A closer look at the Saskatoon real estate statistics for August 2010
The Saskatoon Region Association of Realtors recently reported August 2010 results for the entire residential category of Saskatoon real estate including single-family homes, condominiums, semi-detached properties, duplexes, mobile homes and vacant lots. Unit sales totaled 313 across all of these property types, a decline of roughly twenty percent compared to the previous August when 392 residential property sales were completed. The average selling price came in at $305,866 last month, a gain of roughly $22,500 (eight percent) when compared to August of 2009. This post will provide a closer look at how single-family detached homes (houses) and condominiums did in comparison to the entire residential category.
House sales continued to decline, slipping 20 units compared to July to settle at 204, roughly twenty-four percent behind last August when 268 Saskatoon houses changed hands. After showing a decline in July, active house listings moved higher again in August gaining 40 listings to finish the month at 773. Last year at this time, single-family inventory sat at 651 so the additional 122 properties produce a gain of nearly nineteen percent over last year. The total months of supply of houses grew to 3.8 months, up .5 months from July, and .4 months ahead of where it was last year at this time.
The average selling price of a Saskatoon house surged higher reaching a near record level of $337,614 to mark a gain of more than $18,000 on the month and finish ten percent higher than it was at the close of the same month last year. The median price jumped even more, moving $21,000 compared to July and $30,000 year-over-year. The three-month average selling price gained nearly $5,000 from last month and finished more than $17,000 higher than it was at this time last year.
I wrote a bit in this post about a skewing of the average numbers that occurred in August because of a significant decline in the number of sales below the $300,000 mark and a small increase in the number of homes that sold in price ranges above $300,000. I believe that at least some of the gains we’ve seen in this month’s average are artificial (not reflective of actual value changes), caused primarily by a change in what types of houses have been selling. The price per square foot (PPSF) numbers seem to support that. The PPSF of a Saskatoon house fell to $242 from $252 last August. Last month’s PPSF is the lowest recorded for any month this year, and well off of the $270-$275 that it has been running at since April. Some of the decline can be explained by the fact that larger homes traded this August (PPSF generally declines as house size increases) but regardless of how you chose to view things, it would be difficult to make a strong argument that prices are actually up ten percent when the PPSF is down by nearly as much. It simply doesn’t add up.
Saskatoon condo sales also took a slide falling to 95 units from 113 the month before, and 112 in August of last year. As demand softened, the supply of active condominium listing available through the multiple listing service edged up 26 units to finish the month at 489, roughly twenty-four percent higher than it was at the same time last year when condo inventory had fallen to 381. The total months of supply based on recent sales took a huge leap gaining a whole month compared to July and 1.7 months compared with the close of August 2009. It currently sits at 5.1 months, its highest point since March of 2009 when it reached 7 months.
Following a five percent slide in the average selling price of a Saskatoon condo through July, prices bounced back a bit as the average gained nearly $2,500 over the previous month to close August at $241,440 and record a year-over-year gain of about $9,500. The median price climbed $11,000 over the month to hit $234,000 and finish $9,000 higher than it was at this time last year. The three-month average remained solid at $244,236, up $22,000 from the close of August 2009.
The average PPSF paid for a Saskatoon condo grew by just two dollars over the month to finish August at $235 and record a gain of about seven percent compared to this time last year when it was at $219. The gain is somewhat smaller than we see in the three-month average selling price, which has grown by ten percent in the same period. Unlike single-family homes, which saw a substantial change in the size of the product that traded, the average size of the condos that sold in August were pretty comparable to last year at 1,025 square feet.
A map displaying the boundaries of Saskatoon real estate areas is here.
An overview of data collection and calculation practices for our statistical reports is here.
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
Norm Fisher
Royal LePage Saskatoon Real Estate
32 comments so far. We'd love to hear your thoughts.
September 8th, 2010 at 9:34 AM
Great review. Most will still think their house went up in value since spring but the truth is that many first time 5/35 debt owners are under water if they bought in the spring. Once cmhc realtor lawyer and closing fees are added to that total re isn’t the investment they thought. Not saying re is a bad investment because it can be a great one. But now is not the time to be buying re as an investment.
September 8th, 2010 at 6:56 PM
Interesting to see what the 0.25% interest rate hike by BoC does
Second in last few months, maybe total rate hikes of 1 % by year end?
Bubble, agree entirely, 5% down makes more sense than zero down, but not much
I think 10% is reasonable, maybe allow 7.5% down next year, 10% after, gradual
If someone can’t afford 10% down, maybe not time to buy
I’ve rented for quite some time, have actually saved up enough to buy even under 10% down (heck 20%) just don’t think is time, even in superior Regina
I’ve followed Crikey’s advise, take the amount I save by renting instead of mortgage on similar (about $300 a month, not even including no tax etc) and invest. Over past 2 years, plus the increase in TSX this is quite the nice amount, taxed at capital gains. This is in addition to putting money into my house fund. Might one day move to BC or somewhere nice. No real reason to own now. I’m saving money, more mobile, and well poised to take advantage of any good opportunity anywhere, much more liquid.
Anyway, low down payments are risky, and let people who can’t afford to save up 5% suddenly have to make payments on 95%. If you can’t save up 10% down, maybe not a good idea to buy yet? Renting is reasonable. The idea of buying at age 20, during your first job isn’t. Heck, renting, and investing the difference (not spending it) actually might be good for your long term wealth to boot. The 20% or so the TSX is up as of late beats the housing market the last couple years.
September 8th, 2010 at 7:00 PM
Norm, any chance of graphing price per square foot?
Might just be me, but always seems such a good way to see if real estate is actually up or down vs. just larger or smaller houses being sold?
I’d sacrifice the median (which for 2010 looks like the average) for the per sq ft line
September 8th, 2010 at 10:25 PM
For you Nick? Well, sure.
Keep in mind that ppsf has its problems as well. It can be skewed based on the types of homes that sell (two-storey vs. bungalow) and also based on average size. This month, it’s certainly most useful in highlighting the artificial spike in the average. I think, over the long-term these issues probably work themselves out, but like averages, there are going to be some odd spikes and dips from time to time.
September 8th, 2010 at 10:36 PM
On the topic of rising rates and the impact that they have on pricing, I found this article from the Toronto Move Smartly Blog quite interesting.
The writer went back thirty years and compared house prices 60 days after each increase in the 5-year rate over that period of time.
“Over the past thirty years, increases in Canadian mortgage rates have not tended to trigger a decrease in houses prices. In fact, more often than not the reverse is true…over this period, totaling 365 months, there were 156 instances where the five-year residential mortgage rate increased over the prior month, and in 97 of these cases, house prices increased two months later.”
The only potential flaw that occurs to me is that perhaps the rising rate actually causes demand to spike temporarily while pre-approved mortgage applicants scramble to beat the increase. Probably would have been more valuable to look a little further down the road following the increase.
September 9th, 2010 at 1:19 PM
I might suggest another potential flaw is that we’ve never seen a run-up in housing prices like this at any point in history, and that this data does not reflect 35 or 40-year mortgages with 0% down, either.
September 9th, 2010 at 1:26 PM
I haven’t heard anything on River Landing, but I’m assuming like J.B. Black Estates the demand for $400k+ luxury condominiums has evaporated somewhat? (if it ever really existed in the first place) Completely unrelated, but did you hear the news about the Olympic Village in Vancouver; over 2/3′s still unsold and the city is on the hook for about $1-billion. Ouch. If there’s no demand for $400k (and up) condos in Vancouver…
September 9th, 2010 at 2:00 PM
I heard the mayor on the radio the other day saying that Lake Placid is “still working on it.” My very cynical interpretation is that financing has not been secured as we were promised back when the deal came back to life. If it were, I think they’d be “moving dirt” and that’s clearly not happening.
September 9th, 2010 at 5:05 PM
Norm,
The blog article you cited above is pure fantasy.
In the past people did not have $1.40 debt for every dollar of income. In the past people had savings and substantial down payments. In the past wages were rising. In the past household credit was flat not growing at a rate of 7.1 per cent per year. In the past a young couples bought a 800 sq. foot houses to raise families.
People now have too much debt, no savings, no down payments(20 per cent or less is not a down payment). Wages are flat, household credit is growing at a rate of almost 4 times inflation.
Even small increases in interest rates combined with the fact that there are no gullible buyers left. We are now at about the same debt levels where all the wheels came off in the States. I can only assume the same is going to happen hear. People think Canada is in different because we don’t have supbrime, alt-a loans. When the real cause of the bubble popping was people running out of money. Their debt levels were too high. I say $1.40 of debt to $1.00 of income is just that, too high.
Nix
September 9th, 2010 at 6:19 PM
Nix, something else that no one really talks about is that all these housing payments are ultimately going to take money out of the economy in the form of reduced consumer spending. So we’re really talking about 30-40 years of radical changes – and even more so if the wheels come off here as well.
September 9th, 2010 at 6:23 PM
Norm, it sounds like the only question is whether we’ll be looking at a walled-in lot next year or a walled-in hole in the ground. Meanwhile, we can’t seem to figure out that we’re short at least 1-2 bridges in this city. I like the River Landing development for the most part, but we really need some serious infrastructure improvements to deal with all these new neighbourhoods and the increased traffic flow. I’m not sure this should have been given as high a priority as it was.
September 9th, 2010 at 6:26 PM
I agree with Nix about the validity of that blog article. The author chose the year 1980 as a starting point for his analysis. We’ve been in an environment of lowering interest rates since about 1981/82. Sure, there have been some short term increases in rates, but rarely lasting more than a couple of years. Remove the high frequency noise and you have a strong downward trend. He is looking for inconsequential correlations in the short term noise when it’s the longer-term trend that is important. I would be interested to see the same analysis done a 3-decade period of increasing rates.
September 9th, 2010 at 6:46 PM
Nix,
Good points.
Travis,
I think he started at 1980 because CREA didn’t start recording house prices until that time.
In any case, I think it’s fair to say that people have clearly pushed the boundaries of what’s affordable. As rates rise, and there’s now some indication that it may be a very slow process, something will have to give. High unemployment probably keeps upward pressure off of incomes.
Jason,
“I’m not sure this should have been given as high a priority as it was.”
Probably a little late for that.
It’s a very disappointing situation. Representations were clearly made that the financing had been “secured” and the city made a big deal out of the due diligence that had done on the group proposing the land purchase. Seems to me that the only step forward has been the placement of the sales trailer.
September 9th, 2010 at 8:43 PM
Norm, you know what they say: “fool me once, shame on you”… “fool me twice, shame on me”.
September 9th, 2010 at 9:25 PM
Hey Norm,
JB Black, I was by there last week and it looked very quite, same this week, has this project stalled?
September 9th, 2010 at 10:30 PM
Rick, that’s what I’m wondering, too. Construction was supposed to have originated in the Fall of 2008 from what I recall.
September 9th, 2010 at 11:18 PM
It’s been awhile since I was by there but it seems to me that there was some construction going on at the site the last time I was by.
Rick, when you say “slow”, are you talking about the building site or the show suite?
September 10th, 2010 at 10:08 AM
Re: JB Black
I go by that site nearly every day. The structural steel is up, and things were going gangbusters for awhile this summer, but very little has happened on the site for the last 3-4 weeks or so. I’m not sure what that means. The website says the completion date is “Early 2011″.
Jason,
The link to the article below indicates the project was initially due to be completed in June 2010 (yes, 3 months ago). It’s been a rough couple of years to get complete financing, no doubt.
http://bit.ly/byuOwa
September 10th, 2010 at 10:29 AM
Jen, thanks for that article. $18.5-million, wow… $469k-$520k (prices seem to have increased – I was sure they had at least a few units under $400k). 2 units sold… It’s a great location, but it’s going to exacerbate parking in that area. There’s only 1 underground stall per unit, no parking in the front, back or one side – and just the one side street (which also happens to be the only 2-hour parking zone).
September 10th, 2010 at 10:42 AM
Jason,
Their price list shows additional parking being available at a cost. You can pick up an extra underground stall for $45K, or a “surface stall” for $25K.
September 10th, 2010 at 12:45 PM
Extra stalls are good (website is not Mac-friendly so I couldn’t see these), but at $470k+ prices are really getting up there. This also doesn’t take into account visitors/guests or residents, staff for the commercial ventures or their customers.
But I wish them all the success in their endeavour; they obviously have a solid business plan and are making progress.
September 10th, 2010 at 1:10 PM
I thought governments were the only ones still building websites that aren’t mac friendly. Had to laugh, a few months ago when ISC rebuilt their site. I couldn’t, and still can’t make it work with my mac. It wouldn’t even work with the current version of IE with Windows.
Recently, my email provider asked me to consider downgrading from Office 2008 to Office 2003 so I could receive the full benefits of Microsoft Exchange Server.
September 10th, 2010 at 9:03 PM
Hmmm, it looks as if Michael Lobsinger/Lake Placid are having all sorts of “issues”. This just in from the Calgary Herald:
Beltline hole ordered backfilled http://bit.ly/cKfZmW
“”The Centuria on the Park [condominium] excavation and construction site is a danger to public safety and adjacent properties,” Kevin Griffiths, chief building inspector, said in a news release.
Backfill work has to start by Sept. 24 and end by Nov. 15, the city said. If Lake Placid doesn’t comply, the city will do the work and bill the company.
The city said this is the third order it has issued to Lake Placed to resolve safety concerns at Centuria on the Park.”
September 10th, 2010 at 9:16 PM
Jen, and just think: maybe we’ll get our own permanent excavation site just like Calgary!
September 10th, 2010 at 10:35 PM
Here is an article on CMHC worth reading. http://financialinsights.wordpress.com/2010/09/10/primer-4-cmhc-the-enabler-to-canadas-housing-addiction/
September 10th, 2010 at 10:52 PM
Norm,
I was talking to a realtor the other day and he said that builders are willing to bend more as of late to get a sale which has had a downward affect on resales. Any truth to this?
September 10th, 2010 at 10:54 PM
Sorry, one more post tonight.
http://www.rbc.com/economics/market/pdf/housereport.pdf
September 11th, 2010 at 12:20 PM
Jen and Jason,
There were a few interesting comments left on the last discussion we had about River Landing, some to do with the “Centuria” hole and the occurrences of “sink holes” around it. Sounds like the hole has been there quite a long time. I’m not 100% sure, but it seems to me that I did some reading on this back in June and Lake Placid was putting the delays on the unstable situation with the ground, though the commenter on the previous thread claims they were in deep financial troubles then.
It’s really a mystery to me why Lobsinger would be grinding so hard for the River Landing parcel if he’s already in over his head, and why our city’s “due diligence audit” wouldn’t have brought that to light.
Doug,
Honestly, I couldn’t really say for sure. We haven’t been working that much in the new home area. Certainly, new home starts are doing very well compared to last year.
September 11th, 2010 at 6:21 PM
Why doesn’t the City of Saskatoon contact the mayor/City council of Calgary and ask them what their experience has been? (or would that be too painfully obvious?)
September 11th, 2010 at 6:29 PM
Wow! That is “thinking outside of the box.” You should consider running for council.
Actually, that seems to be so fricking basic and obvious that I must assume it was done as part of the due diligence process. Didn’t they pay big bucks for some kind of a due diligence audit? At one point, towards the beginning of round two, Mayor Atchson said they had conducted the most thorough investigation that had ever been done for a land sale in Saskatoon. Given the serious questions about Lake Placid’s ability to complete the project I’d be stunned if these questions weren’t part of that investigation. Like hmmm, maybe we should look into their track record?
September 11th, 2010 at 10:14 PM
Norm, it does seem fricking obvious! The fact that this is the third order the City of Calgary has issued to Lake Placid to resolve safety concerns at this site doesn’t exactly scream “due diligence” on the part of Saskatoon City Council, I have to say. This and the fact that the Calgary also has threatened to bill Lake Placid at their expense if the back-filling isn’t completed quickly doesn’t exactly suggest this developer is flush with cash, either.
Hopefully, would also have been fricking obvious to get a performance bond from this developer. Too much to hope for, do you think? Bah.
September 12th, 2010 at 9:01 AM
How about alternatives? During this timeframe we’ve added two new hotels with a third one now under construction downtown. And I would appear as though we also have a good supply of luxury condominiums as well. How about some alternatives? A convention centre… an IMAX/science centre… an outdoor amphitheatre (imagine going to see the Saskatoon Symphony for an outdoor sunset concert on the riverbank). All of the above? I’d even welcome a giant Ferris wheel like the London Eye at this point…
The City is not going to recoup the investment costs in this project on increased property taxes and land sales in the vicinity (and this has to be one of the dumbest and riskiest business plans I’ve ever seen). I can’t believe taxpayers signed off on this… (oh wait, we didn’t).
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