In a recently released report from RBC Economics, economist Amy Goldbloom makes a pretty compelling case that real estate is “overvalued” in western Canada and “out of whack with the underlying fundamentals.”
Goldbloom takes “a look beyond the standard affordability measure” and delves into “price to rent ratios,” something which I just happened to touch on, though not nearly as eloquently, in the comment thread of the most recent Week in review. 🙂
This report is brilliantly written and equally thoughtful, but one comment left me scratching my head. See if you can identify it.
Goldbloom has this to say about Saskatoon. “Housing markets across the major cities in the Prairies have long been the most affordable in the country. But, the recent pick-up in Saskatoon’s market has quickly changed conditions. Regina and Winnipeg have seen their price-to-rent ratios move up during the last few years after stable valuations through the 1990’s but are still at modest levels. The bigger story is Saskatoon where the recent pick-up has caused price-to-rent ratios to soar. In contrast to Calgary, Edmonton and Vancouver, the pick-up in Saskatoon has been very concentrated in the last year. The sudden and steep acceleration in price-to-rent ratios coincides with the sharpest deterioration in affordability on record. More expensive conditions already appear to be pricing people out of the market. Fifty percent price gains are starting to weigh on demand and softer demand should feed through to cooler price gains ahead.”
Read the RBC Canadian City Trends report here.
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Royal LePage Saskatoon Real Estate