For years, Northern Ontario has taken a backseat for public policymakers. Be it the lack of economic opportunities or infrastructure, Northern Ontario has been a land rich in potential, but it could not seem to advance to the next level. However, the area has experienced significant change since the start of the pandemic, when major urban centres in southern Ontario witnessed an exodus, as more households ventured across the province. With newfound freedom to work remotely and the desire for more space, many people made the move to regions like Sudbury to North Bay, in search of affordability and liveability. This shift has led to impressive gains in Northern Ontario housing markets, creating a once-in-a-generation opportunity for the overall economy. But can the Sudbury real estate market sustain this momentum, as Ontario and the rest of the country waves goodbye to the public health crisis?
The early 2022 numbers look promising for the Sudbury housing market.
A Spotlight on the Sudbury Real Estate Market
According to the Sudbury Real Estate Board (SREB), residential property sales rose at an annualized rate of 0.9 per cent in February, totalling 234 units. This represented a new sales record for the month.
On a historical basis, home sales were 27.5 per cent above the five-year average and 44.4 per cent above the 10-year average for this time of the year.
But while sales activity was notable, the pricing gains turned heads in the early part of 2022. SREB data show that the average price of homes sold in February surged 39.4 per cent year-over-year to an all-time high of $524,787.
Year-to-date, the average sale price in Sudbury advanced 36.1 per cent to just below $500,000.
One of the most significant factors for recent trends in Sudbury has been low supply levels failing to keep up with demand.
The number of new listings jumped 12 per cent from the same period a year ago, hitting 281 new residential listings. Active residential listings dropped 33.1 per cent to 186 units, the lowest in the month of February in about three decades.
New listings were 12.6 per cent above the five-year average, while active listings were 68.7 per cent below the five-year level.
Moreover, months of inventory have steadily fallen, clocking in at just 0.8 months at the end of February. This is down from 1.2 months in February 2021, and below the long-run average of 6.3 months for the month of February. Housing experts typically monitor this measurement since it represents the number of months it would take to exhaust current stocks at the current rate of sales activity.
New housing construction has been relatively non-existent so far this year. According to Canada Mortgage and Housing Corporation (CMHC), there were zero housing starts in February, bringing the year-to-date total to just five units, down from 11 at the same time a year ago. Housing completions were also less than half of what occurred last year.
Will Sudbury Remain an Affordable Housing Market?
The Sudbury real estate market is showing no signs of slowing down, leading to the consternation that this Northern Ontario town could join the rest of the province’s affordability crisis. However, officials say that ensuring that residential properties remain affordable is the city’s top priority.
“I do believe that we’re in a very good position because we’re one of the most affordable cities above 100,000 population in the province,” Mayor Brian Bigger told Sudbury.com. “We have the land, (and) we have many years’ worth of pre-approved subdivisions that are open for development.”
Indeed, price growth is forecast to be modest compared to other Ontario real estate markets. According to the RE/MAX 2022 Canadian Housing Market Outlook, Sudbury housing prices are projected to advance five per cent by the end of the year. Meanwhile, the number of home sales is anticipated to fall three per cent this year.
“Less-dense cities and neighbourhoods offer buyers the prospect of greater affordability, along with liveability factors such as more space,” said Christopher Alexander, President, RE/MAX Canada, in a statement. “In order for these regions to retain these appealing qualities and their relative market balance, housing supply needs to be added. Without more homes and in the face of rising demand, there’s potential for conditions in these regions to shift further.”
With many offices calling back their employees and big cities reopening, there is a concern that many people who fled these hyper-dense municipalities for greener pastures in small towns will be reversing their residential decisions. Moreover, now that interest rates are beginning to normalize, there is the expectation that the housing market could start to cool down, especially when public policymakers at all three levels of government are employing various mechanisms to bring prices down.
Perhaps Sudbury will maintain its housing affordability status and be somewhere in the middle in the coming months: no massive correction and no enormous growth in prices.
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