If interest rates do come down, as some market watchers expect sometime in 2024, it will add fuel to the fire of this very warm market.
Is it just me, or did 2023 sort of zip by, despite its challenges?
Leaving aside war, ugly politics and drought for the moment, because this is supposed to be a real estate column, soaring inflation (now improving), high interest rates (hopefully stabilizing), and a serious dearth of housing inventory (still a problem) were among those challenges.
Will they improve next year?
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What improvement looks like depends somewhat on your perspective: are you a seller, a buyer, or both? Because apparently, Saskatoon’s residential real estate market is unlikely to loosen up anytime soon.
On the demand side of the equation, we have a relatively positive economic outlook. The Conference Board of Canada said last week it expects the Saskatchewan economy to grow 1.5 per cent next year, which may not be a thrilling number but beats the 0.6 per cent Canada-wide forecast.
Largely on the supply side and also last week, Re/MAX Canada provided a market forecast for 2024, and it predicts Saskatoon’s seller’s market will continue. While sales will be flat, largely due to low inventory, the average price will rise two per cent to $383,600 from the $376,000 posted to the end of October.
“That’s going to be a trend for quite a while,” Warren Ens, a Realtor with Re/MAX Bridge City Realty, told me. “When it comes to Saskatoon, all year we’ve been behind in the listings. There’s very little inventory.”
As for nearby housing options, “Martensville and Warman (listings) are statistically half of what they usually are at any given point,” he said.
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While all this has been going on, our region has also seen quite an influx of new people — largely immigrants, but Ens is seeing a new phenomenon of late. People from Ontario, dominantly Toronto, and British Columbia are starting to see the benefits of living in Saskatoon — and yes, they are moving in because they can actually afford to live here.
These buyers are driving sales of more expensive homes, perhaps at a level the city has not ever seen, Ens said.
“There’s definitely some bigger money coming into the province — not just Saskatoon.”
While they can afford to pay more than $500,000 for a home, many of these new residents have small down payments, which tells Ens they were renters in the bigger provinces where buying homes was out of reach.
Even if they’re not moving here in droves, “right now we have such low inventory, even a little thing will have a big impact on us.”
Ens, a landlord, said the rental market also remains tight. When a property is listed on Facebook Marketplace, “you will have 30 (interested) people in the first hour. They’re having open houses for rental properties.”
He wonders if the tight housing market will have an even bigger impact on the price of rent going into next year and beyond.
“It’s not going to be quite as affordable as it is today. The trend is definitely that we will be becoming more of the normal in Canada rather than just the cheap place to live,” he predicted.
Indeed, sales have remained steady despite interest rates having been a “major factor,” because many buyers are deciding they must buy now because they don’t expect prices to fall in the future.
“I can’t imagine what this market would look like if the interest rates had stayed at three or four per cent,” Ens said.
“I almost see it as the quiet before the storm. Interest rates have definitely slowed things down, but the minute they come down, we’re going to see these housing prices go up.”
While today’s competitive market is not like the wild years of 2006-07, when inventory plummeted and prices soared, some of its characteristics are similar if not as widespread.
As a buyer’s agent, Ens competed on a home priced at more than $500,000 that attracted multiple offers in one day.
As a seller’s agent, he listed a home that attracted a showing within 15 minutes and sold two hours later.
The tactic of presentation of offers, which had been rare in the market for many years, is also happening with some regularity, he added.
The upshot, of course, is that new homes need to be built, even as builders face labour shortages. Purpose-built rental buildings have gone up, but even owner-occupied condos, much less single-family homes, are not being constructed at the rate Saskatoon requires. Ens also expects lot prices to start rising in new neighbourhoods.
“I see none of this changing in the next little while,” Ens said. “I don’t think we’ve ever built as many homes as we actually need to right now.”
If interest rates do come down, as some market watchers expect sometime in 2024, it will add fuel to the fire of this very warm market.
Let’s hope some of the new government supports for new housing — GST and PST rebates on some building and support for suites, for example — start to have a meaningful effect next year, because even if you’re a seller and these conditions are supporting the supply side, you have to live somewhere, too.
Joanne Paulson is a Saskatoon author and freelance journalist who has been covering real estate, off and on, for more than 25 years. Do you have a fascinating real estate story to share? Get in touch at jcpwriter@sasktel.net.
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