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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No Provincial Economy Immune from US malady

April 3, 2008 · Filed Under Market Trends and St. John's Real Estate · 1 Comment 

RBC released it’s Provincial Outlook today and is quite clear “no provincial economy immune from US malady”.

The tone for the report is caution throughout most sectors including labour, housing, exports and Canadian dollar.

Saskatchewan is expected to be the growth leader in 2008 as its economy benefits from strength in energy, mining, and agriculture. Newfoundland is expected to be the laggard as waning oil production weighs on its growth.

Housing affordability is poised to improve across the country this year on the back of falling mortgage rates and cooler house price gains. House price growth is expected to move into the single-digit range in almost every province by year-end. This contradicts Remax’s 2008 house price increase for St. John’s but is in line with CMHC’s report.

Saskatchewan will continue to benefit from last year’s in-migration surge in 2008 before housing activity simmers down in 2009. Every province except Saskatchewan is likely to see a decline in new home construction in 2008.

Saskatchewan — The new provincial growth leader
We expect Saskatchewan to be Canada’s top growth performer this year, coming in at 3.6% in 2008 and 3.2% in 2009. Saskatchewan and Manitoba have become the new ‘it’ provinces with hot housing markets, big capital spending plans and tight labour conditions. Saskatchewan now ranks number-one across all key housing indicators that we track. House prices became overvalued in a very short time and it is likely only a matter of months before a decelerating trend sets in to bring markets back closer in line with underlying fundamentals. The cool down is likely to be similar to what is currently going on in Alberta. On the business side, however, Saskatchewan has more upside potential than Alberta. Saskatchewan benefits from strong export volumes and high prices for oil, uranium, potash and grains. A surge in migration inflows confirm that these strengths are being noticed. The unemployment rate (4%) is holding at its lowest rate in 25 years and skilled labour shortages are a growing concern. Labour shortages are supporting the fastest wage growth in the country.

Newfoundland and Labrador — Waning oil production
Newfoundland topped the growth charts last year — growth is expected to have come in at about 9% — but is set to slip to last place in 2008 as oil production declines. Offshore oil production is expected to drop 15% in 2008 as all three oil producing fields face falling production volumes. Prospects for expansions at existing oilfields leave the door open for upside potential in the early part of the next decade. Potential projects include the Hebron development, the Hibernia Southern Extension and an expansion at White Rose. The province’s mining sector (mostly made up of nickel and iron ore) is offsetting some of the weakness on the oil front. Iron ore prices have soared by 66% since 2007 and are expected to keep the value of shipments at an elevated $4 billion in 2008 for a second consecutive year.

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Newfoundland Oil and Gas Week

February 25, 2008 · Filed Under Newfoundland Oil and Gas and St. John's General · Comment 

Oil and Gas Week is underway in Newfoundland. It was conceived to raise the profile of the oil and gas industry in Newfoundland and Labrador and build an appreciation for the impact that it has on the province’s economy. This is achieved through a variety of promotional and educational activities. A particular focus is being placed on educating secondary and post-secondary students about a variety of aspects of the industry, as well as providing information on potential career opportunities for future generations.

Newfoundland and Labrador’s offshore oil and gas industry currently has three producing offshore oil projects: Hibernia, Terra Nova, White Rose.

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NewfoundlandLabrador.com

February 11, 2008 · Filed Under Local St. John's and St. John's General · 1 Comment 

Lately the Government of Newfoundland Labrador has been flocking the television with commercials promoting tourism to Newfoundland Labrador. If you frequent TSN, Business News Network (BNN), or FoodNetwork to mention a few, you’ll notice this ad being televised many times throughout the course of a TV show.

With increased hype in St. John’s real estate due to recent news in offshore oil developments (particularly Hebron), it appears not only an increase in real estate for Newfoundland, but a number of people vacationing to Newfoundland. The budget for tourism for 2008 is stated to be approx $12 million, doubling the budget since the current government took office in 2003.

Newfoundland Labrador’s unique tourism marketing won the Tourism Industry Association of Canada’s (TIAC) Marketing Campaign of the Year Award in November of 2007. It was also listed in the Bluelist Book, a top 30 travel destination for 2008 by Lonely Planet Publications, one of the world’s most respected travel guidebook publishers.

Newfoundland and Labrador was most recently recognized by an internationally-respected travel guide as a top destination of choice. The Fodor’s travel web site is currently featuring a section entitled “Where We’re Going in ’08: Seven Places Americans Have Yet to Discover“, which includes a recommendation to visit this province.

Newfoundland, rich with history. Rife with culture. Sprawling with natural beauty. All these wonders have been here for thousands of years, embraced by those who happened upon them. It’s up to the traveler to enjoy them, to go vigorously in search of people, adventure, of places to experience. Around every bend you will find a piece of heaven, a delightful sight, a playful breeze that will help your journey.

“The Lonely Planet, Travel and Leisure magazine, The Wall Street Journal and CNN are among the highly-acclaimed travel publications, news outlets, and web sites which have recently discovered our province as a unique travel destination,” Minister Jackman said. “The world is discovering our secret, and we are more than happy to share it with them.”

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