Real estate downturn could be good news for Sault home buyers

RBC - Canada’s largest bank - foresees the country’s real estate bubble popping with a big downturn in both sales and prices.

With inflation pushing lending rates up, those rising rates are expected to cool down the real estate market.

As reported earlier, local home sales were down significantly in July as compared to July 2021 but the average price was still up at $320,314 - a 20.3 per cent increase from last year.

While RBC forecasts the overnight rate will climb to 3.25 per cent by October, the bank and real estate industry experts see the anticipated downturn in prices as a correction and a welcome change.

“What we’re experiencing in Sault Ste. Marie is more of a market stability, which to me is a good thing because it’s allowing buyers to have a little more power to buy a home,” said Jonathan Mogg, Sault Ste. Marie Real Estate Board president. 

That could turn out to be good news for first time home buyers in the Sault, some of whom lamented back in March that out of town home buyers, many from southern Ontario, were paying big money for homes in the Sault, those buyers either GTA residents eager to relocate away from the hustle and bustle or absentee buyers purchasing Sault homes and renting them out.

That trend squeezed out many Sault residents desiring to buy a house in their hometown.

“That seems to be cooling off,” Mogg told SooToday.

“Big time investors will always be in play, people who are in southern Ontario and decide that they want to invest in housing but can’t afford that market so it’s been pushing those kinds of people up north. But we’re noticing that with the interest rates going up there’s a lot less of those types of investors entering the local market, so that’s positive.”

“It’s kind of hit a point where a lot of people have cooled off on the idea of investing in housing so that’s good for the local people because now they’re starting to have a chance at buying a home again,” Mogg said.

“What I’m noticing is that a lot of buyers who were previously disillusioned are starting to come out of the woodwork and getting excited about trying to buy a house again. That’s awesome because these are people who had tried previously and the market was just too hot for them at the time. Now they’re seeing things cool off a little bit so it’s spurring them to say ‘okay, now’s the time I’m actually going to buy a house, this is it.’”

“It’s good to see that,” Mogg said.

Mogg said renting a home is still an option for those who can afford it because the average three bedroom bungalow in Sault Ste. Marie’s price is approximately $320,000 - making it hard for anyone with a budget under that amount.

That can cost between $1,500 and $2,000 a month.

That’s not the best option for most people, but the option is there for those who have the cash.

As far as apartment rentals are concerned, rates for two bedroom apartments in the Sault cost at least $1,300 a month.

Though realtors naturally prefer people to buy homes as opposed to renting them or renting apartments, Mogg said “it goes beyond a professional thing. Being a member of this community I want everybody to have the chance to have good quality housing.”