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Moose Jaw… A Great Place to Call Home
Nationally, home prices showed moderate to strong year-over year price increases in most markets, with the average price of a home in Canada $502,643 in the third quarter of 2015. The price of a two-storey was $615,304 and a condo $338,684. In Saskatchewan the average resale price was an estimated $296,400 in 2015 compared to $298,359 in 2014.
In the past few years, Saskatchewan’s large influx of migrants has generated momentum in resale market. Relatively improving economic conditions in other provinces has moderated the inflows of migrants.
According to Canadian Real Estate Association, Saskatchewan saw the decline in MLS resale market in 2015 thanks to a large supply of listings and slowing demand. In 2016 CMHC forecast that the average resale price in Saskatchewan will be $300,800; this compares to $273,600 for Manitoba and $389,600 for Alberta.
For the housing market, the slowdown in population growth and employment comes at a time when a glut of supply is looking to be absorbed with a record number of completed but unoccupied units. Residential construction is expected to remain weak in 2016 and 2017, as household formation and population growth slowly absorbs the over-supply of housing units.
Forecasters predict national builders will reduce housing starts in 2016 to adjust to the slowdown in demand from first-time buyers and better manage high inventory levels. Builders are striving to reduce inventory in the face of moderating economic fundamentals exacerbated by the downturn in oil and shrinking economy. There is even some speculation that the combination of inflated home prices and heavy debt loads has the nation set for a housing crash, what the central bank has called a key vulnerability in the economy.
Saskatchewan rising supply and slower net migration has moderated the building of single detached homes. In 2015 the building of single-detached starts has moderated to an estimated 3,800 units down from 3,900 in 2014, and 4,184 starts recorded in 2013. Barring any significant drawdown of inventory, a similar level of starts is expected in 2016. The biggest drop in construction has been in multiple-unit apartments and condos. CMHC forecasts that the number of multi-family starts will drop to 3,800 starts in 2016. Although multi-family starts in the province have exploded over the past few years, they moderated to an estimated 3,700 in 2015, compared to 4,500 units in 2014 - the highest level of production on record - and 4,106 units in 2013. This compares to only 1,037 starts recorded in 2009.
A report by RBC Economics Research says mortgage rate cuts have improved affordability of homes in Saskatchewan and Alberta but in late December, lending rules for residential mortgages tightened. A minimum down payment of 10 per cent is required on those homes priced at over $500,000; these homes represent less than one per cent of the total market.
In Saskatchewan, MLS sales declined to an estimated 12,500 in 2015 compared to 13,868 resale homes in 2014. This trend is expected to continue as the number of resale homes is forecast to drop to 12,700 in 2016. In the resale market, the number of homes for sale has risen to more than an eight months’ supply, near the highest level in at least a decade. Regina’s benchmark price is down six per cent since its late-2013 high.
2016 Moose Jaw Housing Outlook Increasing local employment growth and in-migration will be key to sustaining or growing the local housing market. Population growth is necessary to allow both single-family and multi-family units to be absorbed. “New home” inventory and increasing supply of resale homes will be a constraining factor to single-detached starts in 2016. With resale supply expected to remain high over the next several months combined with shrinking demand, the average MLS price is expected to increase only moderately or possibly decline.
As the new K+S potash mine moves into its operational phase hiring permanent staff at the mine site will increase the demand for all types of housing in Moose Jaw. Of the anticipated 350-400 employees, the city hopes to attract over half to live in Moose Jaw. Unfortunately, lower levels of economic growth in other sectors have had a tempering effect on demand for local housing.
The continuation of low interest rates in 2016 will support home sales and is prompting first time home owners to look at used homes as more affordable than new. Rising rents and low mortgage rates may encourage more tenants to move into home ownership.
2015 MOOSE JAW MLS RESALE MARKET HOUSING Historically any downward trend on the average price of market housing was caused by a disproportional number of older, smaller and less expensive homes being sold. In 2015, the city recorded 498 sales compare to 504 in 2014, a marginal 1.2 per cent decrease. These homes are on the market an average of 69 days before they are sold. The city experienced a 5% rise in new listings in 2015, with 1,086 properties added on MLS compared to 1,031 in 2014. In 2015 Moose Jaw market experienced the poorest “solds to listings” performance in recent history, and was deemed a “buyer’s market”.
The new matrix Home Price Index (HPI) is a better measure of price growth or retraction. In December, Moose Jaw’s MLS Home Price Index (HPI) reported a residential Benchmark price of $225,800. This points to stable pricing in the market despite fewer sales and increased listings. The MLS HPI also shows selling prices up 6.7 per cent over the past three year period and 30 per cent in the last five years.
MOOSE JAW HOUSING PRICE COMPARISON 2015 Fall Report Moose Jaw remains a very affordable and attractive community in which to own a home. The Fall 2015 MLS HPI Benchmark Price for residential units within the city of Moose Jaw was $225,800, the second lowest compared to the six neighboring cities. Moose Jaw experienced positive price growth compared to other cities with the Benchmark Price up by 2.4% percent from the same month of last year, among two showing positive growth and healthier local economies.