Economic woes haven’t hurt prices

It’s striving for balance, with home prices remaining surprisingly stable in Saskatoon

If you’re following the Saskatoon housing market — perhaps you’re thinking of selling or buying, or just interested in real estate — you might be asking yourself, what the heck is going on?

This province and our neighbour to the west have been in a protracted period of economic tension for several years — indeed, since 2014, more or less. Oil prices have tanked.

The pipeline debate has raged but got us nowhere. Other commodities have also been under global stress; consider the depressed price of uranium, now in its eighth year following the tsunami that crashed into the Fukushima, Japan nuclear power plant.

Agriculture, too, got off to a dry and grim start this spring, and ended the season with a cold, late harvest that left frozen crops in the fields. And of course, there’s the trade situation with China.

Considering the housing market is dominantly reliant on economic conditions, and particularly the jobs that ebb and flow along with them, one might be justified in thinking residential prices and sales would continue to head south, as they had for at least a couple of years.

But they haven’t.

Here’s the overview, using numbers provided by the Saskatoon Region Association of Realtors. At the end of November, year-to-date MLS home sales numbered 3,401, up seven per cent from 3,167 last November, and also up from 3,286 in 2017. The aggregate value, or dollar volume, of those homes was $1.127 billion, also up seven per cent, while the average selling price was statistically the same as last year’s at about $331,500.

For those of us who lived through the housing boom of late 2006-07, creeping into

2008, these may be pale and uninteresting figures. Perhaps we thought the excitement of homes flying off the market after bidding wars that drove up prices would never end, or at least that the market would stabilize at those heady numbers. And perhaps we believed our boom, too, would never end. Builders were scrambling to keep up with demand, people were flowing into the province, and rental vacancy rates were well under three per cent.

It all came to a screeching halt. Before we could blink, the market was overbuilt, landlords were facing a 10 per cent vacancy rate, listings soared and houses were slouching off the market, if they sold at all.

Remarkable, then, that the housing market is as stable as it is, considering the economy is still rather rocky.

It’s still terrible out there for the builders of homes. However, the market appears to be striving for balance, borne out by the drop in listings. In 2017 at this time, 8,649 homes had been listed for sale, a rather staggering number. By November 2018, that had fallen to 7,646, a full thousand fewer; and by this November, they were down another three per cent to 7,443.

Why is the market showing some resilience? Some people in the industry posit the theory that buyers finally decided they’d waited long enough, having watched the market go down for four or five years. In other words, there was pent-up demand, much of it among those hoping to spend under $400,000. Condo sales have risen significantly, lending credence to the idea.

The absorption of new homes has taken a long time, but again, especially in the condo market, it’s happening.

Another thing that’s happened over the past few years is the considerable increase in hightech companies and the jobs they’re creating. Call it the new era of diversification.

And while in-migration is slowing, it hasn’t stopped. The Saskatoon Regional Economic Development Authority (SREDA) reported a 0.4 per cent increase in the Saskatoon Census Metropolitan Area (CMA) population in the third quarter, to 329,205, and that’s not just babies being born.

Meanwhile, interest rates — which we’ve been exhorted to fear were going up (a lot! Look out!) — have stayed low. While some government policies, such as the means test (that requires people to qualify for higher five-year rates) have not exactly supported sales, people still need homes. They want their own homes. They’ll adjust and buy something a little less expensive.

We’re a long way from the previous boom, and likely some distance from the next. But despite the challenges faced by this province, the housing market is, at least right now, surprisingly balanced in our city. That’s a good thing, because the state of the housing market reflects the confidence of your people, and their ability to afford their own shelter.