Nova Scotia's housing market will stay gloomy, realtor says
Lending rule changes and fewer military transfers are impacting prices, Al Demings says
The real estate outlook in the rest of the country might be rosy, but a Dartmouth realtor is predicting that Nova Scotia's housing market will continue to be slow in 2016, continuing a two-year trend.
"We're one of the few markets in Canada that has seen a significant slowdown," Re/Max realtor Al Demings told CBC's Information Morning.
Although markets are static elsewhere in Nova Scotia, numbers from that activity are too small to offset a slowdown in the Halifax area itself, he said.
Problem has many causes
Several factors are to blame, he said.
First-time home buyer activity, which acts as a catalyst to the rest of the market, "has been almost non-existent," Demings said.
That's partly a result of changes to lending regulations that make it more difficult for buyers to qualify for mortgages, he said.
A slowdown in military transfers to Halifax has had an impact as well, as has the drop in oil prices, he said.
Paradoxically, the continuation of low interest rates is also responsible, as fluctuations in rates can be a signal to consumers that they need to act, he said.
"When the market is stable and cheap it's not an incentive. When the rates start to go up people think, 'I'd better buy now'," Demings said.
CMHC projects 'marginal gains'
A housing market outlook completed by the Canada Mortgage and Housing Corporation in the fall found for the third year the "resale market remained weak" in Halifax with a decline in sales from 2014.
According to the CMHC, there were between five to eight per cent more listings in 2015 than previous years. The report says an aging population shifting away from owning means there are more people looking to sell than to buy.
It projected the resale market would experience "marginal gains" in 2016 and 2017.
Another survey, done by the real estate company Royal LePage, said Halifax has "healthy year-over-year price increases across all housing types surveyed."
It found that in the third quarter of 2015, the median price of a home in the region went up 4.1 per cent, with the median price of a condominium in Halifax going up 12.4 per cent.
'At the saturation point'
The low cost of land in Halifax is a factor since it means that, unlike elsewhere in the country, the price of a condo is comparable to that of a single-family home, Demings said.
As a result, renting a condo is less expensive per month — and more appealing — than buying one, and many people who are downsizing are choosing to rent, he said.
"We're about the only place [in Canada] this is happening," Demings said.
The price dynamics involved in buying a condo in Halifax just don't make sense — and the market may be oversupplied with condos as a result, he said.
"We're at the saturation point. I would suggest that we have way more than we need," Demings said.
'Hold off for a while'
Demings says people selling and buying within the Halifax area will be fine, but he says people may lose equity if they're selling here and buying in another province.
He suggests people selling as they retire cool their heels, for now.
"My recommendation would be to hold off for a while," he said. "It will return."