If you follow the residential real estate market in Canada, it won’t take long until you hear statements that go something like this: we’re not building enough houses.
Demand is outpacing supply, which leads to higher prices as buyers increase their bids in a market where inventory is scarce. And the only way to offset that situation is to increase supply or build more. But it seems we’re not inclined to pursue that course in most regions of the country.
Here is the complicating factor. High interest rates coupled with tougher stress tests for buyers make builders gun shy – they don’t want to risk being stuck paying higher interest rates for spec properties at a time when buyers are having trouble qualifying for a mortgage. So, the supply remains suppressed.
The value of residential building permits issued in February in Saskatchewan were down 70 per cent from the same time a year ago.
Yet, investors working the non-residential market – properties such as commercial, office or industrial buildings – have not pulled back and are basically on the same pace as they were a year ago.