Regina Real Estate
Executive Summary
The purpose of this report is to explore the state of the real estate market in Regina and to provide suggestions whether it is an appropriate time to invest homes now. This report identifies imbalances to analyze some problematic market conditions in local housing markets from past database. Also, it predicts the future trend of housing price. This report is based on secondary research, including a review of key documents about economy of Regina, analysis of home prices in Regina over the past few years, analysis of current supply-demand relationship, and information about population projection.
Introduction
The purpose of this report is to explore the state of the real estate market in Regina and to provide suggestions in regards to whether it is an appropriate time for house investment. The statistic and data of housing market and economic conditions are primarily retrieved and referenced from Canada Mortgage and Housing Corporation (CMHC) and Multiple Listing Services (MLS®) system website.
To determine if it is the best time to invest in housing sector in Regina, the report first explores the current trend of real estate in Regina by observing imbalances existing in the regional housing markets. It then illustrates the potential future growth of housing demand and supply by analyzing Regina economy, employment, and population next few years. The brief description/explanation in regarding to the imbalances:
• “Overheating, which is caused by demand significantly and persistently outpacing the supply of housing” ( Housing Market Assessment Regina CMA, 2016, p7).
• “Price acceleration, which occurs when the growth in house prices strengthens over time on a persistent basis” ( Housing Market Assessment Regina CMA, 2016, p7).
• “Overvaluation, which is detected when house prices remain significantly above the levels warranted by fundamental drivers of housing markets such as income, population, and actual and expected financing costs” ( Housing Market Assessment Regina CMA, 2016, p7).
• “Overbuilding, which is detected when the supply of readily available housing units significantly exceeds demand” ( Housing Market Assessment Regina CMA, 2016, p7).
Analysis
Historical statistics
A quick outlook on the Regina real estate status past decade. From Annual Historical Statistics-MLS® Residential-Total Regina City & Region (see Table 1), there are three key findings. Firstly, the amount of home listed units fluctuated from 2006 to 2014. In the middle of 2014, the total units experienced a significant growth until the moderate drop in 2015. Secondly, the condition of home sales was not stable, but hovered over 3,500 units between 2006 and 2015 and peaked at nearly 4,000 units in 2007. Thirdly, the trend of home prices was in an upward trend between 2006 and 2015. It climbed dramatically in the first two years, which followed by a moderate increase from 2008 to 2014 and a slight decline in 2015. According to the 2016 Monthly MLS® Residential Total-Regina City & Region (see Table 2), during the first quarter of 2016, the total home listings and total sales showed upward trends, but the monthly average price fluctuated. CMHC pointed out that MLS® sales and resale prices in Regina will remain relatively flat in 2016 and move slightly higher in 2017 (Housing Market Outlook Regina CMA, 2016, p1). Is it a good time to invest in the housing market now? To answer this question, the report discusses whether the following imbalances exist based on the statistics above.
Table 1
Table 2
Overheating
There is no sufficient evidence to identify the existence of overheating in Regina’s housing market. “Overheating is caused by demand significantly and persistently outpacing the supply of housing” (Housing Market Assessment Regina CMA, 2016, p7). “In the current economic environment of slower net migration, fewer resale homes have exchanged hands this past year” (Housing market assessment, p3). The sharp drop of oil price has had adverse impacts on economy in this region, lowering the level of income and increasing unemployment rates. In such circumstances, net migration has been moderated and housing demand has also declined. However, the amount of homes listed was much larger than the homes sold in recent years. In other