It comes as no surprise that we have seen major changes in the economy as a result of the COVID-19 pandemic. Everything about our normal way of life has been impacted, and the real estate market in Canada is no exception. The real estate market has seen major changes and disruptions and leaves a lot of concern as to how pricing will be affected in major cities across Canada, including Saskatoon.
Saskatchewan’s largest city, Saskatoon is the cultural and economic hub of central Saskatchewan. Earning the nickname POW City, the economy of Saskatoon has long been associated with potash, oil and wheat. It is home to 46 inner-city neighborhoods, which include new developments as well as historical sites, each flaunting its own unique character and attractions. Saskatoon enjoys one of the lowest costs of living among major cities in Canada. Paying less for housing makes Saskatoon an attractive option for young couples and millennials looking to settle down.
The 2020 Saskatoon Housing Market Outlook identified Saskatoon in late 2019 as experiencing a buyer’s market, and the expectation for Saskatoon in 2020 was that the average residential sale price would remain flat at zero percent. New Canadians and high net-worth individuals drove the Saskatoon housing market in 2019 and were expected to continue to drive the market in 2020. It was anticipated that in 2020, single Millennials and young couples would be crucial players in driving the market as well. This leaves many wondering how the Saskatoon housing market will be potentially impacted during this uncertain time.
Staying Safe Amid the COVID-19 Pandemic
Efforts to “flatten the curve” have proved to be essential in keeping everyone safe and preventing our healthcare systems from becoming overwhelmed. With physical distancing orders in effect across the country, realtors and home buyers needed to find ways to adapt and carry on.
The Saskatchewan Realtors Association has taken measures to protect home buyers and realtors as they attempt to do business during the pandemic. One of the biggest changes is that there are to be no open houses, public or private, due to the risk of possibly spreading infection. When showings occur, they are currently limited to only those people who are the key decision makers.
Saskatchewan Housing Market Not Seeing Same Impacts as Rest of Country
Although we have witnessed the COVID-19 pandemic negatively impact many real estate markets across the country, we can see that a month into the pandemic, Saskatchewan’s real estate market is not experiencing the same blows to its housing market as is the rest of Canada. This bodes well for the housing market in Saskatoon.
In Saskatchewan, the first case of COVID-19 appeared on March 12, with the province declaring a state of emergency on March 18. When we compare sales volume figures since the start of the state of emergency with the same period last year, we can see that while there was a 6.2% drop in total sales and a 9.6% drop in total sales volume, this decline did not affect the residential market.
In general, real estate markets in areas heavily affected by COVID-19 have seen their total number of transactions decline. While there is a chance for Saskatchewan to see their transaction volumes eventually decline further as well due to COVID-19, low interest rates and declining inventories should help to ensure recovery once this rocky period subsides.
Saskatoon Home Sales
Let us have a closer look at recent home sales in Saskatoon. In March, there were 274 residential sales. When we compare that number with last year, total sales and sales volumes went up 6%, going from 258 in March 2019 up to 274 in March 2020. Sales are also up 7.2% in the overall region, going from 346 to 371. However, it should be noted that while sales numbers have gone up, the number of new listings in March 2020 fell quite a bit from last year. New listings in Saskatoon fell by 14.2%, going from 702 to 602.
Homes in Saskatoon stayed on the market an average of 55 days in March, which is a decrease of 3.5% from 57 days last year. Average home prices in Saskatoon made an impressive jump from $316,737 to $347,189, which is an increase of 9.6%, and were about 3% above the five and ten year average price. Average home prices in the region also saw an increase of 8.4%, going from $306,161 to $331,793.
Increased Sales and Decreased Listings
In general, we are seeing a trend of increased sales and decreased listings in Saskatoon and region. If this trend continues, we should anticipate seeing an increase in prices. With the changes to the mortgage stress test rules starting this April, this should lead to a positive affect on residential markets. There is speculation that the increase in sales could be due to the uncertainty over what could happen if the COVID-19 pandemic continues. In addition, we should begin to see more home buyers and in particular first-time home buyers qualifying for mortgages and deciding to jump into the market.
Low Interest Rates
Over the past three years, we have seen a decline in inventory levels in the Saskatoon market. This means there is a little less selection to choose from for prospective buyers. However, interest rates are the lowest they have been in a long time, so for a qualified prospective buyer, this could prove to be a great time to buy a new home. As always, it is important for homeowners and buyers to work with a certified realtor to make sure they are getting appropriate advice before purchasing or selling a home.
With low interest rates and increased sales, along with affordable housing options, Saskatoon’s housing market shows the potential for weathering the storm of the COVID-19 crisis and coming out stronger than before. If you are looking to dive into the market during this unprecedented time, it is in your best interest to work with a qualified, experienced RE/MAX REALTOR® who can help guide you through the market.