Real Estate Market Trends: Supply and Demand
Supply and demand are integral parts of the real estate market. The balance between the two can drastically change the experience of buying and selling property. New Brunswick is currently in the throes of a buoyant property market, a market that has been steadily growing for some time. The fourth quarter of 2020 was record-breaking, seeing prices and days on the market reach levels unseen in New Brunswick’s property market history. But with all this hoorah, for many, the question remains: what is driving this market, and is it sustainable?
There are always pundits that believe that the market is volatile, that it is impossible to predict where the market is heading because trends determine prices. Perhaps that has been the case in the past, but for New Brunswick, the resounding message is that this revived market is here to stay.
Why Should You Care About Supply and Demand in the Market?
The general perspective is that the property market is only significant to REALTORS® and investors, but the market affects the region’s economy, business sentiment, and neighbourhoods on a molecular level. It affects buyers, sellers, tenants and their families. When the property market is booming, it signals to companies that investing in development in the area will have rewarding results. When property sales rise, the population grows, and with it, the experience-pool of a community increases.
In a seller’s market, this displays growth. Because a home is a long-term purchase, a seller’s market shows that people are taking a significant step to establish roots in the region.
What’s Causing New Brunswick’s Sellers’ Market?
New Brunswick’s booming market can be attributed to two factors: supply and demand, which is exacerbated by the rise of telecommuting and reasonable housing prices.
The primary difference between New Brunswick and neighbouring provinces, Nova Scotia and Quebec, is that New Brunswick still has a lot of room for home prices to continue to increase. This contrast is even bolder compared to Ontario or British Columbia. The median single-family home in New Brunswick is 45% cheaper compared to Quebec and 36% cheaper compared to Nova Scotia, where the median prices are $328,000 and $276,300 respectively, according to data from the final quarter of 2020. Consider how far below the national average price of $621,000 these numbers are to get an idea of the room for growth available on the east coast.
These prices reveal that New Brunswick has been overlooked in terms of both possible investment and development and steeply undervalued, giving the province time to catch up to its neighbours.
Besides the affordable house prices, New Brunswick also offers families an ideal lifestyle. Many inter-provincial buyers are looking closely at what New Brunswick offers, especially for those telecommuting to work. Before the pandemic, nearly 6% of the workforce worked remotely – according to information from PWC – this could increase to 12% post-pandemic as more workers want to make their remote work to become permanent. For industries where in-person work isn’t necessary, this presents a fantastic opportunity to purchase property at a fraction of what it would be in other provinces.
The growth in telecommuting correlates with the demand for housing in New Brunswick. The province is perfect for families and professionals who may not want the hustle and bustle of metropolitan areas but still want the convenience.
More buyers moving to the province has a domino effect, resulting in further development, more opportunities, and more economic expansion. This is a never-ending cycle. More buyers buy in the province, development increases, attracting even greater numbers of buyers.
What This Means For Fredericton
Homes in Fredericton are currently 4% cheaper than the provincial average. Making the market significantly undervalued and meaning there is an opportunity for extensive property appreciation. Besides being cheaper, there’s also less inventory in Fredericton, compounding the seller’s market.
Supply And Demand
Supply and demand determine the type of market we’re experiencing. When demand increases and there isn’t adequate supply, we enter a seller’s market. When demand decreases and supply increases, we enter a buyer’s market, and when supply and demand are equal, we enter a balanced market, this is the basic principle of the property market.
Because of supply and demand in Fredericton, the forecast is that the city will remain in the throes of a seller’s market for the foreseeable future.
Demand in Fredericton
There are three main kinds of buyers in Fredericton: lifelong residents, out-of-town buyers, and inter-provincial buyers.
In New Brunswick, Fredericton represents an ideal balance between community and property prices that spread across the spectrum. Because property prices vary and Fredericton has established communities, this increases demand among buyers because they have more options than they would in other cities. Buyers can get more land, buy into an existing community, and have more amenities than they would elsewhere when they buy in Fredericton.
When you combine that with the sharp increase in telecommuting, the demand for Fredericton homes is unlikely to slow down soon.
Supply in Fredericton
But contrasting the booming demand is property supply. Although demand has almost doubled recently, supply hasn’t increased as aggressively. Fredericton is unique to other cities because there aren’t many property developments – either in construction or in planning – that buyers can buy into. This gives sellers more control over who they decide to sell to and for how much.
That’s part of the allure in Fredericton.
What is even more telling is that Fredericton’s market has been experiencing a significant increase in sales for some time. In the first quarter of 2019, long before any quarantines or lockdowns, Fredericton home sales had reached a nine-year high. Homes in the area were selling quickly, offers made above asking, and inventory on a downward trend: all traits we are still experiencing, though now to a greater extent.
The expert REALTORS® at The Right Choice Realty are here to help guide you through any phase of the real estate market.
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