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!