A Grateful Perspective of Real Estate in Newfoundland and Labrador
The Real Estate market in St. John’s and surrounding areas have changed over the last few years years, but it shouldn’t scare you from making the move that you want to make. There is no denying we had a pretty good economic run from 2008-2014 in Newfoundland and Labrador which in turn fueled a hot real estate market of buying, selling, and upgrading. The market has cooled since the lower oil prices (And subsequent government revenues) have shrunk, and what's followed has been a seismic shift in the confidence around our great province.
Having spent the better part of 15 years being in and around the Real Estate and Mortgage Industry, I have seen a lot of change in our overall housing market during that time. I've been fortunate enough to have attended countless Real Estate and Mortgage conferences all over North America throughout my career, and during that time I've developed great friendships with colleagues from all across Canada. Those connections have afforded me many opportunities to have first hand knowledge on the challenges in other markets and it's allowed me to have perspective to compare them to our own. Despite what many people believe, "the arse is NOT out of 'er", in Newfoundland, in fact just the opposite. The true number still suggest that have extremely affordable Real Estate on the North East Avalon when compared to many other cities in Canada.
A recent study by our friends at Century 21 ranked average home purchases and St. John’s estimated at $167 per square foot, making it the 4th most affordable city in Canada to buy property. While in comparison, the most expensive places come as no surprise as the Greater Toronto Area, and Vancouver, with their pricing ranges from a ONLY $627 per sq ft (In Oakville) - $818 in the downtown core. Moving further west it progresses to $963 for downtown Vancouver and a mind boggling $1210 (in West Vancouver). These numbers got me thinking and wanting to dig deeper to find out where much of our income really goes.
I know you are going to say those cities are much larger, they have stronger economies, and we pay much higher taxes than they do to live here. Yes, we are definitely taxed higher than the rest of the country, that is true, but just how much more are we paying in taxes and for things that we consume every day?
When compared against the 2 most expensive cities in Canada, an average earner in Newfoundland pays between $1358 (ON) and $1998 (BC) MORE in Federal and Provincial taxes at the same salary in those provinces. So, they certainly have an advantage there.
We all know Muskrat Falls is about to add increases over the coming years, but we currently we pay 11.8 cents per KwH in NL, while Ontario pays 13.5cents per KwH (also increasing over the next few years) and BC a paltry 8.78 Cents (about 25% less than we do).
Auto Insurance Rates average $1100 per year in Newfoundland (yes, some are higher, and some are lower, we're looking at the averages here). In Ontario the same averages, it costs $1920 and $1428 in BC respectively.
Always a hot topic on social media when the price of oil rises and falls. In Newfoundland we've been paying about $1.20 per litre in 2017. Ontario pay less to the tune of about 7 cents per litre. Our one upside, the vast majority of us don't have extended commutes like many families do in the Greater Toronto Area. British Columbia? Try $1.27 per liter out there. When you factor in commute times and traffic volumes in other parts of the country, do I dare go so far to say that most of us are spending far less overall on fuel than those residing in Canada's most expensive cities!
When it comes to housing, in Newfoundland (and based on the most recent 2015 stats) we spend approximately $13,222 per year on housing expenses, while Ontario and British Columbia are paying just a tad below $20,000 per year (in after tax dollars of course) to service their housing costs in those provinces.
Minimum Wage - In NL we just increased our minimum wage to $11 per hour Oct 1, 2017 and while we are still paying our workers less than they do in Ontario or British Columbia - it's only by .35 cents per hour in BC and .40 cents in Ontario.
Our housing rental market has been consistent over the last 4 years at around $850 per month for a 2 bedroom apartment, in comparison, the the same space in Toronto or Vancouver has risen to more than $1700 in Toronto and $2090 for Vancouver.
Average Weekly Income
A closer look at the incomes are also showing some similarities, but with the exclusion of the Northern Territories, (and to many peoples surprise) Newfoundland actually STILL has the 2nd highest weekly average earnings (Alberta’s being the highest). While Ontario and British Columbia's are earning 5% and almost 11% less than we are here in this province.
Which brings us back to the undisputable fact that St. John’s (and surrounding areas) Real Estate is extremely affordable when comparing it to other major Canadian cities. Sure they have tax advantages on their side to the tune of almost $2000 per year, however it just doesn't account for the exuberant increases in their living expenses when compared to ours.
Despite all the doom and gloom, we at NormanLane Real Estate are very optimistic with the housing market (which is also supported by the CMHC in their most recent Housing Market Outlook which clearly shows the worst is behind us.) Our streets might not be paved with gold from the windfalls of our offshore sector, but overall we are still in pretty good shape, and as any lifelong islander knows, we are a VERY resilient bunch who will always find a way to make it work.
For comparison here is a recently listed home in St. John's vs for $525,000 vs one that's listed in Burnaby, BC (30 minutes outside of Vancouver because there are no homes, attached or semi detached in Vancouver listed under $500,000). This certainly draws some perspective.
West End of St. John's, NL
Burnaby, British Columbia (30 minutes outside Vancouver)
Mark Norman is the Owner /Accredited Mortgage Professional of NormanLane Real Estate, St. John's, Newfoundland's Premiere Full Service Real Estate Boutique.