By NICK STEWART
While the explosive growth of North Bay’s housing scene is good news for some, deficiencies in the entry-level market are barring many would-be first-time homeowners from finding a place to call their own.
“The biggest problem we have right now is that we have a number of people on the entry-level housing scene that can’t buy houses,” Dave Wylie, president of the North Bay Real Estate Board, says.
“We haven’t got anything for them right now. It’s a big issue, and I don’t know how we can address it just yet.”
Homes in the $120,000 to $150,000 range are practically nowhere to be seen, and the ongoing boom of the local construction industry is contributing to the problem, Wylie says.
Labour and building costs have driven prices to hit nearly $200 per square foot. Combined with the rampant demand for higher-end homes and various municipal construction costs such as lot levies, developers have little incentive to cater to the lower end of the market.
To help rectify the problem, the city recently tore down some CN Rail trestles in order to clean up and service an area specifically for the construction of up to 30 lots intended for starter homes. Proposals are still out for construction of the new homes, which will be built through the spring to be sold by the fall of 2008.
“We recognize the problem and feel that this is something we can do to help,” Mayor Vic Fedeli says. “It’s important to take these kinds of measures, because we fully agree with the North Bay Real Estate Board when they say it’s a significant issue.”
While this is a step in the right direction, Wylie says more comprehensive solutions will have to be developed in order to head off the issue.
As an example, he points to a Canadian Mortgage and Housing Corporation program which allows buyers of lower-end homes to install new doors, windows and roofing and apply it against the cost of their mortgage.
“While our city council has been involved, not many outside politicians have jumped on board, and I think it has to be a provincial issue. If ever they were short of houses in Toronto, my God, it’d be on the front page of the papers.”
Until recently, some entry-level homes could be found by traveling to the outskirts of the city with a willingness and ability to engage in home repair. However, the overall tightness of the market has begun to drive up the costs of even these houses, further putting the squeeze on entry-level seekers.
This tightness, created by the rampant strength of the high-end market, is one of the major factors contributing to the issue, Wylie says.
As companies have begun to settle into North Bay to cater to the construction of the new hospital and general employment levels continue to rise, more developers are building homes on contract rather than building on spec. This further reduces the potential for lower-end homes, Wylie says.
In fact, aging baby boomers who are gainfully employed and riding high on a strong local economy are helping to make North Bay one of the hottest housing markets in Northern Ontario, according to Warren Philp, regional analyst with the Canadian Mortgage and Housing Corporation, says.
Much of this activity is taking place within the segment of the market where existing homeowners are looking to move up to a larger second or third home.
“These people, it seems, aren’t done building and buying housing, and they’ve been fueling a lot of the demand, I think, in the last five years in Northern Ontario’s major markets,” Philp says.
Through to the end of August, sales in North Bay are up six per cent over the same period last year, reaching 1,134 sales versus 1,070. This has led to $220 million in sales this year to date, a 16 per cent jump over $189 million at this point last year.
However, new listings have dropped by four per cent, reaching 1,572 over 1,632. This reduction in supply, along with the increased level of demand, has helped to drive up prices.
The average cost of housing is $175,460 to date, up from last year’s total average of $160,854. This puts the majority of activity in the market in the $150,000 to the $220,000 range, Wylie says.
This activity is in keeping with the nearly decade-long streak of constant growth in the North Bay housing market, which has seen increased sales nearly every year since 1999. That year, total sales hit 962, rising annually to hit 1,446 last year.
The same holds true for price increases, which peaked at 9.6 last year. This year’s total is on track to match that number, with a nine per cent jump through August.
This robust showing is expected to last through the end of the year, and has the potential to emerge from the winter months relatively unscathed, Philp says.
“I’m not in the job of forecasting in North Bay, but I’d be hard-pressed to say that prices now are going to end the year under $174,000, let’s say. Given the run prices have had month-to-month, they continue to exhibit strength, and I can’t see them going backwards here for the last four months of the year.”
