Residential Market Commentary - Price explosion in Charlottetown
The biggest, busiest and hottest housing markets in Canada have been pointing to foreign buyers as key contributors to outrageous price acceleration for several years. Now outsiders are the focus in a price explosion in one of the smallest markets in the country.
Charlottetown, the capital of Prince Edward Island and the cradle of Canadian confederation, has quietly been at the centre of a housing crunch for the better part of year. Recently the situation sprang onto the national scene because of the influx of buyers, not from overseas, but from other parts of Canada.
Prince Edward Island, as a whole, has become a big draw because it offers seaside properties at a fraction of the cost of the west coast. Charlottetown has seen a significant influx on newcomers, drawn by comparatively low prices. The average cost for a home in the city is a little less than $280,000 – a relative bargain compared to most other urban centers in Canada – but it is nearly a 40% increase from just three years ago.
In an economy where a significant portion of incomes are based on tourism and other seasonal work, that kind of jump is hard to absorb. And tourism, itself, is causing concerns. Many properties that might, otherwise, go on the market are being converted to short-term rentals, constricting the stock of both resale homes and long-term rental accommodations. The vacancy rate in Charlottetown is about 0.2%.