Prince Edward Island Real Estate Investing Success in 2023 - PEI Real Estate
Just off the coast of Nova Scotia and New Brunswick lies gorgeous Prince Edward Island real estate market, a slim jewel in the Gulf of St. Lawrence. While most foreigners may even forget that Canada has its island off the eastern coast, this picturesque stretch of land was the birthplace of Canada.
The original Mi’kmaqs settlers marvelled at the beauty of Prince Edward Island. They named it Epekwik, which means “resting on the waves.” That name could not have been more apt for this idyllic piece of Canada that is growing in popularity by leaps and bounds.
Though Prince Edward Island runs just 140 miles from tip to tip, there is more than enough charm to compete with any other province in Canada. Just consider this, regardless of where you’re at on Prince Edward Island, you are no farther than 16 kilometres from a body of water. Thanks to the province’s small size and overwhelming beauty, it’s no wonder that less than half the population lives in urban areas.
Despite the even population spread across the Prince Edward Island real estate market, there are still ample opportunities for real estate investment if you know how to invest and where to look.
But first, if you want to dive into the Prince Edward Island real estate market, click the link below for a free strategy call today.
An exploding population
At first glance, the population of Prince Edward Island may not seem overwhelming. At 153,000 residents and counting, PEI rates as Canada’s tenth most populated province. A lot of real estate investors may take a glance at that number and immediately assume that their time would be better spent elsewhere.
That would be a mistake. If the Island’s immigration rates continue as they have, a savvy real estate investor could be getting in on the ground floor of something big with Prince Edward Island real estate.
Over the last two years, the province of Prince Edward Island has grown faster than any other in Canada, by a large margin. That higher population has nothing to do with a growing number of births. It’s not a fluke, either. Year after year, more people are moving to Prince Edward Island than any other place in the nation.
It’s not just Canadians, either. Since 2010, the number of international immigrants to Canada has hit record highs. As the number of immigrants to Canada spikes, several of those people are choosing to set down their stakes on Prince Edward Island real estate.
Skyrocketing home costs in Prince Edward Island Real Estate
All that new traffic to the Prince Edward Island real estate market has had a dramatic impact on the real estate market. In the last five years, the market in PEI has come to rival the nation’s biggest cities in terms of its difficulty and potential payoff.
Toronto is a Canadian city that seems to get most of the attention when it comes to investment news. Rents and home prices are high and getting higher, and investors with the capital could stand to make a lot of money. In recent memory, investing in Prince Edward Island real estate has come to look increasingly similar to those larger markets.
Indeed, the increasing demand for Prince Edward Island real estate has seen home values jump more than 38 percent in the last three years. That’s more than a ten percent increase compared to Toronto, which saw a 25 percent increase in home value, or Ottawa, which saw a 21 percent increase in home value over the same period.
People shopping for a home in the provincial capital of Charlottetown are running into a real estate market so stuffed with prospective buyers that they’re pulling out all the stops just to get noticed. They need to give sellers a reason to choose them over the competition. Some families, for example, are including portraits as well as letters meant to strum on a seller’s heartstrings.
One real estate broker said the Prince Edward Island real estate market was so hot, “People are banging on doors, saying ‘I like your house, are you interested in selling?’ And some people say ‘yes, maybe we are if the price is right.’” In short, if you’re an investor with the capital, PEI somewhat resembles the Wild West right now.
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Prince Edward Island Real Estate Construction can’t keep up
Before the outbreak of the novel coronavirus, COVID-19, the Prince Edward Island real estate market was on track for record home construction for the third year in a row. That increase is nothing to sneeze at, either. Prince Edward Island Construction Association general manager Sam Sanderson estimates that the total value of construction went from $350 million in 2018 to more than half a billion dollars at the end of 2019. And that number was set to go up once more in 2020.
Demand for housing is so high in the Prince Edward Island real estate market that most new multi-unit buildings are often filled by the time construction is completed.
Even working at a feverish, record-breaking pace, one factor keeps new construction on PEI moving slowly. That’s a lack of skilled labour. For some reason, the province is having issues drawing in new tradespeople. Even with the surge of new construction projects, there remain about 500 open slots for skilled tradespeople throughout Prince Edward Island. The skilled labour shortage means that construction simply can’t keep up with the demand for new homes, no matter how much money builders throw at the problem.
Even if Canada were to be able to safely reopen tomorrow, and even if the exact number of skilled workers were to show up ready to work the next day, long-term bets indicate that it might still be several years before the supply of available housing rises to meet the level of demand.
In short, that one factor means that the Prince Edward Island real estate market is very much a seller’s market, and it’s likely to remain so through 2025. Those people with a finger in PEI real estate investment may be able to ride a significant price advantage for quite some time.
The great escape
As construction struggles to compensate for the influx of people to Prince Edward Island, the price of homes in the city’s urban areas is steadily rising. In 2017, the average cost of a home in the capital city of Charlottetown was $200,000. Today, the average price of a home in the same city on the same spot in the same condition is roughly $277,000. What’s more, a lot of new construction — even multi-unit buildings — cater to those with a higher budget.
As a result, the availability of starter homes for young families has become scarce. Those in search of private homes in the $200,000 range are now slowly moving to the outlying areas of larger municipalities. As a result, real estate investors operating on a modest budget should consider probing the communities surrounding larger towns like Charlottetown in search of good deals. Fortunately, Prince Edward Island’s limited square mileage opens up a lot of possibilities for those willing to do the legwork.
Visitors in droves
As you might expect with any stunning, oceanfront island-like PEI, people want to visit. Given the Island’s inviting atmosphere and temperate climate, it’s no wonder that Prince Edward Island is one of the most popular destinations in Canada.
The number of people who visit Prince Edward Island has always been high, but things have gotten serious in the last decade. Between 2013 and 2017, the number of visitors to Prince Edward Island began to swell dramatically. By the end of 2017, the number of visitors to Prince Edward Island had eclipsed a million annual tourists. Quick reminder: that’s about seven times the local population.
Of course, all things must come to an end, and in 2018, Prince Edward Island announced that it had received fewer visitors in 2018 than in the year prior. Yep. PEI received precisely 1.3 percent fewer tourists. The island still easily hit the million-visitor mark in both 2018 and 2019. On average, the visitor vacancy rate is somewhere around .2 percent.
For real estate investors, that means that the PEI short-term rental market is extremely lucrative. Coupled with the Island’s difficulties in kick-starting new construction projects, those investors able to take control of a short-term rental unit (or two), could see continued returns for years to come. It’s also possible, once again, to use the relatively small size of Prince Edward Island to your advantage.
That is, scouring the outlying municipalities could turn up excellent investment opportunities for short-term rental properties that — while not located in an urban area — still provide rest and relaxation in picturesque spots.
The Best Places to Buy Prince Edward Island Real Estate
Charlottetown, Prince Edward Island
Prince Edward Island’s capital and largest city, Charlottetown was the home of the Canadian Confederation in 1867. Since then, the city has continued to hold an important place in Canadian culture and history. While small by urban standards, with a population of just over 36,000, the city is an important center for PEI life.
The city’s economy is focused almost entirely on the government sector. Agencies ranging from federal to provincial to municipal are all main employers here and provide well-paying and stable jobs to many of the city’s residents. The city has also seen growth in health care and education, with more and more people taking these types of jobs as those fields continue their upward trend. The University of Prince Edward Island is one of the chief education employers, as it enlists many types of workers in service of its 4,700 students.
The real estate market in Charlottetown is suffering from a lack of inventory in the wake of COVID-19, which is the story in virtually every Canadian market as 2020 concludes. Prince Edward Island real estate as a whole had been seeing major growth in housing construction throughout 2018 and 2019, but those had already started to decline before the coronavirus pandemic further depressed this growth.
Charlottetown prices were skyrocketing before the pandemic, with prices rising by 38.5 percent across 2018 and 2019. This price increase was largely attributed to immigrants arriving through the provincial nominee program. The flipside of this is that many of these folks don’t necessarily stay, but when they leave, they make a very good return on the housing that they had purchased when they first arrived.
This rise in prices has stagnated in the first half of 2020 when it comes to single-family homes, but condos and townhouses have surged in value, seeing growth in prices by 27.5 percent across Q2 and Q3 of 2020. All of this information creates a muddled picture of the market, but most projections have the Charlottetown market continuing drastic upswings in price, thanks to low inventory and several motivated buyers who are ready to purchase after the pandemic slowdown.
Summerside, Prince Edward Island
The city of Summerside is the second-largest city on Prince Edward Island, boasting a population of just about 15,000 people. Like Charlottetown, it relies heavily on government services for employment and its economic health.
The Canada Revenue Agency is the single-largest employer in the city, but other businesses like Vector Aerospace Engine Services Atlantic, Testori Americas and Honeywell are all major aerospace and transportation companies that call the city home and provide both jobs and tax revenue. There are also large frozen foods plants that employ a large number of residents, so the economic picture in Summerside is diverse. This diversity is a positive sign for investors, as it means that there are several different price points at which one can enter this market.
The story here is the same as in Charlottetown and in virtually every real estate market in Canada – low inventory is making for higher prices. However, Summerside does have some opportunity for value. For starters, the cost of living here is low, which is reflected in low real estate prices. Even if prices are higher than they’ve historically been, there are still some chances here for investors who are not flush with capital to get involved in a market that shows signs of steady growth for years to come. Prince Edward Island in general is a popular destination for tourists and retirees, so the real estate outlook is strong.
Stratford, Prince Edward Island
Many of Prince Edward Island’s smaller towns also have some enticing offerings for real estate investors. Stratford, located just southeast of Charlottetown, is the third-biggest municipality on PEI and its fastest-growing town. The surging population is a sign of a place where an investor can get in on the ground floor in a community that’s clearly on the rise. Almost 73 percent of the town’s residents reside in single-family homes, which is something that investors should also take into consideration.
Its growing population is attributed to both interprovincial and international migration (three of its most common languages after English and French are Chinese, Mandarin and Dutch), so the town is showing signs of becoming an even more culturally vibrant space.
It plays host to many festivals and celebrations that capitalize on this status, so it’s a community-oriented place as well that is welcoming to all. Stratford is also helped by the fact that it has the lowest tax rates of any full-service community on Prince Edward Island – a factor that many real estate investors might overlook when considering where they’d like to invest their money.
Prince Edward Island’s greatest assets are its intimate size, its beautiful scenery and its diverse population of Canadians both native and recently arrived. The real estate market across the province is clearly showing signs of crawling out of the hole that the coronavirus inflicted on the entire country, and the savvy real estate investor will perform their own research to find value and the opportunity for sustained growth in many of PEI’s towns. Prices are rising, but with the right attitude and research approach, investors should be able to track down properties of reasonable value.
High-end opportunities
For those people who want to see their real estate portfolio skew toward high-end purchases, the upper-echelon communities of Charlottetown provide plenty of opportunities. There are several neighbourhoods throughout the city in which the average home prices start at half a million dollars.
You can opt for the cozy boathouses of Paynter’s Creek and French River. Shop the Old-style English manors that dot Brighton. Hob knob with the elite who make up the peninsula of Lewis Point. Regardless of your tastes, there is likely to be a neighbourhood in Charlottetown with the right upscale dwelling for your investment dollars.
The perfect opportunity for joint investment
It’s probably no surprise that you won’t have much luck trying to dive into investment in Prince Edward Island real estate by yourself. Sure, you likely understand that you’ll need to be on good terms with a knowledgeable real estate agent and a bevy of financial experts. More than that, however, successful investors seek out the company and insight of entrepreneurs young and old.
Unfortunately, on PEI, you’ll have to look long and hard for one of the real estate investment groups that seem ubiquitous in other provinces. That doesn’t mean that investing in PEI real estate needs to be a solo game. Working with a partner (or two, or three or four partners) in the province not only increase the breadth of your investing knowledge, but it also reduces the financial stress of buying into a market that is as competitive as Prince Edward Island real estate.
Prince Edward Island Real Estate Professionals
We have searched high and low for real estate investing professionals in Prince Edward Island real estate. Below, you can find professionals we have researched and can confirm they specialize in working with Real Estate Investors.
To ensure the maximum success in investing in Prince Edward Island real estate, or any city, you should always use professionals who understand and work with investors, your income depends on it.
This list may not fully list all the professionals in the area, but the ones we have personally investigated and that we would refer our clients to.
If you’re a real estate professional and would like us to consider adding you to the list, please contact us.
Mortgage Broker
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As well, if you would like to discuss financing options for Prince Edward Island Real Estate, click the link below for a free strategy call to discuss which lenders you can use to succeed in the Prince Edward Island real estate market.