Housing supply

Paulson: Tight housing supply welcomes 2022

The numbers are in and it’s official: Saskatchewan has set a record for home sales in 2021.

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I don’t need a crystal ball to predict that people will need to be patient when looking for a new home in early 2022. (That being said, if you have a crystal ball, I always looking for one.)

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Let’s start with the obvious. The numbers are in and it’s official: Saskatchewan set a record for home sales in 2021. Sales of 17,387 soared 17% from the previous record set in 2007.

In our beautiful city (and region), a record 7,405 homes sold, up 25% on 2020 – which was also a strong year post-lockdown.

New listings in our area also reached 11,309, up 6% from 2020. Yet, at the end of December, inventory was at levels not seen since 2012 and 17% lower than in 2021. So that the average price, $349,933, also increased, although by 6% less dramatic, we set a (slightly different) record benchmark price of $329,000.

As the Saskatchewan Realtors® Association (SRA) noted, as the pandemic “triggered broad disruptions and challenges for some sectors of the economy, housing has exploded.

At least.

Meanwhile, on the new housing front, single-family home permits were actually down slightly in 2021 from a year earlier, 565 from 581. Building a home has been quite a challenge for reasons that will be explained. later. That being said, multi-family (or condo) permits nearly doubled from 987 to 1,876, according to a report by the Saskatoon and Region Home Builders’ Association (SRHBA). (There’s a whole column right in there.)

The watchwords for 2022 will be stocks, inflation and interest rates. On the last day of 2021, there were 386 single-family homes on the market in the city of Saskatoon, and I’m here to tell you that’s crazy, especially when a buyer filters through some of the really not-so-fantastic properties.

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In addition, there were 422 condos, a far cry from something like 700 not so long ago. This will take us through 3.4 months, in theory; sales always drop in December, and they drop in cold weather. Since supply is measured by dividing active listings by sales, that 3.4 might not hold for long when the New Year’s market kicks in.

In other words, good luck finding a good home, unless you’re in the market for over $700,000. (Not me.)

Meanwhile, inflation continues to rise in the COVID supply chain crisis environment, and the Bank of Canada will almost certainly raise the benchmark lending rate soon – possibly in April. The early months of 2022 are going to see a very tight housing market, even as COVID continues to have an icy grip on our hearts and our health.

Chris Guérette, CEO of the SRA (and former CEO of homebuilders), noted that there is indeed a “long list of challenges” for 2022.

“We are very aware of the challenges ahead over the next 12 months,” she said in an interview. “Inflationary pressures, rising interest rates from Q2; this is going to have an impact on the people currently in the accommodation, not only the owners, but also the tenants. »

Also, supplies are still scarce right now, she added.

“It takes a little longer to build and renovate a house than before the pandemic. This is because we are still very clumsy with our supply chain. And there is a huge labor shortage that is not going to improve in 2022.

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“It’s a very long list and we haven’t even started talking about government policy yet. The federal government says they have a housing plan and are developing some policies, but these are really for the major centres. They are certainly not solutions for Saskatoon.

“Inventory levels will continue to fall in 2022 and we all know what that means. It means that it will put increasing pressure on these prices. That is what we are looking for.

Jason Yochim, outgoing CEO of SRHBA, said the increase in MLS sales also reflects increased sales in the new home industry; but it’s nearly impossible to unpack the exact numbers as some builders sell privately and others sell on MLS, or both.

But inventories are also low among new single-family construction, and he sees labor and supply chain issues continuing into 2022.

Supply and demand will see price increases in the sweet spot, that range of $500,000 and below,” he said. “If we can’t get the houses built in a certain timeframe, people may not be able to wait.”

However, despite the price increases, Yochim noted, “It’s still a very affordable place to live compared to other markets.”

It’s true. The province-wide average price in 2021 was just over $284,000, so it’s safe to say that we’re collectively a Canadian bargain.

Even so: pack your patience. Visit your lender in advance and keep in touch; your pre-approval may not survive the time it takes to find a property. But remember, despite the recent incredible weather, it’s still a wonderful place to live with a strengthening economy, and prices are still beating most markets. It will be worth it in the long run.

Joanne Paulson is a freelance writer and journalist from Saskatoon who has covered real estate on and off for over 25 years. Do you have a fascinating real estate story to share? Contact us at jcpwriter@sasktel.net.

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