Is the Halifax Real Estate Market really BOOMING?
Wednesday, Sep 11, 2024
THE MARKET IS BOOMING IN HALIFAX. This is the trend that most agents have on their Instagram Accounts. Call me pessimistic, but I don’t see the market changing in Halifax unless rates are below 4% and there is more inventory to choose from.
We are in a “Cinderella state of mind” Buyers are looking for the perfect fit and sellers want the fairytale of “covid pricing”.
OUCH!!!!
Ok let’s talk about the market. Not just what has been happening but let’s look at this historically.
Analyzing the data from the Halifax real estate market between January and August from 2016 to 2024, several trends and relationships become evident:
Interest Rates and Market Activity:
Generally, there's an inverse relationship between the 5-year mortgage rate at the start of the year and the number of homes sold. Lower rates in 2021 (3.3%) saw the highest percentage of homes sold (89%), whereas higher rates in 2024 (6.31%) saw a decrease in sales, though the selling percentage remained stable at 75% since 2022.
This trend suggests that as borrowing costs increase, fewer people are able to or willing to buy homes, impacting the number of sales, though the percentage sold remains relatively stable due to a corresponding drop in listings.
Listing and Sales Volume:
The number of homes listed and sold has generally decreased over the years. The listing peaked in 2016 with 6070 homes and dropped to a low in 2023 with only 3526 homes. Sales followed a similar trend, peaking in 2021 at 4397 homes.
This decrease could be influenced by several factors including market saturation, economic conditions, and changes in buyer preferences.
Selling Efficiency (% Selling):
The efficiency of selling homes has increased notably from 2016 to 2021, peaking in 2021 at 89%. Since then, despite fluctuations in interest rates, the efficiency has stabilized at around 75%.
This increase through 2021 could be attributed to a combination of favorable interest rates and potentially increased demand in a post-pandemic environment where more people were looking to change living situations.
Average Price Trends:
The average price of homes sold has shown a consistent upward trend from $270,000 in 2016 to $565,500 in 2024.
The increase in prices could reflect a variety of factors including general market appreciation, inflation, and possibly a shift towards selling higher-priced homes.
The Halifax real estate market shows signs of cooling in terms of volume but maintains a relatively high efficiency in selling listed homes. The continuous rise in average prices despite higher interest rates could suggest a strong market demand or a shift in the types of homes being sold (e.g., more high-value properties). This data could be useful for strategizing sales approaches and understanding market dynamics in relation to interest rate changes.
Predicting the real estate market's trajectory into the spring of 2025 involves considering current trends and external economic factors such as interest rates and overall economic health. Here's a projection based on the provided data:
Interest Rates: If interest rates remain high, this will likely continue to impact buyer affordability. A high interest rate environment typically cools demand as borrowing becomes more expensive. However, if there are cuts or stabilization in the rates, it could invigorate the market somewhat.
Listings and Sales Volume: Given the trend of decreasing listings and a relatively stable percentage of sales, we might see a continued drop in the number of homes listed as sellers wait for more favorable market conditions. Sales volume might stay consistent if interest rates stabilize, leading to a moderate increase in demand.
Selling Efficiency: The percentage of homes sold has stabilized around 75% in recent years. Assuming no drastic economic changes, this efficiency might remain around the same mark, indicating a balance between supply and demand in the market.
Average Prices: Average prices have been consistently rising, and this trend may continue into 2025, albeit possibly at a slower pace if the market cools down. The rising prices could also reflect a shift toward selling more upscale or newly constructed homes, which tend to be pricier.
Economic and Demographic Factors: Other factors to consider include population growth, migration trends (especially given Halifax's appeal), and general economic conditions such as employment rates and consumer confidence, which can all significantly influence the real estate market.
For spring 2025, the Halifax real estate market might see continued stabilization in terms of sales efficiency, with a possible modest increase in listings if the economic outlook improves or interest rates decrease. Average prices are likely to increase but at a potentially slower rate depending on the broader economic conditions.