Saskatchewan REALTORS® Association (SRA) Government Relations Committee members fanned out across the province earlier this month to support The Canadian Real Estate Association (CREA) and REALTORS® to advocate for increased supply and partnerships with other orders of government and unlocking homeownership. These ideas will absolutely be key to rebuilding a more resilient economy for Canada and its municipalities. Today’s Speech from the Throne shows the Government is listening.
One of the single greatest issues the Canadian real estate market faces is declining levels of housing supply. The seasonally adjusted number of residential properties left for sale on MLS® Systems of Canadian real estate boards and associations are close to falling below the 100,000 mark for the first time on record. Six years ago, that number was a quarter of a million.
Immigration is a key factor in ensuring a healthy housing continuum. There is a false belief that the demand for shelter in Canada by immigrants has placed pressure on housing supply, prices and infrastructure. In 2020, immigration levels declined considerably because of pandemic-driven restrictions. Prior to that, according to Statistics Canada, international migration accounted for more than three-quarters of the total population growth in Canada since 2016, reaching 85.7 percent in 2019. Housing prices should have become more affordable, then, with the pandemic, but they didn’t.
Demand pressures on housing and infrastructure are only one factor when deciding adequate levels of immigration. More buyers chasing fewer homes to buy, or rent is at the core of housing price inflation. To tackle the supply issue, the federal government needs to ensure adequate housing opportunities are available for Canadians across the housing spectrum.
We will continue to work with our parent association, CREA, to recommend policies that address supply issues like including clauses in Infrastructure Bilateral Agreements with provincial and territorial partners to encourage and incentivize the creation of more housing supply. As immigration levels increase to meet the demands of the job market, the housing continuum will be strengthened by the increased demand for both home rental and ownership.
It bodes well for Saskatchewan that immigration will also be a priority for the federal Liberals. Immigration dropped significantly with travel restrictions in place due to COVID-19. Statistics Canada reported that as of January 1, 2021, Canada experienced the lowest annual growth since 1916. The drop in immigration during the pandemic has affected all provinces and newcomer admissions fell from 342,000 in 2019 to about 185,000 in 2020—a 45% plunge.
While a return to pre-pandemic immigration levels will not be immediate, the economic stimulus that flow of immigrants will supply is vital to stimulate the economy. The SRA has already begun conversations with the Saskatchewan Government to ensure that immigration is a key area of focus.
We are also keeping our eye on inflation and a shortage of workers. There is concern that the Liberals are injecting too much stimulus into the economy at a time when wages are flat, the cost of everything is going up, and there’s a lack of confidence overall in the economy. The Throne Speech lacked key measures on the economy and did not provide any specific actions to manage inflation, or issues with supply chains.
When you look back at the market statistics for 2020 and 2021 and recall the number of record months of sales in our province, all while immigration levels fell, we will need to make a concerted effort to ensure that supply can meet demand now, and into the future as immigration increases.
Interest rate hikes are also on the horizon. In a speech about the stability of the financial system, Bank of Canada deputy governor Paul Beaudry said that “Canadians who stretched their finances to buy into the white-hot real estate market are highly exposed to rising debt servicing costs.” There is concern that “financially stretched households have little breathing room to absorb any disruption to their income. A job loss could force many to drastically cut their spending to keep servicing their debt.” The Bank of Canada does have tools to stem inflation, but as the cost of things increase, it still is to be seen whether it can truly be controlled.
Bank of Canada Governor Tiff Macklem sees the increase in costs as something “transitory but not short-lived”. Meanwhile, Federal Conservative Party Leader Erin O’Toole illustrated how much the cost of living has increased by analyzing breakfast in a simple but impactful tweet.
Your Government Relations Committee, with support from Sam Krahn, SRA’s Director of Government & External Relations, will be looking at the many, many issues facing the real estate industry in Regina on December 2nd so we can power the right priorities that have an impact on your business, and can power our growth. More to come.
