In April, 354 people bought homes in Halifax. That’s an almost 50 percent drop compared to April 2019 and, according to the Nova Scotia Association of Realtors, the fewest homes sold in the city since 1995.
But that hasn’t stopped house prices in the city from climbing.
Last month, the average cost of a Halifax home was $330,565. That’s a 4 percent hike compared to April 2019.
So why is it that, during the worst recession in recent memory, as home sales plummet to their lowest levels in decades, houses in Halifax are still getting more expensive?
According to Matt Honsberger, it all comes down to supply and demand.
Honsberger is the sitting past president of the NSAR. He explains that, even though there are way fewer people buying houses right now, there are even fewer selling them.
“When you look at what happened during Covid-19, from March 15 through today, the number of sellers dropped quicker than the number of buyers,” Honsberger explains.
Halifax was already in a “sellers market” before the Covid-19 pandemic hit the city. More people were looking to buy homes than sell them and that meant fierce competition for a limited supply.
As numbers from the Canadian Real Estate Association show, the pandemic pushed 50 percent of buyers out of the market in April. That would have meant less competition and lower prices if a full 60 percent of sellers didn’t also tap out.
CREA numbers show 804 new listings came onto the market in Nova Scotia in April, which was a 60 percent decline compared to April 2019.
“When Covid-19 hit people said, ‘well I’m just not going to put my house on the market.’ So those who were left who did want to buy were competing for a much smaller amount of inventory,” Honsberger explains.
He says that in the past few weeks he’s seen several instances where more than 10 people have made offers on the same house.
House Prices Will Likely Keep Climbing
Honsberger says those multiple-offer situations, as well as the fact that houses are still selling fairly quickly, means Halifax house prices will likely “stay pretty steady, or even drift up a little bit” over the next six months.
“This is not the time when prices are coming down,” he says.
The last big hit to the Halifax housing market came in 2012 after new mortgage rules and shriveling job prospects saw a flood of people sell their homes.
Honsberger said that when “the bottom fell out of the market” back then the sales volume went way down but prices didn’t.
“Even through all of that we didn’t see a lot of price adjustment,” he says. He says he believes this time things will be similar — at least in the short term.
Beyond six months it’s difficult to predict what the housing market might look like. Largely, Honsberger says, it will depend on how many people can start working again.
“Jobs and [consumer] confidence are the big things that we’re looking at right now. If the job numbers improve dramatically then we’re going to be just fine,” he says.
Honsberger says there is a three-to-six-month window where the market will stay steady. However, if large numbers of people still aren’t back to work by late in the year Halifax might be looking at a “legitimate adjustment” in the market.
Have Questions? Let's Talk Mortgages
Glen Estabrooks
902.489.4898
Email: glenestabrooks@mortgagegroup.com