A Look at Saskatoon Real Estate

The Canadian housing market is experiencing a correction. Whether conditions escalate remains to be seen. Still, the Bank of Canada’s path to policy rate normalization is weighing on the real estate industry. But while multiple housing markets – from major urban centres to rural communities – are experiencing some pain right now, some others seem to be holding steady. A case in point is the Saskatoon real estate market.

Despite rising interest rates and cooling demand, prices in the Saskatoon housing market have not cratered. In fact, despite the pandemic-era boom, values did not venture to the moon either. This explains why Saskatoon has remained one of Canada’s most affordable housing markets. These modest gains have attracted families from other provinces and immigrants, as average prices have allowed many households to achieve the dream of ownership.

So, how is the Saskatoon housing sector performing heading into the home stretch of 2022?

A Look at Saskatoon Real Estate

According to the Saskatchewan Realtors Association (SRA), home sales tumbled 25 per cent month-over-month in September, totalling 329 units. However, despite a sluggish start to 2022, sales activity in the Saskatoon real estate market generated momentum in February and remained strong until around July.

Saskatoon housing prices remained relatively unchanged from August to September, with the benchmark price coming in at $383,300. But this is up close to seven per cent from the same time a year ago.

While rising interest rates have cooled off demand, supply challenges continue to be ubiquitous in the Saskatoon real estate market. This has allowed prices to remain elevated while other major urban centres are witnessing a downward trend.

New residential listings totalled 590 units in September, relatively the same as last year. Active residential listings have soared this year, climbing more than 43 per cent since January to 1,222 units. Plus, the average days on the market is down from where it was earlier this year, falling from a peak of 51 days in February to 39 last month.

Also, here is an interesting analysis of inventory data for Saskatoon, according to the real estate association.

“Overall inventory levels are 20 per cent lower than last year and 33 per cent below the traditional average. In August, 77 per cent of inventory was below $500,000, a segment of the market that reflected nearly 84 per cent at this time last year.”

“Supply remains a challenge in the market and while we are seeing some signs of improvement, the gains are in the upper end of the market and have not offset the declining supply of more affordable homes,” said Saskatchewan REALTORS® Association CEO Chris Guérette in a statement. “Higher lending rates are having a cooling impact on demand, but the challenge continues to be having enough supply available in the lower price ranges in our market.”

However, new housing construction activity has been healthy this year, rising to 356 units in August, according to fresh data from Canada Mortgage and Housing Corporation (CMHC). This is up 267 per cent from the same time last year. Year-to-date, housing starts have surpassed 2,000 units, compared to around 1,808 units in the first eight months of 2021.

Will 2023 Change the Saskatoon Housing Market?

From British Columbia to Ontario, the central bank’s inflation-busting crusade has significantly cooled the Canadian real estate market. Residential sales activity has slowed, while national average prices have dropped nearly four per cent year-over-year, to $637,673, according to the latest data from the Canadian Real Estate Association. Of course, many housing markets are faring worse than others, but Saskatoon and the broader Saskatchewan real estate market have held steady.

“While Saskatchewan is experiencing a slight pullback in sales, we continue to expect that we will fare better than other regions of the country,” Guérette noted.

But what gives? There are many factors, such as housing affordability, strong demand, and recent homebuyers not purchasing residential properties near 2022 highs.

Whether the Prairie housing market can sustain this trend or not remains to be seen. In a recent resale housing market update, the Canadian Real Estate Association (CREA) forecast that home prices in the province would plummet by more than ten per cent this year and an additional three per cent in 2023. Despite the drop in sales, prices are projected to average $325,648 in 2023, up approximately five per cent from this year.

“Home sales have cooled sharply in recent months,” the CREA said. “Prices have also been halted in their tracks following a record-setting five months of growth between October 2021 and February 2022.”

Even if higher interest rates were to catch up to Saskatoon or the province, it might not result in a dramatic decrease in prices because valuations have been more subdued compared to what has occurred in many pockets of the Canadian real estate market.