Residential Real Estate Check-Up With Donna Harding Of Engel & Völkers NS

Dec 3, 2023 | Real Estate

By Andrew MacDonald

  • Residential Real Estate Check-Up With Donna Harding Of Engel & Völkers NS

Donna Harding, who owns Engel & Völkers NS franchise with her husband Sebastien Latulippe says the high-end real estate market is being affected by high inflation.

“Our high-end market has been affected the same way the lower end of the market has been affected,” Harding tells The Macdonald Notebook.

“The increases in interest rates have impacted the entire market,” she adds, and that also includes the first-time home-buying market.

“Often when you look at market changes usually you will see properties in the lower price ranges tend to go faster, and we have stuff in lower price points that is going faster, that is common sense,” she says.

But, then she says the amount of buyers in the lower-priced real estate market “is changing, because of the higher interest rates.”

Donna Harding and her husband Sebastien Latulippe own Engel & Völkers Halifax-NS.

Harding talks about real estate listings, providing me with figures.

In the first-time home buyer market, there are 153 listings between $250,000-450,000 in Halifax Regional Municipality. Across Nova Scotia, in this category, there are 852 listings.

Between $300K-$450K there are 127 listings in HRM, and 620 across the province, notes Harding.

Looking at prices from 0 to $450,000, in HRM, there are 183 home listings and across NS, a total of 1,374 properties are in this category.

“The biggest story right now is how a market behaves when you are in a period (of economic downturn). I hesitate to use the word ‘recession’. It depends on who you talk to. Are we in a recession, aren’t we in a recession? Some factors indicate we are, but other things like (low unemployment) indicate we aren’t. But, consumer spending is down – so that is a huge indicator. But, inflation is coming down, which is a good news story,” adds Harding.

“But, what happens to real estate markets when you got interest rates continuously being increased, all of these increases over the last year and a half have absolutely affected our market.”

She says the quantity of sales from 2021-2023 is way down. “But, 2021 is probably not a good indicator anyway, because 2021 was a very unusual year (because of accelerated sales due to the pandemic). But, even going back and looking at stats in 2020, which was more of a reasonable year, because we were closed down for a few months. If you look at the quantity of sales (from 2020-2023), it is significantly down,” adds Harding.

“Some of that was inventory-driven because we did not have enough inventory. We see the inventory creep up now – and that is because we don’t have the number of sales because fewer buyers are buying, so more inventory stays, and has gone up each month,” she explains.

“What is interesting is when you look at the entire market, the average price point is still going up and it is going up because when inventory stays low, markets continue to move.”

She says 2023 market conditions were impacted into June by “wildfires everywhere and the floods.”

Those natural disasters “halted the market,” says the real estate broker. “It has to halt the market. What we saw from the first of May to the end of September, my realtors outside of Halifax were quite busy, but inside of Halifax was really really slow because of the wildfires and floods.”

And, then coming into August, there were two more interest rate hikes, which caused the real estate market to slow down.

“It’s been a very unusual year. I do not think anyone can look at the real estate market in Nova Scotia in 2023 and say (the market is solely down) because of interest rates, or it’s because of inflation. I think it’s a combination of factors that were very unique in our province.”

First-Time Home Buyer Market

The continual hikes in interest rates, high inflation and the cost of living increases are obviously impacting the first-time home buyer market – an understatement.

“Obviously if you are looking at someone planning to buy a house that is $450,000, if you look at how much it would have cost with a mortgage rate of 2 per cent compared to 5 per cent, it is significant.”

She says the 5 per cent interest rate in Canada equalizes out to really being seven per cent, because of a federal government rule that a home buyer has to be qualified for a mortgage 200 basis points above set interest rates.

“That is a good rule,” which was implemented five years ago, following a housing collapse in the United States market.

“The response in Canada from a mortgage perspective, they put this rule in place on when you are qualifying a buyer at interest rates of the day, you have to add two per cent on the top,” adds Harding.

“That means a buyer today that wants to get a mortgage at five per cent or five and a half has to qualify at seven per cent or seven and a half per cent. And that is high.”

The Nova Scotia Association of Realtors has long had a policy in place that the deed transfer tax on home buying be waived or payment on this tax is delayed for first-time home buyers.

The deed transfer tax on a house sale price in HRM is 1.5 per cent, and higher in rural municipalities. The municipal governments charge and collect the deed transfer tax.

Harding is unequivocal on that score on its meaning for first time home buyers.

“To remove deed transfer taxes for a first time home buyer would absolutely help them in order to close a property – there is no doubt about it,” says Harding. “That is an extra 1.5 per cent of the purchase price if you are in Halifax. That is a significant amount of cash, and it means they have to have down payments plus that.”

“If that was removed it would enable them to get their down payment faster – there is no doubt about that,” the broker adds.

“But, I do not see any headwinds on the horizon of HRM approving such a policy and I do not see any headwinds of the province coming in with any kind of a mandatory policy on this.”

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