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No silver bullet to stop Sault Ste. Marie's housing market spike

The average price of homes sold locally in February topped $327,000. What needs to happen in order to cool a white-hot housing market?
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Damian Berto of Sault Ste. Marie thought he was financially set to purchase a home for himself and his three children when seeking out real estate in the Algoma District just after the COVID-19 pandemic took hold. 

He was primarily looking for a home in Echo Bay and Desbarats. Berto was constantly getting outbid, so he tried the Sault instead. He was repeatedly throwing down offers that were up to $40,000 above asking price, but says the competing bids were $60,000 to $70,000 over asking, with about seven to 10 competing bids on average for each home. 

“I just wasn’t even on the same planet as some of the bids that were coming in,” he said. 

Berto was advised by his real estate agent that if he wasn’t willing to put up that kind of money, it would be almost a waste of paper. He says that five years ago, one could purchase a “pretty nice house” for $300,000 - but nowadays, “that’s just not a thing.” 

“I was unsuccessful to a point that it just discouraged me from looking altogether,” he said. “Anything that would’ve fit into my budget was just not suitable. It was just a rundown home or too many renovations, or not big enough for myself and my kids.”

Berto has been told by family members, who are involved in real estate, that out-of-town investors are driving up prices. 

“I do have a personal friend who sold their home to a couple from Alberta - bought the house sight unseen, put in $40,000 over ask and never even seen it. Looked at a few pictures online and signed the papers,” he said. 

According to statistics from Sault Ste. Marie Real Estate Board, the average price of homes sold in February of this year was a record $327,195 - a 49 per cent spike from February 2021.

A housing affordability task force convened last year by the provincial government has reported that house prices in Ontario have nearly tripled in the last 10 years, far outpacing income growth.

That same report from the task force contained 55 recommendations aimed at allowing more people in Ontario to find and afford a home, including a goal of building 1.5 million homes in 10 years.

The report from the housing affordability task force also identified a number of roadblocks to increasing Ontario’s housing supply, which include neighbourhood pushback on approval processes and municipal policies aimed at preserving 'neighbourhood character,' which the task force says can prevent building even simple suites on existing homes where the rules otherwise allow it, exempt projects of 10 units or fewer from public consultation when they only need minor variances, and limit municipalities from hosting consultations beyond what is required in the Planning Act. 

The task force recommends eliminating those municipal policies in addition to making changes to the Ontario Land Tribunal, where it said a single person appealing a development can tie up new housing for years by paying a $400 fee. 

Municipal Affairs and Housing Minister Steve Clark said he's confident he can enact some of the solutions through legislation or regulation or both before the spring election.

"It's a very complex problem. There's not a silver bullet," Clark said in an interview with The Canadian Press

Ward 2 councillor Luke Dufour, who has been involved in a handful of projects aimed at creating more affordable housing units locally, says “the pressure is on both supply and demand for housing.” 

“We clearly aren’t building enough homes in order for the ones that we do have to be affordable, and I think the housing affordability task force is correct on that,” Dufour told SooToday. “On the other side of the ledger, I think that in order to build truly affordable housing, the government needs to look at grants and subsidies in order for that to happen because the private market is never going to build truly affordable housing. It’s just too expensive with modern building codes.”

Dufour added that the construction industry in Ontario, including Sault Ste. Marie, is just too small to build the amount of homes that they hope to build in order for prices to go down.

“There’s just not as much competition that’s going to drive down the price of new construction,” he said. 

Dufour recently penned three resolutions that address the need for affordable housing locally.

One of the resolutions in particular calls on the province to direct a portion of the rise in revenues from the provincial land transfer tax into a public affordability trust that would partner with service managers and housing non-profits to deliver grants that would help build more affordable housing units in the municipality. 

“Who knows how much money is sitting there, right? And that extra revenue has been made off of basically the growth in the real estate market, so doesn’t it make a lot of social and economic sense to have a structural economic mechanism that takes the growth of the real estate market and reinvests it back into affordability?” Dufour said. 

Another resolution Dufour introduced to city council looks to loosen existing zoning bylaw restrictions by directing city staff to explore “the potential benefits and costs of Sault Ste. Marie adopting ‘as-of-right’ zoning in its new Official Plan.”

“You run the risk of council saying no, or neighbours kicking up a big fuss,” said Dufour. “We’ve seen this a couple times over my council career where people were up in arms about a duplex being built on their street, which is a real problem because we only have so much land, and the land that’s cheapest for us to service is the land that’s already serviced. 

“And if we can fit more people on that land, it’s much, much better for the long-term health and growth of the municipality.”

In a recent opinion piece originally published by The Conversation, Brian Doucet, Canada Research Chair in Urban Change and Social Inclusion at the University of Waterloo, says the report by the provincial housing affordability task force is missing some critical pieces by leaving out low-income issues. 

“There were no housing advocates, people with lived experiences of poverty or non-profits working with those struggling with eviction, foreclosure or homelessness on the task force. Incorporating their knowledge is important — for example, intensification can lead to an erosion of housing options for those on low incomes,” Doucet wrote. “It is troubling that this report explicitly states that building new affordable housing was not part of its mandate.

“Also absent from this report is any mention of rent control. In Ontario, sitting tenants enjoy some degree of rent control, but when a new unit is built or an existing one becomes vacant, landlords can charge whatever they like. This creates huge incentives to evict sitting tenants via ‘renoviction,’” he continued. “It is also worrying that there is no discussion of the role that investors play in fuelling the housing crisis. The report simply dismisses any attempts to cool the market by reducing demand from speculators.”

Doucet noted that in Ontario, a quarter of all home buyers are investors, up from 16 per cent a decade ago.

Meanwhile, the City of Sault Ste. Marie’s tourism department has shelled out more than $33,000 within the past year for an advertorial which appeared in Maclean’s magazine as part of ongoing efforts to entice more people to relocate to the municipality, despite having a housing market that's preventing locals from buying a home.  

Travis Anderson, director of tourism and community development for the City of Sault Ste. Marie, says there’s been a “labour crunch” in terms of finding skilled labour to replace an aging workforce in Sault Ste. Marie, with one report projecting a labour shortage of 10,000 people over the coming years, given that nearly 25 per cent of the Sault’s workforce is over the age of 55.

Anderson says he’s looking to the private sector in order to expand residential housing options in the Sault Ste. Marie. 

“When you talk to a local contractor, most are nearly at capacity based on the number of new builds and renovations that they’ve had over the past couple of years,” said Anderson. “We’re hopeful that we’ll get some new housing options in the market, and hopefully that will lead to a situation where we’re seeing more housing available and ideally, reduce costs.”

- with files from The Canadian Press and The Conversation

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James Hopkin

About the Author: James Hopkin

James Hopkin is a reporter for SooToday in Sault Ste. Marie
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