Is Canada experiencing a national housing affordability crisis or a regional one? Many headlines dominating national newspapers suggest the entire country has become unaffordable. While British Columbia, Ontario and even Atlantic Canada have experienced record-breaking price gains and sales activity, Canada’s prairie provinces have been leading the charge for housing affordability.
Alberta, Manitoba and Saskatchewan offer many opportunities for young families to achieve home ownership without breaking the bank or having to spend decades saving a down payment.
Don’t believe it? Let’s look at some recent real estate stats to see how these three provinces facilitate an environment where many households can buy residential property without battling through bidding wars or borrowing more than they can realistically afford.
Canada’s Prairie Provinces Lead the Charge for Housing Affordability
The Alberta real estate market is still on track for a record-setting year amid the rebounding oil and gas sector and a national economic recovery. But the housing market continues to strike a delicate balance between growth and affordability, appealing to both homebuyers and owners.
The average selling price for all home types edged down 0.359 per cent to $415,821 in September, although valuations are higher than they were a year ago, according to the Alberta Real Estate Association (AREA). At the same time, residential sales have slumped, new residential listings have slipped, and the sales-to-new-listing ratio (SNLR) has held steady.
Moreover, new housing construction took a breather in September, according to Canada Mortgage and Housing Corporation (CMHC). Housing starts declined to 2,152 in September, down from 2,165 in September 2020. However, year-to-date housing starts are way up to almost 22,000, from 15,729 in the first nine months of 2020.
supply is down, but so too are demand and prices. Welcome to the beautiful (and very accessible) province of Manitoba.
According to the Manitoba Real Estate Association (MREA), the average sale price of a residential property fell 4.29 per cent month-over-month, to $332,056 in August (the most current market data available at the time of writing). This comes as home sales plummeted 17.19 per cent month-over-month in August, to 1,738 unit sales.
Will fresh supply trickle into the market soon? New residential listings declined 10.64 per cent to 2,259 units. However, housing construction is on an upward trajectory, with housing starts climbing to 719 in September, up from 285 at the same time a year ago, according to CMHC data. Year-to-date, housing starts have topped 5,000, up from 3,928 in the first nine months of last year. It’s hopeful news for buyers in the Manitoba housing market.
The province of Saskatchewan has attracted many out-of-town buyers seeking more affordable housing options. Although this province has recorded notable price gains since the start of the pandemic, it has flatlined on a month-over-month basis.
According to the Saskatchewan Realtors Association (SRA), the benchmark price for residential property was $287,900 in August 2021 (the most current data available at the time of writing), which is relatively unchanged from the previous month.
While other regions have experienced declining supply, Saskatchewan has seen its inventory levels hold steady, although they are still at their lowest levels in seven years. With that said, easing sales have increased the number of months of inventory to seven. This measure refers to the length of time it would take to liquidate current inventory at the present rate of sales.
Residential development is on the rise in Saskatchewan, with housing starts surging to 545 in September, up from 150 at the same time a year ago. In total, year-to-date housing starts approach 3,000, up from a little more than 2,000 at the same time last year.
“Activity can vary significantly depending on the location and property type. For instance, when considering the two largest cities in the province, home prices have recovered in Saskatoon while there remains a significant spread from 2012 levels in Regina. For both buyers and sellers in this market, it is important to understand the local conditions,” said Chris Guérette, Saskatchewan REALTORS® Association CEO, in a news release.
A Regional Housing Strategy?
During the 2021 federal election, all of the major political parties proposed strategies to tackle the housing file at the national level. But John Carter, broker and owner of RE/MAX River City, told the Edmonton Journal that Ottawa needs to concentrate on presenting regional solutions to tackle the housing issue, alluding to Alberta’s capital, Edmonton, recently being ranked the fourth most affordable city in the nation.
“The federal level needs to work with provinces and major municipalities on a collaborative approach to develop the strategies that will actually work,” he said.
Indeed, industry observers warn that NIMBYism and slow approval processes prevent an increase in supply that would help alleviate sky-high real estate prices across the country. Considering this is a subject for provincial and municipal governments, the federal government won’t have much say in altering zoning by-laws or local development.
Does this mean it is time for city hall to step up rather than lean on Parliament Hill? If the Prairies can maintain housing affordability for many Canadians, then other jurisdictions could as well.