Housing market wilted during pre-budget jitters, but perking up: CMHC

CHMC analyst Chris Janes says people in St. John's started buying again when the budget wasn't as dire as expected, and numbers for the fall were good.

Analyst Chris Janes says people in St. John's are buying smaller, cheaper homes

CMHC says housing market should be 'steady as she goes' in the next 12 months. (Graeme Roy/Canadian Press)

Real estate sales are down in St. John's but there's a bright side to the drop.

New numbers crunched by Chris Janes, a senior market analyst for Canada Mortgage and Housing Corporation, show a 11.3 per cent drop in house sales in the capital city from 2016 to 2017.

But the real story, Janes said, is in the months before the provincial budget and the months after.

CMHC analyst Chris Janes said the market is dominated by first-time buyers looking for smaller, cheaper homes. (Ted Dillon/CBC)

"If we look at prior to the budget in April, the market was basically at an all-time low from our perspective and people were simply in a wait-and-see mode, not willing to go out and make a big-ticket purchase such as a house or even a car for that matter," Janes told the St. John's Morning Show.

When the budget wasn't as brutal as expected, and people in the province let out a breath, they started to buy again.

More homes were sold in August, October and December of 2017 than in those same months the year before.

"We think that trend will continue," said Janes.

Cheaper, smaller homes

Those homes are largely being bought by first-time buyers, said Janes, so they tend to be cheaper and smaller.

"We're not seeing very many sales now over $400,000," he said.

The numbers for 2017's housing starts in St. John's — the number of new home constructions begun in the city — reflect this trend, too.

There were 26 per cent fewer construction starts for single-detached homes in the city in 2017, but 44 per cent more construction starts for smaller, cheaper, higher-density types of housing such as duplexes, triplexes, semi-detached and row houses, said Janes.

Housing starts for small, cheaper, higher-density homes are up in the city, according to CMHC numbers. (Reuters)

He said those people who had the pockets to keep building large, seaside homes outside of St. John's were still doing so, but not as much as they once were.

"[It's] not nearly what it was like at the peak of the market, obviously," he said.

'Steady as she goes'

Predictions for St. John's and for the province, said Janes, are fairly good.

"Steady as she goes would probably be the theme that we're looking at," he said.

Janes said the market rebounded after the budget dropped in April, 2017. (Robson Fletcher/CBC)

Janes thinks the market already hit bottom before the 2017 budget and he doesn't see any reason for it to drop or climb significantly over the next 12 months.

"When we get beyond that and the provincial government's fiscal situation begins to improve and we get some job growth back into the market, we think the housing market will do quite well after that."

With files from the St. John's Morning Show