Regina real estate surge expected to keep pace in 2021: CHMC
REGINA -- The Canada Mortgage and Housing Corporation (CMHC) is projecting another strong year for Regina's real estate market after a 22 per cent sales surge in 2020.
According to the CMHC Housing Market Outlook for spring 2021, sales are expected to keep a similar pace to the end of 2020 before slowly moderating to a level more in line with economic conditions and population growth by 2023.
"The initial declines in employment and household disposable income at the onset of the pandemic were short-lived," the report reads. "Interest rates declined to support lending and economic activity, while also expanding home buying budgets, since their decline brought mortgage rates lower."
Taylor Pardy, a senior analyst with CMHC, said people having a chance to save money during the pandemic is one factor in the current market.
“To some extent that increased savings, along with lower mortgage rates that we're seeing in the market right now, has really translated into a lot more housing demand,” Pardy said.
The last time Regina saw a level of sales as high as 2020 was in 2012, a year of major economic expansion in the city.
"The strong pace of [Multiple Listing Service (MLS)] sales and subsequent decline in active listings put upward pressure on the MLS average home price, causing it to rise two per cent in 2020," the report said.
The pandemic did have a noticeable impact on the city's employment and population growth. The main contributor population-wise is a slower rate of immigration, one factor expected to continue through 2021.
Employment conditions are expected to improve by the end of the year as the vaccine rollout and COVID-19 measures are slowly relaxed. Both employment and population growth are projected to return to more normal levels in 2022 and 2023.
Significant increases in new construction are also on the forecast horizon after picking up in the latter half of 2020 for a year-end increase of 42 per cent. Despite the increase, housing construction starts were 35 per cent lower than the five-year average.
Construction is projected to increase given the demand in the resale housing market, lower existing home inventories and lower new home inventories with continued growth forecast through 2022 and 2023 with increasing rates of international migration.
“What we’re anticipating over the next few years is builders are going to have pick up production across the board whether it’s single detached or apartment condominium,” Pardy said.
Rental housing demand keeping pace with supply increases and less turnover among renters helped keep the vacancy rate stable through 2020. The CMHC said it expects a decline in vacancies as demand increases in the short term.
"As supply and demand continue to come back into balance, year-over-year increases in average rents are also likely to increase in magnitude relative to the post-2014 period of rents being relatively flat," the CMHC said.
Mike Duggleby, the owner and broker of Royal LePage Regina Realty, anticipates the University of Regina's planned transition back to in-person classes during fall 2021 is likely to have a major impact on the rental market.