As hot as Canada's real estate market has been, it's been heating up even faster in communities that are participating in the commodities boom. And with oil cracking $80 (U.S.) a barrel, wheat hitting a nine-year high and gold soaring above $720 an ounce to its highest level in decades, the boom is gathering speed.
The resource-driven real estate boom isn't just a Western phenomenon, with the mining centre of Sudbury, Ont., cracking the country's top five metropolitan centres in July in terms of housing price gain. The price of a resale home there is up almost 23 per cent to nearly $180,000, according to the Canadian Real Estate Association (CREA).
"Prospecting has been driving a lot of economic activity right across the north. Mining has been doing very well, and as a result there are more people working both at the mine sites but also in the supply industry and in the exploration industry," said Chris Hodgson, president of the Ontario Mining Association.
Activity in Timmins, Ont., Sudbury and Red Lake, Ont., is being driven by long-running nickel mines, and also gold mining as high commodity prices encourage new firms to restart old projects.
The development of Ontario's first diamond mine, De Beers Canada Inc.'s Victor Diamond project, has also been a boon for Timmins and Sudbury, two of the nearest major centres. The cities are serving as "staging grounds" for the mine, which is currently under construction, Mr. Hodgson said.
High commodity prices also mean resale home prices in oil and gas hubs such as Calgary and Edmonton have continued to rise, with those markets leading the country for much of the past few years. In Saskatchewan the two largest cities, Saskatoon and Regina, have been riding the rally in resource prices as well, on surging gains in wheat and barley. Resale house prices there jumped 54 and 29 per cent, respectively, in July.
However with higher mortgage rates, utilities and taxes also in the picture, income isn't keeping pace with prices despite the country's strong labour market, said Derek Holt, assistant chief economist at Royal Bank of Canada.
The cost of owning a two-storey detached home in Alberta rose to 45 per cent of median pretax household income in the second quarter, up 5 per cent from the first three months of the year, according to a study by Mr. Holt released yesterday.
The Saskatchewan housing market suffered its worst quarterly deterioration in affordability since Royal Bank started its study in 1985, with a two-storey detached home costing $263,972, or ownership costs equating to 40 per cent of the median household income.
An area to watch is northern B.C., which has been attracting both new and returning residents. Mining and a pickup in logging activity due to the mountain pine beetle epidemic has caused a need for workers in Prince George, said Marnie Scott, a real estate agent in the city of 77,000 located at the confluence of the Fraser and Nechako rivers.
"Lots of new families have moved here from all over Canada," Ms. Scott said.
Canadian National Railway Co.'s shipping operations could also lure residents to Prince Rupert. Yesterday CN broke ground on a new container terminal there expected to create 1,000 new jobs a year. North America's closest port to Asia by sailing distance, the Port of Prince Rupert will serve as a hub for exports including grain, coal, and iron ore.
© The Globe and Mail
