Canadian Cities Struggling With The Big City Real Estate Boom, Real Estate News, ET RealEstate
Growing demand has led some small Canadian communities to see house prices soar more than 75% in one year.
“Small towns are hit hard. They are attracting interest like never before, ”said Stephan Gauthier, an Ottawa real estate agent who is increasingly helping clients buy in villages well outside the city.
Impressive gains in Canada reflect similar trends in New Zealand, Australia and Britain, where rural house prices accelerate faster than in cities as eager buyers rush to grab cheaper properties. in small towns and white collar workers are betting on being able to work from home even after the pandemic is over.
The boom in Canada brought builders to smaller communities. More housing means increased demand for drinking water and wastewater treatment, forcing some cities to speed up expensive infrastructure projects.
For residents, the influx of city dwellers is a double-edged sword. The new residents are bringing life and diversity to places where – before the pandemic – schools closed and many businesses struggled during the winter.
But soaring house prices are excluding locals from the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small business owners looking for staff.
Even existing homeowners, whose home values have risen sharply, are unable to move up the ownership ladder as the gap to the next rung widens beyond their means.
“You want people to come here and help build the community. But at what cost to the people who have been here for generations?” said Nancy Cherwinka, who lives in Prince Edward County, a Lake Ontario peninsula known for its vineyards and beaches.
Moving to the country
About 75,000 people have left Toronto and Montreal – Canada’s two largest cities and major COVID-19 hotspots – for other parts of their respective provinces of Ontario and Quebec during the year until in July 2020, the largest such migration since at least 2001, according to the latest data from Statistics Canada.
For Prince Edward County, about 200 km (125 miles) east of Toronto, this migration has helped push house prices up by 78.5% per year, putting property beyond the reach of many residents. local. The average selling price of a home in April was C $ 740,112 ($ 610,000).
“Now the rental market has gone crazy,” said Chuck Dowdall, chief executive of the Prince Edward County Affordable Housing Corporation, as potential buyers forgo buying and renting instead.
The tightening of rents makes it difficult for small businesses to hire and retain staff, even if they pay above the minimum wage.
It’s a struggle that Samantha Parsons and her husband, owners of Parsons Brewing Company, know well. They built a small dormitory next to their brewery to temporarily house the workers and even had staff stay with them. This year, they entered into a lease for a three-bedroom house for the employees.
“You have to be creative,” Parsons said, adding that they were still losing talent because of the housing challenge.
If you build it
To tackle the housing crisis, Prince Edward County is forecasting more than 3,000 housing starts through 2026, including dozens of below-market rental units.
This boom is putting pressure on municipal services, particularly the aging of water infrastructure. The region is stepping up plans to spend C $ 68 million ($ 56.2 million) on its water and sewer system, with developers bearing much of the bill.
New home construction is also increasing in other small centers across Canada, with rural starts in the first quarter of 2021 at their highest level since 2008.
In Collingwood, Ont., A four-season resort town about 145 km (90 miles) northwest of Toronto, the population boom has forced the community to halt all new home construction while it seeks to remedy the problem. its severe water shortage.
In Nelson, a former mining town in the Kootenay Mountains, B.C., an explosion caused by an infill housing and coach pandemic is forcing the small town to expand its wastewater and water treatment infrastructure earlier than planned.
“We were heading down this road anyway … but now it’s been sped up. So that’s going to put us on a bit of a back,” said Mayor John Dooley, adding that the sewage plant would cost her. alone about 25 million Canadian dollars. .
Dooley said Nelson hopes to share the costs with the province and the federal government.
Back in Prince Edward County, about half of the children in a rural daycare are new to the community since the pandemic. At the city’s twin daycare, a quarter of the students are newcomers. Enrollment in local schools is also on the rise, reversing a trend that had led to closures in previous years.
More young families living in the community will ultimately benefit, Cherwinka said, as long as they stick around once life returns to normal.
“I hope they stay, I hope this is not just a solution to a pandemic,” she said. “Hope this is long term.”