Housing sales hit record high in Regina, rising mortgage rates expected to affect demand
Laura Sciarpelletti | CBC News | Posted: June 15, 2022 11:55 PM | Last Updated: June 15, 2022
Saskatchewan's housing market sees increases while the rest of Canada sees decreases
Despite supply issues, Saskatchewan's housing sales remain high compared to pre-pandemic years. In fact, housing sales in Regina hit a record high in May, with 456 units sold.
That number raises the year-to-date sales up to 1,615, according to the Saskatchewan Realtors Association's market statistics for May 2022.
In Saskatoon, 541 units were sold in May. That's among the highest levels seen.
"I think what's different for Saskatchewan is that some of the inflationary challenges that everybody is facing, as well as you know the changes in interest rates, are not hitting us as hard," said Samantha Krahn, director of government and external relations with the Saskatchewan Realtors Association.
"I think inflation is actually lower here than in a lot of places in the country.… Our reality is different. Things are still, you know, affordable here. There is opportunity. Prices have been increasing, but there's still a lot of room for buyers here."
Ups and downs
According to the Canadian Real Estate Association, Saskatchewan homes are selling at their lowest point since the beginning of the pandemic. Saskatchewan is also the only province with cheaper homes this year, compared to 2021.
Still, the average cost of a home in Regina was higher in May than it was five years ago by 4.1 per cent.
The same data showed house prices in the overall Saskatchewan and Saskatoon regions increased 8.9 per cent and 13.3 per cent respectively.
When comparing prices month-to-month, houses in Regina came in 0.3 per cent cheaper in May than they did in April.
In the Saskatchewan and Saskatoon regions, house prices increased by 0.1 per cent and 0.6 per cent over April's prices respectively.
Meanwhile, the Saskatchewan Realtors Association says new listings are needed.
"We don't see that changing anytime soon. I imagine that the supply levels are going to continue to be low and it's going to be all of our jobs … business, government … to figure out how we can get more more built and do it smartly and responsibly," Krahn said.
Unlike some areas of the country, Saskatchewan sales trended up in May compared to earlier in 2022. There were 1,814 sales total in May, which is slightly lower than 2021's record. However, the recent numbers are well above typical housing sales in May.
Year-to-date sales total at 6,682 units, down 11 per cent from last year's record high, but more than 27 per cent higher than long-term trends.
Meanwhile, Canada's overall housing market continued to cool down in May from its red-hot pandemic pace, with the average Canadian home sold during the month going for $711,000, a decline of more than $100,000 in the past three months.
While May is typically a strong month for home sales, the Canadian Real Estate Association said that the volume of homes that sold in all of Canada fell precipitously during the month, down by 20 per cent compared with the same period a year ago.
Increasing mortgage rates
There may be a small storm on the horizon. Rising mortgage rates are expected to have some cooling impacts on housing demand.
As of May, the benchmark price in Saskatchewan — which represents the price of a "typical" home — reached $330,300, nearly one per cent higher than in April and four per cent higher than 2021's levels.
"While sales activity could be impacted in coming months, it will take some time for the market to return to more balanced conditions," said Chris Guérette, CEO of the Saskatchewan Realtors Association.
Jason Childs, associate professor of economics at the University of Regina, said upcoming mortgage increases may affect the size and types of homes people seek to buy in Saskatchewan.
"You're going to be looking at maybe something a little smaller, something a little more modest. The era of the McMansion might be coming to an end," Childs said.
He also said Saskatchewan housing sales might be high right now because people are trying to get a house before the rates rise.
"So you get in now, you lock in at that lower mortgage rate if you think rates are going to hit, say, six and a half [or] seven per cent."
Regional sales, price trends
Sales trended up compared to earlier in the year for most of the regions in the province, according to the Saskatchewan Realtors Association. Even though provincewide sales were lower than last year's record levels, there was year-over-year growth in Moose Jaw, Regina and Yorkton. All of these cities recorded new highs for the month.
The association said housing units are not plentiful right now. But even so, residential benchmark prices have trended down for the areas of Moose Jaw, Swift Current, North Battleford and Yorkton in May.
Steady price growth has led to new high prices in many of the larger centres in the province.