year-over-year to 2,792 units. Historically, active listings were a little more than 52 per cent below the five-year average and 63.8 per cent under the ten-year average.
Months of inventory – the number of months it would take to sell current stocks at the present rate of transaction activity – totalled 1.6 at the end of April. This is down from the 6.4 months at the same time last year and below the long-run average of 8.4 months for this time of year.
New construction activity slowed down at the end of the first quarter. According to the latest numbers from the Canadian Mortgage and Housing Corporation (CMHC), seasonally adjusted annualized housing starts tumbled 16.1 per cent for a total of 4,348 in March. Completions were also slightly down to 378 from 386 in March 2020.
Despite the disappointing figures, TD Economics is optimistic about housing construction moving forward, pointing to the various bullish trends.
“With interest rates low, demand robust, prices elevated, and unsold inventory levels low, the backdrop for housing construction remains solid. The consistently high trend in starts seen since the third quarter of last year corroborates this narrative,” the financial institution wrote in a research note.
What is the Short-Term Future of the Nova Scotia Real Estate Market?
The province recently imposed new border restrictions to combat a fresh outbreak of the coronavirus. This has home sellers and real estate agents concerned that it could impact out-of-province homebuyers. However, Donna Malone, president of the Nova Scotia Association of Realtors, is confident that it will not do much to slow down home-buying trends, telling Global News:
“I don’t think it will result in more people deciding they don’t want to buy a home in Nova Scotia, if that was their intention all along. This is not the first time that (the province) brought in regulations that were temporary and took them off at a different point in time when things have improved. So I think things will improve and the time period will end.”
Also, according to Malone, the property sales cycle is at most 45 days, so buyers would be looking at a closing date after May 20 anyway.
Ultimately, right now, nothing can slow the Nova Scotia housing boom down, aside from an injection of fresh supply. Whether through monetary policy normalization or government intervention, the broader red-hot Canadian real estate market will only cool down with new housing stocks.