Turning the corner: A profile of the real estate market in Corner Brook, N.L.

Being home to a pulp and paper mill in a one-industry city is generally not a highlight in winning over property investors. But the Newfoundland city of Corner Brook, home to about 25,000 people, has become a prime Canadian target for property investors, nonetheless.

While the pulp and paper mill is the prime employer, there’s also the region’s largest hospital and Sir Wilfred Grenfell College, all driving strong rental demand. Gros Morne National Park, offering year-round tourism activities is nearby as well.

The attractions have proved more than enough for the local property market lately, as the vacancy rate has sat below one per cent. That’s been good news both for investors and first-time homebuyers, although made apartment-hunting difficult for renters.

“It’s a great opportunity for first-time homebuyers who are buying homes with apartments, and it’s also a great opportunity for people who want to invest in residential income-producing properties,” says Ken Brown, a senior Realtor with Royal LePage NL Realty.

A first-time homebuyer can buy a home, then rent out part of it to help cover the mortgage. As an example, Brown says one could buy a typical new bungalow with a basement apartment for $230,000 to $250,000. That basement apartment could bring in $700 a month in rent.

“It makes the monthly mortgage payment supplemented by the apartment pretty reasonable for
first-time homebuyers,” says Brown.

Specifically, a 20 per cent down payment on a $240,000 property, with an interest rate at four per cent and 35-year amortization, would allow for a monthly mortgage payment of about $850 per month, leaving the mortgage payment at just $150 per month. Developers have also done well lately, although there’s room for more based on demand.

“We’re having some developers here now put in apartment buildings with two-bedroom apartments, going for $1,100 a month,” says Brown. “And they could fill those buildings 10 times over.” Buying one of those apartments would cost around $270,000 to $280,000, he says.

Corner Brook is something of a major centre for the rest of western and northern Newfoundland, located on the Bay of Islands at the mouth of the Humber River, home to excellent salmon fishing. In the winter, residents and tourists can find skiing nearby at Marble Mountain, just 10 minutes away.

The region recently spent funds on marketing in the U.K. and Ireland for the Humber Valley Resort, some 30km from Corner Brook. That project went bankrupt a year ago, however, leaving creditors in Canada and abroad owed more than $100 million.

That failure aside, the rest of the real estate market has done well in Corner Brook. Some of those foreign investors hooked by the advertising have discovered other parts of the city as well. Foreign buyers have especially favoured the waterfront properties. Going forward, a lot still depends on the city’s main industry, but Bell is optimistic.

“Provided we do have continuity with the pulp and paper mill, for the next year or two, we’re going to maintain a good rate of growth,” he says. The fact Corner Brook’s mill has its own power source is at least one sign of its stability ahead.

Corner Brook’s population expands to about 75,000 in the immediate surrounds, and properties there are also selling well, says Bell. Most outside of the city go for about 10 per cent less. Those surrounding communities include Stephenville, Deer Lake and Pasadena.

In his annual state of the city address to open 2010, Mayor Neville Greeley says he wants to see the city centre continue to develop to make it a more attractive place to live and focus growth in the middle rather than expand too much outwards.

Most rental opportunities are already within Corner Brook’s city borders, says Bell. “That’s where the employment is.”

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