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Lack of residential lots pressures Saskatoon real estate market

The Saskatoon and Region Home Builders Association is arguing that the City of Saskatoon is not making enough new lots available for single family detached homes and that argument rings true to my ears.

Alan Thomarat, executive director of the association points out that while housing starts in 2006 are clearly ahead of last year (37%) they remain 15% lower than those achieved in 2004. The Canada Mortgage and Housing Corporation (CMHC) reports 1,384 housing starts including 886 single family detached homes for the Saskatoon region over the first 11 months of the year. Thomarat says that the Saskatoon area should be able to build 2,000 homes a year, and that the market could handle as many as 2,500 to 3,000 per year “within the decade” if the land is available.

City land branch manager Rick Howse expressed skepticism that Saskatoon could support 2,000 lots saying, “Any CMHC report I’ve seen doesn’t indicate that kind of growth.” However, he did explain that the city fell short of its lot servicing objective for 2006 due to wet weather in the spring and a lack of capacity for Saskatoon construction companies to meet objectives.

Thomarat points to the fact that 35% of new single family home starts are now happening outside of the city as an indication that the city is not making enough lots available. Significant residential developments are currently underway in Warman and Martensville; others are planned for Corman Park and Clavet. Are people actually turning to bedroom communities because of a scarcity of lots in Saskatoon? It is apparently so. November saw 91 new starts for each Saskatoon and Regina. In the Saskatoon area, only 52 of those starts were within city boundaries while Regina captured 76 of the 91 starts in that area.

Thomarat links the lack of city building lots to the increasing prices of existing residential real estate in Saskatoon. “These price increases will have the largest impact on entry level homes, reducing affordability for populations within Saskatoon that can least afford it.”

It’s hard to argue with his logic. Resale prices have risen as much as 15% in some neighbourhoods over the past year and resale inventory continues to shrink. As of today, there are 309 active residential listings available within the city limits. 265 of those are single family homes and 44 are condominiums. This is the lowest number of listings which I have seen in 14 years of business. At the same time, demand continues to remain strong and you don’t have to be an economist to understand that these factors together mean increasing prices for Saskatoon real estate. Without more development in new housing, resale inventories are likely to remain low, pushing prices higher. People are not going to sell their existing homes if they don’t have a place to go.

Meanwhile, the Saskatoon economy is strong with many small business owners indicating an appetite for expansion. The only real problem is finding people to help manage the growth. My colleagues and I have a sense that the people want to come home but we’ve really got no place to put them. I can’t help feeling that Saskatoon isn’t in an ideal position to fully capitalize on a growing interest in our fine city. Somebody, find us a way to build some houses or hang the no vacancy sign.

Read the Saskatoon Star Phoenix story by Murray Lyons here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

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Norm Fisher
Royal LePage Saskatoon Real Estate