Newfoundland urban housing starts soared during the month of May, according to preliminary data released today by Canada Mortgage and Housing Corporation (CMHC). May’s total housing starts soared 49 per cent, with 230 posted within Newfoundland compared to 154 a year ago. A total of 224 of the 230 starts were within St. John’s metro versus 124 last May, a record increase of 81 per cent.

Year-todate, there have been 471 new homes started across the province versus last year’s total of 395 homes during the same period. A total of 456 of these starts occurred within St. John’s metro, for a year-to-date increase of 33 per cent.

“With pent-up demand for newly built homes within the local housing market, May’s notable increase in housing starts is an example of the impact that a limited supply of current listings available for sale can have on residential construction activity,” said Chris Janes, Senior Market Analyst with CMHC in Newfoundland and Labrador. “With a buoyant sellers market, the current supply of active listings is approximately 50 per cent lower than a year ago, so buyers are shifting to new homes, simply because they cannot find a suitable existing home in the resale market,” added Janes.

An economic engine firing on all cylinders has driven residential real estate activity in Newfoundland and Labrador to new heights. Home sales in the first quarter of 2008 climbed just over 14 per cent, rising from 624 units—and a buyer’s market—one year ago, to 713 units, and a seller’s market. Average price followed suit, with year-to-date values rising close to 14 per cent to $156,953, up from $138,167 in 2007. The momentum is even greater in St. John’s, where average price now approaches $190,000. Not since a very short-lived period in 2004 has the city seen the level of consumer confidence that exists in the marketplace today.

Fueled by export growth—in the form of crude oil—Newfoundland-Labrador’s GDP growth led the country in 2007 at a substantial 13.4 per cent. Newfoundland- Labrador has reported the largest single-decade turnaround in GDP per capita in one decade—a first in Canadian history. Out-migration has been stemmed and population growth is expected for the first time in 15 years. Premier Danny Williams has promised that the province will be a “have” within the next 11 months.

Prosperity has fueled a spending spree that includes housing, retail, and auto sales. Inventory levels are tight and multiple offers are commonplace on homes across the board.

First-time buyers are entering the market en masse, taking advantage of zero and low down payment plans and longer amortization periods. Equity gains have also played a role, prompting serious move-up activity. Home sales priced in excess of $350,000 are brisk.

Investment is a growing segment of the real estate market, spurred by purchasers from Western Canada. Lower interest rates are expected to stimulate even greater activity in the marketplace.

There are $10 billion in capital works projects on the table and the pressure is only starting to build. Natural resources are the key to success and the future has never looked brighter for St. John’s. Real estate will following lock-step, with sales and prices exceeding 2007 levels by double-digits at year-end 2008.

Read the full Remax Atlantic Canada Martket Trends Report 2008

Alberta’s red-hot economy is fueling demand for residential real estate in Nova Scotia, PEI, New Brunswick, and Newfoundland this year, according to a report released today by RE/MAX Ontario-Atlantic Canada.

“Strong economic performance in Western Canada continues to spillover into other parts of the country,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “A serious influx of Western Canadian purchasers has bolstered housing sales in every Atlantic province. Tremendous job opportunities available in Alberta that allow commuting to and from the East Coast have served to further strengthen home-buying activity in the region. Last, but certainly not least, after living in Western Canada for many years, more and more Maritimers are returning home.”

Newfoundland-Labrador (St. John’s, Corner Brook, Grand Falls) currently leads the region overall in terms of percentage increases in both unit sales and average price, with the number of homes sold up close to 18 per cent year-to-date and average price up almost 15 per cent, compared to the same period one year ago. Two thousand and seven was the first and only year since Newfoundland joined Confederation in 1949 that the province led the country in economic performance. GDP growth soared to 13.4 per cent due to mining and oil development, according to Statistics Canada.

“Housing performance in Newfoundland has been nothing short of remarkable,” says Polzler. “There are $10 billion in capital works projects on the table and the pressure in the real estate market is only starting to build. By year-end 2008, housing sales and values are expected to climb by double-digits, leading not only the region, but the country, in terms of percentage increase.”

Just read this article on VOCM.com discussing the increase in house prices in St. John’s and surrounding areas. Notice the jump in house price from $151,000 to $180,000 for a 1000 sqft bungalow home in St. John’s.

House Prices Continue to Rise: Survey
May 1, 2008

A new survey shows house prices in the province continue to rise, thanks to robust activity in the oil patch. The Century 21 spring survey shows that prices in Atlantic Canada over the past year have gone up by between nine and nineteen per cent in the greater St.John’s area and Grand Falls-Windsor. They were the only two areas in the province surveyed. As an example, a 1,000 sq. foot bungalow in Paradise and the west end of St.John’s that cost $151,000 this time last year now sells for $180,000, a 19 per cent increase. And it’s not only oil that’s driving things. Century 21 notes that the first year of positive migration since 1990 is also responsible for the higher real estate values.

Although a recent report pegged St. John’s as one of the most affordable cities in the G7 nations, affordability is a growing concern. Buyers continue to face challenging market conditions, including unprecedented demand and extremely tight inventory levels.

Multiple offers are quite prevalent. It is not uncommon to see quality, new listings generate three to four offers after only a few days on the market, with most selling for more than list price. Bungalows are especially coveted.

Despite a sense of urgency in the marketplace, buyers remain quite determined. Most are willing to compromise by way of necessity, while others ante up more money to compete. Some entry-level purchasers are sitting on the fence, waiting for more product to come on stream with the Spring market and better weather.

Currently, average price in Greater St. John’s hovers at $172,000. Although the St. John’s downtown core has more affordable options, most purchasers prefer Woodlands, Cowan Heights, and Mount Pearl, where three-bedroom, resale homes start from $180,000.

Condominiums are a viable alternative, but this type of product is popular with only a small percentage of first-time buyers. St. John’s Condos can start from $100,000 for a one-bedroom unit in an old military conversion to $130,000 for a two-bedroom in an older building in the northwest end of the city. Duplex product, though limited, is also growing in demand, and more units are coming on stream.

The least expensive sales recorded to date in St. John’s include a detached home with some new upgrades that changed hands for $140,000 and an 800 sq. ft. condo apartment that sold for $95,100 in an older, but renovated, building. Both were located in the city’s east end.

With average prices forecast to experience double-digit momentum yet again this year, it is expected that the first time buyer segment will remain very active as purchasers try to buy in before prices rise further.

MLS Residential Sales Post Solid First Quarter

• MLS® residential sales increased 14.3 per cent to 713 units compared to last year’s first quarter sales of 624 units

• January, February and March MLS® sales were 236, 238 and 239, respectively and were held back by a lack of active listings

• Driven by low inventory, the first quarter average MLS® house price jumped 13.6 per cent to a record $156,953 compared to $138,167 during the first quarter of 2007

Resale Market Classified as Sellers

• The resale market headed quickly to a sellers classification last Fall and remained there throughout the first quarter of 2008

• Average time-on-market trended lower during the quarter, strong price growth continued and many choice properties enjoyed multiple purchase offers

• Current trends indicate the market will favor sellers once again during the second quarter, but an expected improvement in active listings may provide some relief for buyers

Active Listings Remained Low

• After falling nearly a half by January, active listings rebounded slightly during February and March, but remained low, restricting unit sales growth accordingly

• The supply of active residential listings averaged approximately 1,150 during the first quarter compared to almost double that number at 2,100 a year ago

• First quarter new listings were near last year’s first quarter level of 1,600, while active listings retreated 45 per cent compared to the first quarter of 2007

Mortgage Rates to Remain Low

• With U.S. recessionary pressures continuing, the Bank of Canada is widely expected to cut rates 50 basis points by June 10th

• Accordingly, mortgage interest rates are expected to remain low in 2008 and start to creep higher in 2009 as investors gain more confidence in financial markets

• One and five-year mortgage rates are forecast to be in the 6.25-7.25 and 6.50-7.50 per cent range, respectively, in 2008 and beyond

A surge in single-detached construction drove urban housing starts during the month of March, according to preliminary data released today
by Canada Mortgage and Housing Corporation (CMHC). March’s total housing starts surged 155 per cent, with 56 posted within the province compared to 22 a year ago. 55 of the 56 starts were within the St. John’s region versus 21 last March, an increase of 162 per cent. The bellwether single-detached housing segment climbed 188 per cent to 49 starts within St. John’s metro versus 17 new homes during the same period last year.
Provincial urban housing starts increased 18 per cent during the first quarter to 176. “After a soft month in February in terms of new home construction, March’s surge in single-detached housing starts is a clear signal that there is unmet demand for new homes within the local housing market,” said Chris Janes, Senior Market Analyst with CMHC in Newfoundland and Labrador. “Low inventory levels of resale or existing homes is causing many prospective buyers to opt for a new home because they simply cannot find what they are looking for within the resale market,” added Janes.
For Canada’s urban centres, total housing starts were up 24 per cent to 15,608 in March compared to March of 2007. Single-detached starts fell 14 per cent to 4,743, while multiple starts of 10,865 represent a notable 54 per cent increase over last year. Throughout Atlantic Canada, there were 522 urban housing starts versus 169 the previous March.