Thunder Bay housing market to favour sellers in 2021, prices expected to rise 10%
The Thunder Bay housing market is primed for another seller’s market in 2021, with 2020’s inventory challenges expected to continue. Low housing supply isn’t restricted to this region, with many Ontario housing markets experiencing low supply and rising prices. In lockstep with low inventory and growing demand, the price of single-detached homes in Thunder Bay increasedto $278,381 in 2020 (Jan. 1 – Oct. 31) compared to 2019’s average price of $259,553 (Jan. 1 – Dec. 31). Meanwhile, average condo price increasedto $275,602 in 2020, up from $250,116 in 2019. RE/MAX expects seller’s market conditions to persist in 2021, with a 10% increase in Thunder Bay home prices, to an average of $273,308.
Thunder Bay currently has about two months of inventory, which should hold steady in 2021. Days on market are expected to decline next year.
First-time homebuyers, typically young couples, are expected to continue driving Thunder Bay’s housing market forward in 2021, with single-detached homes remaining in highest demand. Young couples will also drive move-up buyer activity next year – a segment that has been highly challenged by low supply and rising prices.
Thunder Bay has experienced rising demand for semi-rural properties, which has been a common trend across many Canadian housing markets as well as regions abroad, as homebuyers seek more square footage and green space outside of urban areas in the wake of COVID-19. Factors impacting this broader trend include the rise in remote work, the desire for more space and less density, as well as lower housing prices.
Activity in Thunder Bay’s luxury homes segment held steady in 2020, thanks to stable supply and demand. These conditions are expected to continue in 2021.
Thunder Bay’s hottest neighbourhoods
The three neighbourhoods in highest demand are Thunder Bay’s Northwood, Grandview and Shuniah neighbourhood in the north end, registering the highest number of sales in 2020. Buyers can expect these areas to remain hot sellers in 2021, thanks to their attractive price point.
Thunder Bay new-home construction
On the new-construction front, housing starts are generally slow in Thunder Bay, with new-home inventory and construction falling short of current demand, as is the case with resale properties. Price of brand-new homes are generally higher than their resale counterparts, and like other property segments, is expected to rise in the future.
Canadian housing market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
52% of Canadians believe real estate will remain one of the best investment options in 2021
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”
At the start of the COVID-19 lockdown, the Thunder Bay housing market experienced a slowdown in real estate activity, but according to the RE/MAX Fall Market Outlook Report, it has returned in a strong way, with regional interest continuing to greatly increase. Buyers are looking to purchase property as soon as possible, in order to take advantage of both low interest rates and current housing prices, which are expected to continue rising with demand exceeding supply.
Semi-rural properties have experienced a surge in demand since the pandemic began, as buyers look for more spacious homes and properties. The luxury market also remains strong, with an increase in demand for properties in this category and a subsequent increase in average home pricing.
Based on these factors, a 10% increase in the average residential sales price is expected in the Thunder Bay housing market for the remainder of 2020.
Ontario Real Estate Trends
What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group.
Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
48% of Canadians would like to live closer to green spaces
48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
33% of Canadians would like more square footage in their home and have realized they need more space
44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report
The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
Balanced market expected in 2020, prices to rise 2%
The RE/MAX Thunder Bay housing market outlook for 2020 calls for balanced conditions, and an anticipated residential price increase of two per cent due to low market activity and minimal change taking place in recent years.
The balanced housing market will be a continuing trend that dominated the Thunder Bay housing market in 2019, with an influx of homebuyers, many professionals working in the medical field. Affordability isn’t a concern in the region and the stress test has not had a significant impact on market activity, which cannot be said for many of Canada’s other housing markets. An aging inventory of condominiums, single-story detached homes and townhomes are leading to increased activity for these property types.
First-time and move-over buyers are expected to continue to drive demand in 2020. The aging population will lead to an increase in buying activity around the hospital. River Terrace and Sherwood Estates will be the hottest neighbourhoods to watch in 2020.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.
Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).
“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”
Lydia McNutt is an award-winning journalist and editor, with almost two decades of experience in the real estate sector. At RE/MAX, Lydia is responsible for developing consumer-facing content while promoting the RE/MAX brand. This includes housing market reports and RE/MAX network news featured on the RE/MAX Canada blog and social media channels. Lydia has been published nationally on topics ranging from real estate, architecture, decor and design, to finance, business, technology, entertainment and lifestyle. When she’s not head-down at her writing desk, Lydia is busy “momming” in Oakville, Ontario, where she lives with her husband, two kids and their chocolate lab, Betty. Email Lydia at firstname.lastname@example.org