Real estate observers say the number of active residential listings in Saskatoon has now sunk to its slowest level in years.

Last month, there were 478 new listings of condominiums, townhouses and single-detached homes in Saskatoon, making it the slowest February for new listings since 2013.

"It's not just fewer listings, there's fewer sales as well," said Josh Buchanan, a Saskatoon real estate blogger and analyst. "I think the market's just coming back to reality."

Saskatoon real estate blogger Josh Buchanan says there's less market activity in the city right now, explaining, "It's not just fewer listings, there's fewer sales as well." (CBC)

Buchanan attributed the drop to Saskatoon having far fewer new builds for sale, compared to the market's peak around 2015 and 2016.

Housing starts have slowed, and Saskatoon's construction industry has watched its margins grow slimmer now that new homes are subject to a six per cent provincial sales tax.

Dream Homes confirmed this week it has laid off close to 40 per cent of its staff in both Regina and Saskatoon.

A glut of new apartment-style condominiums in Saskatoon has also dissipated, with some hitting the rental market, and others being heavily discounted after sitting on the market for months on end.

Homes by Dream is selling these row houses in the company's new Brighton subdivision, on Saskatoon's east side. Dream recently laid off close to 40 per cent of its residential staff in Saskatchewan, citing a slump in housing starts. (CBC)

"Some buyers that could qualify maybe for a single-family home before the mortgage rule changes now were looking into the condo market," said Jason Yochim, CEO of the Saskatoon Region Association of Realtors.

Yochim said tighter lending rules and a sluggish economy are making buyers cautious.

"Long gone are the days of speculative selling where you could put your house on the market at a price and if somebody falls in love, they'll pay it," Yochim said.

"If they don't have to sell, they may be just sitting back in the weeds waiting to put it back in the market when the market's a little stronger," he said.

Home prices starting to settle

The average price for single-family detached homes in Saskatoon is currently hovering around $335,000, a drop of roughly 10 per cent from its peak in 2015, according to Norm Fisher, a longtime Saskatoon real estate broker and analyst.

"When you have a thousand condominiums out there that are new and not occupied and finished that doesn't do a lot for for confidence," said Norm Fisher, a real estate broker at Royal LePage Vidorra in Saskatoon.

"Anything that is under the $500,000 mark is fairly marketable if it's priced realistically," Fisher said.

He said condos have seen a 20 per cent drop in prices over the same time.

Fisher said his office has seen a handful of cases in the past few weeks where buyers place overbids of up to $10,000 on a desirable condo, especially amid multiple offers.

But those remain rare, he said.

"We have another challenging year ahead of us for home sellers," said Fisher. "For the past 15 months, we've had 15 months of consecutive year over year declines to the listing inventory."

Stricter mortgage rules squeeze some buyers out

Analysts say a number of people who bought homes over the last decade may now owe more money on them than sellers are willing to pay.

Last year per capita, Saskatchewan led the country in mortgage defaults.

"People are a lot less likely to give their home away for a lower price than they think it's worth," said Buchanan. "They don't want to take a loss."

Fisher, who's worked as a real estate agent in Saskatoon since 1993, remained optimistic.

"Over the past four years, we've added about 23,000 residents to the overall Saskatoon area," said Fisher. "All of those people need a place to live."