A Spotlight on the Sudbury Real Estate Market

For years, Northern Ontario has taken a backseat for public policymakers. Be it the lack of economic opportunities or infrastructure, the northern part of the province has been a land rich in potential, but it could not seem to advance to the next level. However, the area has experienced significant change since the start of the pandemic, when major urban centres in southern Ontario witnessed an exodus as more households ventured across the province. With newfound freedom to work remotely and the desire for more space, many people made the move to regions like Sudbury to North Bay in search of affordability and liveability. This shift has led to impressive gains in Northern Ontario housing markets, creating a once-in-a-generation opportunity for the overall economy.

But can the Sudbury real estate market sustain this momentum as Ontario and the rest of the country attempt to balance a slowing economy and higher interest rates? Numbers in the first half of 2023 showcased a mixed landscape in the Sudbury real estate market.

A Spotlight on the Sudbury Real Estate Market

According to the Sudbury Real Estate Board (SREB), residential property sales tumbled nearly 10 per cent year-over-year in August, totalling 236 units. On a historical basis, home sales were 16.5 per cent below the five-year average and close to 12 per cent below the ten-year average for this time of the year.

In the first eight months of 2023, residential property sales plunged more than 24 per cent year-over-year, totalling 1,634 units.

But while sales activity has diminished significantly over the past year, home prices have remained solid, even in a rising-rate climate. Association data show that the MLS® Home Price Index (HPI), which industry experts say tracks price trends far more accurately than average or median price gauges, advanced nearly eight per cent year-over-year to $450,900 in August.

The average price of homes sold in August climbed a little more than nine per cent to $479,958. In addition, the more comprehensive year-to-date average price slipped by 2.2 per cent to $467,159.

But if sales activity has slowed at an exceptional pace, how can prices in the Sudbury real estate market remain on an upward trajectory? It is all about supply, which has been mixed as of late.

New residential listings surged nearly nine per cent compared to the same time a year ago, totalling 389 units. They were also three per cent above the five-year average, but 4.4 per cent below the ten-year average for the month of August. At the same time, active residential listings tumbled 1.6 per cent, totalling just 628 units. Active listings were nearly 11 per cent below the five-year average and an astounding 48.7 per cent below the ten-year average.

New housing construction activity has markedly improved from a year ago. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts rose about 15 per cent year-over-year to 78 units in August. In addition, on a year-to-date basis, housing starts have risen approximately 34 per cent year-over-year to 255 units.

Will Sudbury Remain an Affordable Housing Market?

The Sudbury real estate market is showing no signs of slowing down, leading to the consternation that this Northern Ontario town could join the rest of the province’s affordability crisis. However, officials say that ensuring that residential properties remain affordable is the city’s top priority.

“I do believe that we’re in a very good position because we’re one of the most affordable cities above 100,000 population in the province,” Mayor Brian Bigger told Sudbury.com in 2022. “We have the land, (and) we have many years’ worth of pre-approved subdivisions that are open for development.”

Indeed, price growth has been modest compared to the broader Ontario real estate market. For instance, according to the Ontario Real Estate Association (OREA), the average price of resale residential homes sold in the province in August was a little more than $832,000. While this was up just 0.3 per cent from the same time a year ago, it is much higher than the typical price found in the Sudbury real estate market.

When the economy started reopening, many offices called back their employees and big cities reopened their doors. Heading into 2024, a long list of companies is gradually abandoning their work-from-home policies altogether and mandating a return to the offices. As a result, there is a concern that many people who fled these hyper-dense municipalities for greener pastures in small towns will be reversing their residential decisions. Moreover, with interest rates at their highest levels in more than two decades – and the Bank of Canada could potentially raise rates one more time in the current hiking cycle – there is plenty of uncertainty in not only the Sudbury real estate market but also the wider Ontario housing sector. This is especially true when public policymakers at all three levels of government are employing various mechanisms to bring prices down.

Perhaps the Sudbury real estate market will maintain its housing affordability status heading into the fresh calendar year and be somewhere in the middle in the coming months: no massive correction and no enormous growth in prices.