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This past year has seen a sharp rise in home prices across the country, and Saskatchewan’s home prices are no exception. If you’re considering a home purchase in this province, make sure you do some homework on the average prices you can expect to pay in any one of Saskatchewan’s centres.
Let’s take a look at the current prices for homes in Saskatchewan to help you make a more informed home purchasing decision.
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What Affects Home Prices?
Mortgage Interest Rates
If you need a mortgage to buy a home, a lower interest rate will make your home loan more affordable. Changes in interest rates directly affect a person’s ability to buy a home. With a lower rate, you’ll be spending less over the life of your mortgage, while a higher rate will result in more interest paid overall.
When rates drop, the cost to secure a mortgage to buy a home is lower, which drives demand for real estate and pushes prices higher. The opposite is also true: when the cost to take out a home loan increases, demand for real estate decreases, pushing prices down.
The health of the local economy is a major driver of real estate prices. An economy that’s thriving is typically associated with stronger consumer sentiment and spending. When the economy is healthy, the price of homes is higher. But when the economy is lagging, real estate prices follow.
A lower unemployment rate is a good thing for the real estate industry, as well as many other sectors. When people are working and are financially stable, they’re in a better position to make a home purchase, which can help improve home prices. But if unemployment rates increase, fewer people will be able to afford to buy a home. In this case, there will be less demand for housing and therefore home prices won’t increase as quickly.
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A seller’s market is characterized by limited housing supply compared to a high number of buyers on the prowl for a home. In this environment, home prices are higher because there’s a lot more demand for housing. On the contrary, a buyer’s market is one in which there are fewer buyers on the lookout for a new home relative to the high supply of inventory. In this case, sellers will keep their prices lower to attract more buyers.
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When it comes to real estate, location is key. The exact same house on a large lot on a quiet cul de sac will be worth more than if it was sitting on a tiny lot on a busy roadway.
Size Of The Home
Generally speaking, a larger home will be valued higher than a smaller home, though several other factors would come into play that can impact a property’s value.
Age And Condition Of The Home
A newer home constructed with modern materials is more likely to be in better condition than an older home that hasn’t been maintained over the years. In this case, the newer home would be valued higher.
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Certain characteristics can add value to a home, such as granite counters, hardwood flooring, fireplaces, and energy-efficient windows.
Real estate professionals typically look at neighbourhood comparables — referred to as “comps” — when determining an appropriate listing price. Comps should ideally be very similar to the subject property, have sold no more than 3 months earlier, and be located in the same area.
Average Home Prices In Saskatchewan
As of October 2020, the average price for a home in Saskatchewan is $290,600. That’s an increase of 7.1% from the same month last year when the average price was $271,337.
That said, home price averages vary from one city to the next, regardless of the average in the province. The following are the top 5 most expensive centres in Saskatchewan to buy a home as of October 2020, along with their average home prices:
- Saskatoon – $304,600
- Regina – $279,400
- Battlefords – $251,125
- Prince Albert – $249,695
- Lloydminster – $228,463
Comparing Average House Prices By Province
|Home Prices 2019||Home Prices 2020||Year-Over-Year % Change|
|Newfoundland and Labrador||$270,500||$281,800||4.2%|
|Prince Edward Island||$249,770||$298,668||19.6%|
How Do Home Prices In Saskatchewan Compare To The Rest Of Canada?
Right now, the average home price in Canada is $607,250, which is more than double Saskatchewan’s average of $290,600. Between October 2019 to October 2020, the nationwide average home price increased by 15.2% compared to Saskatchewan’s increase of 7.1% over the same time period.
Most centres in Canada — including in Saskatchewan — saw very healthy price increases over the past year. But the gains were most pronounced in Ontario, Quebec, Nova Scotia, and PEI.
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How To Determine How Much You Can Afford In A Home Purchase
Before you hire a real estate agent to help you search for a new home to buy, you should have a firm grasp of what you can comfortably afford. To determine a realistic price to shoot for, consider the following tips:
Calculate Your Gross Debt Service (GDS) Ratio
Lenders will use certain metrics to determine whether or not you can get approved for a mortgage for a certain amount, and your GDS is one of them. This ratio represents how much of your gross annual income will go towards housing expenses, such as mortgage payments (including principal and interest), property taxes, and utilities. Your GDS should be no more than 30% to 32%. The lower, the better.
Calculate Your Total Service (TDS) Ratio
In addition to your GDS, your TDS will also be assessed by your lender. This ratio represents how much of your gross annual income will go towards all your debt payments, including your mortgage, personal loans, car loans, credit cards, and other debts. Your TDS should be no more than 37% to 40% of your gross annual income.
Get Pre-Approved For A Mortgage
A mortgage agent or broker should be the first person you talk to before you decide to search for a home. More specifically, you may want to consider getting pre-approved for a mortgage. A pre-approval will tell you the maximum loan amount you can get approved for based on your income, assets, and other information about your financial profile. With that figure in mind, you’ll have a clearer picture of what you can afford so you can focus on homes that fit within your budget.
Having said that, you may not want to spend up to the maximum amount that your lender has pre-approved you for. You’ll want to have money left over for other expenditures. Maxing out on a home purchase can leave you “house poor“.
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Costs Associated With Buying A Home
Your mortgage will probably be your biggest housing expense when you buy a home, but there are plenty of others that you will need to budget for. Generally speaking, closing costs range from 2% to 5% of the purchase price and can include any one of the following:
- Home inspection fees
- Real estate commissions
- Title insurance fees
- Appraisal fees
- Lawyer fees
- Adjustments (expenses that were prepaid by the seller)
- Moving expenses
Plus, the ongoing cost of owning and operating a home should also be considered. Common housing expenses include the following:
- Property taxes
- Condo fees (if applicable)
- Maintenance and repairs
- Home insurance
- Cable, internet, and telephone
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Should You Buy A House Or A Condo?
When it comes time to invest in real estate, should you purchase a house or a condo? There are pros and cons to each type of dwelling, so you’ll want to weigh them against each other to determine which type of property to buy.
Why Buy A Condo?
- Affordability. Condos tend to be much cheaper than homes, which is a huge incentive for many buyers. If money is an issue for you, then a condo might be a great starting point for you to get into the real estate market.
- No maintenance. With a home, it’s your job to mow the lawn, shovel the snow, water the plants and flowers, and tend to other components of your home. Condos, on the other hand, offer the allure of maintenance-free living. The condo fees you pay every month will go towards the building’s upkeep, so you don’t have to worry about any of these extra chores.
- On-site amenities. Condos tend to offer a variety of amenities within the building, like fitness rooms, party rooms, swimming pools, and even pet baths. The amenities offered will depend on the building, and you’ll usually pay more in condo fees for more features.
- Proximity to work and entertainment. Condos tend to be located closer to busier centres that offer employment, entertainment, and daily amenities that you can often walk to.
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Why Buy A house?
- More space. You’re limited in square footage with the average condo, while a house tends to come with far more space, both inside and out.
- More flexibility. Since you own your home, you’re free to decorate and update it as you please. Condos, on the other hand, come with rules that restrict how you can enjoy your home. For instance, you may not be able to have a BBQ on your balcony, paint your front door a certain colour, or have pets over a certain size.
- More control over the sale process. As a condo owner, you’re relying on the condo association to make the right decisions about how the property is operated. If your association runs into legal problems, you may have trouble selling your unit. But in the case of a home, you’re in complete control over its legal status and avoiding things like liens on the title that could deem the home difficult to sell.
Buying a home is expensive, but Saskatchewan’s average home prices are more affordable compared to many other provinces, as well as the national average. Still, it’s a big financial investment that warrants careful consideration and assessment of your finances. Take the time to do the math to determine how your current income can support a mortgage before you put an offer on a home in any one of Saskatchewan’s cities.
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