The housing market in eastern Newfoundland is hot. The barriers to building more are hefty

The housing market in Newfoundland and Labrador is competitive with demand exceeding supply, but there are strong barriers to building more homes to meet ambitious federal targets to ease a housing crunch, according to two industry professionals. 

Real estate agent Colin Morgan says it's a seller's market, with the benchmark price of a typical home in the province sitting at $297,000.

"That's up about $11,000 over the last three months," said Morgan.

In the last week of July, Morgan said, there were 54 home sales in St. John's and more than half of them were sold for more than the asking price. 

Morgan says increased immigration, people moving from other provinces and low inventory levels are helping to keep the demand for homes — and prices — high. 

"There's more people coming into the province than homes that are available. So when that happens, buyers have less to choose from and then people pay more than what people are asking for, typically," he said.

Morgan said homes in the province, while increasing in price, are relatively affordable for people from Ontario, British Columbia and Quebec, where customers can be more affected by higher mortgage interest rates.

"The benchmark price as a province is $297,000. You can't get that anywhere in Canada," he said. "Halifax is $420,000, Quebec is $550,000, Vancouver is $1,000,000, Ontario's $850,000." 

Morgan also says fewer people are selling, so the number of homes listed for sale, known as inventory, is low, with just a five-month supply. 

"What that means is, if every Realtor in the province stopped listing houses right now, those listings would go in five months. To give you context, in 2018, we had 22 months of inventory," Morgan said. 

On average, he says, there are at least 15 people viewing each property, and many sellers have a strategy by listing a time and date until they are accepting offers, rather than taking offers on a first-come, first-served basis, so if there are multiple buyers interested, they can take the highest bidder.  

With prices increasing, Morgan says, some buyers can no longer afford the type of home they were eyeing even six months ago.

Morgan said he's even seen buyers write letters to the sellers in hopes of swaying the sale in their favour.

"Sometimes it works," Morgan said. 

Barriers to building more homes

The Canadian Home Builders' Association in Newfoundland and Labrador says this summer has been a busy home construction season.

"They've been flat-out," said executive officer Alexis Foster. 

She said there have been about 700 housing starts in the province from January to the end of June. 

But that's a far cry from the 10,000 homes that need to be constructed in the province each year, according to the Canadian Mortgage and Housing Corporation, to meet demand by 2030.

"We're not going to get there, unfortunately," Foster said.

Foster says the biggest thing standing in the way of building more homes is a shortage of workers in the skilled trades.

"We need more carpenters, we need electricians, plumbers, painters, plasterers. Everything that goes into the house we need right now," Foster said.

"We need to make sure that we're encouraging youth to get into the trades. There's lots of opportunities to have a great career in the trades but right now we just don't have the workers to fill the need."

As building ramps up, the home builders' association says it would like to see the provincial government regulate homebuilding and license contractors.

"We don't currently have it. There are other jurisdictions in Canada that do," Foster said. "However, Atlantic Canada does not have a contractor licensing right now … so anybody can go and build your home."

Foster said licensing contractors would provide protection for consumers by ensuring that contractors have the necessary insurance and are registered with Workplace N.L. 

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