Home Prices! As the season for home sales is winding down for the year it’s not a bad time to review what happened in Thunder Bay housing markets. And I’m still surprised. Based on Thunder Bay realtor sales statistics, the median home price (more about that “median” later) jumped from about $340k in 2023-24 to over $380k in 2024-25. This amounts to a surprising 12% increase in the last 12 months, a historically high number which slightly beats the highest increase posted in the covid years.
What’s interesting is the run that Thunder Bay has been on. Since about 2015 we have been steadily clocking large year-over-year increases. A solid decade in which prices have almost doubled!
Here’s some anecdotal “color” based on my own experience: firstly the increase this year appears to be across the board, from the cheapest to the most expensive homes appreciating in a similar fashion. Values for rental properties also appear to be significantly up. There is a premium on fully renovated homes, probably because contractors are in short supply these days.
Will this party go on forever? Heck no. Historically, real estate values (and I mean in general, all of Canada, from the beginning of statistical time) don’t increase much faster than inflation, though recent decades have clearly broken that trend. Returns on stock market investments have generally performed much better. The fever of housing price increases in Toronto and Vancouver now appears to have broken, with a 4-5% DECLINE in 2025.
Here’s the thing – price increases in Toronto in recent decades occurred in an environment of high immigration, driving population growth. Can the same be said of Thunder Bay? We all know that the numbers on the sign outside of town haven’t really budged in decades, still hovering around 110,000. Even if you allow for a 10%-20% under-counted population in Thunder Bay, we still aren’t keeping step with population increases in the big centers. In the long run – population is the biggest factor in home values.
So what’s really pushing prices upward? Probably it’s the national market. Economically, this is called a substitution effect. Given what the current price is in Toronto, a small but noticeable amount of migrants will choose to live in Thunder Bay instead, and when they sell there and buy here they can afford to outbid locals. Will this trend continue in the short term? Probably. But eventually we will regain the natural balance of home prices in TBay vs. Toronto and that migration effect will dwindle. Another factor contributing to the increase is that houses are now bigger and fancier on average than they used to be (a composition effect).
Also at some point in the next few years provincial and federal governments will get beyond the hand-waving stage about housing affordability and we may finally see some overdue action to turn the aircraft carrier of housing prices around.
Only three things will make a meaningful difference to lowering housing prices:
1. Boosting and prodding the construction industry to build more.
2. Changing regulations and tax policies to reduce the size of mortgages that people are allowed to carry.
3. (Not desirable) A sputtering economy or a spike in interest rates.
I don’t project we will see a decline in home prices in Thunder Bay in 2026. But I bet before 2030 we will.
A note about median values: As a reminder, median values are not the average, but the middle. So of the 1000 odd realtor sales that occur every year half are above and half are below the median price. The median is a better metric for tracking home values than the average because a few high value sales can torque the average. The median is better made to tell you what the “typical” home sells for. In Thunder Bay, the “typical” home is usually one like an average Northwood 1000 sq. ft. bungalow.