Which is the most affordable housing market in Canada?

It’s long been viewed as one of the country’s most reasonably-priced markets amid surging home values and intense bidding wars elsewhere – and now Saskatchewan can lay claim to being the most affordable province to buy a home in Canada.

That honour once belonged to New Brunswick, but new data from the Canadian Real Estate Association (CREA) shows that its average home prices surged past Saskatchewan in May, registering a sharp year-over-year increase.

The MLS composite benchmark price for New Brunswick properties was $296,700 – up nearly 30% over the previous year – compared with $289,500 in Saskatchewan, which saw a year-over-year increase of just 3%.

That’s not to say buyers have it all their own way in the Saskatchewan market despite its affordability. Shawna MacDonald (pictured top), owner and mortgage broker at the Saskatoon-based The Mortgage Associates, told Canadian Mortgage Professional that competition remained at extremely high levels even as interest rates increase and many markets across the country begin to cool.

“We are still in a low inventory market, so bidding wars without conditions are still happening, and houses are selling for over the asking price,” she said. “It’s a very competitive market.”

The impact of the current rising-rate environment will likely become apparent over the summer, MacDonald said, although at present many clients appear eager to secure a purchase before rates increase even further.

“Last year, our business consisted of a lot of refinances given the low rates,” she said. “Now we’re more heavily weighted in purchases. Everyone is trying to get in before their great rates expire.

“A lot of people still hold rates under 4%. I anticipate in a couple of months we will see the effects of higher rates, once inventory becomes more readily available.”

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The Saskatchewan Realtors Association (SRA) said sales in the province were slightly down in May over the previous year, although activity remains well above typical levels. That’s exemplified by the fact that sales are down 11% over last year’s record high, but have boomed 27% compared with long-term trends.

MacDonald, recently named one of the Top 20 Small Market Brokers for 2022 by CMP, said that 99% of her clients were from inside the province, suggesting that it has resisted speculation from external bidders that other parts of the country have experienced during the last two years.

SRA’s CEO Chris Guérette, said that the long-standing inventory issue was keeping the Saskatchewan market relatively busy even as activity levels registered a marked drop-off over the previous frenzied year.

“While demand for homes in Saskatchewan has remained relatively strong so far this year, we did not go through the same early demand surge as some markets,” he said. “In fact, our market is exhibiting trends that we typically see in the spring.

“What we are still struggling with is lower supply levels, which is keeping conditions relatively tight and causing further upward pressure on prices.”

Despite becoming a pricier market than Saskatchewan in May, New Brunswick also registered some cooling in homebuying activity compared with the previous year.

Home sales were down by nearly 10% over a record-setting May 2021 – although they remained extremely high by historical levels, CREA said, coming in 12.9% higher than the five-year average and 27.2% above the 10-year average for May.

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Affordability remains a huge challenge in most markets across Canada, with a recent report by real estate analyst Point2 revealing that 38 of Canada’s largest 50 cities featured zero listings for under $200,000.

Still, a “glimmer of hope” for buyers was the fact that regional pockets of affordability remained throughout the country, that report’s author Alexandra Ciuntu told CMP, with Cape Breton (Nova Scotia) offering 44% of its homes’ prices below that amount and Ontario’s Kawartha Lakes also making the cut.

Unsurprisingly, the Prairies featured the most homes for sale for under $200,000 – with Regina, Saskatchewan among the most affordable cities in the country, the report found.

That said, further upward pressure on home prices in Saskatchewan is likely to ensue, according to the SRA, as a result of supply shortages that show little sign of abating. That means the market could be set to continue moving at a rapid pace for a while yet.

“While sales activity could be impacted in coming months, it will take some time for the market to return to more balanced conditions,” said Guérette.