By October 2009, prices were up 3.9 per cent in Moncton from a year earlier, compared to a 2.7 per cent drop overall in Canada, according to the property index of Statistics Canada. Part of that is because Moncton never really experienced the major gains in the past few years like other parts of the country.
While other cities saw double-digit growth, Moncton never went outside five to seven per cent gains in home prices. Going forward to 2010, Canada Mortgage and Housing Corporation (CMHC) predicts growth in average price will again be strong, up 3.4 per cent to reach between $222,500 and $230,000.
"I think our local market should stay stable for the short term," says Paul Burns, president of the Greater Moncton Real Estate Board and an agent with Century 21. "An economist once described our market as boring and it will probably stay that way."
That's not to say Moncton's market is without risk. The region's economy is based in part on the trucking industry and its shopping centres serving the local area also play a big part. A rise in fuel costs could hurt consumer confidence, says Burns. Exchange rates could impact trade and tourism as well.
But the prices have already risen, and thus far, Moncton has made it through. In fact, it has performed very well.
"The local joke has been that if we hadn't heard the news, we would have missed the recession," says Burns. "Our employment levels stayed high, our population grew modestly and interest rates stayed low - all of which supported our steady growth."
The draws for Moncton residents are many, but it mainly comes down to affordability and quality of life. Crime rates are low, homes are affordable and of good quality, and there are plenty of outdoor activities nearby such as national parks, beaches and golf.
Situated at the geographic centre of the Maritime Provinces, Moncton has been dubbed "Hub City." Its CMA is the fastest growing urban region east of Toronto.
It was home to both a major shipping industry, then to the Intercolonial Railway of Canada, but after each closed its central location still allowed for the economy to keep moving. The trucking industry is now the latest reincarnation. Saint John, Fredericton and Charlottetown are all within a two-hour drive, says Burns.
Moncton is made up of three municipalities: the city of Moncton, city of Dieppe and town of Riverview. Lately, Dieppe has seen the most growth, says Burns, where development has been primarily single-family homes geared towards first-time homebuyers.
"Our housing costs remain reasonable, in part, because our building lots are reasonably priced compared to other cities," says Burns.
Condos can range greatly, from $100,000 to $300,000. Vacancy rates are generally below four per cent, and have recently fallen below three per cent, helping to push up rents of late. Burns says a two-bedroom unit with appliances will often go for $650 per month or less plus utilities.
In order to come out cash flow-positive with a $200,000 condo in Moncton, an investor with a 35-year amortization and with 20 per cent down with a four per cent mortgage rate would need to charge at least $650 per month.
"Rentals typically go to young people starting out, or more often now, to retirees," says Burns. According to CMHC, the lowest vacancies last year were in North Moncton, at 2.4 per cent, nearly half the four per cent vacancy in Central Moncton, with the highest number of properties.
In general for house buying, Burns recommends investors avoid the difficult task of flipping here and instead hold on for the long term.
"In Moncton, you need a plan to hold on for a longer term and build equity by mortgage pay down," he says. "The slow and steady gains in market value."
From the February 2010 issue of CRE
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If you're looking for high-risk gains in the real estate market, Moncton is not for you. But if your goal is steady growth going forward, then look no further than this Atlantic city.