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Overly optimistic developers and frigid weather appear to have put a bit of a dent in Regina’s housing market.
Regina is the only major city where prices have fallen since the end of last year, according to the Canadian Real Estate Association’s home price index. Ottawa prices have fallen slightly on the index over the past 12 months.
“In the last six to eight months we’re certainly starting to see a little bit of a downward trend in pricing,” says Mike Duggleby, a local realtor with Royal LePage. “The house you sold last year for this price is probably going to be a little bit less this year.”
His hypothesis? “The builders may have gotten ahead of themselves a little bit.”
Regina’s economy has been one of the healthiest in the country. A few years ago low vacancies and strong in-migration were driving house prices up. Developers took notice. And they might have built a little too much, too fast.
“We’ve got several new neighbourhoods going right now, and all of them went out of the gates hard and were developing very quickly,” Mr. Duggleby says.
“In my 33 years of real estate I’ve never seen so many new builders in Regina,” says Re/Max realtor Rob Nisbett.
Local developers have seen the error of their ways and housing starts have begun to fall. But in the aftermath of the construction boom, listings of existing homes have risen. According to Re/Max, Regina became a buyer’s market this winter, with total inventory in January and February rising 11 per cent from a year earlier to 1,137 (up from 953).
“We’ve got what for us is a fairly high inventory of resale homes right now,” says Mr. Duggleby. “Buyers have got a lot of choice. And those that are properly priced – aggressively priced – are selling quickly. Those that are trying for that extra $10,000 or $15,000 are sitting.”
An abundance of supply isn’t the only issue. “This year we had weeks on end of minus 25 degrees with a 30 mile an hour wind that would put the wind chill up at minus 50,” Mr. Nisbett says. “People just go ‘I’m sorry, after I’m done work or on my Saturday, I don’t want to go out in this.’”
“We had a miserable winter,” echoes Mr. Duggleby.
Sales were down in January and February.
The average price at which homes sold in the city during March was $328,781, up 4.8 per cent from $313,849 last year. But averages can be skewed higher by a larger number of expensive homes selling. The home price index seeks to account for that to give a better measure of the underlying change in the value of homes. Regina prices have fallen 1.93 per cent over the last year, according to CREA’s index.
“Before there was a stigma that once your house price got too high in Regina you’d never be able to sell it, but that stigma is gone,” says Mr. Nisbett. “We’re now selling million-dollar-plus properties… “We’re having people move into town that are engineers and architects and draftsmen,” he adds. “Because you’re a pipe fitter or a welder doesn’t mean you’re living in an average-priced home.”
In a recent report, Re/Max said “skilled tradesmen from other provinces and immigrants from China and Ireland flocked to Regina this winter to fill jobs in the resource, manufacturing and agricultural industries.”
But the number of newcomers isn’t what it used to be. “We were experiencing very strong in-migration into the province, and that has slowed down a little bit,” says Mr. Duggleby. “We’ve still got a big help-wanted sign out there, we’ve got tens of thousands of job openings, we’re just having trouble getting people to come in and fill them. Once we get that rolling, a lot of this excess inventory will get soaked right up.”
After decades of selling real estate, Mr. Nisbett remains optimistic.
“If you want a true perspective on how good the economy’s doing, you go to menswear clothing,” he says. “If menswear clothing is doing very well, the economy’s doing well, because unfortunately dad’s the last one to get a new pair of pants. The kids are the first to get new clothes, and then mom. And our menswear clothiers are doing very well.”