Prices in Sask. will stabilize, says CMHC

Mortgage insurer says forecast depends on strong income growth, migration

Canada’s mortgage insurer expects Saskatoon housing starts, home sales and prices to stabilize and then increase modestly over the next two years, but remain generally below levels seen in the recent past.

However, the Canada Mortgage and Housing Corp. warned Thursday, that forecast depends on employment and income growth, as well as net migration, remaining strong through the end of 2021.

“It’s a recovery that we are forecasting, but we expect that it will be modest,” said CMHC senior analyst Goodson Mwale.

In its latest housing market outlook for the city, CMHC projected an average resale price of between $319,000 and $325,000 this year, rising to a forecast high of $329,000 over the next two years.

By comparison, the average home price of units listed on the multiple listing system — which does not capture private sales — was $327,248 in 2018, down from $336,703 in 2017 and $343,497 in 2016, the CMHC said.

Sales, meanwhile, are expected to finish between 4,100 and 4,500 this year before rising to a peak of 4,800 by the end of 2021. In 2018, Saskatoon reported 4,314 home sales, down from almost 4,700 two years earlier.

Mwale said the projections are based on expectations of continued job growth, particularly in the service sector, as well as net migration — both of which tend to rely heavily on the province’s resource-extraction industries.

In its outlook, the federal Crown corporation said higher interest rates and tighter mortgage qualification rules are expected to increase demand for more affordable homes and condominiums over the forecast period.

Those “affordability challenges” are also expected to influence new construction over the next two years, with multi-unit growth outpacing that of single-family dwellings, the CMHC said in its forecast.

That recovery is also expected to affect rental units in the city, driving vacancy rates down from around eight per cent last year to six per cent by the end of 2021, Mwale said.

In all cases, the CMHC said, a pronounced economic slowdown would push new construction, sales and prices toward the lower end of its forecast ranges over the coming years.

The CMHC’S new forecast comes amid what has been described as a persistent buyers market in Saskatoon. Supply has outstripped demand, leading sales and prices to languish.

Earlier this month, Royal Lepage said the market “continues to show signs of recovery” and is moving toward “balance” even as aggregate prices dropped slightly year-overyear.

It’s a recovery that we are forecasting, but we expect that it will be modest.

GOODSON MWALE, CMHC senior analyst