'Built a Stonebridge to accommodate a Prince Albert': Analyst expects Saskatoon housing to stay tight

Housing prices continue to climb in Saskatoon as a combination of strong sales and low inventory helped close out the year with the second highest sales in history.

"Gone are the days where there are vacant houses in Saskatchewan," Saskatchewan Realtors Association (SRA) CEO Chris Guerette said.

"Houses are used up, they are a very valued commodity, and that's going to be a challenge for the next few years to come."

New data from the SRA shows Saskatchewan closed 2023 with a sixth consecutive month of sales above the historical average.

In December, 757 homes sales represented a year-over-year gain of 19 per cent.

When looking closer at Saskatoon, a competitive housing market limited inventory even further. Saskatoon closed the year with a benchmark price of $377,033, up two per cent compared to 2022.

Last year, 4,654 homes sold in Saskatoon, with December alone marking a 14 per cent year-over-year gain.

"A really competitive market for buyers, at least. This was actually the second busiest year in Saskatoon in terms of residential sales," Josh Buchanan, Saskatoon-based real estate analyst said.

Even with 10 interest rate increases in a matter of 16 months by the Bank of Canada, Saskatoon's housing market remained hot, with inventory declining to nearly 45 per cent below the 10-year average.

"We need to keep a very watchful eye on inventory because we have to make sure that our supply can keep up with demand," Guerette said.

"That's two to three months (of inventory) is what we've been seeing."

The cause is a rapidly growing population, largely due to immigration.

According to provincial data, Saskatoon's net population grew by over 36,000 people in the last 15 months. In that same span, an estimated 4,300 new homes were built.

"We built a Stonebridge to accommodate a Prince Albert," Buchanan said of the city's struggles to meet housing demands.

When you add in people who are forced to downsize because of rising interest rates at mortgage renewal time, the market — especially for homes priced under $500,000 — is even that much more competitive.

"The downside to being a seller right now is if you do sell, where do you go? Because there's not much available," Buchanan said.

"There's pretty much inventory shortages on everything other than maybe like the high-end housing"

While these challenges are helping Saskatoon's housing market to stay competitive and keep house prices rising unlike major centres like Vancouver and Toronto, the low levels of inventory are beginning to worry Guerette.

If demand continues to outpace inventory, Saskatoon could approach a similar situation to 2007 when people were buying homes sight unseen because of record demand.

"Many of us still remember that because it was a very painful process," Guerette said. "It's concerning to us."

While few people could have predicted Saskatoon's housing market to stay this competitive throughout the year, Buchanan was more surprised to see the market completely reverse in five to six years.

"Maybe six years ago, your average realtor had two or three active listings, whereas now they have one. So they feel like it's slower just because they have less listing activity," he said. "Six years ago, we had double the inventory we have right now."