A complicated riddle in Corner Brook
CORNER BROOK Dave Wells says he’s aware of a few factors that might be driving Corner Brook’s housing market to new heights, but he can’t fully explain why sales are up more than 30 per cent in comparison with last year.
Wells has been involved as a realtor with the Corner Brook market for more than 35 years and he told The Western Star he’s never seen anything like it.
He said prices have more than kept pace with the boom in the market. He remembers selling a house five years ago for a record in the city of $349,000. He said this year there was a residential property sold in the city for close to $2 million.
He said money’s cheap these days. He said a mortgage payment in 1982 when interest rates hovered around 23 per cent a mortgage on $100,000 cost about $1,800 a month. He said the same payment today could support a mortgage worth $300,000.
“If you come here and can’t find a house to rent, or an apartment to rent, what’s the next alternative buy,” Wells said.
He said there’s a number of people moving in to the city to be closer to the amenities they need mainly the hospital. He said he’s sold three houses to people from Pasadena about 30 kilometres down the Trans Canada Highway so they could be closer to Western Memorial Regional Hospital.
“I think it’s what Corner Brook has to offer. Even if we don’t have the industry, we have the cheap jerseys infrastructure for older people to live. You’re near the hospital, the university, arts and culture, combined with that, too it’s got a lot to do with it.
“I do know a lot of people that are moving back from Pasadena that moved up to Dawe’s units. When those apartments opened up near The Western Star the old OLPH site there’s three couples that I know of that are moving out of Pasadena and moving in there simply because it’s close to the hospital. I know a couple that lived in York Harbour and are moving to Corner Brook.”
Dominique Pinard, an analyst with Statistics Canada, said the average wage has gone up slightly in the past few years, but there are fewer people working. She said the unemployment rate has gone down from 13.1 per cent in 2007 to 12.8 in July 2008. She said the workforce participation rate went down too.
She said you can’t make any statements on the Corner Brook economy based on those numbers, but she said the overall picture hasn’t changed a http://www.cheapjerseys11.com/ lot.
“For the participation rate in July 2008, it’s a three month moving average, is 58.9 per cent, compared to last year in July when it was 62.1, so it’s down 3.2 per cent. That means there’s less people in the labour force than there were in 2007.
“It seems like it’s a lot, but it’s a three month moving average and it’s a small sample, so you have to be careful with the changes. That’s 2,600. That’s not a lot.”
She said across Canada the average yearly earnings went up by four per cent, and on the west coast the employment rate went down. She said there was an employment rate of 54.7 per cent in July 2007 and in July 2008 the rate was 51.4 per cent.
She said it’s hard to draw conclusions based on the figures.
“You can say there are fewer people working and people are earning more the average across Canada,” she said. “From the labour force survey, you can’t make a conclusion on the level of income.”
Dr. Gabriella Sabau, a economics professor at Sir Wilfred Grenfell College, said the house purchase market and the rental market are two separate entities entirely.
She said the inventory is old houses and new construction. She said there aren’t enough new buildings being built, which is a problem.
She said another problem is the houses being built now are much larger and costly than the average family needs. She said the trend, which seems to be coming from the United States, doesn’t reflect the reality and energy efficiency the average family needs. She said houses should be going up smaller, more quickly and with a smaller pricetag.
She said the price of labour and materials is going up. She said if the price of houses have gone up about 10 per cent, with inflation at about 4 per cent, then demand is driving the prices.
It’s a provincial phenomenon because in Canada the housing market is going down now.
“Prices are not going down, but they’re not increasing as much as they used to. This is specific for here and it shows economically we’re not in a recession as the rest of Canada is, which is good. On the other hand inventories are not high enough, which is a big problem for this province.”
“It’s the difference between supply and demand,” Sabau said. “While supply is not up to what is needed, demand has been increasing because of higher employment and higher net migration into the province.
Paul Barnable, Corner Brook’s community services director, said this year’s housing starts should end up at about 40, or 45, which is a fairly good year.
He said to date 33 houses have been started.
The last time there were triple digit housing starts in the city is 1988 and 1989 at 132 and 109 respectively.
Barnable said apart from those two years the starts have been steady since the mid 1980s when there was a dip because of uncertainty with the mill.
He said once they dipped below 96 in 1977, there have been two spikes in the market. He said an isolated jump in 1996 at 89 starts and the earlier two year jump. He said in 1975 there were 176 homes started in the city.
He said as of 2007 there were 6,143 residential lots with buildings on them some with multiple units at an average assessed value of $101,112 per lot.