Real estate tales from the borderlands

Sizing up capital cities along U.S.-Canada boundary

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Add Comment Add Comment | Comments: 0 | Posted Nov. 29, 2010

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Sizing up capital cities along U.S.-Canada boundary

Steve Bergsman
Inman News

About two months ago, I took a look at how the housing markets in two of North America's capital cities -- Washington, D.C., and Ottawa, Canada -- fared in the recent downturn.

As it turned out, both markets saw some slight downturn, but with a stable employment base of federal workers and government lobbyists, the cities came through the global recession without the bruising real estate market maladies experienced in other major cities.

That got me thinking about state and provincial capital cities, so I abstractly chose a region in North America along the Canada/U.S. border to take a peek at municipalities where smaller but equally prevalent government bureaucracies were a key factor in the local economies.

My region of choice was northern New England and the province of Quebec, which borders my three states of focus: Vermont, New Hampshire and Maine.

It was interesting to throw the province of Quebec's capital city, Quebec City, into the mix because of the four locations it is really the only one of significant size with a population of almost 500,000 (the metro population is more than 700,000).

In comparison, the three northern New England capital cities are tiny. The largest is Concord, N.H., at 43,000 people, and then we get to two of this country's smallest capital burghs: Augusta, Maine, at 19,000 people; and Montpelier, Vt., at 7,800.

While the three U.S. capital cities experienced minor economic tremors from the global recession, Quebec City probably did as well, if not better, than most major metropolitan areas in North America. Of course, these are all older cities where the local housing markets saw modest gains during the boom times and didn't really expect too much disappointment in the bust.

As a provincial capital city, Quebec City is extremely dependent on its government bureaucracy, which accounts for 30 percent of jobs. Toss in a big, still-expanding insurance industry presence and that's about 50 percent of all jobs.

There is also a growing manufacturing sector. Earlier this year, Quebec City boasted the lowest unemployment rate in Canada, at below 4 percent.

After extrapolating that cursory employment information, you might hazard a guess that the housing market in Quebec City rests on very stable ground. And you would be right.

"The market is strong today, and prices continue to rise," reported Jeannette Casavant, an independent real estate agent in the city.

However, the one sign of weakness in the market is that it is taking longer to sell a house today. "Before, if a house was on sale you would immediately have three offers at the same time. Now, it sells within 60 days. There are still a lot of buyers out there," said Casavant.

Going back a decade, Canada suffered an economic slowdown and housing prices weakened across the country, including in Quebec City. So back in 2002, if you were lucky you might have a found a two-bedroom condominium in a great Old Town location for $200,000. Today, if it went on the market it would sell for $500,000.

"Prices have appreciated quite a bit lately and that means we have gained back what we lost 10 years ago," Casavant said. "Prices will continue to rise."

In 2008, the unemployment rate in New Hampshire was a mere 4.3 percent. A year later, unemployment spiked upward to 7.2 percent, the state's highest rate in 17 years.

That wasn't felt too severely in Merrimack County, where the capital city of Concord can be found.

"It always seems as if the state has a lot of job openings," said Karen Hatch, regional development manager for The Bean Group in Bedford, N.H.

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