How is the housing market doing these days?
It’s been a long time since there’s been any kind of a frenzy around the housing market in Saskatchewan, but it feels like things are starting to stabilize for the first time in a long time.
Housing Starts are Down
The CMHC is reporting that Canadian Housing Starts fell to their lowest level in nearly two years in September. Economists had been expecting about 210,000 housing starts in Canada during the month of September, but only 188,683 units were started last month.
Not very many of those Housing Starts were in Saskatchewan. There were only 255 Housing Starts in Saskatchewan last month – that’s a big drop from the 432 Housing Starts from the month of September in 2018. Overall, Housing Starts in Saskatchewan are down by 29.5 percent this year, compared to the same period in 2017. It is the highest percentage rate change in the Country.
Mortgage Rates are Up
Mortgage Rates are still pretty low, but they are definitely higher than they were during the Saskatchewan Housing Market Boom of 2007 to 2011 or 2012. The MCAP Prime Rate went as low as 2.25 percent in April of 2009. It’s now at 3.70 percent, which is still pretty low, but it makes it that much tougher to obtain a mortgage, especially for first time buyers.
Mortgage Rules are Tougher
Even though the MCAP Prime Rate is at 3.70 percent, new Mortgage Rules introduced last year mean that home buyers need to be able to qualify for the Bank of Canada’s five-year benchmark qualifying rate. That sits at 5.34 percent, which is a big difference, and it means that most buyers can afford to purchase a home about 20 percent less expensive than they were able to purchase before the new Mortgage Rules came into effect.
The stress test was designed to make it tougher for people to purchase houses, and it worked.
House Prices are Down
House prices have been going down almost everywhere in the Country in the past few years, and nowhere more-so than in Saskatchewan. On top of everything else, our Natural Resources Based Economy has had a tough go of it. Potash prices are down, and there have been lots of layoffs. Uranium prices are low, and there have been lots of layoffs. Oil and gas is slowly recovering from a huge drop in prices 5 or 6 years ago.
The average House Price in Saskatoon in July of 2016 was $346,879. In July of 2018, the average House Price in Saskatoon was $297,200. That’s a drop of about 14 percent in just two years.
According to statista.com, the Median House Price in Saskatchewan is expected to drop from $289,400 in 2018, to $287,000 in 2019. So basically stay where they for the foreseeable future.
Have prices stabilized now at this new lower level? Only time will tell, but it does feel like the market is returning to normal.
Market is Returning to Normal
What I mean by returning-to-normal is that we are in a market right now where Sellers are selling their homes because they need to sell, not because they are testing the market to see how much money they can make on their homes.
And Buyers are buying properties because they need a home to live in, not because they are hoping to hit it rich by buying a home, and having it increase a whole bunch more in a short period of time.
That is probably a good thing, especially for young people who will be looking to get into the Saskatchewan Housing Market in the coming years.
A good time to Sell or Buy Privately
With prices down from what they were a few years ago, it’s also a good time to buy or sell privately. Anyone who is selling their home for less than they paid likely won’t have much equity built up in that home. And if it isn’t Mortgage-Free, Real Estate Fees can take up a big percentage of a person’s equity in their home. So you might want to keep that in mind if you are thinking of selling or buying in the future.