Condo construction hits 30-year high in Saskatoon, concerning experts
Watch above: The number of unsold condos in Regina has hit a record high and Saskatoon might not be far behind. As Meaghan Craig explains, the number of condos under construction in Saskatoon is at a pace not seen in 30 years.
SASKATOON – Real estate agents position condos as “hassle-free” living ideal for first-time buyers, immigrants looking to bypass the rental market or those looking to downsize.
“The condo that we have featured in this building currently is a 989 square-foot, two bedroom, two bathroom condominium and it’s priced at $276,900 with very similar finish that you see here,” said Vaughn Krywicki, a real estate agent for RE/MAX, following a tour of a show suite at a new complex in Willowgrove.
The condo has a very defined marketing plan to target potential buyers. Buy it before March 31, explains Krywicki, and the builder will pay your condo fees for six months, more than $1,800 in savings.
“This is the first situation I’ve encountered, some other things that can happen sometimes is the developer may throw in a full set of appliances or a blind package, that type of thing.”
They are incentives that may be needed to draw in potential buyers. According to Canadian Mortgage and Housing Corporation(CMHC) officials, the number of unsold condos in Regina hit a record high late last year.
In Saskatoon, the number of condos under construction was at a pace not seen in three decades. There were a total of 1,954 starts, with 49 per cent of those intended for home ownership. It would also be the first time in 10 years that multi-family starts surpassed single-detached construction.
“That is the concern moving forward that at some point unless we see a high level of absorption by the market in the home ownership in the condo and condominium market that those units will find their way into inventory.” said Goodson Mwale, senior market analyst for CMHC.
“What we’ve observed over the past couple years or so is that builders are responding to an increased demand for lower priced options in the market as an alternative to a single-detached home.”
Based on January numbers, the average cost of a condo in Saskatoon was $317,000 compared to a single-detached home at $432,000.
The boom is fueled by robust employment and net migration which experts predict will moderate both this year and 2016.
“When you’re having that supply that’s elevated and then demand is also moderating, that obviously would entail that builders would have to pull back so in fact we’re expecting to see a moderation in total housing starts both in Saskatoon and Regina over the next couple years.”
Mwale expects the overarching theme going forward in both major cities will be inventory management by builders especially in the face of the current economic environment and uncertainty in the market place.