Saskatchewan Home Ownership becoming more Affordable

It became more affordable to own a Saskatchewan home in the first quarter of 2009, as interest rates plummeted and prices began to back off of 2008 highs, RBC Economics reported Wednesday.

In its housing report, RBC said a standard detached bungalow ate up 42 per cent of a household’s budget, down from 45.3 per cent in the last quarter of 2008.

The average price of the same bungalow — which RBC uses as its benchmark comparative property across the country — is $291,000, down 0.4 per cent. It takes an income of $67,700 of qualify for a mortgage on such a home.

“Interest rates are a big factor. It obviously depends by province, but in Saskatchewan it was the biggest factor over the last year,” said Robert Hogue, economist with RBC.

“Sixty per cent of the decline was due to lower mortgage rates. In Saskatchewan, you have had a little bit of price decline, but prices have started to decline later than in the rest of the country.”

Last year at this time, prices were still rising, starting to drop only in the fall of 2008, noted Hogue.

“Things are starting to get a bit more balanced. Late last year (and) early this year, buyers just went en masse to the sidelines — and not just in Saskatchewan but pretty much across the country,” he said.

“Around summer last year, there was a big influx of sellers trying to lock in high prices, and being a bit nervous that prices might start to fall. You had a huge imbalance in the market — few buyers, lots of sellers.

“Since then the number of sellers putting their properties on the market has declined quite a bit. We’re looking at much better balanced conditions, particularly in Saskatchewan.”

The affordability index for a standard two-storey home also improved to 44.8 per cent from 47.3 per cent. The two-storey costs an average $301,000, down 5.2 per cent quarter over quarter, and requires $72,100 in income to qualify for a mortgage.

A standard condominium now takes up 26.7 per cent of income, down from 29.7. The average condo costs $178,100, down nearly seven per cent, and requires qualifying income of $42,900 in to purchase.

RBC considers 32 per cent of household income an appropriate level of affordability, so Saskatchewan homes are still above the bank’s recommended number. The expenses included in the affordability index include principal, interest, property taxes and heating costs.

Affordability has improved to 33.2 per cent in Alberta, down from 37.8 per cent; and to 35.3 per cent in Manitoba, down from 38.2 per cent. Among cities, Vancouver is still far ahead of the Canadian pack at 62.6 per cent.

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