In the aftermath of the coronavirus , plenty of trends in the Canadian real estate market started to form. These developments, from big-city households relocating to rural communities, to the digitization of the housing industry, have led to incredible growth in areas of the province and country that would normally not experience such a boom. The North Bay housing market is one of those rural municipalities in Ontario witnessing a once-in-a-generation surge. In the past, Northern Ontario has faced challenges attracting young families looking to plant roots mainly because of the lack of development. As the saying goes, times they are a changin’.
But why has change come to North Bay?
In 2020, nearly every aspect of society transformed. More people are working from home, giving them the opportunity to fulfill their professional duties from any location. They do not need to live where they work, enabling a home purchase outside of urban areas. Another factor contributing to a strengthening North Bay real estate market is that interest rates are historically low, which widens the housing options available to buyers. In other words, they can borrow more money at a less expensive rate, allowing homebuyers to get more square footage and more of the amenities they desire.
What’s more, North Bay is no longer a rural area with only the basic amenities. Since 2018, the city has initiated an economic development campaign to attract business investment and skilled workers. With an inevitable influx of out-of-town buyers, this is a strategy that seems to be paying off.
Current Real Estate Trends in the Sizzling North Bay Market
So, what do the housing numbers show for North Bay?
According to the North Bay Real Estate Board, residential property sales advanced 9.6 per cent in December from the same time a year ago. Year-to-date, home sales have risen 10.3 per cent year-over-year.
The composite/single-family benchmark price increased by 26.1 per cent in December to $270,400. Plus, the dollar value of all home sales in December 2020 spiked 67.2 per cent to a new high of $34.7 million for the month of December.
Could inventories come down and potentially lift prices even further? If the current trends persist, it is more than likely that real estate valuations will climb even more. In December 2020, there were 79 active residential listings, down 62.6 per cent from the end of December 2019. This marks a three-decade low for active listings in the North Bay housing market.
Moreover, the months of inventory declined from 2.9 in December 2019 to just one at the end of December 2020. The long-run average for this time of the year is 7.1 months. This is a crucial metric because it represents the number of months it would take to sell present stocks at the current sales activity rate.
What Will 2021 Look Like for the North Bay Real Estate Market?
RE/MAX recently released its North Bay Housing Market Outlook (2021), forecasting that residential real estate growth will average between four and six per cent across all property types, to more than $305,000.
The report identified North Bay as one of many markets “heavily impacted” by buyers from Southern Ontario migrating north. These buyers seek more space and affordability in the fallout of the COVID-19 public health crisis. Another factor that could trigger higher prices in 2021 – and beyond – is that new construction is falling short of demand.
“Looking ahead, North Bay lacks the resale inventory and new-home starts required to keep up with the current demand from move-over buyers, should this pace continue,” the report stated.
The overall Canadian real estate market will experience growth, aided by the Bank of Canada’s low interest rate, which is expected to remain low throughout 2021. This key development could be utilized for better housing conditions, which could justify the booming luxury home market across Ontario.
However, not everyone is convinced. Fitch Ratings projects that Canadian home prices could slump by as much as five per cent in 2021. It identified declining rents, a substantial drop in immigration, and mortgage affordability stress tests that will apply pressure to the red-hot housing sector as reasons why this growth may not pan-out. This is much lower than the Canada Mortgage Housing Corporation’s (CMHC) 18 per cent decline prediction. Plus, Fitch’s downbeat estimate came soon after the Canadian Banks Association (CBA) published data highlighting that mortgage arrears rates increased in May, suggesting that homeowners stopped paying their mortgages in February, one month before the cross-country lockdowns.
Northern Ontario: The Next Real Estate Boom?
Could Northern Ontario be a hot spot for the next real estate boom? This region of the province has had difficulty attracting capital and people in the past, but with evolving consumer patterns and economic trends, North Bay and its municipal neighbours could witness a revitalization in the aftermath of COVID-19. Plus, the north enjoys plenty of beautiful sceneries and sounds unmatched by anything in the rest of Ontario. If more homebuyers relocate to North Bay, this could be the start of a regional transformation, for the better.