A seasoned REALTOR®s Perspective
As a seasoned realtor with over two decades of experience navigating the Nova Scotia real estate market, I must assert that the landscape we are witnessing today is markedly different from what it was just a year ago, or even at the beginning of this year. The first few months of 2023 suggested a continuation of the frenetic buying activity that had characterized the previous two years.
Impact of Rising Interest Rates
The early months of 2023 presented us with a unique scenario. Interest rates were slowly creeping upward, yet the consensus was that they would return to more favorable levels by late 2023 or early 2024. Nevertheless, homebuyers remained confident, diving into the market with enthusiasm. Properties continued to sell above asking prices, with both median and average sale prices increasing both monthly and annually. Furthermore, inventory showed a slight monthly increase.
However, the landscape shifted as the Bank of Canada persistently increased interest rates. This, in turn, had a dual effect. Firstly, it limited the number of potential buyers eligible for mortgages, and secondly, it created stress for homeowners with variable rate mortgages. Consequently, both prospective buyers and homeowners opted to adopt a cautious stance, watching closely to see if the interest rate would continue its ascent.
The Unpredictable Inflation Factor
To complicate matters further, the Bank of Canada’s efforts to curb inflation through interest rate hikes did not yield the intended results. We observed surging gas and food prices, alongside an unrelenting rise in housing costs, despite these rate hikes. The upcoming announcement by the Bank of Canada on September 6th looms large, as it will determine whether mortgage rates will increase yet again. Homeowners with variable rates find themselves at a critical juncture, compounded by the rising cost of living, making homeownership appear increasingly unattainable.
Analyzing August 2023 - A Region-Specific Overview
Now, let’s delve into the specifics of the Nova Scotia real estate market for the month of August 2023, focusing on Halifax and the Annapolis Valley. It’s crucial to note that these figures are derived using both median and average methods, which can yield varying results. The distinction lies in median calculations, which identify the middle value within a dataset, as opposed to average calculations, which sum all values and divide by the total number of data points.
Understanding the Impact of Calculation Methods
This distinction is particularly significant in Nova Scotia due to the wide range of property prices within the same regions, primarily attributed to our extensive oceanfront properties. Consequently, it’s imperative to ascertain the calculation method used when interpreting market reports.
New Listings and Inventory
In August, the number of new listings decreased by approximately 10% in the Halifax-Dartmouth regions and Nova Scotia as a whole compared to the previous year. In contrast, the Annapolis Valley saw a substantial drop of 23.5%, while the South Shore experienced a slight increase of 3.2%. A month-to-month comparison showed a decrease in new listings in Halifax-Dartmouth and Annapolis Valley but an increase on the South Shore.
These new listing trends resulted in Nova Scotia’s current residential housing inventory reaching 2,592 properties, marking an increase of 58 from July and a decrease of 24 compared to the previous year. Halifax-Dartmouth currently boasts 796 properties, an increase of 41 from July but only two less than last year. The Annapolis Valley has 510 properties, and the South Shore has 363, both showing increases from July and slightly surpassing last year’s numbers. This indicates that homes are remaining on the market for longer durations.
Days on Market and Showings
Analyzing “Days on Market” and the number of showings until a property garners an offer provides insight into other critical factors affecting the market. The number of showings required to secure an offer remained relatively consistent from July to August, even when compared to August 2022.
For instance, Nova Scotia currently requires between 8 to 11 showings, Halifax-Dartmouth averages 10 to 14 showings, the Annapolis Valley falls in the range of 7 to 10, and the South Shore typically sees 6 to 8 showings. However, it’s essential to consider the timeframe over which these showings occur when evaluating the data. For instance, the average Days on Market (DOM) for the South Shore was 48, indicating that it took 48 days to achieve the necessary 6 showings to secure an accepted offer.
Days on Market Analysis
Regarding “Days on Market,” there’s a notable range between median and average calculations. In Nova Scotia, the median DOM was 14 days, whereas the average was 35 days. Although this represents a slight increase from July, the median figure remains consistent with 2022, while the average is 29% lower. This suggests that a significant number of properties are remaining on the market for more than 35 days.
In Halifax-Dartmouth, the median DOM was 8 days, two days fewer than in July and 2022. In the Annapolis Valley, properties spend 22 days on the market on average, or 39 days when considering the mean. On the South Shore, homes typically remain listed for a median of 20 days, or an average of 48 days.
Home Sales Trends
August saw a decline in home sales compared to August 2022. Nova Scotia reported a 14% decrease from the previous year but only a 1% drop from July. Halifax-Dartmouth experienced a 10.6% decline from 2022, with a 7.9% decrease from the previous month. The Annapolis Valley reported an 18.2% decline from 2022 but an 8% increase from July, with 12 additional sales. Meanwhile, South Shore home sales declined by 23.2% compared to the same time last year but rose by 12.7% compared to July. This indicates that buyers may be expanding their search to regions with more affordable housing options.
Home Sale Prices
When considering home sale prices for August, both median and average calculations reveal a range of figures. However, the percentage increase in home sale prices compared to the previous year is relatively consistent for Nova Scotia as a whole and Halifax-Dartmouth.
In Nova Scotia, median home prices increased by 11.5% to $390,000, and the average price increased by 10.1% to $428,627 compared to the previous year. However, August’s provincial prices experienced a decrease from July’s figures, which stood at $407,250.
In Halifax-Dartmouth, average home sale prices surged by 20-23% compared to the previous year, depending on whether you consider median or average calculations. In August, the average home sold for $538,315, representing an 8% decrease from July. Median prices, on the other hand, increased by $9,000 from July to reach $529,950 for August.
For the Annapolis Valley, average home sale prices increased by 12.6% compared to 2022, but median calculations revealed a more substantial 20.2% increase. The average home sold for $357,838 in August, marking a 5% decline from July. Median home sale prices for August reached $360,000, reflecting a 2% increase from July.
The South Shore, known for its diverse property price range due to oceanfront properties and rural locations, reported a 20% decrease in average prices compared to the previous year, with properties averaging $386,516. Median home prices in August were $358,125, showing a 20% increase from 2022 and a 10% increase from July.
The Outlook for 2023
In conclusion, the current state of the Nova Scotia real estate market is not solely the result of the COVID-19 pandemic or interest rate fluctuations. It represents the culmination of factors that had been brewing before the pandemic. Nova Scotia had already experienced low inventory trends and multiple offer situations in the years leading up to the COVID-19 shutdown.
The Nova Scotia government implemented commendable programs to attract immigrants, international students, and support seniors in aging in place. However, the housing sector of the provincial government failed to address the impending housing crisis. We lost a significant portion of our workforce to the Western provinces during the oil boom, and their return was never incentivized sufficiently, as our existing workforce continued to age.
It is a complex dilemma, a catch-22, where competitive wages are necessary to attract the workforce needed to build the infrastructure required to support a growing population. As we navigate the remainder of 2023, both buyers and sellers in Nova Scotia should remain vigilant, as our real estate market’s trajectory is influenced by a multitude of factors that extend beyond the pandemic and interest rates.
Sources:
- [Canadian Real Estate Association – National Price Map](https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/national-price-map/)
- [Canadian Real Estate Association – Quarterly Forecasts](https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/)
- [CREACAFE – Realtors and Broad-Based Inflation in Canada](https://www.creacafe.ca/what-realtors-should-know-about-broad-based-inflation-in-canada/)
- [Bloomberg – Bank of Canada’s Interest Rate Hike](https://www.bloomberg.com/news/articles/2023-09-01/surprise-contraction-means-bank-of-canada-is-probably-done-hiking-interest-rates?leadSource=uverify%20wall)