JOSH BUCHANAN

March 10, 2017

To build on my previous post regarding current construction statistics, I’ve also looked at the most recent CMHC reports in order to analyze how many units are currently under construction as of February 2017 compared to the same month in previous years to determine what we can expect moving forward.

Below is a table illustrating a snapshot of units under construction within the city of Saskatoon recorded for the month of February by the CMHC.

You can see that construction has finally fallen off in 2017 in a big way compared to recent years during the same month. It’s too early to say if this will continue into the future or if February is just an outlier, but I think it’s reasonable to assume that the decline in construction is a reality that is here to stay for a while.

The graph below depicts the number of units under construction by month using statistics for Saskatoon and surrounding area provided by the CMHC.

The year 2014 is when the local market dropped into a balanced ratio and the ratio has fallen ever since. You can see by the graph that there was a fairly quick response to the shift in the market and construction numbers have trended sharply downward from the peak in 2014. While there was a timely response, it was still too slow and too small as we have found our market oversupplied ever since the beginning of 2015.

Conclusion:

If you are someone who is desperately hoping that inventory levels and new listings decline so that the market can get back into balance, then these numbers should come as music to your ears. However, if you are someone who relies on real estate development as a primary source of income, then this information might be downright scary. The number of people in related professions who are already out of work is staggering and it may get worse before it gets better. From one perspective this is a positive sign but from the other side, it’s a negative sign. Which of the two angles will have a greater impact is yet to be seen but regardless of the outcome, it’s an impact we will be feeling very soon.

Data sources:

CMHC Report: https://www03.cmhc-schl.gc.ca/hmiportal/en/#TableMapChart/1700/3/Saskatoon

The views represented are solely those of Josh Buchanan and are independent from any professional organization.