According to a new report, housing affordability in Fredericton, N.B. has worsened at a dramatic pace as the median home sale price jumped 85 per cent in five years.
Aspiring homebuyers in the city, like Grace Colter, didn’t have to read the report to understand the issue. She’s been living it. The 25-year-old has moved back with her parents to save.
“I feel like I should be in a different spot right now with my housing,” she said.
Lalith Kuragodage, 38, bought his house two years ago but not before paying $40,000 over-asking.
He said his house, which was valued at $200,000 about three years ago, would now sell for about $340,000 and thinks housing prices in New Brunswick are now too high.
“It’s not affordable actually,” he said.
Stephanie Calhoun, a real estate agent at Royal LePage Atlantic, sees the challenge young people face in her work. She’s tasked to help clients navigate through it.
“It’s near impossible for young people to buy their first home,” said Calhoun, who noted how house prices have jumped since the COVID-19 pandemic. “Often times, they’re required to have assistance from family. Or having to tuck away as much as they can for a much longer period of time.”
Fredericton’s Housing Needs Assessment report highlighted how housing affordability has significantly decreased in recent years, and households earning between $60,000 and $120,000 can now afford far fewer homes and apartments.
From 2019 to 2024, the median home sale price in Fredericton jumped from $210,000 to nearly $388,000.
A household earning $100,000 that could’ve afforded 93 per cent of the listings in Fredericton in 2019 could only afford 29 per cent of the houses listed in 2024.
During the same period, a household earning $60,000 in 2019 that could’ve afforded 60 per cent of the homes for sale in Fredericton, could only afford 3 per cent of what’s for sale in 2024.
“It presents a really big challenge,” said Jason LeJeune, Fredericton City Councillor for Ward 11 and a member of the city’s housing committee.
LeJeune said it’s particularly relevant for the first time home buyers who are looking for their starter home. It’s also competitive, with multiple offers going for a property that often drives up the price.
“There’s a real lack of supply of starter homes and affordable homes for young folks or any folks really looking to enter the market,” he said.
The cost of rent also rose, squeezing budgets and making it more difficult for buyers to save. Households earning $40,000 per year – the median for renters in Fredericton – saw the share of leasing opportunities they could afford drop from 47 per cent in 2019 to 16 per cent by 2024.
Demand helped drive up prices
Fredericton’s population has grown to about 77,500 – a 14 per cent jump – since 2021.
LeJeune says that during the pandemic and the months that followed, Canadians from large cities moved to smaller cities, including Fredericton. The councillor said while that’s not exclusively what caused the price hikes, it’s been a main contributing factor.
“People coming with different income brackets and different ability has really escalated the price of housing,” he said.
Mathieu Laberge, Chief Economist and Senior Vice-President of Housing Insights at Canada Mortgage Housing Corporation, said that before COVID-19, a lot of the housing affordability issues were concentrated in Vancouver and Toronto but hybrid or remote work saw many people move to smaller cities that drove up demand for home ownership.
“That increased demand for homeownership meant prices went up, making affordability more difficult across the board and in many of our urban centers in Canada,” Laberge said.
He notes the deterioration of affordability of the housing market meant renters stayed in rental units for longer, increasing the demand for those units, and driving up rental rates.
Need for more units
Fredericton’s Housing Needs Assessment report underscored the need for more units. The city currently is short 3,010 units, including more than 2,200 non-market units.
The report said the city will need 13,395 new spaces by 2034. That means more than 1,300 units each year.
In 2022, Fredericton’s housing starts came close to that, amounting to 1,299 homes.
LeJeune said last year between 700-800 housing units were started.
“So, there’s work to do,” he said.
The councillor said Fredericton needs federal programs to help.
“It needs to be impactful, not incremental,” he said.
” Adding five per cent to an existing budget is not going to meet the need. We’re talking about having to meet record development numbers.”
While speaking with reporters about housing in general on Wednesday, Canada’s new housing minister Gregor Robertson was asked if prices need to go down.
“No, I think that we need to deliver more supply, make sure the market is stable. It’s a huge part of our economy. But we need to be delivering more affordable housing,” Robertson said, pointing out the government of Canada hasn’t been building affordable housing since the nineties and that’s created a shortage.
A tale of two markets
Matt Honsberger, the President of Royal LePage Atlantic, said realtors are seeing different types of buying behaviours, depending on the price point.
First-time home buyers are competing for homes, while homeowners who are looking to move have more time to make that decision and the market is more balanced in that respect, he said.
Honsberger said he’s seen lots of creative solutions for people to try to get into the housing market, such as buying a home with someone else, buying farther out of town or receiving a downpayment from “the bank of Mom and Dad.”
“I’ve had three or four conversations with sellers holding a portion of a mortgage for a buyer that’s coming in,” Honsberger said.
