February 2021 was a great month for real estate and real estate investing in Sault Ste. Marie, continuing a positive pattern of growth and suburbanization in the area. Steady market growth in Sault Ste. Marie reflects a province-wide trend engendered by COVID-19. With remote work becoming increasingly commonplace, more people are moving from major metropolitan areas, such as Toronto, to smaller outskirt cities, in search of better value for their buck.
Sault Ste. Marie touts livability, affordability, and promising up-and-coming potential. Moreover, the city’s economy, job market, and real estate market have fared extremely well in the face of the global pandemic. If you’re an investor looking to kickstart or strengthen your portfolio, now is the time to consider real estate investing in Sault Ste. Marie.
Real estate investing in Sault Ste. Marie: key takeaways
- Sault Ste. Marie is a great place to live and do business. The city offers an ideal location near the Canada-US border, low operating costs, quality local talent, and affordable land and real estate to entrepreneurs and business owners. For those looking to settle down in the city, the cost of housing is considerably lower than it is in cities such as Toronto and Sudbury.
- Sault Ste. Marie’s population is growing, thanks to high rates of immigrant retention. Migrants from other parts of Ontario also factor in to Sault Ste. Marie’s rising population.
- During COVID-19, many Canadians relocated to smaller cities (a) to be close to nature, and (b) in search of better affordability due to financial pressures. As such, Sault Ste. Marie’s real estate market saw peak, record-breaking conditions throughout COVID-19.
- To date, strong real estate conditions have persisted in Sault Ste. Marie. Home sales have increased by 65 percent since last year and active listings are at their lowest in over three decades. There is steep competition for housing stock in the area, with local brokers reporting 100 percent of offers are competing.
- The future of real estate investing in Sault Ste. Marie is bright. Economic recovery spurred by the COVID-19 vaccine, the global commodity boom, an uptick in electric vehicle activity, job creation, and rising immigration rates will all factor into rising demand for housing in the area.
- Sault Ste. Marie is a great place to invest in real estate for investors who are looking to kick start their portfolios, as well as more experienced investors who are looking for a smart, safe, and long-term addition to their portfolios.
A great place to live and do business
Sault Ste. Marie is known for being a great place to do business for a number of reasons. The city is ideally situated at the heart of the Great Lakes, close to the Canada–US border, making it an important transportation hub for the province. In recent news, Sault Ste. Marie has received official designation as a foreign trade zone (FTZ) point. It will be the first FTZ point in Northern Ontario and one of 15 in Canada. The city will now offer exemptions from duties, tariffs, and taxes for businesses engaged in importing and exporting. For entrepreneurs and business owners, Sault Ste. Marie also offers low operating costs, quality local talent, and affordable land and real estate.
As real estate in many Ontario cities has become increasingly unaffordable, Sault Ste. Marie’s market has remained approachable. In Sault Ste. Marie, the average cost for a detached single-family home was just $182,000 (as of 2019). That’s compared to $792,000 in Toronto and $269,000 in Sudbury. Meanwhile, compared to Toronto, rental costs are 50 percent less in Sault Ste. Marie. Purchasing power is also over 28 percent higher in Sault Ste. Marie.
Because of its affordability, the Sault area is an attractive place to settle for newcomers to Canada and immigrant retention rates are reflective of that. According to a report by Pathways to Prosperity, 69 percent of the immigrants that arrived to the city between 2002 and 2006 remained there five years later, and 73.4 percent of the immigrants who arrived from 2007 to 2011 remained five years after that. Immigration retention is bolstered by government-backed programs and initiatives, including the recently launched Rural and Northern Immigration Pilot.
Real estate in Sault Ste. Marie: a COVID-19 outlier
According to survey information from RATESDOTCA, 51 percent of Canadians who relocated in 2020 due to COVID-19 did so to be closer to nature. Meanwhile, 36 percent felt financial pressure to find a cheaper home. Situated near three of the Great Lakes and home to the expansive St. Lawrence forest, Sault Ste. Marie certainly fits that bill and more.
Now, being able to work at home and remotely with the use of modern information technology, especially during the pandemic, is the prime mover behind people from bigger, busier southern Ontario cities wanting to relocate to the Sault and area. (Jean Morrison of StreetCity Realty speaking to SooToday)
The trajectory of Sault Ste. Marie’s real estate market throughout the COVID-19 turmoil speaks volumes about its strength, resilience, and future promise. While real estate markets in major metropolitan areas across the country saw a significant cool down, Sault Ste. Marie’s saw peak, record-breaking conditions.
To date, strong real estate conditions have not only persisted in Sault Ste. Marie, they’ve actually deepened. According to information released by the Sault Ste. Marie Real Estate Board, home sales increased a whopping 65 percent in February 2021 compared to the year previous and active listings were at their lowest in more than three decades. These numbers bode extremely well for anyone interested in real estate investing in Sault Ste. Marie.
A strong addition to your real estate investment portfolio
According to a recent Livability Report by RATESDOTCA, Sault Ste. Marie ranked 39th out of 166 Canadian communities based on affordability, growth potential, and lifestyle. In other words, Sault Ste. Marie is a great place to live and invest in and people are cluing in. The result has been steep competition for housing stock, intensified further by interest from institutional investors.
Sault Ste. Marie is a great place to invest in real estate for investors who are looking to kick start their portfolios, as well as more experienced investors who are looking for a smart, safe, and long-term addition to their portfolios. Since the city is still up-and-coming, real estate can be purchased at an approachable initial investment. And though investors may observe a slower pace of demand at first, the city’s population is expected to grow as many industries expand, including the alternative energy, manufacturing, technology, natural resources sectors, amongst others. In the coming years, Sault Ste. Marie will attract increasing numbers of immigrants and interprovincial migrants thanks to growth in these sectors, which will promote job creation and intensify the demand for housing.
Real estate investing in Sault Ste. Marie: looking forward
Below, we’ve rounded up some data that speaks to the strength of Sault Ste. Marie’s real estate market in the years to come.
The commodity boom and an uptick in electric vehicle activity
Sault Ste. Marie’s economy and real estate market will be positively impacted by the global commodity and electric vehicle boom. In the coming years, electric vehicle-related manufacturing operations and nearby mining operations will create thousands of jobs. For instance, Sault Ste. Marie’s Algoma Steel site could soon be home to a proposed ferrochrome production facility. Ferrochrome is used in the production of stainless steel, which is a key component of electric vehicles. In terms of mining operations, Sudbury company, Transition Metals, will soon begin exploration just north of Sault Ste. Marie. Historically, the southeastern shore of Lake Superior has shown signs of possible iron oxide copper gold deposits. As the job market is stimulated by these large companies, the housing market will be as well, as newcomers flock to the region for long-term employment.
The positive impact of the COVID-19 vaccine on real estate
The COVID-19 vaccine will allow for economic recovery, job market recovery, and an uptick in immigration numbers. And as economies return to some semblance of normalcy, consumer confidence will begin to rebound, bolstered further by record-low interest rates. Low rates will lead to large-scale purchases, such as real estate purchases. With the opportunity for affordable, great quality real estate in up-and-coming locations already realized, real estate conditions in Sault Ste. Marie will continue to heat up.
A high cap rate and proof of future housing market demand
Sault Ste. Marie’s cap rate is currently between 7 and 10 percent, depending on the property type and on the area. This is considered a relatively high rate, indicating lower market demand and a relatively untested market at the time the cap rate is calculated. But a high cap rate can also mean acquisition at a lower purchase price, as well as lower operating costs, meaning more cash flow in your pocket immediately. Moreover, as we’ve discussed on the blog before, cap rates are always subject to market fluctuations. And as we discussed earlier in this article, there is real proof of future market demand in Sault Ste. Marie. So, as the city continues to grow and gentrify, so will the profitability and ROI potential of real estate investments in Sault Ste. Marie.
If you’re interested in learning more about Sault Ste. Marie, we dig deeper into the drivers of Sault Ste. Marie’s economy and how they contribute to the record real estate conditions in the city on the blog.
Invest in Sault Ste. Marie with Crescendo Equity
If the white-hot real estate conditions in Sault Ste. Marie have piqued your interest, get in touch to find out how you can get in on the action and invest through Crescendo Equity. Crescendo Equity is made up of a team of dedicated senior real estate investors committed to identifying high potential assets, repositioning them for maximum cash flow, and offering exceptional investment returns to partnered investors. Find out more about how Crescendo Equity makes real estate investing simple by visiting our website.