The Moncton real estate market is forecast to have another stellar performance, according to a new RE/MAX report looking at the Canadian housing industry in the year ahead.

In 2024, the average sales price in Moncton is projected to rise five percent to $350,171, with sales anticipated to climb three percent. After years of being a buyer’s market, the Atlantic Canada city will transition to a seller’s one in the coming months.

Many first-time homebuyers see the writing on the wall. In addition to elevated interest rates, they are also realising that Moncton could be one of the premier real estate markets in both the Maritimes and broader national arena, says Roger LeBlanc, the owner of RE/MAX Avante, in the RE/MAX 2024 Housing Market Outlook.

“In response to higher interest rates and a general fear of ‘missing out on the market,’ we’re seeing first-time buyers shift their home-buying expectations by moving down-market,” he said in the report. “First-time homebuyers who once expected to buy a single-detached or a semi-detached are now shifting their buying expectations toward a semi or a ‘mini-home,’ given the market.”

Indeed, the Moncton housing market is already witnessing an increased demand for semi-detached residential properties. Plus, downsizers and first-time buyers are showing increased interest in condominiums and high-end condo-townhomes.

Moncton Housing Inventory Levels

Housing supply has turned into a hot-button issue for Atlantic Canada, RE/MAX says.

“Looking ahead to 2024, low inventory will continue to impact local housing market conditions in Atlantic regions,” the report said, adding that interest rates will also have a huge role to play in the upcoming year.

This is also true of the Moncton housing industry.

According to the Greater Moncton REALTORS, new residential listings edged up just 1.3 percent year-over-year in November, while active residential listings plummeted 11 percent year-over-year.

Historically, new listings were 3.6 percent above the five-year average, and active listings were 4.2 percent below the five-year average for this time of the year.

Despite a slight drop from the previous year, new housing construction activity was solid in 2023.

In the first 11 months of 2023, housing starts tumbled 4.8 percent compared to the same span a year ago to 1,876 units, Canada Mortgage and Housing Corporation (CMHC) data show.

“While new listings experienced only a marginal year-over-year uptick, they continued at an above average pace for this time of year,” said Devon Babineau, President of the Greater Moncton REALTORS® du Grand Moncton, in a statement. “However, overall inventory dwindled to its lowest level since early spring, with the number of active listings at month-end falling below the long-term average.”

This comes after all three levels of government announced nearly $7 million in joint funding for housing projects in Moncton.

Looking ahead, the top three neighbourhoods in the Moncton housing market are expected to be North Moncton, Dieppe Fox Creek, and Riverview East.

Mortgage Rates and Moncton Real Estate

With limited inventories already prevalent throughout the Moncton real estate market, industry observers warn that there could be substantial competition for these stocks should mortgage rates begin to come down at a rapid pace this year.

The conventional five-year fixed-rate mortgage had been firming above six percent toward the end of 2023. However, expectations that the Bank of Canada (BoC) would start cutting interest rates in 2024 have weighed on government bond yields, allowing mortgage rates to slide in the process.

In many circumstances, mortgage lenders are beginning to offer borrowers as low as five percent. By the end of the year, some economists expect the average mortgage rate to be approximately four percent as the central bank begins loosening monetary conditions later this year.

“We think the Bank of Canada will remain on hold through the end of this year [2023] and the first quarter of next year before initiating a series of rate cuts starting in the second quarter of next year [2024],” said TD Economist Rishi Sondhi in a report. “We think the Bank of Canada will remain on hold through the end of this year [2023] and the first quarter of next year before initiating a series of rate cuts starting in the second quarter of next year [2024].”

Of course, the futures market is starting to price in rate cuts as early as March.

Right now, the Canadian economy is contending with inflation hovering around three percent, sluggish conditions, and a softening labour market. For monetary authorities, determining if it is the correct time to begin pivoting from quantitative tightening to quantitative easing will be a delicate balancing act. Is it premature to cut rates, or is it the best moment? This will be the question for BoC Governor Tiff Macklem.

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