P.E.I. home prices up 25% as supply plummets

The price of a home on P.E.I. is rising rapidly as more buyers compete for a dwindling supply, according to the April report of the P.E.I. Real Estate Association.

"There's a lot of activity and not much to sell," said association president Wayne Ellis in an interview with CBC Radio's Island Morning.

"Listings are now down by, probably, pushing 30 per cent. Prices are up and when you have no listings it breeds competition."

The report shows the average sale price of a home on P.E.I., for the year to date to the end of April, is up 25 per cent over 2020, and has almost doubled in the last five years.

The number of new listings on the Island has been falling since 2016, and inventory levels were hit further by a jump in demand this year. At just 2.3 months, the inventory level in April is a little over a third of what it was a year ago.

Greg Rivard, a Charlottetown city councillor who is also a realtor, is familiar with housing issues. He said buyers need to act quickly to get what they want. He said many houses are priced out of the market.

"People are renting right now, they're looking to buy their first home, and they just can't," he said. "I've been working with clients now for three or four months and we've seen multiple homes and we get there and we find out A, there's too much work to be done based on the price, or B, we just don't win the bid."

While lack of supply is the key factor, Ellis said there are other factors at play.

Low interest rates have made borrowing for larger mortgages more attractive. Construction costs are up, and that is driving prices for new homes. The higher price for new homes is, in turn, affecting the market price for existing homes.

While real estate agents are trying to keep up with the market, Ellis said most homes are now selling for over the asking price, and usually with several offers over asking for the seller to consider.

"It's always the highest bidder at this point with the least conditions," he said.

"People get frustrated if they find they can't get what they want, particularly if they've offered over what the asking price is, and they find out they didn't get the property."

Ellis said there are lots of well-priced homes that are still available for first time home buyers, but they might have to be more flexible with location. 

Prices will likely remain high until interest rates go up, said Ellis, and that is not expected in the next couple of years.

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