St. John’s Fall Housing Market

November 12, 2008 · Filed Under Market Trends, Newfoundland Oil and Gas, St. John's Investments and St. John's Real Estate · Comment 

CMHC has released the following report.

Strong fundamentals such as a solid local economy, continued immigration and favorable employment will sustain the demand for housing within the St. John’s region throughout the remainder of this year and in 2009. Accordingly,  the housing market will continue to perform well. The renovation sector will build on its recent strength, exceeding $800 million annually over the forecast period. With home ownership costs increasing, some prospective buyers remain sensitive to prices when considering the purchase of a home. However, personal income growth and a tight labour market will continue to provide support to the overall level of demand for both new and existing homes.  Furthermore, energy related announcements such as Hebron and growth throughout the Newfoundland oil industry continue to fuel the housing market, with unprecedented buyer demand supporting current and future house price appreciation.

Having posted record sales for several years in a row, the St. John’s resale market is expected to continue this trend, eclipsing the 4,000 unit mark this year and in 2009. Accordingly, the forecast calls for MLS® sales of 4,800 units this year, with 4,400 sales expected in 2009. With many new homes selling through the MLS® system, solid numbers for housing starts will have a positive impact on total MLS® sales over the forecast period.

Unprecedented housing market activity this year has been characterized by higher than normal unit sales, constrained listings supply and sharp price increases. In fact, active listings are approximately 40 per cent lower this year versus last year and with demand expected to remain high over the forecast period, unit sales growth will be constrained by fewer listings in 2009. While favorable for sellers, very tight resale market conditions have proved challenging for buyers, resulting in multiple offers and offers above list price on choice listings.

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St. John’s Remax Upper End Report

September 26, 2008 · Filed Under Market Trends, Newfoundland Oil and Gas, Remax Reports and St. John's Real Estate · Comment 

Strong economic performance is fueling sales of luxury homes priced in excess of $400,000 in St. John’s this year. Year-to-date MLS reported sales over $400,000 have climbed 78 per cent, reaching 50 units in the first seven months of 2008, compared to 28 at the same time in 2007. The increase in sales activity of luxury homes extends much further than the MLS statistics reveal considering the present record volume of new executive home construction.

Under the leadership of Premier Danny Williams, Newfoundland has flourished.  Strength in the energy sector has bolstered the local economy and residential housing sales.  Unemployment is at a record low and wages continue to rise. The average price of a home has increased significantly, prompting unprecedented move-up activity.  Sales are up across the board with price points climbing in more and more communities. Once a rarity in Newfoundland, homes sales are now beginning to occur over $1 million.

Although a considerable amount of new home construction exists in St. John’s, demand for new homes continues to outpace supply.  A shortage of skilled trades is the trouble point within the marketplace, as many skilled trades people have migrated to Alberta for work in recent years. This factor burdens the ability to satisfy the demand for new homes. The construction period for production of an average single family dwelling that would typically require a five to six-month schedule is now taking double the amount of time to complete.

Inventory levels are up in the $400,000 plus price range, but quality listings are few and far between with a shortage in key luxury neighbourhoods.  Sought-after locations in St. John’s and surrounding areas include Churchill Square, King William Estates, Waterford Valley, Country Gardens, Hogan’s Pond, and specific regions within the communities of Topsail and Manuels, where properties are priced from $500,000 to $2 million.

Luxury homes priced at fair market value tend to sell within 30 days, while excessive overpriced listings stagnate. Well-priced properties in coveted neighbourhoods are experiencing multiple offers.

The majority of buyers are young professionals in their late 30s and 40s. Many are employed by the oil and gas industry, or hold high-paying jobs in business, engineering, and medicine. Transfers from out-of-province and international buyers represent a significant presence at the top-end of the market, with many investing in established neighbourhoods, the urban core, and ocean view or pond frontage properties.

Price appreciation has experienced a huge jump in recent years with values up as much as 35 per cent over the last two years in the luxury market.  The majority of upper-end sales occur at the $500,000 to $900,000 price points.  Currently, the highest priced residential listing is $1,475,000.

The offshore development of Hebron, Newfoundland’s fourth oil field, located just 350 kilometers from St. John’s, is forecast to further impact the local economy.  In the foreseeable future, the province is expected to receive significant royalties from offshore oil activity.  The revenues will help diminish the highest per-capita debt in the country and secure Newfoundland’s economic outlook and that of the residential real estate market.
Leading the country in terms of percentage increase in luxury home sales are Regina (up 306 per cent); Winnipeg (up 89 per cent); St. John’s (up 78 per cent); Saskatoon (up 72 per cent); Kitchener-Waterloo (up 47 per cent); Ottawa (up 36 per cent); Halifax-Dartmouth (up 20 per cent); London (up 14 per cent); Greater Vancouver (up five per cent); and Victoria (up four per cent). Solid performance is likely a result of consumer confidence, particularly in provinces like Saskatchewan, Manitoba, Newfoundland, Nova Scotia, and parts of Ontario where solid economic fundamentals helped to bolster the number of homes sold in the upper-end.

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Hebron: the after effect

August 26, 2008 · Filed Under Market Trends, Newfoundland Oil and Gas, St. John's Investments and St. John's Real Estate · Comment 

Well, it’s almost a week since the big Hebron deal was signed.  Lots of talk, hype and rumors about the real estate market has surfaced.  I’ve “heard” houses being jacked up 40k to 50k the day after and keep getting questions from my past clients….are they true?   Remember the quote,  “Believe half of what you see and none of what you hear.”  There have been a fair number of listings this past week.  None to me seem 40 to 50k over where they should be.  Does this mean that people will not be cashing in on the positive news?   Of course they will.  If I personally had my house to sell I would “try” it as well.

I was interviewed by CBC Radio last week, the same day that Hebron was signed, and asked my opinion on the effect of the news.  Here is a clip of the interview.  (Click here for the full article NL housing prices jump as Hebron signed)

Steve Winters, a realtor with Remax, said he noticed the trend begin in the spring, as speculation swirled of a coming Hebron deal.

“We’re starting to see the prices jump, and what $150,000 could get you last year is not going to get you near this year,” Winters said, adding that people from Western Canada, in places such as Fort McMurray and Vancouver, are buying homes on the northeast Avalon sight unseen.

Winters said some people in Newfoundland may get pushed out of the market because of the sudden increase, and that home buyers may not be able to buy the house for which they just received mortgage approval from a bank.

Personally, my thoughts for the rest of this year:  gains will be fairly consistant in an upward trend.  Maybe another 5% gain til the end of 2008.  Remember we have already seen at least a 20% increase from the beginning of the year from current stats.

CHMC is stating that the next 3 - 5 years look VERY promising for Newfoundland Real Estate.  A 15% - 20% increase per year.  Quite possible to double the cost of a property in St. John’s in 5 years in a good area.

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Hebron is a go for Newfoundland

August 20, 2008 · Filed Under St. John's Real Estate · Comment 

Worth potentially 20 billion dollars to Newfoundland over the next 20 years and over 3000 jobs to be had.  Today Danny Williams unveiled the Hebron deal in a live news conference at the Fairmont Hotel in St. John’s. Start of construction is aimed for 2012 with oil projected to flow in 2017.

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Herbon Announcement Set for Tomorrow

August 19, 2008 · Filed Under Local St. John's, Market Trends, Newfoundland Oil and Gas, St. John's General, St. John's Investments and St. John's Real Estate · Comment 

The day has finally arrived. All newspapers and local websites are anticipating a formal announcement tomorrow from Premier Danny Williams giving the thumbs up for Hebron. Good timing seeing that the deadline for the agreement was slated to expire on Thursday.

The breakdown in ownership is Chevron Corp. which owns 28 per cent, Exxon Mobil Corp. the largest shareholder with 37.5 per cent, Petro-Canada and Norway’s state-owned StatoilHydro ASA own the rest. The province of Newfoundland will receive a 4.9 per cent equity stake in the project.

So far this year St. John’s Real Estate has jumped about 20% with a projected 15% increase in 2009. In the beginning of the year CHMC went on record saying 7 - 8% increase in housing prices while Remax was deemed highly optimistic with their 12% projection for 2008.

With this impending news release, how will the real estate market react? When will the oil companies start moving people into the St. John’s and start buying up properties? Is too much of a good thing too fast good for Newfoundland Real Estate?

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St. John’s Housing Market Records Stellar Second Quarter

August 8, 2008 · Filed Under St. John's Real Estate · 1 Comment 

Released from CMHC today

The St. John’s area housing market recorded a stellar second quarter, thanks to a bustling economy, positive net-migration and stable consumer confidence. These factors combined increased the level of demand for both new and existing homes throughout all municipalities within the region during the April to June period.  Strength in the existing homes market continued, while growth in residential construction activity was led by a surge in starts of single-detached homes. As expected, the positive momentum from last year’s Hebron and White Rose oilfield extension announcements, combined with favourable demographic and economic fundamentals, produced record second quarter results.

Although 2004’s record second quarter housing starts actually exceeded second quarter 2008 levels by 110 starts, demand for new homes from April to June was exceptional within the St.  John’s region. In fact, starts were limited only by builder capacity constraints due to a very tight labour market for skilled trades. In support of this, most new home contracts signed so far this year have been for completion as far as nine to 12 months out and include final price protection clauses for builders. Such high demand boosted residential construction activity throughout the St. John’s region during the second quarter and resulted in double-digit growth.

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Regetta and Hebron - to be confirmed

August 6, 2008 · Filed Under Local St. John's and St. John's General · Comment 

News this morning (5:45am) postponed the 190th St. John’s Royal Regatta due to weather, maybe til Thursday (personally I’d say Friday)  Could make it a long weekend in St. John’s.  So it’s business as usual this first Wednesday in August.

Speaking of business….the Hebron deal has been postponed as well.  Final last minute details are still being worked out.  The memorandum of understanding expires August 21st.

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