Buyers struggle to find affordable housing, developers struggle to build it
It's challenging to find affordable housing in New Brunswick these days, according to some buyers, sellers, renters and industry data.
A prospective first-time home buyer in Fredericton says after more than a year of house hunting and making 12 offers, they're trying not to give up hope, but finding a place to live, work from home and grow a family is beginning to seem impossible.
Only one of their offers was initially accepted, said 30-year-old Stefanie Bouchard, but the tentative agreement quickly fell through.
"We've kind of become numb to the rejection," Bouchard said.
"Once we put the offer in, we kind of shut down until we hear back, so it's less heartbreak when we get that 'No.'"
Bouchard and their partner are shopping for a home in the low end of the market price range.
In the last year, they said, homes in their budget have become fewer and farther between.
Even mini homes on leased land are going for up to $200,000, said realtor Rebecca Steeves.
"With the way bidding is going lately," said Bouchard, "you really have to look at a house that's $50,000 below what you're hoping to pay because you know that the bidding is going to go that far."
Fredericton area real estate data
Jan-April 2021 Year to date 2022 New listings 1,237 941 Sales 981 726 Value $250,226,866 $232,394,378 Average sale price $255,073 $320,102
Steeves agreed it's a challenging market for young home buyers.
It's typically taking eight to 15 offers for them to find a place, she said.
About 40 per cent of her buyers in the last year have come from out of province, said Steeves, and they often have cash in hand from selling smaller units at higher prices.
If a buyer puts any conditions on their offer, she said, they're likely to lose out.
Making an offer with no home inspection is scary, said Bouchard.
"They have to decide whether the risk is worth it to them," said Steeves.
If the buyer is very motivated, she said, "they're going to let the conditions go and just hope to shop in a price range where if there's a deficiency in the house, that they can afford to fix it."
According to the Real Estate Board of the Fredericton Area, Inc. active listings haven't been this low in more than two decades.
The board's jurisdiction includes Fredericton, Oromocto, Woodstock and surrounding areas. There were only 285 units on the market at the end of March.
The supply of houses has been decreasing since 2012, said Steeves, "because builders haven't been building and buyers have been coming."
"I don't think it's going to slow down until resale and building costs are closer together."
In the meantime, house hunting is a "pretty awful" and frustrating experience, said Bouchard, but they are resolved to keep looking.
They don't want to spend 16 hours a day cooped up in a bedroom/office.
"We need to find a place to live," said Bouchard. "Whether that's owning a home or renting a new place, both markets are out of control."
Average rent for a two-bedroom apartment
Canada Mortgage and Housing survey data 2020 2021 N.B. $893 $969 Bathurst $701 $751 Campbellton $645 $667 Edmundston $600 $633 Fredericton $979 $1,047 Miramichi $709 $738 Moncton $949 $1,043 Saint John $825 $888
Even some apartment developers who started out trying to create affordable units say they are having trouble keeping prices down.
Greg Hooper is involved in converting the old St. Stephen Inn into housing.
One of two buildings there is now ready for tenants in 14 units.
Hooper said he's happy with the remodel, but the project was an eye opening first experience for him.
It took a few months longer than planned to get it done, he said, and came in about $300,000 over budget.
"The cost is right through the roof with building materials, the cost of labour, insurance."
As a result, rents are about $200 more than he originally planned to charge — $900 for a one bedroom and $1,100 for a two bedroom, plus utilities.
"It's the cost of doing business today, unfortunately," he said.
For comparison, average rent for a two-bedroom apartment in Fredericton last year was $1,047, according to the Canada Mortgage and Housing Corporation, and an apartment building that opened just a couple of years ago on the St. Stephen waterfront rents two-bedroom and three-bedroom units ranging from $955 to $1,370.
"We're lucky we finished the building at the start of the pandemic," said Beacon Apartments owner Gerald Ingersoll, who is also president of the Saint Andrews Chamber of Commerce,.
Lumber prices are going up and down "like a yoyo," said Ingersoll, banks are reluctant to lend money for small-town housing projects and supply chain issues are slowing everything down.
You've got to order appliances as soon as shovels hit the ground, he said.
There's still demand for new units, no matter how affordable they are to people whose incomes are in the lowest brackets.
All but a couple of the available units in Hooper's new building have already been rented by a mix of tenants including some seniors.
He said he hopes to have another 16 apartments at the old motel ready in the fall. And he's also working on 12 units in Milltown.