'We're in our own little bubble here'

SAINT JOHN - Bonnie McDermott takes pictures as she walks around a concrete foundation while an excavator lumbers around the perimeter, its tracks clanking and squeaking with each centimetre. It doesn't look like much now, but in a couple of months McDermott's family of four will move into their first home and out of their apartment.

                                         

Developer Scott Darling currently has $53 million worth of homes and condominiums being constructed in phases.  

Her husband Darren stands on a mound of dirt and puts his arm around their son Ryan and points to where their house will eventually rise from the dirt and rocks. For the family, it's the realization of a dream that the bustling economy and bargain-basement interest rates have made a reality.

"It's good to know that we're going to be in our own home after all these years," Bonnie McDermott said.

Just three weeks ago, the family was sitting down at developer Scott Darling's office and poring over plans.

"They'll be living in there in August," Darling said.

Falcon Crest, located behind Simonds High School, is one of Darling's most recent subdivisions and has 30 lots available.

"We must have 40 people working on this street alone today," Darling said.

He currently has $53 million worth of homes and condominiums being constructed in phases.

The building boom is unprecedented since the time the Saint John shipyard and the city hummed to the tune of the frigate program.

"I think we're in our own little bubble here," Darling said as he stood outside the sales office at another one of his subdivisions - Forest Hills. "You don't want to take it for granted."

Not even 10 years ago, he said, building lots were going for less than $20,000. The average price has now almost doubled.

The trend that saw hundreds of area trades people flock to northern Alberta has slowly begun to reverse as that province's economy grinds to a halt. While Darling said he's only sold a few homes to people returning from Alberta, he has received a number of calls from real estate agents looking to invest in the area.

"Saint John is on the map," Darling said.

Harold Coughlan of Century 21 has $3 million of developments under construction and another 160 lots worth $30 million waiting in the wings. When he became a real estate agent in the '60s, interest rates were more than double the current 3.5 per cent.

"We're very fortunate to be in Atlantic Canada," Coughlan said. "I've waited 40-some years to say that."

Coughlan calls the current economic climate historic.

While other housing markets have seen wild fluctuations, the price of Saint John homes has climbed gradually and not spiked with the market. Currently, new homes in Saint John are selling for approximately $20,000 more on average than homes in Moncton. The average home in the Port City is selling for $166,172.

"We've gone on a gradual scale over the years," Coughlan said. "We're like the tortoise and the hare, we just crawl along gradually."

John Rocca is continuing to develop $25 million worth of condominiums on Water Street. And Bentley Crossing, which has already sold out two phases, is now constructing a third phase on Chesley Drive near Harbour Passage.

Amy Poffenroth, deputy commissioner of the city's building and inspections services department, said May was a hectic month, with slightly more than $2 million in single-family home permits issued. That's a decrease of about $700,000 from 2008.

"It's exciting and we get to see things from the ground up," Poffenroth said.

From January until May, more than $8.5 million in single-family home permits have been issued by the city. That's down slightly from the same four-month period last year.

The numbers may be down slightly, but Poffenroth's department is still going full blast. Each house is inspected at least five times during its construction.

"Often times we do more than required," Poffenroth said. "We have a little bit of ourselves in those projects."

The total value of single-family permits issued in 2008 was slightly more than $33 million. The biggest month was June - $4.1 million.

The boom, though, didn't come out of the blue, at least not for Poffenroth.

"At some point you could see it coming," she said. "You could always feel something was coming."

In April, the average sale price nationally fell slightly more than three per cent. The Saint John market saw an increase of 4.5 per cent, just edging the provincial average.

Peter Pappas of the Saint John Real Estate Board said the main driving force behind the market is the proposed second oil refinery, but other projects such as the refurbishment of the Point Lepreau nuclear generating station, Canaport LNG and the natural gas pipeline are pushing the market forward.

But much of it, Pappas said, is a market that has been underpriced for years being brought in line with similar-sized markets. Six years ago, he said, people moving here and buying homes didn't have sticker shock when they saw the price of homes. It was more likely, Pappas said, that they fell down laughing.

"They were looking at or real estate prices and laughing," Pappas said. "They couldn't believe it."

Source: Published Monday June 29th, 2009 - Telegraph Journal