Is the supply of detached homes, under $200,000. on the Halifax Peninsula really changing?

Is the supply of detached homes, under $200,000. on the Halifax Peninsula really changing?

For anyone considering a move to Halifax and wanting the conveniences of short easy walking, biking or a quick bus ride to downtown Halifax, the first place they usually look is ‘The Peninsula’. Divided into 4 areas; south, west, central and north, most areas offer the urban walk-able living lifestyle with close proximity to shopping, cafe’s, restaurants, theaters, Churches, green spaces, parks and community gathering places.  And, of course, surrounded by the ocean with the Halifax Harbor on one side and the Northwest Arm on the other. Next comes the question of affordability…

Generally speaking, since 2012, less than 1% of detached homes sold on MLS® on the peninsula were under $200,000. and an average of 3% of detached homes sold on MLS® on the peninsula were over $1 million dollars.

On the entry level end, since 2012, excluding condo’s, the actual percentage and number of detached homes MLS® sold under $200,000 hasn’t really changed (except for 2016-2017) but what these numbers don’t show is the size of the homes sold. Each year the listings under $200000. tend to be smaller and typically are bungalows.;

2012-2013 .6% of total Halifax Peninsula Sales (4 homes)

2013-2014 .7% (4 homes)

2014-2015 .7% (4 homes)

2015-2016 .8% (5 homes)

2016-2017 1.6% (11 homes)

2017 (Jan-Sept) .6% (3 homes)

On the high end, since 2012, the MLS® sales of properties over $1 million dollar has generally been increasing.

2012-2013 2.4% of total Halifax Peninsula Sales

2013-2014 2%

2014-2015 2.9%

2015-2016 3.8%

2016-2017 4.9%

2017 (Jan-Sept) 3.6%

So what does this mean? My professional opinion is to buy anything detached under $200000. (excluding main thoroughfares) on the peninsula to maximize your real estate investment – especially if you are a first time home buyer!  Compromise on space, forgo costly renovations (except paint and utilities) and hold until the increase in the market pays for your utility upgrades and doubles your down-payment to buy your next home. It may happen faster than you think! Logic and historical real estate patterns says that any real estate that offers time saving easy lifestyle living will become more valuable as our demographics shift and our needs and demands re-prioritize. Consider how in 2000 approximately 40% of all MLS® sales of detached properties on the Peninsula were under $200,000. compared to less than 4% so far this year. According to NSAR and CREA our HRM (Halifax Regional Municipality) overall prices have increased 4.2% in the last year.  It also lists our average price at $297,700. but that is based on MLS® sales of properties covering all of HRM which is a very large area. (approximately 1 hour by car from one end to the other).

Ready to buy? Call me anytime. ‘Let’s Talk Real Estate!’

~ Michele Vyge-Fraser (902) 830-6397

Red Door Realty Agent/Associate Broker with over 20 years experience


Adding mortgage default insurance same as financing with 0% downpayment?… may sound good but does this protect your investment?

The attached link c/o The National Post explores the risks and advantages of low downpayments…

‘At one point during this housing boom, people could buy a house with no money down. In fact, once mortgage default insurance was tacked on, they have loans for almost 103% of the value of their purchase.’… ‘The housing industry wants no part of any increase in the down payment. A study this month from the Canadian Association of Accredited Mortgage Professionals estimated half a million sales since 2007 would have been lost.’… ‘CAAMP asked respondents in a survey released last week what would happen if they were asked for a 10% down payment. Of those who purchased since 2007, 45% say it would take them out of market and another 14% were not sure – about 100,000 lost deals a year.

Hmmm… so is it; what’s good for the real estate industry is good for the individual investor or the other way around?

Breaking it down…

– mortgage default insurance protects the banks not the individual

– the cost of mortgage default insurance is anywhere from 1-3% of the value of the mortgage

– the longer your amortization period, the higher your premium

– the lower your down payment, the higher your premium

– anything less than a 20% downpayment must be insured by law in Canada

– sometimes, especially with rental properties, mortgage default insurance may be required with over 20% down payment

– the premium is added to your mortgage so you pay interest on it

– on average purchase price of $30000. with 5% downpayment ($15000.) the premium would cost $7000. to $10000.

– $7000. to $10000. premium adds $40. to $60. month to your mortgage of which approximately 1/3 pays the compounded interest on the loan

– GST/HST is charged on the insurance which you pay upfront

Essentially you are now carrying a $295000. mortgage on a $300000. purchase which translates into the same as a 1% +/- downpayment…. hmmm again…

Real Estate activity is definitely profitable for the entire real industry – which includes a substantial part of our GDP. Beyond the actual purchase and financing of real estate, construction, DYI and employment, materials, insurance, maintenance, utilitity providers and more all benefit our collective economy.  

The ultimate question is whether you are safe? Are your personal investment and associated commitments are safe with low down payments? The answer is probably yes – assuming you are safely employed and in a part of the country (like Halifax) where annual property value increases tend to average out at 5%+ a year over 7 years. The answer is more likely no if you are investing a more volatile market where prices swing more than 10%. 

The best protection is to invest in stable regions where the market tends to be predictable and where 5% downpayment investments can safely grow to 10-20% over a few years. (the’ ladder approach’ to buying real estate) In higher risk regions, however, ideally self impose ‘insurance’ by either increasing your downpayment to 25 – 30% or invest in owner occupied investment properties. This will buy you peace of mind and time! If the market is slow and your property value is down, you will be in the best position to wait out the typical 7 year cycle…. more on this at another time:)