A Brief Report on the Real Estate Sector in Timmins, Ontario
Timmins, Ontario is an important economic hub in North East Ontario, with a population of around 43,000 and an industry driven by natural resources. The city’s population has seen little to no growth in the last decade, but due to the increase in gold prices, one of the economy’s most abundant resources, the real estate prices have been forecasted to increase as well. In addition to gold, the city’s economy is also dependent on the local industry of base metal mining.
The Local Economy
Timmins was founded in 1912, after the discovery of gold in the area. Since then, the economy has seen its own rises and falls, but has grown into a small city. While the economy is still primarily dependent on mining of gold and base metals, other industries such as forestry, education, telecommunication and tourism play a secondary role.
The global financial crisis of 2007 and 2008 had little to no effect on the local economy, because gold prices remained high during that time. All other industries were affected, but still had very little negative impact on the city’s economy. This alone speaks to the extent the mining activity in this area impacts the city’s economy.
The medical facilities, regional transportation and recreational facilities within Timmins are improving at a fast pace, and the city continues to attract more visitors and tourists every single year. However, the city’s population has seen small declines throughout the last decade. The population was around 43,600 according to the 2001 census. It came down to nearly 43,000 in the 2006 census, and in the most recent census of 2011, it was declared to be around 43,100.
The majority of the local population consists of people of European lineage. Around 53% of the population speaks English as their first language, and about 39% speak French. Around 88% of the population is Christian.
Real estate construction activity in Timmins is very low when compared with other cities in Ontario. Only 9 new single detached units were reported in the second quarter of 2012, and no condominiums or other high density population buildings are currently being constructed. The lack of growth in the city’s population is the main contributing factor to this lack of construction.
|Second Quarter||January- June||Second Quarter||January-June||Second Quarter|
Table Adapted from CMHC
As the numbers in the above table suggest, the construction activity has improved in 2012 when compared with 2011. And still more construction can be expected in the third quarter.
Although new mining ventures are being undertaken and areas around the city are being explored and developed, the employment opportunities within Timmins are still limited. Add to that the very low in-migration rate, and the city now has a very low demand for new houses or buildings. Taking all these facts into consideration, one would automatically assume that real estate prices in Timmins are low. However, that is not the case. The real estate prices in Timmins have seen a record 29% rise in the last four years. The rising prices of gold, as well as the increased demand for resale properties can be attributed to these rising real estate prices.
With a very limited amount of new construction, unavailability of rental accommodation, and very few units listed for sale, buyers in Timmins are unfortunately left with little choice. As a result, the prices are high and properties don’t often sit on the market for too long. Offers are usually submitted hours after a market has been listed; and bidding wars are not uncommon.
The increased mining activity is indicative that many new employment opportunities will be available. However, the current in-migration rates are minimal, the work force is aging and the youth is migrating towards larger economic centers. The Timmins Economic Development Corporation (TEDC) and the Timmins Local Immigration Partnership (TLIP) have taken active measures to improve in-migration, but results from these strategies have yet to be significantly felt.
According to a 2011 report by the City of Timmins, and which can be found at timmins.ca, the amount of youth leaving the city, the aging workforce, and the low in-migration are trends observed all over Canada. At this rate, there will be a shortage of 1.2 million skilled labour by 2025.
The real estate market in Timmins is driven by supply, demand and buying power as with other markets throughout Canada. Currently the supply is low while buying power is also low due to the mortgage rules that went into effect for the entire country in July 2012. Timmins, just like other areas of Ontario and Canada, is expected to see some slight price decreases in the next year or two. In the meantime, there could be minor increases in prices.
The low in-migration rates have resulted in low new-construction and it will not improve dramatically in the near future. There will be increased activity in the construction sector, but the amount needs to be increased in order to continue to support the economy.
The single detached units will remain high in demand, and their prices will continue rising for the time being.
Discussion and Conclusion
Investment opportunities in the city’s real estate industry are high. Any investment made in single detached home units will prove to be a wise investment, based on the rate at which property values are rising.
Investors in the construction sector seem to be playing it safe, with only nine new constructions reported in the second quarter. However, that is a major improvement from the second quarter of 2011. The construction industry will pick up in the distant future, so investors more interested in this area will benefit in the near future.
The resale market is the hotspot for investors looking for a quick ROI. With properties spending so little time on the market, flipping single detached homes in exchange for a large profit is an especially wise strategy in Timmins right now.
In conclusion, it can be said both long term and short term opportunities are available in Timmins, Ontario. The ever increasing prices of real estate property are indicative of a prosperous future. The only major challenge faced by the city is to promote in-migration. Once they do the property prices will continue to climb along with the population.