Sales have dropped because the supply of homes on the market has dropped while at the same time the bench mark price went up.
“Numbers this year are down in regard to the number of sales year to date right around the seven per cent mark,” he said.
The supply of housing for sale has dropped, with 170 homes in the inventory, a reduction of 18 per cent in the last year.
Honch said the pandemic has changed the nature of the service sector which has, in turn, changed the type of property people can buy.
“Those individuals who lost income as a reflection of their jobs, have kind of changed the type of property that we would see sell,” he said.
Houses in the 100,000 to $250,000 range are down almost 20 per cent in that price this year compared to last year.
That demographic is more impacted by changes in interest rates than people buying higher priced homes.
Sales have continued, though, of higher-priced properties, which means a 2.3 per cent increase in the benchmark price to over $250,000.
“There are a lot more higher end sales this year, and likely a reflection of those people not having as much concern over an increase in interest rates,” Honch said.
Sales of homes starting at $400,000 to $500,000 are quite a bit higher this year compared to 2022.
The rental landscape has also changed and sales of revenue properties have increased substantially.
“Landlords know there is some concern with individuals purchasing homes and when they can’t purchase a home, they will rent,” he said.
Increased crime in some neighborhoods also changes buying patterns as people will avoid that area.
“In some areas that would have affordable housing cause buyers to stray away from purchasing as they don’t feel safe,” Honch explained.
A potential buyer also does not know if they will be able to sell their home if the crime trend in the neighborhood continues. One or two decades can change a neighborhood from safe to unsafe, he added.
The Bank of Canada will announce its next update on interest rates tomorrow, but it has been predicted there will be a .25 per cent increase once again.
While many buyers take a wait and see attitude when interest rates go up, the current situation is leaving some people unable to know what their next step should be.
The economy has not performed as predicted since the start of the pandemic with sales jumping in unexpected areas like home renovations and increased residential sales outside of major centers as people worked remotely.
“We’re going through a time that we’ve never been through before. We’ve never been through a global pandemic that has kind of changed the way people work or the way they spend money,” Honch explained.
Federal policy changes during the pandemic such as dropping the interest rate to 1.5 per cent and removing the stress test of an extra two per cent caused the real estate boom because buyers could add $100,000 to the value of the home they could afford.
Prince Albert still has a reasonable benchmark price which will help keep the situation more stable.
Should there be a sudden glut of houses listed, then the prices will drop but Honch estimates it will take years for the local inventory to catch up to where it once was.
Prince Albert is best served by being Prince Albert and focusing on local demographics and what the economy offers in terms of jobs, Honch said.
“I know we always want to be Saskatoon, we always want to be Regina but we’re a different community here. We just need to be PA,” he said.