A Spotlight on the Thunder Bay Real Estate Market

The Northern Ontario real estate market has enjoyed an impressive boom for the last two years, driven by historically low interest rates and changing pandemic-induced consumer patterns. One of these places is the Thunder Bay real estate market. The municipality has enjoyed exceptional growth since the beginning of the coronavirus pandemic, allowing the city to revitalize the decades-long sluggish economy. But will this part of the province join the broader national housing industry’s slowdown?

Since the Bank of Canada (BoC) pulled the trigger on a few rate hikes this year, the Canadian real estate market has started cooling off. Whether this is the new trend or not remains to be seen, but the latest developments have prompted market analysts to home in on various areas of the country.

Has Thunder Bay sustained the momentum? The numbers have painted a notable portrait of the Thunder Bay real estate market.

A Spotlight on the Thunder Bay Real Estate Market

According to the Thunder Bay Real Estate Board, detached home sales increased at an annualized rate of 11.2 per cent in June, totalling 119 units. This is 2.1 per cent above the five-year average and an astounding four per cent below the 10-year average for this time of the year.

When it comes to prices, they continue to be highly elevated, suggesting that the growth is sticky and it could be challenging for prices to come down.

In June, the median sale price for single-detached homes advanced nearly 18.6 per cent year-over-year, totalling $350,000. The year-to-date median price surged 19.4 per cent year-over-year to $345,000.

The data show homes are spending less time on the market today than last year. According to the local real estate board, the median number of days on the market for these types of houses was 13 in June, down from 14 days the same month last year.

While conditions are tight, supply is not coming online fast enough. The newest figures from the Canada Mortgage and Housing Corporation (CMHC) show that there were zero housing starts in April, down from 12 in April 2021. So far this year, housing construction activity has been minimal compared to last year.

That said, municipal officials have been looking at new ways to facilitate supply and ease the pressures of urban sprawl. City hall has recently been assessing local housing by-laws that could permit the development of new homes on smaller lots, residential housing in backyards, and subdividing any detached house.

“I think people are encouraged that we’re taking things in a new direction that we’re looking to support intensification, a more walkable community, a greener community, a community that will be more resilient to climate change, a community that values the protection of its natural environment, and is supportive of businesses,” Leslie McEachern, the city’s director of planning services, told CBC News.

Will Thunder Bay Continue to Welcome More People?

Like many other small towns in the province and the rest of the nation, Thunder Bay is trying to attract and retain newcomers who have abandoned major urban centres in favour of more affordable housing markets. But while prices have skyrocketed in Northern Ontario, the region remains far more affordable than in most parts of Canada’s most populous province.

According to Statistics Canada, three of the five largest urban centres in Northern Ontario experienced population growth, including Thunder Bay. From 2016 to 2021, Thunder Bay enjoyed a population boost of 0.9 per cent, compared to a 0.4 per cent dip in the previous five-year span.

Clearly, Queen’s Park has been sniffing an opportunity to develop Northern Ontario. For years, critics assert, public policymakers have abandoned the province’s northern region, focusing primarily on the Greater Toronto Area (GTA) and other large cities and towns. From greater Internet connection to better infrastructure, the province and municipalities are attempting to take advantage of this once-in-a-generation opportunity.

Will they cash in, or will the effects of the post-pandemic economy force newcomers to return home to Toronto, Ottawa, or other bigger cities? This has been one of the biggest questions put forward by housing analysts. Until the data proves or disproves this narrative, the next major component will be the central bank and interest rates. Now that the Canadian real estate market is witnessing growing interest rates, industry observers will be combing through the data to see how much more weakness is in store for one of the world’s largest housing sectors.