The housing market in eastern Newfoundland is hot. The barriers to building more are hefty

The housing market in Newfoundland and Labrador is competitive with demand exceeding supply, but there are strong barriers to building more homes to meet ambitious federal targets to ease a housing crunch, according to two industry professionals. 

Real estate agent Colin Morgan says it's a seller's market, with the benchmark price of a typical home in the province sitting at $297,000.

"That's up about $11,000 over the last three months," said Morgan.

In the last week of July, Morgan said, there were 54 home sales in St. John's and more than half of them were sold for more than the asking price. 

Morgan says increased immigration, people moving from other provinces and low inventory levels are helping to keep the demand for homes — and prices — high. 

"There's more people coming into the province than homes that are available. So when that happens, buyers have less to choose from and then people pay more than what people are asking for, typically," he said.

Morgan said homes in the province, while increasing in price, are relatively affordable for people from Ontario, British Columbia and Quebec, where customers can be more affected by higher mortgage interest rates.

"The benchmark price as a province is $297,000. You can't get that anywhere in Canada," he said. "Halifax is $420,000, Quebec is $550,000, Vancouver is $1,000,000, Ontario's $850,000." 

Morgan also says fewer people are selling, so the number of homes listed for sale, known as inventory, is low, with just a five-month supply. 

"What that means is, if every Realtor in the province stopped listing houses right now, those listings would go in five months. To give you context, in 2018, we had 22 months of inventory," Morgan said. 

On average, he says, there are at least 15 people viewing each property, and many sellers have a strategy by listing a time and date until they are accepting offers, rather than taking offers on a first-come, first-served basis, so if there are multiple buyers interested, they can take the highest bidder.  

With prices increasing, Morgan says, some buyers can no longer afford the type of home they were eyeing even six months ago.

Morgan said he's even seen buyers write letters to the sellers in hopes of swaying the sale in their favour.

"Sometimes it works," Morgan said.