If Craig Alexander – TD Chief Economist is on the money again, these numbers could suggest that our market is ready for our move-up buyers to make their move in 2014. I would love your opinion. Happy New Year – May 2014 be better than ever!
In an article by Roger Taylor – Chronicle Herald – March 4, 2013 “… Craig Alexander, senior vice-president and chief economist with TD Financial Group was quoted saying ‘Halifax’s housing affordability is the envy of the rest of the country. “If you compare the average income of individuals in Halifax to the price of homes, there are no signs of excess valuation,” Alexander told me on the phone from Washington, D.C., where he was attending a conference. Alexander says it only takes about 3½ to four years of income to fully pay for an average home in Halifax. The national average is about five. Toronto is modestly above the national average. In a hot market like Vancouver, it takes 11 years’ worth of income to acquire a home. Having low affordability works in favour of first-time home buyers, but an economy also needs home prices to grow to allow existing homeowners to benefit from the appreciating value of their home over time, he says.The worst thing to happen to the economy would be boom-and-bust cycles. Alexander says he hasn’t identified an economic catalyst that would lead to a significant weakening in the Halifax real estate market.“I don’t think (Halifax) economic activity will be booming (in 2013). But at the same time, I don’t think there’s anything on the horizon that would suggest a correction in sales and prices is imminent.”
Changes to mortgage insurance rules last year may have discouraged some people from purchasing a home, says Alexander, but he believes that will abate as time goes on and people have time to adjust to meet the new financing requirements. The shipbuilding work has been slower to happen than most would have hoped, but he says it will happen and the economy will benefit from that activity.
“I just don’t subscribe to the idea that Halifax is headed for a significant economic correction.”
The CMHC’s Matthew Gilmore agrees that 2013 will be relatively flat for the economy and, more specifically, the Halifax real estate market. But things should start to pick up closer to the end of the year, and economic activity should really improve in 2014. Although sales will be flat this year, home prices should grow by two or three per cent, he says.”
I have heard both Craig Alexander and Matthew Gilmore speak over the last few years and am always impressed with their common sense approach and accuracy. Written in March of last year, it is interesting to review it again as we start 2014. The point that most stands out for me going forward is the idea of it taking 3 ½ – 4 years of income to fully pay for an average home in Halifax as compared to the national average of about 5 years. Considering the median total income in 2011 for Halifax was $78690. (According to Statistics Canada) we should now be closer to at least $80000. Times 4 suggests an average HRM affordability of $320000. My 2013 housing statistics review in my newsletter last month confirmed much of their positions in the article. (to subscribe please contact me or go to michelevygefraser.com)
A quick recap of 2013 MLS ® HRM residential only sales:
3401 sold between $50,000 -$300,000
(compared with 2144 currently for sale)
656 sold between $300,000 -$350,000
(compared with 444 currently for sale)
1051 sold over $350000. of which 17 were over $1 million
(1206 currently for sale $350000 -$1.m & 47 over 1 million)
Again, if Craig Alexander is on the money, these numbers could suggest that our market is ready for our move-up buyers to make their move in 2014. What is your opinion? Are you ready to buy or sell?
Please call or send me an email at 902-830-6397 or email@example.com anytime.
All the Best for 2014!