The Estevan residential real estate market is experiencing a spring rise.
In the interview with the Mercury, real estate agent with RE/MAX Blue Chip Realty Linda Mack said there were as many properties sold in April as over the first three months of 2019.
The following couple of months also promise to be busier than the past winter.
“The statistics show that May is the busiest, May and June are very busy. So we are hoping that it will even be busier in May and June,” said Mack.
Usually, in winter a lot of sellers prefer to take their houses off the market since they don’t want to move when it’s cold, which decreases the total number of properties for sale. And this year wasn’t an exception.
There were about 200 residential properties listed in Estevan as of April 25, which is much higher than what it was in the beginning of the year (there were 176 active listings in the middle of January in Estevan). However, not everything went as it always does this year.
“For some reason, it seemed slower this year, maybe because of the bitterly cold January, February and March. And I think probably this year March was the slowest that any realtor can remember,” said Mack.
And with the nicer weather finally settling on the Energy City, the inventory went up again. But the demand is still nowhere close to where it was about five years ago.
“Obviously with our economy, people are still hesitant to be buying or upgrading,” said Mack.
Even low-interest rates, which stick between the 3.25 and 3.75 per cent mark for first time home buyers as opposed to about 10 per cent before, don’t help to bring the inventory down.
The stress test introduced by Canada Mortgage and Housing Corporation (CMHC) also contributes to the lower amount of sales.
“The stress test is when you get your mortgage from the bank, they determine whether or not they are going to give you your mortgage based on higher rate of interest, just thinking if the interest rate goes up, they don’t want buyers to be ‘OK, I got good interest rate, now it’s gone up and now I can't afford my payments anymore.’ That’s prevented some people,” explained Mack.
For the last five years, there were not enough buyers to bring the inventory down. And when the inventory doesn’t come down, then the prices are driven down.
The prices have gone down about 25 per cent on average and keep dropping. However, sometimes the lack of demand is not the only factor affecting the prices.
“One thing that’s kind of interesting that’s bringing prices down is when you’ll have a house that’s sold in the neighbourhood for considerably below market because the sellers, they’ve got their house paid off, they can afford to sell it below market. It’s a really good deal for the buyer, but it drives prices down in the neighbourhood or even in the whole city,” Mack pointed out.
Despite the general economic decline, some properties didn’t lose much value
“Some properties, they won’t go down as much. If it’s a type of property that is a little bit hard to come by, for example, bungalow style condos. Not many of them come for sale. So perhaps those haven’t dropped quite as much,” said Mack.
On the other hand, properties that were rebuilt to be rented out during boom years now see hardly any buyers.
“There used to be a lot of houses that would sell fast because they had basement suits. Maybe the owners would live on the main level and they made the basement into a shared kitchen and then just had rooms for rent. And those houses would be attractive to buyers, but not anymore,” Mack said.
She noted that today it’s harder to find renters, however the contemporary real estate prices allow good bargains for those seeking an investment option.
“It’s a good time to get some really good deals and probably later rent it or part of it out. But with the slower economy, there are fewer people looking for rentals and the vacancy rate is higher,” she said.
Rent rates are down, and there are still some people looking for rentals, but landlords just need to be more patient as properties don’t get rented out as fast as they used five years ago.
