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Interprovincial migration has emerged as a nationwide trend as people relocate somewhere where they can buy a house they can afford or cash in on home equity to purchase somewhere cheaper.
Globe Advisor recently spoke with Chris James, wealth advisor with James Financial Advisory Group at CIBC Wood Gundy in Fredericton, who is No. 13 in Atlantic Canada on The Globe and Mail and SHOOK Research’s Canada’s Top Wealth Advisors: Best in Province ranking, about what he’s seen in his city.
Has Fredericton been affected by significant interprovincial migration?
Yes. The people having the most success in the housing market here are people from out of province who sold their house there and were able to purchase a house here for cash.
Despite inflation and higher interest rates, they can still afford to buy a house here because the cost is much less than it is in other provinces.
While housing prices still look attractive, it’s certainly not what it was two years ago at the start of the pandemic.
How has this trend affected local homeowners?
Locals can’t compete with out-of-province buyers. Some locals want to take advantage of their house’s improved value and use it to move up to a bigger house. But while they’ll get more for their house than they could three years ago, the next house they buy is also going to be more expensive.
So, we’ve been running some numbers with clients to see if it really is a good idea to make that move financially. Generally, the numbers didn’t work positively. They would have to take on more debt not just because of the price of the house but the mortgage interest rate.
The numbers don’t work like they did when the interest rates were 2 per cent. They’re at 6 per cent now.
The hot housing market has also caused property taxes to increase significantly, a double-digit increase on average this year.
We were the place to go for the cheaper housing prices. Now, younger locals who don’t have a home already are really getting pinched because where do they come up with that financing? If it’s not the bank or mom and dad, then where do you go? And there are fewer cheaper places to go.
Are there any success stories with local clients being able to move up and afford it?
We did have a couple of clients who did well. They sold their houses and moved in with their kids and grandchildren. They were looking to take advantage of a hot housing market.
This interview has been edited and condensed.
- Deanne Gage, Globe Advisor Reporter
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What you and your clients need to know
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– Globe Advisor Staff