The most recent housing start statistics look rather bleak in our growing city; meanwhile, the rental vacancy rate remains low.
Published May 22, 2024 • Last updated 3 hours ago • 4 minute read
If you consider just the most recent housing start statistics, it looks rather bleak.
Canada Mortgage and Housing Corp. reported recently that single-family starts in Saskatoon fell 32 per cent April over April, to 45 units.
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All other starts (multi-family, townhouse, etc.) were up, but not by much: there were 60, up 15 per cent from 52 last April.
It seems hardly enough to resolve the growing housing crisis in our rapidly-becoming-cramped, population-increasing city.
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Meanwhile, “resale” or used homes are still flying off the market. Last month, 690 homes sold, up 26 per cent from 545 in April 2023, and that was a goodly number — especially in a market with historically low listings.
And the rental vacancy rate lingers in the two per cent range, as rents — of course — rise. Saskatoon saw an almost 15 per cent increase in two-bedroom rental costs — among the highest in the nation; but it’s worth remembering that the average rent, at $1,417, is still the most affordable among the 25 cities evaluated by Rentals.ca in its April report.
Take that number with a pinch of salt, though, warns Cameron Choquette, CEO of the Saskatchewan Landlord Association. Not everyone is paying the higher prices. The survey does not represent contract rents but asking prices, which tend to rise when there is turnover.
That said, he agrees that the market remains incredibly tight and rents are rising.
“The decade-low vacancy that was reported in January, we haven’t heard that it’s gotten any better out there,” Choquette said in an interview.
“Anecdotally, we’re still seeing waiting lists and hundreds of applications and a market that is really showing signs of that sub-two per cent vacancy, and in newer areas sub-one per cent.”
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And so, it’s the year-to-date apartment housing starts that are particularly jarring. In the first quarter of 2023, there were 815 starts. This year? Only 144.
“Which seems bonkers,” said Nicole Burgess, CEO of the Saskatoon and Region Home Builders’ Association. “That’s a dramatic decrease … but it’s really tied to two or three big apartment projects that went permitted around that time last year.”
So that’s all the baddish news.
The thing about stats, which are crucial to understanding but can still be compared to damn lies, is that in smaller markets, small numbers over short timeframes can show big percentage changes.
Looking at year-to-date starts, for example, instead of just April, builders have started 183 single-family homes; they started 172 in the same period of last year. Up. Not down.
“It’s definitely business as usual when we compare year over year, which I think is a much better indicator,” Burgess said.
Indeed, sales of new homes (which have lagged due to interest rate increases) have finally risen this year, 88 per cent of those being single family … so is that indicative of a shifting market? Maybe it is.
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“What I think is really happening is that everyone is just waiting for those interest rate drops that have been alluded to, somewhat promised, to come to fruition this year,” Burgess said.
The other potential game-changer is the “big win” delivered by the federal government in the last budget, which is the 30-year mortgage amortization on new construction for first-time home buyers, she said.
“That is going to be a really important driver … and that comes into place in August.”
Burgess said she’s spoken to banks which have told her they’re getting organized to pre-approve buyers based on the new criteria. Therefore, some of those people could be ready to jump by late summer.
She supports the limitations of the policy, because if the longer amortization applied to everyone for all types of homes, it would have “thrown gasoline on the fire.”
Indeed, home builders’ groups advanced on Ottawa to argue for the limitations, saying a more widely-applied policy would drive up inflation and demand and erode affordability.
But we have to build more new homes, “so this is incentivizing new construction and again limiting it to first-time home buyers who have been absent from the new home market.”
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Another interesting development is that there’s an uptick in semi-detached and row house building, she said. These types of homes are becoming more popular because the prices are lower than for detached homes, and will be even more affordable with the 30-year amortization.
And construction itself is up across the board.
“We talk about the starts and what’s to come, the permits,” Burgess noted. “But what’s under construction, year over year, we have 1,912 units,” including some of those big apartment builds. “When we look at what’s being built right now, there is a lot of activity and likely more coming.”
Choquette also thinks the situation may begin to ease soon — at least somewhat.
“Summer will be better; hopefully we’ll see some buildings being completed.”
If we want to capitalize on population growth, which is obviously driving a lot of this demand, “we need a diverse selection of housing for anyone who wants to call Saskatchewan home,” he added.
“Housing is absolutely central to quality of life, population retention and communities with a good standard of living.”
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Yup.
Joanne Paulson is a Saskatoon author and freelance journalist who has been covering real estate, off and on, for more than 25 years. Do you have a fascinating real estate story to share? Get in touch at jcpwriter@sasktel.net.
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