CMHC expects buyer’s market moving into 2017
Saskatoon house sales decrease 7.8% in first eight months of 2016
Saskatoon’s housing market will likely remain tilted in favour of buyers through the end of the year and into 2017, when the economy starts to recover, Canada’s mortgage insurer says.
In the meantime, there is still strong evidence of overvaluation and overbuilding in the city, leading to “problematic conditions” in the housing market, Canada Mortgage and Housing Corp. (CMHC) said Wednesday.
“When the economy starts to improve, and housing demand starts to firm up a little bit, we’re probably looking at 2017 and 2018 before we can say that conditions have shifted,” CMHC senior market analyst Goodson Mwale said.
Current buyer’s market conditions are due to weak oil, potash and uranium prices curbing job growth and migration, the primary drivers of housing demand, and are reflected in sales, price and construction data, Mwale said.
Sales in Saskatoon are down 7.8 per cent over the first eight months of 2016 and expected to reach between 4,880 and 4,920 units this year, CMHC said Wednesday. By comparison, 5,332 sales were reported in Saskatoon last year.
A “gradual improvement” in the economy should offset recent changes to mortgage rules and boost sales to between 4,940 and 4,990 units in 2017 and between 5,030 and 5,070 the following year, the CMHC said in its report.
At the same time, the Crown corporation expects average home prices to fall to between $335,580 and $339,060 this year, down from the $342,727 recorded last year. It said prices should rebound to between $343,630 and $347,560 by 2018.
New construction is also trailing the pace set last year. Earlier this month, the CMHC said builders are on track to start work on 2,079 new units this year. By comparison, 2,293 housing starts were recorded last year and 3,531 in 2014.
Mwale said the market’s recovery hinges on global commodity prices, and that current conditions will remain until oil, potash and uranium start to recover — probably next year.
“(Until then) buyers of homes would have an opportunity to negotiate a better price and, in that kind of environment as well, it’s not uncommon to see homes selling at a discount.”