The StarPhoenix November 1, 2013 - Total housing starts in the Saskatoon Census Metropolitan Area (CMA) are expected to moderate to 3,200 units this year and slow further to 3,050 units in 2014, according to Canada Mortgage and Housing Corp.'s Fall 2013 Saskatoon Housing Market Outlook.
"Rising inventory will inhibit new home construction through 2014, as will a reduction in net migration from the record high of 2012. With the risk of further additions to inventory next year, local builders will be reluctant to increase the pace of construction in 2014," said Goodson Mwale, CMHC's senior market analyst for Saskatchewan. Single-detached starts are on pace to moderate 21 per cent to 1,600 units in 2013 in response to lower net migration and rising inventory. A slight increase to 1,650 units is expected in 2014 as supply and demand become more balanced.
Despite the moderation from 2012's record high, single-detached starts remain above by historical standards.
Saskatoon's multi-family starts - which consist of semi-detached, row and apartment units - are on pace to moderate 7.4 per cent to 1,600 units in 2013.
Rising inventories and competition from a well supplied resale market continue to inhibit growth in starts this year. Without a meaningful reduction in inventory, a further moderation to 1,400 multi-family starts is expected for 2014.
Annual sales in Saskatoon's resale market are expected to total 5,300 units in 2013, slightly lower than the record 5,398 transactions achieved a year ago.
"Despite support from a strong labour market and low mortgage rates, demand for existing homes in Saskatoon has moderated this year due to lower net migration, resale price gains, and higher monthly carrying costs," the report said.
For 2014, supported by favourable economic and demographic factors, 5,400 sales are projected.
The average MLS resale price in Saskatoon is forecast to reach $331,500 in 2013 and $339,000 in 2014. That is an increase of 3.8 and 2.3 per cent respectively, below the 6.1 per cent increase in average price last year.
Nationally, CMHC now expects slightly more housing starts this year and slightly fewer in 2014 than in the previous outlook issued in August. The new forecast is for between 179,300 and 190,600 units this year, with a mid-point of 185,000 units.
That's up from the previous 2013 forecast of 182,800 starts - an increase of 2,200 that is almost offset by a lower forecast for 2014.
CMHC's new 2014 range is 163,700 and 205,700 units, or 184,700 at the mid-point, down 1,900 from 186,600 units in the August forecast.