Is the bubble about to burst?

Last year in the depths of a recession, Thunder Bay’s housing market still managed to be one of the few places in the country to realize year over year increases. Today, Thunder Bay’s housing is reaching historic heights, but with the HST, mortgage changes and
predicted interest rate hikes ahead, is our inflated market floating toward a giant pin?
We asked some of the city’s real estate heavyweights (and we don’t mean in pounds either), a builder, and a mortgage specialist their views on where the market is headed.

Our Expert Panel:
Mario Tegola, broker of record for RE/Max First Choice Realty
Bunker Hill, top sales performer
Chris Kelos, C. Kelos Homes Ltd., leading local builder
Judy Szabo, mortgage specialist with Mortgage Intelligence

BAYVIEW: We’re hearing rumours that some houses are selling for more than asking this spring – is this true?
Mario: It is definitely happening. I don’t like it – but we’re seeing a lot of multiple offers right now on certain price ranges. $120,000 to $200,000 is red hot. There is a shortage of good quality in that price range. Almost every bungalow is selling for over the asking price.

BAYVIEW: Is this pace sustainable?
Bunker: There are a lot of good things happening in our city. Our unemployment rate is below the national average and the hospital and L.U. are really driving the economy. I think the shortage of listings and developed land are going to keep prices firm. There is some new property opening up at Sherwood Estates and River Terrace, but I see the strong market continuing for some time to come.

BAYVIEW: Cottage prices have been another emerging story – just how heated is lakefront property?
Bunker: Well, they don’t make anymore of it. Again, it’s a case of supply and demand. Camps that sold for $120,000 five years ago are now selling for around $180,000. Shebandowan is insane – it’s becoming Muskoka of the North. Lake Superior is really strong too, along with the inland lakes within 30 minutes of the city like One Island & Hawkeye.

BAYVIEW: Are we headed for a bubble?
Mario: The Thunder Bay market is always consistent; we don’t have the big spiky peaks and valleys when the economy changes. The big story is supply and demand. If you’re looking for a home in some select price ranges, there are too few listings. Sure the market is up right now but we’re still the most affordable place to live in Canada.

BAYVIEW: Chris, is there a rush to build with the HST coming?
Chris: There is definitely a rush to take possession of new homes before the HST kicks in. There is also a shortage of building lots in the city right now – meaning people are making fast decisions. The shortage of resale product is also causing a strong demand for new homes.

BAYVIEW: Judy, have you seen more first time buyers entering the market?
Judy: First time buyers have been coming in for pre-approvals. You can still purchase a home with 5% down, 20% for an investment property. Mortgages are still very accessible. With five year mortgages around 4%, monthly house payments are still very low and in my view rates could actually go a bit lower. We’ve also been doing a number of refinances lately for clients who want to take advantage of the lower interest rates.

BAYVIEW: Mario, would you encourage your kids (first time buyers) to buy right now?
Mario: Prices can only go up. I’m just not saying this because I’m in real estate either. Any house I’ve ever owned has never depreciated – it’s an asset not a liability.