Housing market in Regina expected to stay strong, Saskatoon to remain balanced

CBC
·4 min read
Regina is currently seeing strong activity in the housing market while Saskatoon has slightly elevated activity. (Graeme Roy/The Canadian Press - image credit)
Regina is currently seeing strong activity in the housing market while Saskatoon has slightly elevated activity. (Graeme Roy/The Canadian Press - image credit)

The Canadian Mortgage and Housing Corporation (CMHC) released its latest housing market outlook (HMO) on Thursday. The HMO looks at housing forecasts at a national level and in Canada's 18 metropolitan areas, including Regina and Saskatoon.

Taylor Pardy, a senior economic analyst at CMHC, said Regina is seeing strong activity in the home market right now.

"We expect that to continue to be the case for 2021 in terms of overall number of sales, however, we do see the total number of sales moderating a bit over the next few years after that from the sort of pace that we're seeing right now, which is very high," he said.

He said with current resale activity, the market is seeing the number of overall homes for sale drop.

"That's creating some additional competition in the market right now and it's leading to some upwards price pressure on average prices in particular," he said. "We're anticipating continuing seeing some modest increase in prices over the next few years as well."

Goodson Mwale, a senior analyst at CMHC in Saskatoon, said the demand for new and existing homes in Saskatoon is projected to remain elevated.

"We're expecting to see continued strength in both the resell and the new home market, and we're expecting to see a continued positive price activity in the resale market as well," he said.

Mwale said there is an upward pressure on the vacancy rate for rentals in the city due to lots of units being under construction. He said the HMO projects this to continue through the year.

"When we consider the fact that we're expecting economic fundamentals to improve over the next couple of years, so 2022 and 2023, we're expecting that the vacancy rate will begin to trend down," he said.

Mortgage rates and average home prices

Pardy said CMHC anticipates mortgage rates across Canada to gradually increase over the next few years. He said historically, the current interest rates are considered low.

"We're being very conservative on our mortgage rate forecast and we're basically anticipating that mortgage rates will return to their pre-pandemic levels by 2023," Pardy said.

Pardy said the average home price in Regina is anticipated to get higher, with year-over-year price increases for the whole market. He said CMHC predicts increases of between one and four per cent per year.

The average price for a home in Regina was $306,000 in 2020, up from $300,000 the year before. This year, it is expected to be between $309,000 and $317,000.

Mwale said the Saskatoon market is shifting toward more balance between supply and demand, which should lead to price gains for the average home.

"We're seeing the average [home] price increase on a year-over-year basis both for single detached as well as for multifamily units," Mwale said "We expect that this trend will continue, but the degree to which it will increase will remain relatively modest."

COVID-19 and the housing market

Pardy said the pandemic caused the savings rate to increase for Canadians, who were able to maintain employment and looking to get into the market.

"It peaked at around 28 per cent and it fell down to about 13 per cent by the end of 2020," he said. "Consumers [were] really not spending a whole lot on other things, maybe some of these individuals decided to jump in and take advantage of those low mortgage rates."

Mwale said there are some risks to the HMO when it comes to predictions and the COVID-19 pandemic.

"If we get a successful rollout of these vaccines and curb the influx or the spread of these variants of concern, that obviously will be a welcome development for the economy," he said. "If we don't get a handle on these things, obviously that would delay some of the recovery."

Mwale said there has been an increase in price of inputs on raw materials such as lumber.

"The risk would be that if prices of lumber [persist], that would have an impact on the construction industry in Saskatoon by limiting the pool of potential buyers due to the higher cost that would have to be passed onto consumers," he said.

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