Stories about inflated housing prices across Canada, and warnings from the Bank of Canada that a market correction is overdue should not scare off renters who are thinking of buying into Yellowknife’s housing market, according to one local realtor and City councillor.
Adrian Bell of Century 21 Prospect Realty did the math several years ago in his blog on life in Yellowknife and demonstrated that anyone renting a two-bedroom apartment would be better off buying a house.
“I think the same holds true today,” says Bell. “Anyone who is renting a two-bedroom apartment or a house can increase their discretionary income by taking the plunge into home ownership.”
Even a single adult would do better than continuing to rent a one-bedroom apartment, says Bell. They would come out of the first five years of interest-heavy payments with lower monthly costs and a nice pile of equity.
Canada Mortgage and Housing Corp. is about to update its semi-annual report on the Yellowknife housing market, but it likely won’t be markedly changed from the last October, when it noted a one-year increase of 1.4 per cent to $1,686 in the monthly rent for a two-bedroom unit.
High average rents
Including both new and existing structures, the average monthly rent for three-or-more bedroom units was $1,836 in October 2014. One- bedroom units rented for $1,394, while bachelor suites rented for $1,169 per month.
Still, housing in Yellowknife comes at a hefty price. According to the territorial government’s ‘Come Make Your Mark’ pitch to potential migrants, the average home price in 2013 was $410,808 compared favourably to Calgary ($429.224), Toronto ($508,578) and Vancouver ($744,559).
But there is far more choice than there was at the beginning of the decade – largely due to changes in the city’s building regulations that were aimed at fostering environmental protection and energy efficiency, but instead stifled development.
The result was a surge in home construction, from condominiums at Tin Can Hill and Niven Heights development to luxury homes at Grace Lake and Homes North Block 501 project overlooking Kam Lake.
Range of options
Close to 1,000 new housing units have been added to the Yellowknife market in the past five years, giving first-time buyers a range of choices, from older modular homes scattered throughout the city to the promise of new condominiums on Twin Pine Hill.
“There are great opportunities and plenty of interest,” says Bell, noting the public response to the announcement that Det’on Cho Corp. and Alberta developer Arthur Cloutier plan to build 126 condominiums with views of Yellowknife Bay.
The Bank of Canada based its concerns for the housing market on an overvaluation which it estimates at 10 to 30 per cent, and warned that high housing prices and debt relative to income leave many households vulnerable.
Layoffs that followed the fall of oil prices have put house prices in Calgary and Edmonton in a “very weak” position, according to the bank, but that could be good news for Yellowknife and the Northwest Territories.
Balancing the downturn in oil and mineral exploration in the NWT is the continued growth in the diamond mines and the government’s push to bring more workers north, which Bell thinks will look good to those who have lost jobs in the oil patch.
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