“On the ground, we’re not seeing much signs of a slowdown in the resale market and sales have been up this year compared to the last, so I think we’re in good shape heading into the latter part of this year,” said Carol-Ann Wesselius, president of the Thunder Bay Real Estate Board.
“It’s still one of the best places in Canada, let alone Ontario, to buy real estate,” she added, which backs up a MoneySense magazine edition wherein Thunder Bay received top marks for the best deals.
Her comments come as CMHC expects housing activity to increase in most Ontario cities for the rest of 2015 before slowing down in 2016 under the assumption that mortgage rates could rise. But housing starts have been down in Thunder Bay over the last couple months.
Just this past April, according to real estate board figures, starts dropped from 138 units in March down to 107 units in April. That said, resales remained strong.
“Demand for new homes will soften in late 2015 due to more choice in the resale market, and a lack of job growth,” said Philp in a statement.
“A slight improvement in employment conditions in 2016 will lead to greater housing demand and therefore starts will edge up.”
According to the CMHC report, total housing starts will decrease slightly to 230 units in 2015, due largely to a dip in demand for rental space as fewer apartment starts. The CMHC expects the number to increase to 255 units in 2016.
Sales are also expected to increase by 1.2 per cent to 1,460 homes sold in 2015 and should hover around the same number in 2016. Analysts are predicting that the resale market will loosen up due to a greater growth in new listings, than in sales.
As a result, average price growth will moderate from 8.1 per cent in 2014 to 4.7 per cent this year and 2.9 per cent in 2016.
“Employment will support rental demand next year, causing the vacancy rate to decrease,” Philp said. “We should expect two-bedroom average rents to increase by slightly more than 2 per cent both in 2015 and 2016.”
Minimal job growth and more choice in the resale market are key reasons why demand for new homes will soften in 2015, according to a CMHC analyst, Warren Philp; However, Realtors remain optimistic.