The Housing Market in Saskatoon
Housing Prices
Saskatoon's changing housing affordability can be seen in both the resale and the new home markets. For example, over a two-year period the average price of a resale home nearly doubled in Saskatoon. The average price of a resale home increased 91 percent from $162,279 in May of 2006 to $310,000 in June of 2008. The price of a resale home has since stabilized with the average resale home selling for approximately $279,477 in May of 2009.
The price of a new home in Saskatoon has also increased significantly in recent years. After peaking at over $400,000 in August of 2008, the average price of a new home in Saskatoon was $372,145 in April of 2009. This represents an increase of 47 percent over the $263,875 average price of a new home recorded in April of 2007.
It should be noted that between the summer of 2008 and the spring of 2009, housing price fell from peak price points in the context of a global economic slowdown. While many provinces and communities in Canada were significantly affected by the global economic slowdown, Saskatchewan and Saskatoon maintained strong economic growth. Saskatchewan is one of the few provinces that is forecast to post continued economic growth in 2009. Therefore, the potential for continued increases in the housing market remains.
In a recently released International Housing Affordability Survey, Saskatoon's housing market was reported to be "seriously unaffordable." The survey indicated that it would take 4.6 years of a median income to purchase the average home in Saskatoon. This is a significant increase over the 2.6 years required in 2006, and the 3.5 years needed in 2007. It is also higher than the Canadian average of 3.5 years and is almost on par with Calgary and Toronto's housing affordability rating of 4.8 years.
Rental Prices
The rental housing market in Saskatoon has also experienced significant price increases over the past few years. The Canada Mortgage and Housing Corporation's (CMHC) Rental Market Report released in April 2009, demonstrates that the average price for a two-bedroom rental unit in Saskatoon increased 30 percent, or $242, between April 2007 and April 2009. Furthermore, the average rent for a one-bedroom unit increased from $516 to $702 and the average rent for a bachelor suite increased from $407 to $534 during the same period.
While these increases are not necessarily on part with the increases experienced in the ownership side of the housing market, demographic groups that traditionally acess the rental market have a comparably lower income than those who purchase units for the purpose of home ownership. Those families and individuals that reside in rental accommodations are less able to withstand recent increases in housing costs.
Forecasts currently indicate that the average rent for a two-bedroom suite will increase to $860 in Saskatoon during 2009. Unfortunately, Saskatchewan's average wage growth has not kept pace with increasing rents in Saskatoon. For example, while the rent for a two-bedroom suite has increased 21 percent (from $346.50 to $420.50 per person, based on 2 persons per unit), wage growth within the five lowest paid industry sectors in Saskatchewan only increased 3.5 percent.
Vacancy Rates
Increasing rental prices are not the only challenge that residents of Saskatoon are faced with. As the demand for housing increased over the past few years, prices rose and the number of vacant rental units fell drastically.
After hovering around 3 percent for some time, Saskatoon's vacancy rate abruptly fell to 0.6 percent in 2007. This meant that for every 1000 rental units in Saskatoon, only 6 were available for rent. People seeking rental housing found it exceedingly difficult to find available and affordable rental accommodations.
Partially attributed to the prevalence of apartment-to-condominium conversions, Saskatoon's City Council passed a policy on Condominium Approvals to place limits on the amount of condo-conversions in order to ensure that the vacancy rate crisis would not be further compounded by increased conversions. Therefore, when the vacancy rate is below 1.5 percent, an application for condo-conversion will not be approved. Moreover, City Council reserves the right to disallow a condo-conversion if the vacancy rate is between 1.5 percent and 3 percent. However, it should be noted that condo-conversions may still be allowed if the building in question has been vacant for 12 months or if 75 percent of the tenants in the building vote in favor of the conversion.
The vacancy rate has since risen from the all-time low of 0.6 percent. As of April 2009, the average vacancy rate in Saskatoon was 1.9 percent. This varies throughout each region in the city with the lowest vacancy rate being 0.9 percent in the city's southeast region.
