Six years ago, my wife and I took a car ride through the center of Saskatchewan, Canada, spending a few days in the capital city of Regina and the small, isolated town of Moose Jaw. We preferred Moose Jaw.
At least Moose Jaw had some quirky things going for it, such as an underground town trail. Regina seemed beat-up and despondent. I guess I arrived two years too early, because around 2007 the province of Saskatchewan caught economic fire, uplifting its two biggest cities: Saskatoon and Regina.
When the U.S. and Eastern Canada began slipping into recession and residential real estate values collapsed like deflated balloons, home prices skyrocketed in Saskatoon and Regina and investors partied like it was 1999 in a Miami Beach condo. They are still partying today, but more moderately.
"In Regina, three-bedroom houses that sold for about $110,000 in 2006 saw prices climb to $270,000 before leveling off," reported Rod Spence of Century 21 Conexus Realty Ltd. in Regina.
Things were even better in Saskatoon, where the $160,000 average home price in 2007 vaulted to $300,000 by the spring of 2010, said Norm Fisher with Royal LePage Saskatoon Real Estate. Prices have leveled off there, too, with average homes prices now fluctuating between $275,000 and $300,000.
The person who clued me into the Saskatchewan renaissance was Bill Madder, executive vice president for the Association of Saskatchewan Realtors. "Saskatchewan used to be known for cheap houses and not many people," he said.
For the past decade, I’d been visiting Canada at least twice every year and that was my impression as well. Next to Newfoundland, Saskatchewan was the most disparaged province in the country. Ask about Saskatchewan and the first thing someone would do is repeat the painful canard that the province is so flat you can watch your dog run away — for days.
Realtors and homebuyers suffered. "The way it used to be in Regina was you would buy a house for $150,000 and five years later it was worth $150,000," Spence joked, but the comment had a strong grain of truth to it.
What changed for Saskatchewan were two things: one temporal and the other of more sustenance.
As in the U.S., home prices were quickly escalating in most major Canadian cities since the mid-1990s so investors looking around for cheaper playing fields discovered Saskatchewan, which had completely missed the residential run-up. Investment dollars poured in.
"In 2007, we had 4,000 transactions — that was a 33 percent increase over the year before," Spence said about Regina. (In 2010, 3,500 homes were sold through November.) In Saskatoon, during that wacky 2007, home prices jumped 20 percent. (Prices are still rising but at a much more moderate rate, said Madder, probably at a 4 percent to 5 percent pace in 2011.)
As prices escalated, pure investment interest in residential housing waned, which is OK because sustainable investment capital has taken its place.
Although mostly known for its agriculture, Saskatchewan has blossomed because demand for its natural resources skyrocketed, attracting billions of dollars in investment and immigration from other provinces. Saskatchewan boasts 51 percent of the world’s deposits of potash, which is used in fertilizers.
Less known is the fact that Saskatchewan is Canada’s second-largest producer of oil behind Alberta. However, much of Alberta’s oil comes from tar sands; in Saskatchewan you can get the product the old way, by pumping it out of the ground.
With the development of natural resources came jobs and people to fill those jobs. "We have been running about 60,000 new immigrants a year across the province over the last couple of years," said Fisher. Most of those folk settle in or near Saskatoon or Regina.
Saskatoon’s population has grown 10 percent since the start of 2007 and today is around 225,000 people, slightly more than Regina, which has a population of about 210,000. The latter city boasts one of the lowest vacancy rates in the country, under 1 percent for rental housing.
Both cities are playing catch-up. According to the Canada Mortgage and Housing Corp., during the first 11 months of 2010, 650 single-family houses were built in Regina, up from 569 units the year before. In Saskatoon, 1,522 detached single-family units were built over the same time period, up from 1,004 units in 2009.
Apparently, Saskatchewan’s good fortune has spilled south of the border into North Dakota. The Wall Street Journal, with a headline screaming, "Resource-Rich States Surge," reported, "The states that weathered the recession best were the energy-rich states of North Dakota and Alaska."
I gave a call to Dan Deutsch of www.fargohomes.com to see what was happening in North Dakota’s largest city.
"Our economy is good; unemployment is close to 3 percent; the state budget is in the black; we have few foreclosures; and homes on the market close in three months," he said.
The median home price in Fargo stands at $160,000, about where it was last year, and very close to peak, said Deutsch. While appreciation isn’t great, the good news for Fargo homeowners is the last time the market saw a significant downturn in residential values was back in the 1970s.
From 1990-2000, the city of Fargo grew just over 20 percent, to about 91,000 people. In the past decade, Fargo grew another 10 percent to about 100,000. (The metro area counts about 200,000 people.)
According to Deutsch, business has been good, as he closed an average two home sales a month in 2010. "Loans are easy to get here," he said. "The banks aren’t afraid to lend money."
For a long time, North Dakota, like Saskatchewan, had not been on anyone’s radar as place to find work and live, but the northern Midwest states and provinces are finally having their day in the economic sunshine.