One of the most compelling developments to witness over the last quarter, has been the climb from modest to record-breaking growth within small towns across the country. This trend is fairly pronounced in a region that had been enduring financial hardship over the past decade: Atlantic Canada. Could the post-COVID-19 real estate market be the real stimulus the eastern region needed? As one of New Brunswick’s major urban centers, the Moncton housing market is booming.
Logging records setting sales activity and substantial housing valuations, Moncton’s real estate sector has never been this hot. The region is attracting homebuyers from across the country, and it is possible that Moncton is primed to become a new top destination for real estate in the Maritimes.
So, what is happening in Moncton? For one thing, a jaw-dropping September performance. But can the city maintain these trends to close out 2020 and head into 2021?
Skyrocketing Demand in the Moncton Housing Market
According to the Greater Moncton REALTORS® du Grand Moncton, residential sales surged 39.7 per cent in September from the same time a year ago. This is on all time record for the month of September. Year-to-date home sales were also up 7.4 per cent from last year.
Moncton real estate prices also posted significant gains in September. The MLS® Home Price Index (HPI) composite benchmark price rose 13.7 per cent to $220,500 in September. The benchmark price for a semi-detached home advanced 12.9 per cent to $216,400, while a single-detached property picked up 13.9 per cent year-over-year to $230,500. Townhouses jumped 11.9 per cent to $171,000, and apartment prices edged up by seven per cent to $199,500.
The total dollar value of all residential home sales was $124.6 million, skyrocketing 113.6 per cent from September 2019. This was a record-crushing high for the month, and the largest dollar value of homes sold for any month on record.
So, what is driving this triple growth? Two trends: unexpected demand and low supply.
“Market activity in Greater Moncton remained strong during the month of September,” said Parise Cormier, President of the Greater Moncton REALTORS® du Grand Moncton, in a news release. “Although new listings are up year-over-year, they are struggling to keep up with the pace of sales. The central story for our region continues to be the unexpected strength of demand for this time of year, combined with the lowest inventory in 15 years. These twin factors are contributing to upward pressure on prices.”
Indeed, new residential listings climbed 12.5 per cent year-over-year – the highest number of new listings added in the month of September since 2015. However, active residential listings fell 34.6 per cent by the end of September. Moreover, there were 2.5 months of inventory by the end of September, down from 5.4 months at the same time a year ago. This metric shows the number of months it would take to sell current housing stocks at the current rate of sales.
Can Moncton maintain this momentum during the fall cycle and into 2021? These strong fundamentals could facilitate additional growth in the New Brunswick municipality as part of the broader Atlantic Canada housing market’s upward trajectory.
Does Moncton Face Threat of Overheating?
The Canada Mortgage and Housing Corporation (CMHC) has identified several cities in the Canadian real estate market that could face “overvalued” homes. The Crown Corporation noted that the nation’s booming housing market is moderately vulnerable, listing six cities that could potentially be overheated:
CMHC Chief Economist Bob Dugan told reporters in a conference call that the level of overvaluation nationwide “is likely underestimated” due to the temporary increase in disposable income amid federal income supplements.
“Conversely, in eastern Canada, Ottawa, Montréal, Moncton and Halifax entered the second quarter of 2020 with emerging imbalances in their respective housing markets,” CMHC said. “Observed house prices in all four had been growing prior to the onset of COVID-19 and continued growing in the second quarter, despite the general weakness in housing market fundamentals. This has led to the detection of moderate Evidence of overvaluation in Moncton and Halifax while a sustained increase in the rate of house price growth has led to the signaling of price acceleration in Ottawa and Montréal. The Ottawa, Moncton and Halifax housing markets are all now assessed at an overall moderate degree of vulnerability.”
The Atlantic Canada Housing Market
Moncton is just one piece of the broader booming Atlantic Canada housing market. From Halifax to St. John’s and Charlottetown, Canada’s east coast has been rebounding quickly since the height of the pandemic pause earlier this year. Be it historically low interest rates or households feeling more financially secure due to government benefits, the region’s real estate sector could experience additional growth over the next 12 months. When you factor in shrinking inventory levels and strengthening demand from homebuyers outside the region, the fundamentals are sound and could justify the renewed sales activity and higher prices within Moncton, and across the Maritimes.