By NICK STEWART
The unseasonably colder spring has cooled not only residents, but also the Timmins’ housing market fever. It saw its first decline in total sales since 2004.
According to local housing data, 194 homes have been sold through to May 2008, as compared to the 219 in this period in 2007.
“Things have somewhat slowed from an overheated market,” says Bruno Gendron, realtor with Royal Lepage.
“Will this stop pricing from going up? With the lack of inventory, I think not, and the market may be taking a breather before its next spike.”
The slight dip in Timmins housing sales through the early half of 2008 is no cause for alarm, agrees Scott Barognolo, broker with ClaimPost Realty. In fact, despite the drop, sales are still above levels seen in 2005, Barognolo says, adding this slight slowdown likely represents the lower end of a cycle. The short supply has led to higher prices, and some purchasers are simply becoming a little more cautious. Both Barognolo and Gendron are quick to point out that the despite the reduction in sales, the story is still a positive one, as the market is still quite active.
Average home sales typically include three-bedroom bungalows, which carry a median cost of $150,000 to $170,000. Another popular sector includes homes ranging between 1,300 and 1,500 square feet, carrying a cost between $250,000 and $300,000.
By and large, however, there is no consistency in the market, meaning that no one area tends to outperform another over time. With the city being made up of different “pockets,” the diversity of the local market keeps one sector from usually outperforming another beyond the short-term.
Interest has even been rising in the multifamily sector, which translates to apartment units. Barognolo says investors interested in these rental properties have been calling from as far away as Vancouver, marking a drastic increase from years past where interest in such properties was quite low.
Contributing to this change are the shrinking vacancy rates, which have begun to reach levels similar to Sudbury, which features some of the lowest vacancy rates in the country.
Data from the Canadian Mortgage and Housing Corporation has shown that, as of April 2008, vacancy rates in Timmins have hit 1.2 per cent, down from 3.5 per cent in April 2007. This is a “drastic shift” from years prior, where local rates have reached into the double-digits, Barognolo says.
The lack of new housing construction continues to be an issue, however. The city has a large supply of available land, but too few new housing projects are being developed, thereby tightening supply and contributing to the rise in the price seen in previous years.
In the first four months of 2008, 11 new housing permits have been issued, as compared to the 17 permits issued in the same period in 2007.
While there are expectations that the permit numbers will rise as the summer months move forward, the loss of numerous larger contractors through the economic challenges of the 1980s has left Timmins in a tight spot.
With no large firms with economies of scale who would be able to pass larger savings to potential purchasers, Timmins is left with few development opportunities in that regard, Gendron says.
He also points out that the cost of home construction in the city is approximately $200 per square foot, creating an additional disincentive for speculative building. This threatens to worsen as the cost of fuel continues to rise, further increasing costs for transporting housing materials.
The infrastructure issues affecting the commercial and retail construction in the city’s West End are also impacting upon housing potential, with excessive pressure on the sewer and water systems reducing the number of serviced lots.
These factors have combined to create an environment where speculative building opportunities are low, leaving resale and slightly higher-cost built-to-order homes as the only real solutions for would-be homeowners.
Regardless, the story continues to be positive, with the market still extremely active; a well-priced home often sells in less than 60 days.
www.royallepage.ca
www.claimpostrealty.com
www.cmhc-schl.gc.ca
