Investors Increasingly Looking To The East Coast For Opportunity

Source – betterdwelling.com

  • “…Atlantic Canada real estate is quickly becoming home to a robust rentier class. In Nova Scotia, investors owned 25.5% of total housing stock in 2020 but 48.7% of recently completed homes. New Brunswick has seen a similar trend where 17.2% of total housing is investor-owned, representing 41.0% of recent completions”

Investors Own Half of Nova Scotia’s New Homes, and Just Over A Third of New Brunswick

Atlantic Canada real estate is quickly becoming home to a robust rentier class. In Nova Scotia, investors owned 25.5% of total housing stock in 2020 but 48.7% of recently completed homes. New Brunswick has seen a similar trend where 17.2% of total housing is investor-owned, representing 41.0% of recent completions. Unfortunately, there’s no provincial aggregate for Newfoundland. Though, it would be surprising to see the province as an outlier.

Atlantic Canada Residential Real Estate Owned By Investors

The share of Atlantic Canada’s non-owner occupied housing stock by city, and grouped by the date the home was completed….

RegionNew ConstructionTotal
Bay Roberts92.149.9
Cape Breton53.420.8
Kentville52.224.7
Truro49.222
New Glasgow48.829.9
Nova Scotia48.725.5
Bathurst47.516.1
Gander47.425.6
New Brunswick4117.2
Corner Brook4024.5
Miramichi38.216
Halifax37.118.4
Edmundston34.614.4
Grand Falls-W.33.322.9
Campbellton33.316.3
Saint John31.814.1
Fredericton30.914.5
Moncton30.413.5
St. John’s2823.5

Source: Statistics Canada; Better Dwelling.

Not a lot of cities across the Atlantic provinces, so let’s go over the big cities and how new supply is faring. In Halifax, nearly 1 in 5 (18.4%) homes are owned by investors, with investors owning 37.1% of recent completions. Moncton goes from 13.5% of total housing stock to 37.1% of recent home completions. St. John’s real estate skews a little higher for total supply at 23.5% investor-owned, but “just” 28.0% of recent completions with investor ownership. 

Investor ownership by itself isn’t a good or bad thing, it is what it is. Why investors are purchasing can be an issue, though. The Bank of Canada (BoC) recently highlighted real estate investors as a risk to the economy. They believe investors are driving up home prices based strictly on the expectation home prices will always rise. When this occurs, the market can become more vulnerable to an economic shock. It’s especially problematic if the investors are older and closer to retirement.

During periods of abrupt economic shock, investors can also amplify turmoil. Investors tend to flee the ship during a downturn, unlike an end-user who rides out most negative shocks. It’s a lesson that should have been one of the most important from the US housing bubble. Even high-income investors with solid credit scores turn into a more significant risk than poor homeowners.