The province saw its busiest year on record during the past 12 months
Canada’s housing and mortgage markets experienced yet another boom year in 2021 – and that surge was no different in Saskatchewan.
Figures released by the Saskatchewan Realtors Association (SRA) at the beginning of January showed that the province’s housing market shattered all records last year, with its total of nearly 17,400 sales representing a 17% increase over the previous busiest year on record, 2007.
As across many parts of Canada, the fact that inventory remained low throughout the year meant that the market strongly favoured sellers in Saskatchewan. That said, despite a 6% increase in the HPI benchmark price compared with 2020, that average price of $284,200 looks decidedly mild compared with the country’s most competitive markets.
Indeed, the SRA noted that even with that year-over-year average price rise, properties in Saskatchewan still cost around 3% less last year than they did in 2014 – with condo prices remaining a full 17% below that pre-2015 high.
Still, the supply shortage problem that has beset the Canadian housing market in recent times has also been a pronounced issue in Saskatchewan, where inventory has also been whittled down.
“One of the single greatest issues the Canadian real estate market faces, including in Saskatchewan, is the declining levels of housing supply,” Chris Guérette, SRA’s chief executive officer, commented towards the end of last year.
“The seasonally adjusted number of residential properties left for sale on MLS Systems of Canadian real estate boards and associations is close to falling below the 100,000 mark for the first time on record.”
Shawna MacDonald (pictured top), owner and mortgage broker at the Saskatoon-based The Mortgage Associates, told Canadian Mortgage Professional that the supply problem had been particularly evident since the beginning of the COVID-19 pandemic as demand surged.
“We have very, very little supply. Back when COVID hit, we had so many people who were preapproved and the demand was there, but the supply was not,” she said. “Nobody was selling. For probably a month or two, we were completely locked down.
“When it reopened, all of that pent-up demand created another supply issue, and then it just went from there.”
That’s resulted in similar bidding wars to those that have become commonplace in other markets in Canada, MacDonald said, with prospective buyers who aren’t able to meet deadlines or secure financing often losing out as a queue of bidders for the same property swoop in.
While the province is generally more affordable than the country’s hottest markets, significant hurdles still remain for first-time homebuyers, particularly with the minimum wage remaining low and the federal government having raised the mortgage qualifying rate last year.
MacDonald said that the combination of those factors had created a difficult situation for would-be new entrants to the market, with the average house price in Saskatoon having risen during the past year while the minimum wage remained static.
“Now the average house price in Saskatoon, for example, is $327,000 and the minimum wage is still only $11,” she said.
“Personally, I don’t know how some of those first-time homebuyers can navigate through that, especially given not only the mortgage payment, but that higher price point. I think affordability is a huge issue.”
The imposition of a blanket hike to the mortgage qualifying rate across the country to 5.25% is sometimes viewed in smaller markets as a means of punishing the country for the excesses of the Ontario and British Columbia housing surge.
In Ontario, the average sold price of a home in November 2021 was almost $913,000 – a figure that MacDonald said would be rare to see in the Saskatoon market.
Still, while advocating a tailored approach to different markets across the country, she said the stress test had proven an effective means of ensuring that those who entered the market were able to do so.
“Of course there should be different rules, but in the same breath I’m grateful for the stress test. It being high really protects our Saskatchewan consumers,” she said.
“That’s always a conversation that we have when we’re educating our clients – that they’re adhering to their budget.”
As for the future of the Saskatchewan market in 2022? MacDonald forecast another profitable year for the province’s mortgage industry, noting that demand and enthusiasm to enter the market remain high.
“The supply is still not there, and I have a large number of clients who are preapproved and have been preapproved since last year that have been struggling to find a property,” she said. “So, I think we’re definitely going to see another busy year here in Saskatchewan.”