Located in Northern Ontario, a mere four hours from Toronto, Sudbury touts a resilient and growing real estate market. Below, I explain why Sudbury’s economy is so promising, why more people are choosing to settle in the region each year, and how such factors are contributing to the strength of Sudbury’s rental segment and real estate market on the whole.
Population growth aided by immigration and interprovincial migration
In part, the strength of Sudbury’s real estate market and economy in general is owing to its growing population. The city has the largest population of any city in northern Ontario—161,531 as of last year—aided by strong rates of immigration. Between 2017 and 2018, Sudbury welcomed 189 immigrants, along with 47 people who migrated to the city from other provinces. More recently, Sudbury was one of the cities selected to participate in the Rural and Northern Immigration Pilot, which encourages and assists skilled foreign workers to achieve permanent residency.
Sudbury has become a prime spot to settle for students, families, and newcomers to Canada for good reason. In addition to its affordable cost of living, Sudbury’s appeal also has to do with its proximity to natural attractions, including lakes, provincial parks, and conservation areas. These factors bode especially well given the current trend of office workers, now working from home, migrating to northern Ontario cities in search of more space, access to green spaces and natural amenities, and greater affordability.
According to recent data from RE/MAX, Sudbury offers one of the best prices for homes in the province, despite the fact prices in the city have risen in recent years. In Sudbury, there has been an increase in average home sale prices since the pandemic: $300,000, up from about $260,000. For the remainder of 2020, there is expected to be a 10 percent increase in the average residential sale price, also according to a report by RE/MAX. Meanwhile, in Toronto, the average price tag on a house is $1.02 million.
Increased livability and an expanding economy
In terms of urban growth, large franchises are popping up all over the city, bolstering the economy, providing business opportunities for local residents, and adding jobs to the market. Between October and December of this year, Sudbury will also be the filming location for an upcoming Resident Evil reboot.
The city is in the midst of many positive developments at an infrastructural level, contributing to its increased livability. These developments extend to include new bike lanes and cycle tracks throughout the city, such as the Paris-Notre Dame bikeway, and major construction projects that are culturally-geared, such as Project Now, The Junction, and Place des Arts—the latter of which will be the first multi-disciplinary arts centre in Northeastern Ontario.
To improve transportation in the city, the Ontario government has announced a $625 million investment in the four-lane expansion of Highway 69. The federal and provincial governments are also making significant investments into public transportation in Greater Sudbury, including the purchase of 53 buses, the implementation of new smart-card technology, and the construction of three new Major Mobility Hubs. According to Sudbury’s director of engineering services, the city plans to spend $55 million on roads, $19 million on bridges, and $22 million on water-wastewater infrastructure in 2020. Some notable projects that are in the works include the Maley Drive Extension, the Vermillion River bridge at Municipal Road 55, the High Falls bridge, and the Levesque lift station.
More promising still is Sudbury’s reputation for being one of the world’s most significant nickel centres. Sudbury’s mining companies employ approximately 6,000 people and support a 300-company mining supply and service sector cluster that employs a further 10,000 people. To boot, it seems that the city’s mining industry has hardly reached its peak, given the recent talks between Vale—a mining company operating out of Greater Sudbury—and Tesla. In Sudbury, Vale has five mines, a mill, a smelter, a refinery, and nearly 4,000 employees.
Strong demand for multi-family rental units
Sudbury’s growth in important sectors such as mining is to credit for rising demand for multi-family rentals in the city. According to information released by the Sudbury Real Estate Board, Sudbury’s housing supply levels are currently sitting at the lowest level in over 30 years. Speaking specifically to Sudbury’s rental segment, vacancy is low and demand is growing.
In 2019, Sudbury’s vacancy rate sat at a low 2.1 percent, which translates into 21 out of 1,000 apartments being available to rent. Subsequently, average rents throughout the city are increasing by 5.6 percent to $1,024 on a year-over-year basis. (That said, Sudbury still boasts one of the most affordable real estate markets in all of Canada.) To add, the average CAP rate of multi-family properties in the city is 8 percent.
In part, rising demand is due to an influx of international students attending post-secondary institutions in the city, including Laurentian University and Cambrian College, amongst others. Moreover, according to the Greater Sudbury Landlord Association, there are also fewer landlords going into the business in Sudbury, as well as across Ontario, contributing to the disparity between supply and demand.
Presently, the City of Greater Sudbury is looking at ways to improve its social housing programs and improve access to housing in general. A few projects that are in talks include a project via Kaymic Developments (Ontario) Inc. to create 826 apartment and condo units in the Lourdes Street area, a rezoning application by Keystone Homes Inc. that would enable an 80-unit complex to be built in Hanmer, and the revitalization of units at 159 Louis Street.
Why invest in Greater Sudbury
In general, the economic, socioeconomic, and housing conditions in Sudbury are extremely promising. Taking the city’s low rate of vacancy and rising population into consideration, the reasonable expectation is that demand for housing will continue to steepen, particularly in the multifamily segment, where supply is most lacking. For those looking to invest in real estate, Sudbury’s market is one to watch.