For the first time in 20 years, Richard Kennedy is getting a taste of what it would be like to sell real estate in Ontario’s hot housing market.
Since COVID-19 hit Canada, the St. John’s-based agent at Hanlon Realty has been fielding multiple offers on properties — a staple of Ontario’s market, but a rarity in Newfoundland. His clients can no longer take weeks to make a decision, knowing they’ll have their choice of properties, but instead need to pull the trigger in days. And, yes, they actually have to make offers above listing price to fight off competing bids.
“It’s the first time in a long time where I’ve seen listings go at asking price or over asking price,” he said, noting the last time he experienced a market like this was in the early 2000s. “I was just speaking to another agent about this: Houses are up for 48 hours and they’re gone.”
Kennedy’s experience is part of a wider trend across Atlantic Canada. In September, prices surged by double-digit percentage points on a year-over-year basis in each province but Newfoundland, where they rose by 7.7 per cent. Sales volumes, meanwhile, hit record totals across the board, according to the Canadian Real Estate Association. Even the worst-performing province, P.E.I., registered a 24.5 per cent year-over-year increase. Newfoundland, at 39.5 per cent, reported the largest bump. In just one year’s time, inventories have been halved, bringing Nova Scotia, Prince Edward Island and New Brunswick into seller’s market territory.
For what you'd buy the cheapest, absolute worst house next to the railroad tracks in Burlington, Ont. for — $600,000 to $700,000 — you can buy a mansion here
Realtors point to a variety of factors to explain the increasingly hot market, from low interest rates to the built-up demand caused by the freeze during the early months of COVID-19. What they all agree on, however, is that there is an increased surge from buyers coming from outside the East Coast and that the pandemic, in one way or another, is pushing them there.
“The thing about COVID is it lit the fire,” said Sandra Bryant, a realtor at Bryant Realty Atlantic in Halifax who says she has been regularly fielding calls from interested parties in Toronto.
Multiple realtors told the Post that buyers are moving to the region knowing that the shift to working from home means they no longer need to be near expensive city centres like Toronto and Montreal and that the aggressive restrictions on visitors to the region have made it something of a safe haven from the virus.
It’s difficult to determine the precise degree to which the influx from outside Atlantic Canada is contributing to the property boom because no organization fully tracks the geographic origin of real estate buyers in Canada.
That’s left to individual realtors like Re/Max’s Michelle Roy in Fredericton, who reports that about a quarter of her sales are coming from outside Atlantic Canada. This can lead to some disparity as a competing agent’s numbers may be several percentage points higher or lower and tell a different story.
Re/Max defaults to the numbers of one local agent in each province. In Nova Scotia, the company reports 20 per cent of sales are coming from outside Atlantic Canada, when only 10 per cent did pre-COVID. In P.E.I., it’s 15 per cent — five times higher than the norm, while an agent in New Brunswick reports numbers around 10 per cent. Sales to buyers outside of Atlantic Canada in Newfoundland have nearly tripled to reach eight per cent.
Those buyers are homing in on what’s always made the region a desirable one: affordability and safety. Even in the midst of one of the most heated housing markets in Canada, buyers from the most populated regions of Ontario could be looking at a $700,000 discount compared to buying a home in the province.
“For what you’d buy the cheapest, absolute worst house next to the railroad tracks in Burlington, Ont. for — $600,000 to $700,000 — you can buy a mansion here,” said Michael Poczynek, a Century 21 Northumberland Realty real estate agent in Charlottetown.
Poczynek said escaping COVID-19 has been top-of-mind for a few buyers from Ontario.
“I have buyers all over Ontario, from Windsor, London, Kitchener, Cambridge and Waterloo, and some of them have said to me on the phone, ‘We can’t get out of here fast enough,’ because they’re just terrified about COVID-19 and sending their kids to school,” he said.
On Thursday, the four Atlantic provinces combined had 108 active cases of COVID-19. Ontario alone has lately been announcing about seven times that number in new cases on a daily basis.
Much of the success the Atlantic provinces have had in controlling the virus can be attributed to the bubble that’s been set up to insulate it from outside carriers.
Travellers entering Nova Scotia and New Brunswick must self-isolate for 14 days upon arriving. In P.E.I. and Newfoundland, further restrictions are in place, and one of the only ways around them is to be a homeowner.
Because of the restrictions, most buyers from outside Atlantic Canada are buying properties sight unseen, according to Donna Harding, a broker at Engel & Völkers in Halifax.
“They’re not here for closings, they’re just grabbing properties so it has to be COVID-based,” she said.
Harding said one couple she helped move into the province from Quebec in July was willing to work around the restrictions and buy sight unseen because they wanted to have enough time to both make the move and get their young children ready for the start of the new school year in September.
That couple, she added, had the added benefit of having jobs where they can work from home, which she thinks may be another catalyst driving interest to the area.
Non-resident buyers with similar working conditions who are also concerned about the pandemic have chosen to purchase property outside city centres. Not everyone is flocking to Halifax, Harding said, describing Nova Scotia’s more rural north shore as a popular destination for Ontarians.
Some of the buyers Harding has moved told her that they were already toying with a move before the pandemic. For most of them, though, it could have been a decision they were planning to finalize in two or three years, but safety concerns and new work-from-home policies brought on by COVID-19 convinced them to move up their timelines.
As a result of the added competition for homes, locals, according to multiple realtors, are having a difficult time adjusting.
For example, Bryant said she’s used to selling homes on Connolly Street in Halifax’s west end for between $300,000 and $400,000, but that’s no longer the case. One recently sold for close to $800,000, she said, and others on the street have gone for $100,000 above listing price.
Those prices might be difficult for locals to swallow, but Ontarians, used to aggressively bidding above asking price, already know the drill.
“Think of this, I always call it bigger dollars and deeper pockets, if you’re coming out of Toronto, then it’s no big deal,” she said.
In Fredericton, Roy has already seen similar price action. In multiple-offer situations, it’s the comfort that a bidder from Ontario has in going $60,000 to $80,000 above the listing price that ultimately allows them to win out.
But it’s difficult for realtors to assess whether the current activity in the market is here to stay.
In St. John’s, Kennedy has seen temporary waves of interest that may last a few months, maybe even more than a year, such as what occurred in the early 2000s, but the market has always settled back to the norm.
A fellow realtor at Hanlon Realty in St. John’s, Larry Hann, worries that change could come as early as the winter.
Many high-earning Newfoundlanders were laid off due to the struggles of the Alberta oil patch. Their high incomes allowed them to buy expensive property in their home province, but if the sector doesn’t recover before their cash runs out, Hann suspects Newfoundland will see a wave of foreclosures.
Roy, meanwhile, is still advising her clients to have a five-to-10-year plan in place if they’re thinking about buying in New Brunswick.
She’s seen too many swings from a buyer’s market to a seller’s market to think that the current trend is permanent. If her clients have a 10-year plan in place, that should be enough to avoid being burned by depreciation, she said.
Harding offers a different idea about the current market dynamics. Most realtors would describe the Atlantic bubble as being one of the predominant factors drawing in more outside buyers, but she can’t help but think it’s keeping others out.
Nova Scotia and P.E.I. have 2.7 and three months of inventory respectively. New Brunswick is sitting just above them at 3.2 months’ worth. To put those numbers in perspective, all three provinces are quickly approaching the 2.6 months of inventory Ontario’s blistering market had in September 2019. Once the Atlantic bubble protecting residents from COVID-19 is dissolved, Harding worries that buyers will become even more aggressive and that these numbers will continue to decline.
“If the Atlantic bubble wasn’t there, I don’t know what kind of market we’d have,” Harding said. “There’s so much demand that if you open the bubble, I’m a little concerned we’re going to have enough inventory to handle the demand.”
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