Newfoundland

I think I should buy stock in Nike, Reebok or some other comfy shoe company. My feet are tired; my pretty summer shoes have been tossed into the back seat of the car and there are no “sold” stickers left in St. John’s.

What’s happening? Its no big secret, the provincial government signed a memorandum of understanding last August 2007 with several oil partners and since then the market has increased almost 35% in one year. Recreational properties have increased almost 22% and I’ve gone begging and pleading to my office mates for a “sold” sticker I need to put on a house. No one has any, not our office, not the local board office – everything is selling, and everything else is sold.

Now to say that prices have gone through the roof is not quite accurate, we still have the best prices for residential homes in Canada and probably still catching up to the mainland, but catching up we are. And, fast.

To add another twist into the mix, Canada Mortgage and Housing Corporation is cancelling/suspending its very popular 100% mortgage insurance for buyers by October 15, 2008. This includes all buyers, first timers and more timers which has really put Realtors feet to the fire. Anyone who qualified has to “get their ducks in a row” (not sure if that’s a Newfoundland term or not) by that time so that means run out and buy something/anything with a roof. Some lenders have already pulled the plug and other lenders are closing the doors on this popular program by October 1. Why? Bankers and lenders have developed a conscience and don’t want us to get into the sub-prime mess happening below the 49th parallel. Imagine that protecting us mere mortals – God bless them I say – thinking of us before themselves. Not that Canada has hit a bit of a slump and that many of the Canadian banks invested heavily in the US mortgage market – no. It’s for our own good like cod liver oil.

Townies (St. John’s men/women) are seeing the benefit of homeownership and the increasing values are moving quickly past the overpass with homes, vacation homes, and land appreciating at prices never seen before.

Before I blow a hole in my Nikes – does any have a “sold” sticker?

Denise Brophy, ABR, ePro, CERC Relocation Specialist
www.MyNewfoundlandHome.com

Although a recent report pegged St. John’s as one of the most affordable cities in the G7 nations, affordability is a growing concern. Buyers continue to face challenging market conditions, including unprecedented demand and extremely tight inventory levels.

Multiple offers are quite prevalent. It is not uncommon to see quality, new listings generate three to four offers after only a few days on the market, with most selling for more than list price. Bungalows are especially coveted.

Despite a sense of urgency in the marketplace, buyers remain quite determined. Most are willing to compromise by way of necessity, while others ante up more money to compete. Some entry-level purchasers are sitting on the fence, waiting for more product to come on stream with the Spring market and better weather.

Currently, average price in Greater St. John’s hovers at $172,000. Although the St. John's downtown core has more affordable options, most purchasers prefer Woodlands, Cowan Heights, and Mount Pearl, where three-bedroom, resale homes start from $180,000.

Condominiums are a viable alternative, but this type of product is popular with only a small percentage of first-time buyers. St. John's Condos can start from $100,000 for a one-bedroom unit in an old military conversion to $130,000 for a two-bedroom in an older building in the northwest end of the city. Duplex product, though limited, is also growing in demand, and more units are coming on stream.

The least expensive sales recorded to date in St. John’s include a detached home with some new upgrades that changed hands for $140,000 and an 800 sq. ft. condo apartment that sold for $95,100 in an older, but renovated, building. Both were located in the city’s east end.

With average prices forecast to experience double-digit momentum yet again this year, it is expected that the first time buyer segment will remain very active as purchasers try to buy in before prices rise further.

• MLS® residential sales increased 14.3 per cent to 713 units compared to last year’s first quarter sales of 624 units

• January, February and March MLS® sales were 236, 238 and 239, respectively and were held back by a lack of active listings

• Driven by low inventory, the first quarter average MLS® house price jumped 13.6 per cent to a record $156,953 compared to $138,167 during the first quarter of 2007

• The resale market headed quickly to a sellers classification last Fall and remained there throughout the first quarter of 2008

• Average time-on-market trended lower during the quarter, strong price growth continued and many choice properties enjoyed multiple purchase offers

• Current trends indicate the market will favor sellers once again during the second quarter, but an expected improvement in active listings may provide some relief for buyers

• After falling nearly a half by January, active listings rebounded slightly during February and March, but remained low, restricting unit sales growth accordingly

• The supply of active residential listings averaged approximately 1,150 during the first quarter compared to almost double that number at 2,100 a year ago

• First quarter new listings were near last year’s first quarter level of 1,600, while active listings retreated 45 per cent compared to the first quarter of 2007

• With U.S. recessionary pressures continuing, the Bank of Canada is widely expected to cut rates 50 basis points by June 10th

• Accordingly, mortgage interest rates are expected to remain low in 2008 and start to creep higher in 2009 as investors gain more confidence in financial markets

• One and five-year mortgage rates are forecast to be in the 6.25-7.25 and 6.50-7.50 per cent range, respectively, in 2008 and beyond

Anyone who has ever been to North America's Oldest City can attest to the fact that it's a great city. St. John's has become a great place to relocate for a variety of recent economic reasons. Here are my reasons why St. John's Newfoundland is a good choice for relocation.

7. Scenery - View Newfoundland's spectacular coastlines, panoramic views, icebergs, whales and provincial parks.

6. Affordable Housing - Average real estate price for in St. John's is lower then most cities in Canada. We are seeing more and more emails from people in Vancouver, Calgary and Toronto looking to relocate back to Newfoundland or looking to invest in Newfoundland.

5. Quality of living - Enjoy a high standard of living, low population, great schools, little traffic, fresh clean air and genuine Newfoundland hospitality.

4. Proximity - Your commute to and from work, schools and amenities is VERY short. You can drive from East End St. John's to West End in about 15mins. With the Outer Ring Road, commute time from Paradise and CBS has been reduced significantly.

3. Nightlife - There is always something to do in the evenings. Plays, theater, beautiful restaurants and live music at most George Street bars.

2. Outdoor Activities - There are lots of winter sports (skiing, ice fishing, skating, snowboarding, ice hockey, snowmobiling, etc.) and endless summer activities (golfing, baseball, soccer, swimming, jogging, sea kayaking, rowing etc.). Hike or camp the trails in provincial parks or the East Coast Trail. Hunt moose, rabbit, caribou or pick blueberries. There is something here for everyone.

1. The next few years are looking very promising for Newfoundland. There is a lot of hype on our oil and gas industry. Hebron, White Rose, Hibernia, and the Terra Nova Project, all major contributors to the Newfoundland Economy. This combined with the low cost of living makes St. John's an attractive city to relocate.

Allow Fraser and Stephen Winters to assist you when relocating to St. John's or surrounding areas. Email us for a relocation package.

There has been quite a debate around the "St. John's real estate water cooler" in recent weeks. Towards the end of 2007 some local builders and subdivisions in St. John's implemented a new "Economic Clause" to their contracts. Buyers have been noted to shy away from certain subdivisions and proceed to others that do not insert this clause. The debate is over whether this clause protects the buyer or the builder. Does it protect the buyer from an increase in purchase price of the house? Does it allow the builder the option to raise the price of the house prior to starting construction?

The clause states:

"This Agreement of Purchase and Sale is subject to the Vendor confirming to the Purchaser or the Purchaser's Agent in writing the final sale price on or before the expiry of 14 days prior to excavation of the dwelling. If no written confirmation of the final sale price is issued by the Vendor on or before the expiry of 14 days prior to excavation of the dwelling the Purchase Price referenced herein before shall be deemed to be the final sale price. If written notification of an increase in the final sale price is issued with which the Purchaser is not satisfied then this Agreement of Purchase and Sale shall be void and of no effect. Upon receipt of the written notice of the increased final sale price from the Vendor the Purchaser must acknowledge in writing within 72 hours their agreement with the increase in price, and failure to do so renders this Agreement of Purchase and Sale void and of no effect with the Vendor returning the Purchasers Deposit or down payment."

What are your thoughts on this clause? Are you in favor of the builder being protected or the buyer?