Newfoundland

There has been quite a debate around the "St. John's real estate water cooler" in recent weeks. Towards the end of 2007 some local builders and subdivisions in St. John's implemented a new "Economic Clause" to their contracts. Buyers have been noted to shy away from certain subdivisions and proceed to others that do not insert this clause. The debate is over whether this clause protects the buyer or the builder. Does it protect the buyer from an increase in purchase price of the house? Does it allow the builder the option to raise the price of the house prior to starting construction?

The clause states:

"This Agreement of Purchase and Sale is subject to the Vendor confirming to the Purchaser or the Purchaser's Agent in writing the final sale price on or before the expiry of 14 days prior to excavation of the dwelling. If no written confirmation of the final sale price is issued by the Vendor on or before the expiry of 14 days prior to excavation of the dwelling the Purchase Price referenced herein before shall be deemed to be the final sale price. If written notification of an increase in the final sale price is issued with which the Purchaser is not satisfied then this Agreement of Purchase and Sale shall be void and of no effect. Upon receipt of the written notice of the increased final sale price from the Vendor the Purchaser must acknowledge in writing within 72 hours their agreement with the increase in price, and failure to do so renders this Agreement of Purchase and Sale void and of no effect with the Vendor returning the Purchasers Deposit or down payment."

What are your thoughts on this clause? Are you in favor of the builder being protected or the buyer?

Total # of Listings [Jan] = 583 (Down 32% from January 2007)

Total # of Sales [Jan] = 266 (Up 53% from January 2007)

Number of Active Listings in the NLAR MLS System = 1902

Average Sale Price year to date = $170,552

Inventory is down again this month. With lots of buyers and lack of inventory, we are seeing most properties listed in St. John's receiving multiple offers. CMHC might be classifying our market as balanced in their Newfoundland MLS Trends Report for the 4th Quarter, but we are clearly heading into a sellers market for the early part of 2008.

Here is a break down by area for the month of January for single family homes

St. John's Real Estate: Listings = 76 Sales = 112 Sales/Listings Ratio = 68%

Average Sale Price: $185,886

Mount Pearl Real Estate: Listings = 18 Sales = 14 Sales/Listings Ratio = 78%

Average Sale Price: $173,200

Paradise Real Estate: Listings = 29 Sales = 15 Sales/Listings Ratio = 52%

Average Sale Price: $207,931

East Extern Real Estate: Listings = 21 Sales = 13 Sales/Listings Ratio = 62%

Average Sale Price: $177,123

Conception Bay Real Estate: Listings = 37 Sales = 15 Sales/Listings Ratio = 41%

Average Sale Price: $159,280

The outlook for Newfoundland Real Estate for 2008 will be positively supported by a strong provincial economy, with the average MLS® price forecast to increase 6.4% to $157,500. REMAX is suggesting a 12% increase which would put the average price around the $170,000 mark. The expected increase in single detached and two apartment homes can be seen already, and it's very early in the new year.
Currently we are experiencing low housing inventory and a high number of buyers. Now is the right time to sell your house for maximum value.

I recently read a review of average St. John's House prices from 2002 - 2008 (forecasted) from CMHC. Good to see the St. John's real estate market on the rise in recent years.

2002 - $113,081 2003 - $119,822 2004 - $131,499
2005 - $141,167 2006 - $139,542 2007 - $148,000

And forcasted for 2008 - $157,500

Want to keep up with the latest market news and trends in St. John's?

We invite you to visit our St. John's Real Estate Blog.

St. John's economy is growing quickly, and the city has been identified as having one of the highest proportion of scientists and engineers per capita of any city under one million population in North America. Economic forecasts suggest that the city will continue its strong economic growth in the coming years not only in the "oceanic" industries related to offshore oil,but also in tourism and new home construction as the population continues to grow.

This growth in St. John's and its surrounding suburban municipalities, particularly Paradise (+31%), Flatrock (+7%), Torbay (+15%), Conception Bay South (+11%) and Portugal Cove-St. Philip's (+12%) St. John's metro area: +5% population; The rest of the province: -1.5% population). Many feel that the growth in St. John's has not particularly spread to the rest of the Province.