Rents rise in NB The price of properties is increasing in New Brunswick and home sales are also up. Suzanne Sharma finds Fredericton might offer opportunities for investors, with vacancy declining and rents rising
Nov. 5, 2009 - Recently, prices have started to escalate in New Brunswick, and in May 2009, they reached the highest level on record for the province at $166,672. According to statistics released by the New Brunswick Real Estate Association (NBREA), this is a nine per cent year-over-year increase and it was the fourth consecutive increase in average price in many months.
The MLS residential average price rose in May 2009 from year-ago levels in all regions of the province. Average price posted the largest gain in Northern New Brunswick, up 23 per cent year-over-year. The average price for MLS home sales rose 12 per cent in Saint John and 4.6 per cent in Fredericton.
Meanwhile, home sales numbered 816 units in May 2009, the highest level in 10 months. Although activity was down 10 per cent year-over-year, the gap between monthly activity this year versus the last continues to shrink. The decline in May was less than it had been the previous month, and already less than half of what it had been in February 2009. By comparison, national home sales activity was down eight tenths of one per cent from year-ago levels.
Sales activity normally rises from April to May as part of a normal seasonal trend, and this year was no exception, says Dwayne Hayes, president of NBREA. The 30 per cent increase in activity between these two months was stronger than normal this year. This resulted in a monthly increase in sales activity of three per cent. The increase builds on monthly gains in four of the past five months. Activity in May was 11 per cent higher than the recent low in January 2009.
New residential listings numbered 1,651 units in May 2009, falling 4.1 per cent from one year earlier after two months of increases.
The supply of homes on the market in New Brunswick remains at elevated levels, but the increase is losing steam, reports NBREA. There were 5,698 active listings in New Brunswick at the end of May 2009, 12 per cent above year-ago levels. Although this is the smallest increase in nine months, inventory at the end of May 2009 stood at the highest level on record.
Sales activity in Saint John numbered 231 units in May 2009, up 4.1 per cent from a year earlier. This is the first year-over-year increase in activity in eight months. The average price of a property was $188,500. Unemployment declined in May 2009 to 6.1 per cent, from 6.6 per cent a year earlier.
Investors are advised to get in now as there are several residential construction projects currently underway, providing buyers with new options. "Improving consumer confidence and lower interest rates are drawing buyers to the housing market," says Hayes. "While inventories are high, they are in step with rebounding sales activity."
More locally, Larry Booker, Realtor at Re/Max Group Four Realty in Fredericton says the housing market is very stable and this is due to the affordable standard of living, including excellent school systems, short commutes to work and easy access to larger centres with daily flights to Montreal, Toronto and some U.S. destinations.
"For Fredericton in particular, our economy is based a great deal on two universities, government work and the military. We have a good high-tech sector and do not have a lot of manufacturing.
"Unlike some of the western provinces, our economy does not rely on the auto or the oil industry. With the downturn in these industries, we are seeing many people that left our area for higher paying positions out West, now returning and looking to purchase homes in our much more affordable housing market. This has kept our demand up and prices rising."
Areas in both north and south Fredericton are performing well, according to Booker. The average price of a property in May 2009 was $176,615. The city-wide vacancy rate is at just above four per cent, while average rents are around $697 for a two-bedroom apartment. Tenants are typically university students or government employees. Experts suggest purchasing a duplex, with average prices at about $230,000 and total monthly rents for both units at about $1,800.
"Rates have hit bottom and are now coming up," says Booker. "For investors, rents are still rising, vacancy rates have dropped and investment property prices are moving up. Banks, although tougher than before, are still looking to lend and offering excellent rates and terms. There has never been a better time to be a buyer in our region."
From the September 2009 issue of CRE