2019 rebound predicted for slumping home prices
When he listed his upscale Willowgrove condominium for sale last month, Chuck Edwards knew it might take a while to sell — and that he would almost certainly lose money when it did.
Edwards, an engineer in the mining sector, bought the condo two years ago, but now wants to sell in order to buy a “cute” older house with a garden, something he misses having.
The two-bedroom unit is currently listed for $295,000, but Edwards — who said he’s received one offer to date — expects it to sell for less than that, likely between $280,000 and $290,000.
“The fact that I will almost certainly get less for it than I paid is disappointing, but it’s not going to materially affect me.
But if I were 30 or 35 and had a growing family, it might be a real problem,” he said.
Edwards is one of thousands of people in Saskatoon who listed homes for sale last year amid what has been described as a persistent buyer’s market, which has been in place for around four years.
A buyer’s market occurs when housing supply outpaces demand, leaving potential buyers with plenty of choice and room to negotiate, while sellers are forced to wait or slash their asking prices.
Experts have attributed current market conditions — slumping sales and slipping prices — to broad economic factors, chiefly weak natural resource prices, as well as tighter mortgage rules that constricted the pool of potential buyers.
Matt Miller, a real estate agent with Royal Lepage in Saskatoon, said that while the current buyer’s market has created some anxiety among people leaving the market entirely, many sellers are also buyers who stand to benefit.
“They’re actually in a good position, because even though their home is devalued, in many cases the home they’re moving into is devalued even more … They take some hit on the sale, but in many cases get a greater benefit on the purchase,” he said.
According to the Saskatoon Region Association of Realtors, there were 3,329 home sales worth a total of $1.1 billion in Saskatoon last year, down from the 3,493 sales worth just under $1.6 billion reported in 2017.
While the average number of days a home spends on the market — 55 — didn’t change from 2017, it remains well above the 10-year low of 40 reported in 2013, when resource prices were soaring.
(SRAR’S data only captures homes sold through the multiple listing system (MLS); homes in the city that changed hands in private sales, as well as new homes sold directly by builders, are not included.)
Prices in the city also took a slight dip last year, making Saskatoon an anomaly in a national real estate market where “healthy gains” were reported in many regions, according to a new survey from Royal Lepage.
The real estate company’s national house price composite says the aggregate price of a detached home in Saskatoon last quarter was $371,486, down 1.7 per cent from the fourth quarter of 2017.
However, that decline is expected to be replaced with growth this year.
In a report published late last year, Canada’s mortgage insurer noted the city’s housing market was on track to decline for a fourth consecutive year in 2018 before rebounding in 2019 and continuing to grow in 2020.
“A key risk to the recovery in residential prices over the next two years would be a decline in fundamentals such as employment, income or population growth,” the Canada Mortgage and Housing Corp. said in its Housing Market Outlook.
Miller said the slow rate of change in the city’s housing market — both over the last several years and projected into 2020 — is a positive, largely because it means the city isn’t in a “boom or bust” situation.
It’s also a positive sign that while demand declined in 2018, the number of new listings declined even more, suggesting the supply-demand imbalance is correcting itself, Miller added.
Edwards said he’s not especially concerned if his condo takes time to sell, but noted the situation could be very different if he had to sell and move on a tight timeline.