St. John's housing market turns red hot

The promise of new megaprojects is spurring a red-hot St. John's housing market, as the number of available homes hits an all-time low and market demand increases.

Larry Hann, a St. John's real estate agent, said the industry has gone from a buyer's market, to a balanced market, to a seller's market in just one financial quarter. It's a trend the Canada Mortgage and Housing Corp., the federal housing agency, hasn't seen in the country in years, he said.

"Inventory is at record lows and there's a lot of pent-up demand in the market," he said.

Housing prices are expected to rise 12 per cent this year, according to data from realty company Remax.

Hann said the trend began with the government's announcement of a memorandum of understanding on the $16-billion Hebron oilfield project in the summer of 2007.

The possibility of other megaprojects, such as the Newfoundland and Labrador Refining Corp. refinery in Placentia Bay and Vale Inco's nickel processing plant, have only added to the real estate frenzy.

"Paying well over the bid price is more and more the norm," Hann said, adding that he's personally seen people pay up to $7,000 above asking price, which had been unprecedented in the market in previous years.

"It's getting a little bit, I hate to say the word 'panicky,' but there's a lot of anxiety in the market now on behalf of buyers."

One hundred per cent financing from banks, meaning people don't have to fork out a down payment, has also helped boost the market. Hann said many of his clients are investment buyers, and houses like duplexes and two-apartment homes are the hottest tickets right now.

It may be a great time to be a seller, but buyers are at the end of their ropes.

Lori Foote currently lives in downtown St. John's and is looking for a house in an east end or central neighbourhood. She's been on the hunt since December, but has been unable to keep up with the market. She's now taking matters into her own hands, she said, by passing out flyers to homes she's interested in buying as a way to try to get a fair shot at available houses.

"Homes are disappearing overnight," Foote said. "In 24 hours, houses are going."

Foote said she's seen homes go for as much as $11,000 more than asking price.

"This market is just unreal. I never thought it would be hard to get a house here. Price is one factor, but just getting the home is a big factor right now because there's at least five to 10 bids on one home and it's only been up for 24 hours."

Hann said Foote's experiences are typical of what buyers are going through, and things aren't about to slow down anytime soon.

The Canada Mortgage and Housing Corp. ranks the St. John's housing market No. 4 in Canada for affordability, meaning people from all over the continent are looking at the northeastern Avalon peninsula for housing investments.

It's a fact that's not lost on house hunters like Foote.

"They say it's only starting," Foote said. "They say we're just on the beginning of the housing market here."