Saskatchewan was one of the least impacted provinces in the country, reporting fewer than 800 coronavirus cases and about a dozen pandemic-related deaths. Health authorities and officials successfully mitigating the spread of COVID-19 allowed the province to launch its reopening campaign earlier than others, entering Phase 4.2 by the end of June. Despite a few bumps in the road along the way, the return to normalcy for this province has been as good as a Double-Double on a Monday morning!
Because Saskatchewan is not witnessing the same devastating effects from COVID-19 as its neighbours, the economy has not suffered a downturn as severe as the rest of the country. And this includes the Saskatoon real estate market.
Today, a lot of homebuyers and sellers have been keenly watching the twists and turns of the Canadian real estate market. Homeowners are still waiting for top-dollar transactions, while buyers are trying to see if they can get a discount after more than a decade of accelerating prices. What is happening in the so-called Paris of the prairies, and is the city of Saskatoon still on track to be one of the most appealing destinations for young millennials looking to buy a first home?
Saskatoon Real Estate Market: A Snapshot
Before the COVID-19 public health crisis, the 2020 Saskatoon Housing Market Outlook anticipated the largest city in Saskatchewan to remain a buyer’s market. Last year, new Canadians and affluent families elevated Saskatoon real estate. This year, single millennials and young couples were forecast to be the main drivers. It might be easy to dismiss this forecast due to the market uncertainty in the wake of COVID-19.
However, the economic plight of Canada’s urban centers, like Vancouver and Toronto, might make POW City even more appealing (POW stands for potash, oil, and wheat, for those less familiar with Saskatoon’s common moniker). Saskatoon benefits from having one of the lowest costs of living, and with housing prices projected to remain flat over the next several months, young professionals and investors may be drawn to this market. But there may be some hurdles to overcome on the way.
According to the latest data from the Saskatchewan REALTORS® Associations (SRA) in June, year-over-year sales have rebounded 38.4 per cent in Saskatoon. They were also 27.5 per cent above the five-year average. Across the province, sales have spiked close to 50 per cent compared to the same time a year ago. Year-to-date, sales are slightly down 0.3 per cent, which is impressive considering the nation went through an unprecedented event.
In June, median home prices increased 3.1 per cent, rising from $320,000 to $329,000. This is also one per cent above the five-year average. New listings in Saskatoon have slipped 11.4 per cent year-to-date, while the sales-to-listings ratios was 62 per cent. This suggests that the city remains a seller’s market.
One of the reasons for the city’s drop in housing prices is due to rising inventory from falling sales. When weaker demand and coronavirus restrictions are factored into the equation, there was inevitably going to be a downward pressure on prices. That said, when the economy returns to some semblance of normalcy, prices and activity are expected to rebound – and they already have from April.
Since cities outside Saskatoon are experiencing jumps in sales, and many local real estate agents believe it is only a matter of time before sales activity rebounds within this city. For example, sales in North Battleford, Estevan, and Yorkton are up ten per cent year-to-date.
Bucking the Trend?
The Canada Mortgage and Housing Corporation (CMHC) captured national attention in May when it published a grim assessment, forecast, and real estate trends for the housing markets across Canada.
Canada’s top mortgage insurer warned that housing starts would decline, existing home sales would drop, and prices could crater by as much as 18 per cent from their pre-crisis levels.
“Canada will experience a historic recession in 2020 with significant declines in all housing indicators. Severe loss in household income and employment, and migration at a standstill contribute to unprecedented falls in construction activity and sales. The decline in housing activity is compounded in oil producing provinces as the energy sector is also experiencing historic lows,” the CMHC wrote in its 2020 outlook.
The consensus on the ground is that the Canadian real estate market will not be as nearly as dire as the CMHC expects. Some markets started seeing an improvement in April, while others reported a rebound in May. With most economies reopening and the pent-up demand anticipated to be a short-term factor in the recovery, industry observers say the housing market will recover.
The Saskatoon and Region Home Builders’ Association (SRHBA) and Regina and Region Home Builders’ Association (RRHBA) went as far as issuing a joint statement to disagree with CMHC.
“It’s really difficult to talk nationally about housing when it’s such a local issue,” SRHBA CEO Chris Guérette told 650 CKOM in June. “Our industry has been quite resilient amidst all this.”
“This is a great time. Interest rates are low and they’re going to stay that way for awhile. You just need to be wary and educate yourself,” she added.
And low interest rates, as well as adapting to the coronavirus, could be the keys for long-term growth.
A Housing Opportunity in 2020
Like the rest of the country, Saskatoon’s housing market will likely benefit from lower interest rates. In March, the Bank of Canada (BoC) cut interest rates by 150 basis points to 0.25%. In a recent policy meeting, new BoC Governor Tiff Macklem suggested that while rates are unlikely to go any lower, they are here to stay to support the economic recovery. With borrowing costs coming down, it is a good time for the patient homebuyers to dip their toes in real estate and acquire the property of their dreams.
Another reason why Saskatoon real estate has been sustainable is due to real estate agents’ adapting to the current conditions. Many realtors have utilised technological solutions, from virtual tours to digital listings to electronic documents. Moreover, the industry is adhering to the guidelines outlined by the health authorities by practicing social distancing, wearing masks and gloves, and offering clients hand sanitizer during open houses.
Both developments have served as boons for real estate, showing that POW City has the market conditions and agent ingenuity to withstand the impact of a second wave of the pandemic, should that wave ever come!