The tale of two (coastal) cities

When I moved to the West Coast from Halifax 22 years ago, I had heard that the Vancouver real estate market was tough to break into.

But how bad could it be? I had just sold a beautiful three-bedroom heritage house in one of Greater Halifax’s quiet neighbourhoods. It went for $134,000, 40% more than what I had paid for it a decade earlier. So I confidently walked into a realtor’s office on the west side of Vancouver, and told him I was looking for a new house in the same price range. He laughed. That $134,000 wouldn’t get me anything but a one-bedroom condominium. Maybe.

Bidding wars were just starting to be a thing in Vancouver, and more than one condo slipped through my fingers as a competitive buyer slapped down a no-conditions, over-asking offer.

How was this possible? How could I trade a two-storey, single-family dwelling for a condo – and still come out the loser?

It was a “bubble”, friends told me. “Just wait, it has to burst.” More than two decades later, that Vancouver bubble still shows no sign of popping. And now my hometown of Halifax is experiencing similar market insanity – multiple offers, sales at 20% over asking, homes selling after only a few days on the market. That house I sold in Halifax is now assessed at a halfmillion dollars. It went up almost $200,000 in the last year – 67% in just 12 months.

“It’s crazy,” says Andrew Perkins, who has been working as a realtor in Halifax for 17 years. He tells the story of his latest deal.

“We wrote offers on eight properties, and they think it’s a good offer – and they’re not even in the top five. There was a condo listed at $500,000, and it went for $100,000 over the asking price. Sellers are loving it because they’re getting more money for their house than they ever imagined.”

David Richardson has sold homes on Vancouver’s west side for 40 years. He nods his head as he hears about the Halifax market, because it’s such a familiar scenario.

“Supply and demand,” he says, “it’s all a case of supply and demand.” Richardson points to one neighbourhood where there would usually be 25-30 listings. Today, there are two.

“It’s just nuts. I’m sitting here with no listings. Normally at this time of year, I’ve got at least 15. Normally by this time of year, I’ve sold 30, 40 homes. I’ve sold 12. There’s no inventory.”

That’s the chorus being sung by realtors across the country. According to the Canadian Real Estate Association’s latest numbers (April 2023), new listings crept up by 1.6% over March, but still sit at a 20-year low.

Yet, when you drive through Halifax or Vancouver, you see bulldozers and cranes on one construction site after another. However, Perkins says, that is not meeting the need for people who want to own their own home.

“Because they are building apartment buildings rather than condos,” he says. “The vacancy rate for rentals is only 1%. And they have been doing that for the last 10 years. So, Halifax doesn’t have that condo inventory the big cities have.”

In Vancouver, there are 11,000 condos slated for construction this year alone. Surely, that will alleviate the supply pressure, right?

“Building towers and towers and towers of condos – come on, a family of four can’t live in a one-bedroom condo,” Richardson says.

It is estimated some 35,000 people will move to the Greater Vancouver area this year – a 0.95% increase over last. But nothing beats Atlantic Canada for growth. Moncton, N.B., is the fastest-growing city in the country, with Halifax a close second. Numbers released last year saw 20,000 people move into Nova Scotia’s capital city – an increase of nearly 5% in one year.

“With the pandemic, we had a lot of remote workers who were in Toronto, Vancouver, these places, who moved to Halifax because the real estate is still very affordable, and they can live anywhere for work,” Perkins says.

A single-family home in Halifax averages around $600,000 right now. With many universities, a strong cultural vibe, and an ocean, the city has a lot of appeal, if not a lot of homes. Although Perkins admits no one can predict a real estate future, he cannot see prices going down.

“As long as inventory stays as low as it is, this isn’t a bubble. Nobody could predict what happened in the last three years. No one. What’s going to happen? Even if we went down 10-15%, we’ve gone up almost 60% since 2020.”

In Vancouver, it is hard to get into a single-family home for anything under $1 million dollars. New zoning regulations are designed to encourage increased density in neighbourhoods throughout the city. Developers can now put a four-plex on a standard city lot. The result? Richardson is seeing builders, not families, predominantly as buyers.

“I just sold a bungalow tear-down, to a builder for $2.99 million,” he says. “No view. And I sold a corner lot, no view, to a builder in one day for $3.26 million.”

Richardson mentions another three lots in Kitsilano, a laid-back community minutes away from a string of popular beaches. The sellers are debating whether to list each of the standard 33x120-foot lots for $2.68 million or $2.88 million. With the new zoning that allows greater density, Richardson says each lot will likely house a four-plex.

With the current price per square foot, he suggests each unit will go for about $1 million. He admits those places will be small – but at least it will add to the scarce inventory.

“I’m not negative,” he adds, “I just don’t see a way out of this thing unless City Hall comes in and rezones everything – everything, including farmland. It’s a crisis, a total crisis.”

(To hear more of David Richardson’s thoughts on the Vancouver market, go to www.businessedgemedia.ca and click on our podcast.)