Condominiums have been the subject of the housing market in Saskatoon and Regina, according to the Housing Market Insight report
released this August by the Canadian Mortgage and Housing Corporation (CMHC). An increased demand for condos in recent years has led to a boom in condo-style developments, which, while providing ample options for home buyers, has led to a high vacancy rate and oversupply when it comes to both condominium and apartment-style housing.
“Condominium ownership has become increasingly popular among young adults and seniors in both Saskatoon and Regina housing markets,” wrote Goodson Mwale, CHMC’s senior market analyst for Saskatchewan. “The emergence of one-person households and couples without children has supported demand for condominiums, as has the rise in international migration.”
Saskatoon realtor Kari Calder has been a realtor for almost a decade and said that when she started out, there wasn’t much available in the marketplace.
“We just did not see very many new buildings and if there were it was more luxury-type condos, not very affordable for first-time homebuyers or for immigrants,” she said.
A number of factors contributed to the rise in demand for condominiums. Employment opportunities and economic growth in Saskatoon and Regina caused those central metropolitan areas (CMAs) to experience a faster-than-average population growth, due in part to immigration – both interprovincial and international. For newcomers, it’s easier to buy a condominium or rent an apartment than it is to buy a single-family detached home.
The housing report mentions that aging baby boomers may have also been a contributing factor to the demand for condominiums in Saskatoon and Regina, as well as the fact that in 2011, one-person households and couples without children comprised 60 per cent of all households in those areas.
“In both CMAs, growth in owner-occupied condominiums helped increase the homeownership rates over this period. Nearly 40 per cent of the total increase in homeownership in Saskatoon between 1996 and 2011 was due to growth in condominiums. In Regina, growth in condominiums accounted for 35 per cent of the increase in homeownership over the same period.” But since both Saskatoon and Regina are affordable cities, according to RBC’s latest Housing Affordability report
, why are more buyers opting for condominiums instead of the standard single family home?
“Lifestyle is a big part of it. I think that people are busier these days,” says Calder, who estimates that at least 50 per cent of her first-time home buyers end up in condos. “Also, we see a shift in how handy people are versus people that need to just live in a place that they only have to take care of what’s inside their four walls. So I think we’re seeing in that generation shift, people are less interested in taking care of and worrying about the external part of a home. They like to be able to turn the key and leave and go on a holiday.”
In addition to lifestyle, “the gap between the median prices of a single-detached home and a condominium unit in both Saskatoon and Regina has remained wide in recent years,” the Housing Insight report states. “Part of this is due to the smaller square footage of condominiums relative to single family units, as well as the availability of entry-level priced condominiums on the market aimed at first-time homebuyers. Another reason is due to higher supply than demand of newly-built condominiums on the market, which has kept downward pressure on prices.”
Even though demand for condominiums has increased in recent years, Calder doesn’t see the demand in Saskatoon ever equaling that of a single family home. The increased demand also led to an increased supply from builders, which means that inventory is high. Throughout the rest of 2016 and 2017, CMHC expects the elevated inventory will limit new construction starts of condos in Saskatoon and Regina.
“If somebody is thinking about buying a condo, definitely the time to do it is now,” Calder says. “We do have an excess of inventory and the resale market is unfortunately affected negatively by the builders. So the more product the builder puts on, the less attractive the resale market becomes for some of the people that bought at the height of the market because they have lost money. But overall, I would say it’s a great time to be looking at buying a condo.”
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