Affordability continues to be a problem in Sudbury's housing market

Affordability continues to be a problem in Sudbury's housing market

Roger Pettingell Sarasota Real Estate

A new interest rate hike means potential homeowners and tenants in Sudbury will have a difficult search in what was already a tough market.

While some say the rate hike it’s a positive sign the market is starting to correct itself, rising interest rates are going to cost homeowners.

“The affordability issue in Sudbury is getting tougher and tougher every day,” said Brian Ceaser, of Today’s Mortgage Choice.

Ceaser said a “stress test” introduced by the government about five years ago didn’t have a big impact because rates were so low.

“So if their interest rate was 2.5 per cent, you had to still qualify at an interest rate of 5 ¼,” he said.

“Now that they’ve raised this by one per cent, the average interest rate is somewhere in the ballpark on a variable of 3.8 to 4.2.”

Ceaser said the move will affect affordability by about 10 to 15 per cent across the board.

“It’s definitely more difficult to qualify — this rate hike will cost your payments to go up about $50 for every $100,000 you have borrowed,” he said.

He expects the market to stabilize, particularly because supply continues to be a problem in Greater Sudbury, and we continue to welcome new residents.

“Immigration to this town is like something I’ve never seen before,” Ceaser said.

“We’re seeing so many people new to Canada that we didn’t see five, six or seven years ago. So with the amount of people coming to town and the lack of inventory, I don’t see home prices dropping.”

His best advice to those coming into town is to buy within your means and have fallback savings in case things go wrong.

“Just because someone qualifies you for that amount, doesn’t mean you can afford to spend it,” he said.

It wasn’t so long ago someone making $60,000-$70,000 a year able to buy a house, Ceaser said. Now two incomes are needed.

“Sudbury, you’ve seen it become a dual-income town,” he said.

Real estate agent Tanya Vanden Berg, chair of the Sudbury Real Estate Board, said even though housing prices are still much higher than they were a few years ago, they are still affordable compared to the rest of the province.

But rate increases will have an impact, she added.

“Well certainly it’s going to affect people’s ability for carrying that load of debt, that mortgage rate being higher,” Vanden Berg said.

“It’s probably one of the highest debts that Canadians, you know, have to pay every single month.”

The average home price in the city was just more than $450,000 in June.

On the flip side of the argument, when it comes to renters, advocates say the city has more work to do.

A recent CMHC study found it’s taking more hours for people working in Sudbury to keep monthly rent at 30 per cent of gross income for a two-bedroom apartment.

“From our end at the Homelessness Network, helping people who are chronically or absolutely homeless, what we’re finding is that there are no affordable spaces presently in Sudbury,” said Ray Landry.

Landry said everyone they’re placing have to be subsidized by their program or they need to find rent-geared-to-income.

“A person on Ontario Works cannot afford a place to live, it’s well beyond their means,” he said.

“A person on ODSP could afford but it will leave people with very little breathing room … Even with our $500 top-up over the housing portion of their benefits, there is hardly anything affordable.”

Landry said none of the city’s roughly 140 homeless people could afford a place to live right now and said the situation facing those who live near the poverty line is dire. 

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