Real estate reality: Just how hot is the St. John's market anyway?

I'm never going to own a million dollar home, but according to Royal LePage, someone's sure buying them up in St. John's.

A recent media release pointed out there's been a doubling of the number of homes selling over the $1-million mark.

At first glance, it seems like something substantial is happening in the local market. So I checked the numbers with the Canadian Mortgage and Housing Corporation. 

So far this year in the St. John's metro area, six homes that were listed at $1 million or more have been sold.

Last year, there were two.

Is this significant at all?

 "Six sales in excess of a million dollars in this market is substantial," said Chris Janes, the province's senior market analyst for CMHC.

"That has an upward impact on the average price obviously but again when you talk about that doubling or tripling, it's really irrelevant." 

That seems to match what you hear on the street. The talk at the proverbial office water cooler is that the market has changed.

Friends and co-workers now talk about seeing more "for sale" signs around St. Johns, hearing about houses staying on the market for longer periods of time, and questioning whether or not the breakneck construction of new homes has slowed down.

Winning streak? 

That's why many eyebrows were raised locally when the Globe and Mail picked up on the Royal LePage release and published a story with the headline, St. John's housing market on a 'winning streak.' 

The accompanying article quoted Royal LePage CEO Phil Soper as saying the local "market continues to drive ahead at a faster pace than the rest of the country," and that St. John's is a "very boisterous market."

Taking that opinion into account, I placed another call to CMHC's Chris Janes, for his take on that report. 

"When you look at articles or headlines such as these, they may be a little bit self-fulfilling," he told me. 

"They may lag the overall market in terms of what we see here on the street by a few months or even a year or two. So for me, it's a bit surprising to see that kind of a headline ... given the current market conditions," said Janes.

No longer a seller's market

Janes told me that since last year, sales are down eight per cent, new home construction is down 24 per cent and inventory is up 14 per cent.

"So the market is certainly in a down trend right now, a downward cycle, which is normal when you come through an aggressive growth phase like we have over the past five or six years," said Janes.

Glenn Larkin, a realtor with Royal LePage in St. John's, says that the local office is on track to have another record year for sales, albeit by a very small margin. 

He acknowledges that the market has changed.

"We have a big inventory right now and sales have declined. So when you get those two things, you're moving into a buyers’ market. I think prices, there will be pressure on prices," said Larkin.

Incentives offered

The picture Larkin paints does indeed sound rather friendly for anyone looking to buy.

"We're seeing a lot of contractors offering incentives — anything from electricity to be paid for a year, to appliances, to bonuses, to selling agents and bonuses, condo fees for a portion of time, and so when you see incentives moving into the marketplace, you know the market's cooled."

Buying's one thing, but what if you're looking to sell?

Larkin says to listen to your realtor and look at making your price "more competitive than what is currently on the market, because those that have been on the market for 30 or 60 or 90 days probably need a price adjustment."

And if you can wait to sell?

"If you're not in a hurry, you might want to wait until the spring. And who knows what spring will bring, " said Larkin.

Is there a bubble about to burst?

All the same, Royal LePage's CEO says St. John's is in better shape than other cities. Soper said the St. John's area "market continues to drive ahead at a faster pace than the rest of the country."

Janes begs to differ. He says the hottest markets right now are the big city heavyweights of Toronto and Vancouver.

Pessimists watching the marketplace are worrying a bubble bursting, especially since oil prices have fallen recently. 

But Janes says that as long as the economy stays solid, there's no reason to worry.

"I guess the key message that I want to put out there is that we don't see prices declining," he said. 

"So with the economic strength that we have in terms of population income, employment growth, all that is still in play and that's providing some pretty good support to the housing market despite the overall slowdown. "