All Real Estate Is Local
“All Real Estate is Local” – What does that mean? First off, it means the local real estate market in Regina is a whole lot different then the real estate market in Calgary, or in Winnipeg, or in Vancouver, or Toronto, or St. Johns, or even Saskatoon!
Real estate markets are affected by dozens of external factors – some broader and some more localized. Consider how the following factors affect your local real estate market:
National influences that effect housing markets across Canada can include things like interest rates, federal lending policies (like the mortgage stress test), and federal tax implications (like first time home buyer tax credits).
The Bank of Canada sets the prime rate (or target rate) for Canada and then most banks follow suit and charge their best customers about 2% above that prime rate. Although there is some fluctuation, most major banks will offer out about the same rate to the same client.
The federal mortgage regulator OSFI (Office of the Superintendent for Financial Institutions) sets the rules which Canadians follow when acquiring a mortgage. The most recent rules referred to as the “mortgage stress test”, have potential borrowers having to qualify at 2% higher then the rate they actually are contracting their mortgage at, so if your mortgage rate is 2.79% you’d actually have to qualify at 4.79%. This change has had the effect of reducing maximum buying power by about 20% when comparing the qualifying rate to the rate borrowers actually pay.
The federal government and Canada Revenue Agency enforce tax credits, policies, and regulations in Canada. Under current law there is a federal tax credit available on qualifying purchases called the “Home buyers’ amount” on line 31270 of your federal return.
Provincial & Regional influences that affect housing markets in Saskatchewan can include things like the strength of the provincial economy, provincial taxes applied to home purchases, and provincial tax credits.
As a resource-based economy, Saskatchewan is susceptible to changes in world commodity prices. When the provincial economy is strong, we tend to see more immigration, lower unemployment, and higher rates of homeownership in Saskatchewan. The reverse is also true when the economy weakens.
Current PST Rules have the provincial sales tax of 6% tax applied to purchases of new construction homes but not to resale homes. This is a significant upcharge and can affect if and where consumers choose to spend money on homeownership, but happily, there is a rebate available for a portion of that PST paid on a new home.
Current Saskatchewan provincial tax rules provide for the “First Time Home Buyers Tax Credit” which is a non-refundable $1050 credit to eligible taxpayers on qualifying homes.
Local and community influences that affect housing markets in Regina can vary widely depending on the lens you look through. For example, proximity to bus routes, workplaces, or shopping can matter greatly to certain home buyers (especially those in lower income neighbourhoods), while homeowners in commuter towns and communities like White City or Pilot Butte tend to not be concerned with that but rather may be seeking completely different amenities like larger lots, lower crime rates, and small town atmosphere.
Neighbourhood amenities can make or break home buying decisions in a hurry. The right school, low traffic areas, or being close to family are additional factors many homebuyers state as the reasons to buy or not to buy in a particular neighbourhood.
When these become trends of larger groups of home buyers local housing markets start to get affected.
For example, when a sizable new employer moves into Downtown Regina, it tends to bring jobs and sometimes also relocates staff from alternate locations. A rise in housing demand accompanied by good paying jobs often translates into an increase in associated home prices. The reverse of this is also true. When the only grocery store in the area closes, that can have very detrimental effects on local property values. The smaller the community the bigger this will impact the local real estate market.
Another example is when new schools, community centres, or other cultural hubs enter or exit a neighbourhood. Consider the recently expanded Regina Huda School in Coronation Park, the newly built joint use St. Kateri Tekakwitha School and Ecole Harbour Landing Elementary School in Harbour Landing, or the closing of Maple Leaf Pool in the General Hospital Neighbourhood. Each of these locations will effect the lives of nearby residents. Adding new schools usually means young families will be drawn to the area while there is a concern that eliminating amenities (like the pool) will lead to higher crime rates in the area. All of these pieces impact your local real estate market.
Yet another example is changes in development or zoning. Between Downtown Regina and the Warehouse District along Dewdney Avenue is over 17 acres of railway land that is expected to be revitalized for new development over the next few years. The 3 levels of government announced at the end of 2018, over $33 MILLION in funding for the Railyard Renewal Project. This project will dramatically change the area and bring loads of construction, people, and money into the neighbourhood. It could take 15 or 20 years to fully realize the entire revitalization and what sorts of residential or commercial properties spring up could range very widely.
One last consideration in local real estate is zooming right in on the individual house level. Consider 2 homes only a couple of blocks apart. If both are about the same size and age with the same upgrades and features would they be of equal value? Possibly, but no two homes are exactly alike. There could still be dozens of factors making a difference in home value between the two. Consider corner lot, busy street vs quiet bay, zoning, what direction the house faces, back alley access, school zone, backing a park, on-street parking, and even the neighbouring properties can matter.
At the end of the day real estate is always about Location, Location, Location. – it can mean different things to different people but I’m positive that ALL REAL ESTATE IS LOCAL. Now the only question is – Where do you want to live tomorrow?
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Dave Markus – The local Expert – Regina REALTOR® – eXp Realty of Canada, Inc.