Saskatchewan to buck national trend of declining resale activity and housing starts: CMHC
The latest release of CMHC’s Housing Market Outlook forecasts declining resale activity and housing starts on a national level, but predicts Saskatchewan will buck the trend showing increases in both categories.
While existing home sales across Canada will experience an 8.5% decline, resale activity in Saskatchewan is expected to “facilitate a record number of transactions in 2008, reaching 13,400 units,” according to the report. Nationally, housing starts will decrease by 6% while Saskatchewan experiences an increase of 17% to 4,600 units, “the highest total in nearly 30 years.”
CMHC believes positive migration trends, expanded production of potash and oil, higher commodity prices and surging government expenditures will continue to drive Saskatchewan’s economy forward in the years ahead.
“The province’s changing economic fortunes are clearly reflected in the 2007 migration figures. After 22 consecutive years of decline, net migration in Saskatchewan rebounded with a record high of 13,583 migrants. Last year’s performance erased all of the losses in the preceding three years.”
Does Saskatchewan have the goods to buck this national trend?
Read CMHC’s Housing Market Outlook here.
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Norm Fisher
Royal LePage Saskatoon Real Estate
There's 10 Comments So Far
May 12th, 2009 at 10:53 am
Grr.
May 12th, 2009 at 10:53 am
Robin,
If it’s any consolation, you can almost always count on CMHC to be wrong.
May 12th, 2009 at 10:54 am
Hah, well said Norm.
May 12th, 2009 at 10:54 am
The report’s much less sanguine than it seems at first glance, although there’s lots of Boosterfodder (TM).
They’re pretty clear that people will no longer be drawn to Saskagina by very cheap housing, and that migration will ‘moderate’. Given this, I can’t see why in the name of the seven circles of Hell they think prices are going to go up by 27% this year; that increase would make housing prices the same or slightly higher than Alberta prices, and I just don’t see people voluntarily moving to Saskatoon and taking a pay cut if housing prices are the same. I also don’t see Alberta investors hanging onto investment properties here if the values of their Alberta properties fall.
They point out that there’s been a real surge in migration into Saskatchewan last year (13,583 people), with half of those being from Alberta: 6,950. This is a far cry from the ‘massive population growth’ that’s been claimed for the city, but it’s significant.
May 12th, 2009 at 10:55 am
“Quote jrochest:
I can’t see why in the name of the seven circles of Hell they think prices are going to go up by 27% this year; that increase would make housing prices the same or slightly higher than Alberta prices, and I just don’t see people voluntarily moving to Saskatoon and taking a pay cut if housing prices are the same.”
lol in my opinion, that number is reached by the following means:
1. People moving into Saskatchewan.
2. General optimism in Saskatchewan being the place to go to now, which actually matters a lot more than you may realize. Just as newspapers have the power to make recessions worse, they have the power to boost things due to optimism.
3. The simple fact they are a Mortgage company and they hope that by saying it makes it true.
I think Saskatoon is all tapped out though and that only Regina, NBFR and PA will see an increase, as we are still well below you guys as far as Average Home Prices are concerned.
IMO, Sask is in for a 10-15% increase this year (Half of what CMHC said) and 5-10% next year and that is only if net migration into the province is equal to or more than it was in 2007.
If net migration reverses or goes down below 5000 people, I think things will flatten out and there will be a correction, though not a huge one. 5-25% max and the ones that would see a 25% correction are the super expensive homes over $500k. The affordable ones would probably see a slight “boom” as people waiting finally buy.
May 12th, 2009 at 10:59 am
I still think that Saskatchewan real estate will continue to rise (albeit at a much more leisurely pace than in the recent past) despite increased listings. Part of the evidence is the numbers from Alberta: prices are stagnant or declining there. One very big reason is that migration both business and personal is reversing and going to other places like Saskatchewan. Albera isn’t the “go to” province that it always was. One need only look at where the energy industry is putting its investment dollars. Less is going to difficult Alberta projects like the hugely expensive tar sands and more and more into easier projects like the Saskatchewan Bakken formation. The horizontal wells in the Bakken are more difficult than a standard well but with new techniques much easier and cheaper than the oil sands process. I look at where energy companies I have shares in are investing and a ton of investments are being made now in Saskachewan instead of Alberta. The royalty situation now is really a wash between Alberta and Saskatchewan – there is no Alberta advantage anymore. The Alberta oil rush is old and stale news. The two big “hot” things in the petroleum world are the Brazilian offshore find and the Bakken. And this only means more money and jobs for Saskatchewan.
May 12th, 2009 at 11:00 am
The CMHC is not a mortgage company.
May 12th, 2009 at 11:00 am
CMHC – Canada MORTGAGE & Housing Coporation….
They’re actually a “mortgage insurance company” but…
May 12th, 2009 at 11:00 am
For those that are unclear about what CMHC does, they insure lenders against losses from delinquent mortgages that go to foreclosure. If your mortgage is insured and you go into foreclosure, the home would be sold and CMHC would cover any shortfall for the lender.
May 12th, 2009 at 11:01 am
RBC calls Saskatoon “Overvalued”
and current prices “Unsustainable”
http://www.rbc.com/economics/market/pdf/citytrend.pdf
New headline, Saskatchewan to Follow National and Alberta trend and go to “Not Hot” Real Estate Status, with declining house values within the year, Royal Bank (a previous pro Saskatoon house price increase) Economics predicts this over the next year, apparently nearing a “buyer’s market”