Nova Scotia Real Estate Market Outlook for 2021
3 Factors that Impacted the Nova Scotia Real Estate Market of 2020
2020 has come and gone. The COVID 19 pandemic has changed the world as we know it. 2020 was a year that saw many changes in how people live, how people interact, how people work, and how people prioritize things in their lives.
Many industries and business sectors saw changes as well. These changes may impact businesses to the point of changing how businesses conduct themselves permanently in the future.
SOCIAL DISTANCING DESIRES
The real estate sector was impacted greatly. Speaking to Nova Scotia specifically, a major impact on the sector of a societal shift of people’s priorities. There was a large influx of buyers from out of province, looking to “move home”, or looking to be close to loved ones.
The shift in priorities pushed Buyers to retire sooner than planned and wanted to move closer to loved ones in case of future lockdowns and to prevent social isolation.
Buyers were also reconsidering where they wanted to spend their time when social distancing was necessary. They were looking to move out of urban areas so that they could have larger, more private properties with more recreational opportunities.
A second major factor that affected the Nova Scotia real estate market was the lack of inventory. Nova Scotia has been experiencing a housing shortage for the past two years now.
See blog post ” 3 Trends affecting the Housing Market of 2020″
The large aging population in Nova Scotia is leaving the workforce, creates a void of workers in the construction industry, that isn’t being filled by a younger generation who left the province for better-paying jobs out west during the oil boom.
Combine this, with successful government immigration incentives, has put increased demand on the housing industry creating a lack of inventory and thus driving home sale and rental prices up.
A third factor that has created the hottest real estate sellers’ market in Nova Scotia in decades is the interest rates being at an all-time low.
Canadian lending institutions have been pretty stringent on borrowing criteria. They even implemented a stress test, to ensure a buyer’s ability to pay if the mortgage rates took a jump. So instead of calculating the buyer’s eligibility at the current interest rate, the banks calculate the approval based on a rate that may be a point or higher.
The interest rates are forecasted to remain low and steady-going forward into 2021. They are anticipated to inch up over the next year or two, but still be at a worthy rate to remortgage or move on up.
2020 vs 2019 Real Estate Comparison
Disclaimer: These figures are compiled from closed residential home sales from the MLS system for Nova Scotia versus figures from when a home purchase becomes confirmed with all conditions met. This is because, in Nova Scotia, not all brokerages post on the MLS system what the sale price of a home is until closing day.
These residential home sales calculations include condo sales, multi-units, and farms. These calculations have also been broken down into different categories such as lakefront, oceanfront, condos, homes with over 5 acres, and new homes or under 1 year in age to better analyze housing trends. Along with an overall analysis of Nova Scotia, a breakdown of these categories is provided for mainland regions of Halifax, the South Shore, and the Annapolis Valley.
- The number of units sold for Nova Scotia from 2019 to 2020 increased by 9% to 12,515 with the average home price increasing by 11% to $278,931.
A 9% increase in units sold is a respectable number to end the year with considering it was amid a pandemic. Considering the number of buyers that are unable to find a property and are still actively looking going into 2021, it is more so the lack of inventory that prevented that increase from being much higher.
- The average home sale price for Halifax for 2020 was $356,317 an increase of 13%.
- The greatest increase in the number of units sold for the Halifax region was in the new home sales (under 1-year-old) with an increase of 37% and an average sale price of $438,763.
- The greatest price increase for residences sold in the Halifax region was for oceanfront which increased by 24% to $614,512.
The Halifax region has desirable oceanfront due to its proximity to Halifax which is also true for being the most desirable region to purchase new home construction and condos. While there are very few larger parcels available for sale in this region, there was an actual decline in units sold that had over 5 acres.
- The average home sale price for 2020 in this region was $212,546; an increase of 10%.
- The greatest increase for units sold was in the properties with over 5 acres, with a 35% increase. With lakefront property units a close second at 33% increase in units sold
- Lakefront, oceanfront, and new home sale prices all had a 20-21% price increase.
The Annapolis Valley region includes parts of Hants County, down the Bay of Fundy coast to Yarmouth. Due to the lack of inventory, buyers expanded their search further away from Halifax and town centers, which increased unit sales in areas such as Annapolis Royal and Digby. While the unit sales increased, the prices of homes in these areas were significantly lower which brought the average home sale price down for the whole region.
- The average home sale price for 2020 in the South Shore region was $238,619, which was an increase of 11% of units sold.
- Greatest price increases were seen on the South Shore.
- 63% price increase for properties with 5+ acres, 82% price increase in newer home prices, and a 36% increase in condo prices.
- Lakefront prices saw a price increase of 21% to $279,003, while oceanfront prices increased 24% to $516,649
The South Shore has lower inventory overall but has the greatest selection of lakefront and oceanfront properties, so while prices increased, the overall unit sales did not take a jump in comparison because this area is known for steady ocean and lakefront sales. Lower unit increases have a greater impact on the increase in average home sales.
Housing Market Outlook for 2021
With the COVID 19 vaccine on the horizon, more sellers are going to be more comfortable to put their homes on the market. Whereas before, the threat of inviting the virus into their home outweighed any sort of profit incentive the sellers’ market was presenting at the time.
Many homeowners who have spent the last several months working from home or social distances have had time to reconsider their needs and wants in a home. And so with the interest rates being so low, homeowners can now afford to purchase a more suitable home and still be paying the same for a monthly mortgage.
With the interest rates expected to remain at all-time lows, these rates present opportunities to first time home buyers who may not have been approved for a mortgage at a higher rate. These rates allow for real estate to be a better investment option than stock portfolios.
Buyers Should Not Wait
Buyers should not expect or wait around for are a slew of bank foreclosed properties. Banks took measures after the housing crash of 2008 to implement stricter borrowing guidelines to prevent a repeat scenario.
Of the 800,000 homes that applied for foreclosure relief, over 50% of those homeowners continued or started to make mortgage payments as of the end of 2020. Also, homeowners learned a valuable lesson after the housing crash as well, that being that equity is better left in their home, rather than borrowing against the mortgage as an extension of a credit card.
See Blog post “COVID 19 VS the 2008 Housing Crash”. Homeowners are less likely to let their home be foreclosed on when they have a substantial amount of equity built up in it.
Sellers Getting Ready
With Sellers putting more homes on the market and Buyers taking advantage of the low-interest rate, the Nova Scotia real estate market is looking to be just as busy, if not busier than last year. The home prices will start to level out due to increased inventory, but the demand will still be there as the inventory is about 3 month’s worth behind a balanced market.