With the decline of the economy in St. John’s during the past couple of years, developers and builders began concentrating on more affordable houses, says an official with the Canada Mortgage and Housing Corp.
The Canada Mortgage and Housing Corp. (CMHC) recently released its third-quarter housing market assessment for St. John’s, and while there’s little change from the first half of the year, there are some small signs of strength.
“Our thinking right now at CMHC is that the housing market likely bottomed in the first quarter of this year and we’re starting to see some signs of strength re-emerge, particularly in terms of price stability,” explains Chris Janes, senior market analyst in this province.
There was also a slight jump in housing starts.
“June was a pretty good month relative to where things have been so far this year, so we’re starting to see some positivity creep back into the market.”
Still, Janes says year-to-date housing starts in the St. John’s area are down 35 per cent from this time last year and the market as a whole is down 60 per cent from its peak in 2014.
“That’s a big pull back, but if builders had continued to build, then we’d be in a massive oversupply situation as well and we’d see a lot more downside pressure on new home prices.”
In light of the uncertainty around the sluggish economy and home-builders being more aware of demand in a deeply rooted buyer’s market, there is less speculator building than there was a number of years ago, Janes says.
Instead, there’s been a shift in terms of the product that’s being built to accommodate a market that has become much more welcoming to first-time homebuyers, Janes says.
As opposed to the $500,000-plus homes that were common when the economy was healthier, builders are now focusing on row houses, duplexes and triplexes.
“Some of these triplexes I’ve seen are starting at $229,900 and that’s enabling a lot of first-time buyers to come into the market now, particularly people who have been waiting for prices to stabilize and stop declining as they have been for the past couple of years.”
Buyers are also much more patient and shopping around more than they were in the past, Janes says.
“People have a lot of inventory to choose from, in a lot of cases high-quality homes, where they may have been looking for a bit of a fixer-upper and getting in at a lower price point and doing some renovations,” he says.
“The cycle from start to finish is longer between thinking about buying, intentions to buy and actually buying.”