Business is not as usual in the world of residential Real Estate trading, as industry members, buyers, and sellers work diligently to implement safeguards against Covid-19. Showings and face-to-face meetings are limited, while medical disclosure forms, Zooms calls, and virtual tours abound. And yet, in the midst of this new normal, despite unprecedented joblessness and economic strife, the residential real estate market in Halifax has remained active, and home prices have remained stable. How?
According to Stats Canada, NS lost 25,000 jobs due to Covid-19 in the latter half of March, after the government began to shutter various sectors of the economy. Primary job losses disproportionately affected the retail, food service, and accommodation sectors, with 25% of food and accommodations jobs being lost in March, along with 10% of jobs in wholesale and retail.
Young, part-time, and low-wage workers were among the hardest hit economically, with 72% of workers between the ages of 18-26 reporting having lost work due to the pandemic (Angus Reid Polling). Because this cohort tends to exist primarily within the rental market, there hasn’t yet been a significant decrease of qualified, active buyers. However, there has been a marked decrease of active sellers.
Driven by strong population and economic growth, residential inventory in Halifax was already at a record low prior to the pandemic. Since March, the number of listings on the market has risen slightly (222 in April from 211 in March), but is still down 47% year-over-year. This could be attributed to the reluctance of many sellers to sell during a time of economic uncertainty.
The result has been a short-term strengthening of what was already one of the strongest seller’s markets in the country. Halifax resale prices were up 6% year-over-year in March, which represents the 4th strongest level of growth in the country. New construction in April (single family starts) was up 79% year-over-year. On the flip-side, multi-unit starts were down a staggering 92% year-over-year, which could indicate growing rental market uncertainty as the unemployment rate rises.
So where is the market headed in the long term? It’s likely that government intervention (deferred taxes and mortgage payments, lowered interest rates, CERB) has alleviated some of the immediate pressure on sellers to sell. However, if the economy remains closed and the national safety net shows signs of weakening, it’s plausible that we could see the market become more balanced, with more inventory for buyers to choose from. Capital Economics has predicted a 5% drop in nationwide house prices over the summer. Sellers who are most vulnerable include investors who were targeting the short-term rental market, or those who had bought a new home before selling their previous one (common in larger markets like Toronto). It’s important to note that real estate markets are largely localized, and Halifax has not always followed nationwide trends that are dominated by the Toronto and Vancouver housing markets. It appears that in spite of global economic uncertainty, Halifax remains a stable investment.