When the pandemic hit last March and lockdowns began, many assumed the economic downturn would translate into lower home prices. People would be thrown out of work, default on their mortgages, and perhaps even lose their homes. The federal housing agency, Canada Mortgage and Housing Corp., forecast home prices could drop as much as 18 per cent in the worst case scenario. The exuberant housing market would surely fizzle out.
And it did, briefly. But then, it came roaring back.
Where is Thunder Bay housing positioned this Spring? We asked a real estate agent, a mortgage broker, a developer and a builder for some clarity on what’s really going on. Eric Vastamaki, a real estate agent with Re/Max First Choice Realty says local pricing has climbed during Covid.
“By the looks of things, I don’t see a change in the trend coming in the near future. We are low in selling inventory so when a house does come on the market, numerous search engine’s catch them and distribute the information to possible buyers immediately. This in itself creates a quick response. If you had asked realtors of what this pandemic would do to the business, most, including myself were preparing for the market to be quieter for some time. The opposite is what actually happened. Very low mortgage rates have also been a huge factor in people moving forward. Anyone that has a job in ‘essential services’ has been able to make moves in real estate. However, there are many out there struggling to survive. I’m hopeful that this pandemic will come to an end soon so the economy will recover for everyone”, says Vastamaki.
Re/Max First Choice Realty Broker of Record Mario Tegola offers this simple Spring prediction, “The spring market will be very busy with a shortage of listings and low interest rates driving the market”.
The recent rebound in housing has caught some local home builders off guard, with a lack of serviced building lots and inventory to sell. Chris Kelos of C. Kelos Homes admits he didn’t predict the kind of demand they’re seeing now. “In the fall any lots we had available were quicky spoken for. Sherwood Estates, River Terrace and Gemstone have all sold out. However, we’re eagerly awaiting some newly serviced lots to become available in Gemstone Estates expected by late spring or early summer”, says Kelos.
Another concern for builders is the cost of materials. “The cost of OSB and linear lumber has more than doubled in the past year. This is going to make things challenging to keep a lid on price increases. But when you compare other areas of the country, Thunder Bay is still a relatively inexpensive place to build a home”, explains Kelos.
John Simperl of Bruno’s Contracting, one of the main providers of serviced building lots in the area admits selection is lower than usual but anticipates new lots to become available in the next few months. “We’re close to having 30 building lots serviced and ready to sell in Mount Forest very soon along with another 16 lots at Whitewater currently available. The market is definitely strong and we’re doing our best to address this. You can’t just flip a switch and create a building lot, the services need to be in place before we can make them available for building”, admitted Simperl.
Finally, most experts agree cheap money is the rocket fuel of the real estate boom. Record low mortgage rates have made borrowing easier, increased competition for houses and inflated residential values.
Mike Missere a Mortgage agent with Mortgage Intelligence believes the current historic low rates might lift higher this year. “Interest rates are moving up a little, but they are still around the 2% mark for 5 year fixed terms. As long as clients don’t run too far ahead by paying too much for the homes, this is a good new story for buyers. We’ve also seen an upswing in refinancing mortgages in recent months. With 10 year bond yields lifting earlier in the month, this might be a good time to get your personal house in order, so to speak”, says Missere.
As we enter Spring the consensus seems to confirm we’re definitely in a seller’s market, with home owners earning the right to feel just a little bit richer.
