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What is Happening in the Thunder Bay Real Estate Market? – RE/MAX News

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Many people are aware of how destructive the coronavirus public health crisis was for smaller towns across the province of Ontario. It has been well documented that major urban centres such as Toronto and Vancouver endured substantial pain that altered their appeal. But the smaller communities also saw a downturn in their economies. Based on the most recent housing market trends, there could be good news on the horizon for small towns as they rebound from the lows experienced earlier this year.

When you consider Canada’s booming real estate industry, few people consider Thunder Bay to be an in-demand housing hot-spot. However, maybe it’s time to re-think these preconceived notions of Ontario’s northwestern markets. Despite the economy taking a hit from the COVID-19 pandemic that resulted in province-wide restrictions, the municipality’s economy is forecasted to rebound next year significantly, and this could bode well for an already recovering Thunder Bay real estate market.

For those who are considering fleeing the big city in favour of planting roots in a new town, Thunder Bay could be a top destination for its housing affordability, as well as a plethora of attractive fundamentals. Rural cities like Thunder Bay are now, more than ever, attracting urban dwellers in search of more space, less crowding, and a budget-friendly price tag on a family home. Below we dive into the trends unfolding in the Thunder Bay real estate market as we work our way through the final quarter of 2020.

What is Happening in the Thunder Bay Real Estate Market?

Thunder Bay may not be experiencing record-breaking sales activity and prices compared to other Ontario municipalities, but the city’s real estate market is certainly rebounding amid the COVID-19 pandemic.

According to the Thunder Bay Real Estate Board, single-detached home sales climbed 25.5% from the same time a year ago, totalling 118 units in the month of September. The median sale price advanced 8.4% to $265,000 in September year-over-year, while the year-to-date median price increased 3.8% to $249,950.

Moreover, single-detached properties spent fewer days on the open market. The real estate association reported that the median number of days on the market for single-detached homes was 18 in September 2020, down from 20 days last year. This is one of the shortest times on record, suggesting that demand continues to rise across the city.

With interest expected to climb even more, will there be enough supply to meet the booming demand? Not quite. According to a new report from Canada Mortgage and Housing Corporation (CMHC), housing starts in Thunder Bay fell 21% in September compared to the same time a year ago. While nationwide housing starts are up, CMHC expects new residential construction to start trending lower heading into 2021.

“The national trend in housing starts was largely unchanged in September,” said Bob Dugan, CMHC’s chief economist, in a statement. “Multi-family starts have been very volatile in recent months, partly reflecting the impact of COVID-19. High levels of multi-family starts in July and August were largely offset by lower levels in September, leaving the trend largely unchanged. This pattern was particularly evident in Ontario, including Toronto. We expect national starts to trend lower by the end of 2020 as a result of the negative impact of COVID-19 on economic and housing indicators.”

As a result, Thunder Bay could evolve into a sellers’ market. When you factor in historically low interest rates and the trend of homebuyers fleeing major urban centres in favour of smaller markets in Ontario, Thunder Bay could become a hot market over the next few years.

An Improving Economy in Thunder Bay?

Market observers are optimistic that Thunder Bay’s economy will modestly rebound next year. The Conference Board of Canada recently forecast that northwestern Ontario’s largest city will experience a sharp decline in the gross domestic product (GDP) this year, but 2021 looks promising, citing the strong housing market, improved tourism prospects, and expansion in manufacturing, construction, and utilities.

Overall, the Ottawa-based strategy think-tank predicts 3.6% growth in local GDP next year.

With parts of Ontario returning to stage two of COVID-19 restrictions, the province’s future over the next few months remains uncertain. Since Thunder Bay sits beyond the limits of Queen’s Park’s list of red zones (Toronto, Ottawa and Peel Region), the city’s rebound is expected to be unobstructed over the next 12 to 18 months, so long as local infection rates remain low.

With the promise of breathtaking scenery and a close-knit community perfect for raising a family, the lure of Thunder Bay is undeniable. If you’re looking to re-plant your roots within a diverse and growing city within a rural setting, take advantage of the affordability of housing within the Thunder Bay market before it joins the ranks of Ontario’s highly priced real estate hot-spots!

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Real eState

What Is the Canada Mortgage and Housing Corporation (CMHC)

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The Canada Mortgage and Housing Corporation (CMHC) is a Canadian Crown Corporation that serves as the national housing agency of Canada and provides mortgage loans to prospective buyers, particularly those in need.

Understanding the Canada Mortgage and Housing Corporation (CMHC)

The Canada Mortgage and Housing Corporation (CMHC) serves as the national housing agency of Canada. CMHC is a state-owned enterprise, or a Crown corporation, that provides a range of services for home buyers, the government, and the housing industry.

CMHC’s stated mission is to “promote housing affordability and choice; to facilitate access to, and competition and efficiency in the provision of, housing finance; to protect the availability of adequate funding for housing, and generally to contribute to the well-being of the housing sector.”1

A primary focus of CMHC is to provide federal funding for Canadian housing programs, particularly to buyers with demonstrated needs. CMHC, headquartered in Ottawa, provides many additional services to renters and home buyers, including mortgage insurance and financial assistance programs. CMHC acts as an information hub for consumers, providing information on renting, financial planning, home buying, and mortgage management.

CMHC also provides mortgage loan insurance for public and private housing organizations and facilitates affordable, accessible, and adaptable housing in Canada.2 Additionally, CMHC provides financial assistance and housing programs to First Nations and Indigenous communities in Canada.3

Professionals and Consumers

CMHC provides services to both professionals and consumers. For professionals, CMHC aims to work in collaboration with different groups to provide affordable housing. Services include project funding and mortgage financing, providing information to understand Canada’s housing market, innovation and leadership networks to access funding and talent to spur housing innovation and increase supply, and providing speakers and hosting events for the industry.4

For consumers, CMHC seeks to provide all the tools an individual would need to either buy a home or rent a home and a variety of information and assistance for current homeowners, such as managing a mortgage, services for seniors to age in place, and financial hardship assistance.56

For financial hardship and mortgage assistance, CMHC provides tools that include payment deferrals, extending the repayment period, adding missed payments to the mortgage balance, moving from a variable-rate to a fixed-rate mortgage, and other special payment arrangements.7

Canada Mortgage and Housing Corporation (CMHC) and the National Housing Strategy

In November 2017, the Canadian government announced the National Housing Strategy.8 Rooted in the idea that housing is a human right, this 10-year, $70 billion project will largely be administered by CMHC, although some services and deliverables will be provided by third-party contractors and other Canadian federal agencies.9

Strategic initiatives of the National Housing Strategy include:

  • Building new affordable housing and renewing existing affordable housing stock
  • Providing technical assistance, tools, and resources to build capacity in the community housing sector and funds to support local organizations
  • Supporting research, capacity-building, excellence, and innovation in housing research10

History of the Canada Mortgage and Housing Corporation (CMHC)

CMHC was established in 1946 as the Central Mortgage and Housing Corporation by the federal government in Canada with the primary mission of administering the National Housing Act and the Home Improvement Loans Guarantee Act and facilitating discounts to mortgage companies. Initially, CMHC began by providing housing to returning Canadian war veterans, and toward the end of the 1940s, CMHC began to administer a program providing low-income housing across Canada.11

In 1947, CMHC was responsible for opening Regent Park, a large low-income housing project, and Toronto’s first urban renewal project. By the 1960s, CMHC introduced co-op housing and multi-unit apartment buildings throughout Canada.11

In 1979, the Central Mortgage and Housing Corporation changed its name to the Canada Mortgage and Housing Corporation

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Real eState

Canadian home price gains accelerate again in May

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Canadian home prices accelerated again in May from the previous month, posting the largest monthly rise in the history of the Teranet-National Bank Composite House Price Index, data showed on Thursday.

The index, which tracks repeat sales of single-family homes in 11 major Canadian markets, rose 2.8% on the month in May, led by strong month-over-month gains in the Ottawa-Gatineau capital region, in Halifax, Nova Scotia, and in Hamilton, Ontario.

“It was a third consecutive month in which all 11 markets of the composite index were up from the month before,” said Daren King, an economist at National Bank of Canada, in a note.

On an annual basis, the Teranet index was up 13.7% from a year earlier, the 10th consecutive acceleration and the strongest 12-month gain since July 2017.

Halifax led the year-over-year gains, up 29.9%, followed by Hamilton at 25.5% and Ottawa-Gatineau at 22.8%.

Housing price gains in smaller cities outside Toronto and its immediate suburbs again outpaced the major urban centers, with Barrie, Ontario leading the pack, up 31.4%.

On a month-over-month basis, prices rose 4.9% in Ottawa-Gatineau, 4.3% in Halifax and 3.7% in Hamilton.

The Teranet index measures price gains based on the change between the two most recent sales of properties that have been sold at least twice.

Canada‘s average home selling price, meanwhile, fell 1.1% in May from April, Canadian Real Estate Association data showed on Tuesday, but jumped 38.4% from May 2020.

 

(Reporting by Julie Gordon in Ottawa; Editing by Christopher Cushing)

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Economy

Bank of Canada seeing signs of cooling in hot housing market

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The Bank of Canada is starting to see signs that the country’s red hot housing market is cooling down, although a return to a normality will take time, Governor Tiff Macklem said on Wednesday.

The sector surged in late 2020 and early 2021, with home prices escalating sharply amid investor activity and fear of missing out. The national average selling price fell 1.1% in May from April but was still up 38.4% from May 2020.

“You are starting to see some early signs of some slowing in the housing market. We are expecting supply to improve and demand to slow down, so we are expecting the housing market to come into better balance,” Macklem said.

“But we do think it is going to take some time and it is something that we are watching closely,” he told the Canadian Senate’s banking committee.

Macklem reiterated that the central bank saw evidence people were buying houses with a view to selling them for a profit and said recent price jumps were not sustainable.

“Interest rates are unusually low, which means eventually there’s more scope for them to go up,” he said.

Last year, the central bank slashed its key interest rate to a record-low 0.25% and Macklem reiterated it would stay there at least until economic slack had been fully absorbed, which should be some time in the second half of 2022.

“The economic recovery is making good progress … (but) a complete recovery will still take some time. The third wave of the virus has been a setback,” he said.

The bank has seen some choppiness in growth in the second quarter of 2021 following a sharp economic recovery from the COVID-19 pandemic at the start of the year, he added.

(Reporting by David Ljunggren and Julie Gordon; Editing by Peter Cooney and Richard Pullin)

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