Economic growth and low interest rates are creating such a boom in home construction in major Northern Ontario centres that some former residents of the North are moving back.
Data obtained in June from the Canada Mortgage and Housing Corp. (CMHC), the federal housing agency that monitors housing trends across Canada, reveals that the number of single family, detached housing starts in Northern Ontario cities, particularly Sudbury and Thunder Bay, is growing every year. The data also shows no signs of this trend slowing in the future.
According to Warren Philp, a CMHC market analyst for Northern Ontario, the first quarter of single-detached is 24 per cent ahead of the last quarter in Sudbury, and nearly 40 per cent ahead in Thunder Bay. North Bay and Sault Ste. Marie also saw above-average growth, albeit by a smaller percentage. Only Timmins had below average growth.
A lot of the growth, however, can also be attributed to local conditions.
Celia Teale, a planner with Sudbury-based Dalron Construction, says growth in Sudbury can be explained mainly by significant new projects and hiring within the region. In the case of Sudbury, a new $440-million Nickel Rim South project undertaken by Falconbridge has created new jobs that require the building of new homes. Spinoff opportunities in mining-related ventures, such as mining equipment suppliers, are also fuelling growth.
“A lot of this growth is coming from out-of-town companies coming to Sudbury,” Teale says.
Al Harrigan is the president of the Sudbury and District Home Builders’ Association, a group representing the interests of regional construction companies and contractors. He says growing employment opportunities allow Sudbury residents to feel at ease spending again.
“When the mine is doing well, they spend. They’re not worrying about the future and whether or not they’ll have a job in the future,” Harrigan says.
Most of this new mining growth, Harrigan says, is being invested in buying and improving existing homes.
Growth is not only coming from mining, however, according to Teale of Dalron Construction. The addition of a new general hospital, as well as the building of the new Northern Ontario Medical School, is bringing more demand for housing.
The addition of housing is also developing related industries at the same time, according to Teale.
“With every new home being built, there is a need for carpeting, appliances and flooring. All this stuff has to be purchased. So, everyone benefits,” she says.
New home construction is also being followed by an increase in home renovations, a factor Teale says is not specific to Sudbury and is affected by the current business climate.
Low interest rates, as well as increased availability of home equity, she says, has led to more Northern Ontarians being able to upgrade their homes, through the addition of new kitchens, bathrooms and other components.
More Sudbury couples, she says, are opting to build or buy larger homes because their families are becoming larger.
In an optimistic turn of events, Harrigan says that he is starting to see families “who left Sudbury in their 20s returning in their 30s.”
Positive stories of growth are not confined to the Sudbury region. Thunder Bay has been seeing new housing improve dramatically over the past few years. For this part of 2004, Thunder Bay has issued 447 new housing construction permits worth $49 million. This compares to 403 for 2003, worth $9 million and 356 new permits for 2002, estimated at $106 million in value. This translates into 99 new houses this year, 66 last year and 70 new houses the year before that.
Jim Buie, the manager in control of new permits for the City of Thunder Bay, says this growth can be accounted for by a recent slump in the value of investments. Buie, speaking in his own opinion and not on behalf of the city, believes declining stock values, as well as other speculative investments, has led Thunder Bay residents and realtors to seek investments in more tangible things like homes.
Thunder Bay-specific projects, such as a new regional hospital, have also led to new home construction. Thunder Bay, like Sudbury, is also benefiting from the addition of a new medical school. The construction of a new medical science building on the Lakehead University campus is also spurring growth.
Consumer demand is one factor contributing to the housing boom in Thunder Bay. Commercial, industrial and institutional building have all experienced a boom, according to Buie. Retail franchises and big-box store developments, such as Home Depot and Pier 1 Imports, have expanded the need for space in Thunder Bay’s inner city, he says.
André Jolin is the president of the Thunder Bay Home Builders’ Association. He believes one can predict the direction of the Northern Ontario housing market by looking at the region in the context of it being one region within the larger, southern-led Ontario economy. Northern Ontario, he says, follows the cycle of housing booms and busts originating in Toronto and other large centres and spreading outwards to the “peripheral regions of the North.”
