Real estate in short supply.

While the real estate market in Northern Ontario is showing signs of improvement, there is reason for cautious optimism.

"Right now, things are good, but I don't know how long it Will last," says John Smith, president of John Smith Realty Sudbury Ltd.

Economic and political uncertainty in the world over this past winter leading up to the war in Iraq has caused many people, who were inclined to make plans such as selling their house, to freeze those plans, Smith says. As a result, houses that did go up for sale were quickly snatched up.

Hot spots in real estate activity in Sudbury include New Sudbury and the south end where there are more buyers than available properties, which drives the price up, he says. Waterfront property is also in short supply.

"To say things are going great guns is being a little overly optimistic," Smith says. "I find that there is a drastic reduction in inventory. I think its about to go. Supply and demand, low interest rates, bright economy they got started with no war. Now, the interest rates are starting to go up."

Renting is an option that will steadily decline once an expected influx of post-secondary students graduating from the double-cohort begin looking for accommodations, he says.

"I can't believe the slim pickings there are in the rental market, but that's forcing a lot of first-time homebuyers," he says. "It's all going to even out, though. It always does. And it could be sooner rather than later.

"I see the market as slightly bullish, but its not on a runaway by any stretch of the imagination," Smith adds. "There are a lot of agents in this business having a tough time making ends meet."

The commercial property market in Sudbury is showing excellent health, says Alex Dumas, a broker for Royal Lepage North Heritage Realty.

"There's certainly more activity. Prices are stable and holding their own."

At one point, there was an outward migration of business and people from communities like Sudbury, but that has stopped, says Dumas.

"The prices have reached a point where investors will receive a good rate of return on their investment anywhere from nine to 13 per cent," Dumas says.

If there is any fly in the ointment, Dumas says the problem is that many people who have real estate property are not looking to sell, but are holding on to their property. As a result, the demand is much higher than the actual supply.

Real estate activity is also starting to accelerate in northwestern Ontario, says Ari Lahdekordi, a broker with Real TV Realty in Thunder Bay.

"It seems as if business is starting to pick up," Lahdekordi says. "There was a lull for a while, but there are positive indicators. We're getting more competitive bids within a certain price range because there is scarce inventory in the $140,000 to $160,000 price range so, when one does come up, there is a lot of interest and excitement in the office."

Lahdekordi says that prices in Thunder Bay have "bottomed out" of a multi-year low from a domino effect that started with the lowering of demand and prices for higher priced homes.

Commercial property is still a challenge to sell, Lahdekordi says.

"Thunder Bay is still in a growth phase and we need more in the manufacturing sector to bring in some higher-pay blue collar jobs," Lahdekordi says. "Once that happens you'll see things really take off. For now we're seeing things on an upward swing compared to three years ago."