“If sales levels continue the way they are, it’s going to continue to be a difficult time for buyers out there.”
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Some Saskatchewan real estate watchers anticipate that recent interest rate cuts may result in higher housing prices for prospective buyers.
The Bank of Canada lowered its key interest rate to 4.75 per cent last week, with lending rates at most banks across the country following suit shortly thereafter.
The drop has been presented as relief from inflation after persistent rate hikes over the last four years, and a break for current and prospective homebuyers on their monthly payments.
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Some predictions suggest the change may end up being more of a boon for sellers than buyers, as both of Saskatchewan’s major city markets are currently facing significant housing inventory challenges.
Cole Zawaski, director of public affairs for the Saskatchewan Realtors Association (SRA), said they are watching this closely and anticipating it will only exacerbate what’s already a seller’s market.
“I think without question, it’s going to spur additional demand,” he said in a recent interview.
Zawaski advised Saskatchewan buyers to expect more price jumps as the ripples from this rate drop play out and the market gets more competitive.
“There’s so little to buy, but there’s a lot of buyers out there,” agreed mortgage broker Candice Carr. “It’s certainly pushing prices up in Regina.”
A residential property costs an average of $397,000 in Saskatoon and $320,000 in Regina, according to the SRA’s most recent data.
Those benchmark prices rose 5.8 per cent and two per cent, respectively, in May compared to the same time last year. Housing sales in Regina have also gone up 5.3 per cent from last year, and 32.4 per cent compared to 10 years ago.
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By contrast, inventory is down 30 per cent year-over-year and 50 per cent compared to the 10-year average, with just 742 residential properties available in Regina as of May. Saskatoon is facing similar pressure, with inventory down 20 per cent.
“If sales levels continue the way they are, it’s going to continue to be a difficult time for buyers out there,” Zawaski said.
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Homeowners most affected by the interest cut will be the ones with variable-rate mortgages, leading to a slight reduction in their monthly payments.
A quarter-percentage-point change won’t mean big savings but a small break is still a break, said Carr. Someone with a $300,000 variable-rate mortgage will save about $45 per month, according to her math.
“On average, it’s about 15 bucks per $100,000,” she estimated. “It’s not that much, but the significant part is that it’s the beginning of a larger rate drop.”
Economists expect overnight interest rates to drop another two per cent by the end of 2025. The next Bank of Canada update is expected near the end of July, and another cut is being predicted.
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Any reduction in interest rates always perks up buyers’ ears, said Carr. She’s already fielding inquiries from clients looking for advice on buying prospects and mortgage renewals in the wake of the new rate.
“Regina is really booming,” she said. “The announcement on June 5 was kind of a trigger for a lot of people to get into the market and buy now, rather than sitting on the sidelines and waiting.”
Regina is characterized as an affordable city in comparison to larger metropolitan centres like Toronto or Vancouver, though Zawaski couched that with the caveat that “affordable” is a relative term.
“Where we’re seeing the most concentrated issues in that inventory space is the below-$300,000” listings that appeal to first-time homeowners, he said.
“And so I do think that falls flat for the folks who are struggling to get into that resale or home market.”
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