Happy New Year!
As we enter 2019, it is very important that we reflect on 2018 so that our decisions in the new year are as efficient as possible. I have attached a graphical analysis on the 2018 Saskatoon Real Estate Market for your viewing pleasure and I will briefly summarize my analysis and predictions below.
2018 vs 2017 (Year over year) looked like this:
- # of homes sales was down -4.7%
- Dollar Volume was down -8% (this is the total amount of Real Estate sold within the city)
- New Listings were down -11.3%
- The Sales to New Listings ratio was 42% (the highest in 4 years)
- Total inventory was at a 6.5 months supply
- The Average sale price was down -3.4%
- The sale to List Price Ratio was 96.3%
- The Average Days on market for the homes that did sell, was 55.4 days.
With the tightening of lending rules and increasing interest rates, we have seen fewer transactions this year vs. last. Less people are being qualified for mortgages due to the rule changes. These potential buyers will be forced to continue to rent until the economy picks up in the prairies.
A decrease in dollar volume reflects less sales and a lower average sale price. The tightening of lending rules and increasing interest rates have put a lot of down ward pressure on home sales in the $450,000+ as less people can afford those homes.
With buyers market conditions, less sellers may elect to sell as they face a potential loss (depending on when they bought). The number of building permits issued to builders this year vs. last in also down about half in the city of Saskatoon. This indicates some home builders have decided to hold off from building until market conditions improve.
Due to a lower supply of listings, the sales to new listings ratio was the highest it had been in 4 years (7,956 new listings/ 3,329 sales).
Months of inventory is a very subjective stat. What it signifies is that if no new listings come for sale, the length of time it would take to clear out the current supply. A figure over 6 months represent a buyers market. (We did see a sellers market during some month in 2018 in the 200-400k price range).
Over supply and lending tightening put downward pressure on prices in 2018. The Average sale price was down -3.4%.
The sale to list price ratio of 96.3% is the lowest it has been in the last 10+ years. Those who must sell are taking offers lower than they would take if market conditions were different.
The average days of market for a home that sold was very similar to 2017 (55.4 vs 54.5).
My predictions for 2019
I believe that we are blessed with a very diverse economy in Saskatoon, and that our city will continue to expand in 2019 (with a large expansion in the technology & agriculture sectors). This will push demand as those who are qualified for home ownership search and buy their home. Careful attention will be put on the Bank of Canada and interest rates, as too many increases may keep buyers cautious. I predict 2 interest rates increases (I was saying 4 a couple months ago) based off Canadian economic indicators. I predict that sellers and builders will continue to adapt to a decreasing supply trend and a lower supply will help keep some upward pressure on prices. I predict that by the end of 2019 (if we see more than a .5% increase in interest rates) we may start to see some slight upward pressure on Rents as more people are forced into renting vs homeownership (thus making now a great time to buy).
2019 will be a balancing act between supply and demand, and I predict that price changes we be neutral. 2019 should look very similar to 2018 unless we see a large economic stimulus (ie. Oil pipe line, higher potash prices, etc..)
Give me a call if you would like some more information or you are looking to buy or sell! Brodie Zuk - (306) 361-5393