Property Prices Hit New Highs in the Sudbury Real Estate Market

The Ontario real estate market has witnessed many success stories over the last 18 months. After years of being dominated by a handful of markets, such as Toronto and Hamilton, the province’s housing sector has experienced exponential growth. From Northern Ontario to municipalities bordering Lake Huron, sales activity and prices have never been higher. But can this growth continue? That is what many homeowners and homebuyers are wondering in the Sudbury real estate market.

Throughout much of the once-in-a-century public health crisis, Greater Sudbury has enjoyed incredible gains across its housing market. And, of course, when local real estate is booming, the broader economy benefits. Sudbury has long been a community attracting urban dwellers keen to leave behind the lights of the big city in exchange for quieter living, small-town charm and more affordable housing. But, while Sudbury still maintains its charm, prices are certainly not staying down.

For now, price growth is expected to remain on an upward trajectory for the next few months. But what happens when the world flips the calendar and ushers in 2022? The latest data could perhaps give us a slight glimpse into how the Sudbury housing marker in the near future.

Property Prices Hit New Highs in the Sudbury Real Estate Market

According to the Sudbury Real Estate Board (SREB), residential sales declined 20.9 per cent year-over-year in July, totaling 292 units. Despite the decline in sales activity, the Sudbury housing market was only three transactions shy of the second-best July on record.

Year-to-date, Sudbury real estate sales increased 36.2 per cent from the first seven months of last year. In total, the Ontarian town saw 1,994 units change hands. Meanwhile, home sales were 0.8 per cent above the five-year average and close to 12 per cent above the 10-year average for this time of the year.

Prices also enjoyed double-digit gains during the dog days of summer. SREB numbers highlighted that the average price of homes sold in July climbed 16.2 per cent to $359,074. The YTD average, which industry experts say is a more comprehensive approach to understand valuation growth, advanced at an annualised rate of 29.7 per cent.

Listings, on the other hand, took a nosedive. The number of new residential listings fell 18.7 per cent to a three-decade low of 300 unit. In addition, the number of active residential listings plummeted 27.8 percent to another three-decade low of 319 units.

The months of inventory, which examines the number of months it would take to exhaust housing stockpiles at the present rate of sales activity, clocked in at 1.1 at the end of July. This is down from 1.2 months in July 2020 and below the long-run average of 5.1 months for the month of July.

Housing starts have started to show signs of picking up. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts totaled 40 in June, nearly double from the previous year. In the first six months of 2021, Sudbury housing starts have totaled 118, up from 37 from the same time last year.

What could happen in the second half of 2021?

What Will Drive the Sudbury Real Estate Market?

Over the next several months, there could be several factors driving the Sudbury real estate market. From employment situations to borrowing costs to the post-pandemic recovery, industry observers will be pouring through the data to spot any trends that could form heading into 2022.

As the Great White North reopens, offices are also opening their doors again after 18 months of relying on remote work policies. The widespread shift to a work-from-home environment in March of 2020 facilitated a trend of professionals exiting the major urban centres, scooping up larger homes at a lower cost in small towns, suburbs, rural communities, and even cottage country. By doing this, city dwellers raised the cost of a three-bedroom home in smaller local markets like Sudbury.

As these working policies shift back to a pre-pandemic normal, will there be a reversal in this exodus trend as people leave the communities of Sudbury, Thunder Bay, and Guelph? If so, new supply would come to the market, and demand would ease in these small markets as working professionals return to Toronto, Hamilton, and Ottawa.

Canada’s labor market is booming again. But, according to Statistics Canada, Sudbury lost 800 full-time jobs in July, while gaining just 300 part-time positions. This led to an unemployment rate of 8.6 per cent in Greater Sudbury.

The expectation is that the Bank of Canada (BoC) will pull the trigger on a rate hike late next year. When you factor in the increased mortgage stress test, it is going to be a lot harder to get your hands on a mortgage, particularly amid an intensifying housing affordability crisis.

All things considered, it’s likely that Sudbury will remain in a seller’s market in 2021.

Sources:

SREB
CMHC
Sudbury Star