By Ian Ross
Affordability is the story behind a surge in home sales in Thunder Bay through the first four months of 2002, says a market analyst for Canadian Mortgage and Housing Corp.
Warren Philp says low interest rates are powering what is shaping up to be one of the best resale years in more than a decade, a trend mirrored right across Northern Ontario.
“We’re forecasting (home) sales to be ahead eight per cent by year’s end,” he says. “We haven’t had a forecast that optimistic in quite some time.
“Realtors are having a hard time finding listings in the $120,000 to $160,000 range, and there’s real good supply at the low end of the market.”
“The resale market in Thunder Bay has really been strong,” with sales, on the Multiple Listing Service (MLS) of the Thunder Bay Real Estate Board, in the first quarter up 34 per cent over last year’s figures.
April saw 170 sales go through MLS, the highest number of single-month sales dating back to June 1993, “and the rates are the main reason,” Philp says.
The average selling price of a home this year is off by about 2.2 per cent, he adds. Philp suggests what is pulling prices off is the larger number of lower end sales taking place.
Looking deeper at this trend, Philp says it remains to be seen whether this resale boom is sustainable over a period of years due to a lack of some solid employment fundamentals and economic activity in the Thunder Bay area.
According to a Statistics Canada labour force survey, employment numbers are not promising - down 3.8 per cent in April from the same time last year. Yet the unemployment rate - 7.8 per cent in the city in April - was down from 9.1 per cent in 2001.
In local employment activity, the addition of some second income call centre jobs, big box expansion, success in the retail sector and a good supply of low-end houses on the market combined with low rates “is making people look seriously at moving from rental to home ownership...and building up equity,” Philp says.
“But I wish I could say employment growth is what’s working in concert with low mortgage rates to boost the resale market but in Northern Ontario not seeing that based on the StatsCanada labour force survey.
“I still have to see a reversal of population decline to see sustained dynamic growth in the housing market.”
The community is optimistic that a planned hydro project between Thunder Bay Hydro and an Illinois-based company could produce a long-awaited alternative engine for the local economy.
Housing starts on single detached homes remain depressed, but have doubled compared to last year with 19 single starts through April, compared to eight in the same period in 2001.
Building permits showed slight improvement, up from 26 last year to 34.
In construction, Harold Lindstrom, manager of the Thunder Bay Construction Association, says the level of activity could be better despite a slate of multimillion-dollar projects either underway or planned for the city, including the $250-million regional hospital.
“We haven’t had a banner year by any means throughout northwestern Ontario, but it’s a reasonable amount of work.”
Weyerhaeuser mill expansions in Kenora and Dryden has drawn a large labour and contractor force from Thunder Bay.
Both projects are well into the $300 million to $500 million range, including the installation of the equipment, and should keep many of his 200 association members busy for a while, says Lindstrom
“We always covered from the Manitoba border to White River and as far north as you want to go,” Lindstrom says. “That’s been a standard for us...there’s never been enough (work) in the city to cover our people.”
In retail, a $8-million Costco outlet in the intercity is underway, and contractors are expected to hear some news in the near future about the groundbreaking schedule for a $6.5-million Home Depot.
