Buyer sues agent for letting them pay too much for a home
“Marty Ummel feels she paid too much for her house. So do millions of other people who bought at the peak of the housing boom.
“What makes Ms. Ummel different is that she is suing her agent, saying it was all his fault.”
I came by this story from today’s New York Times by way of the 1000 Watt Blog, one of my favorite daily stops.
Naturally, I can’t speak to the facts of this particular case and it’s my guess that it will be a difficult argument to make. However, the story should serve as a reminder to agents that there is more to representing a client than finding them a home and putting a contract together.
Ultimately, we are responsible to “protect and promote the interests” of our client. If they’re offering to pay more than market value, they have a right to know it. They depend on us to tell them the truth.
Nobody can predict the direction of a real estate market with absolute certainty, yet almost daily I hear from people who claim that a Saskatoon real estate agent has told them that prices are going to go through the roof this spring. Just three weeks ago, one agent stood in my office and relayed portions of a conversation he had with a buyer. “This house will be worth $X by spring. I guarantee it!”
“Hmmm…and I think you just did guarantee it.”
If your agent is using this kind of language, he or she may be either ignorant or reckless. I could be wrong, but it’s worth thinking about. 
The full New York Times story 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.
Follow our daily updates on Twitter @SaskatoonHomes.
Norm Fisher
Royal LePage Saskatoon Real Estate
51 comments so far. We'd love to hear your thoughts.
May 22nd, 2009 at 1:18 PM
And in the situations where the agent is being less than diligent, when does it become their fault?
When does any behaviour along these lines become despicable? It seems like you can drive greed to any low as long as you keep it prim and proper. That includes spurting free market ideologies and a lot of self-starter rhetoric.
The point? When money is the benchmark, rest assured that is all they will be driven by. We need to rehabilitate society into being a little less frantic about wealth.
May 22nd, 2009 at 1:23 PM
There’s no accountability in this market. Right from our journalists, to legislators, to analysts, to realtors, there are no checks and balances in the real estate market to ensure that the professionals are doing their jobs professionally and responsibly. So when Dwight Percy puts out an article claiming “avg home price $300K by next spring”, analysts say “saskatchewan economy never hotter”, and realtors “guarantee a hot market in the spring”, it all becomes a self-fulfilling prophecy. And when the bubble cracks, none of the aforementioned parties is left holding the bag… it’s the buyer. Unfortunately, there really are no unbiased experts for buyers to turn to in a market that requires the largest investment they’ll ever make… it really makes no sense and, sadly, saskatoon has really become a victim to the worst kind of market manipulation.
J.
May 22nd, 2009 at 1:28 PM
Well said Johny, well said.
May 22nd, 2009 at 1:28 PM
Johny,
Well said indeed!
Man, you’ve done more to promote that Dwight Percy article than he ever did. Spring is just around the corner.
I agree with you 100% that “professionals” should be held accountable for the language they use, but let’s hope that people always have a right to their opinions.
Should there be a system of “checks and balances” to hold bears accountable when they’ve given clearly bad advice? Thus far, they can take almost all of the credit for lost opportunity in this market. I’m not saying that can’t change but it’s clearly the case today.
May 22nd, 2009 at 1:30 PM
I don’t like Dwight Percy’s subjective journalism.
Ultimately, A lawsuit is exactly what our market needs to keep our professional market representatives honest. There’s no question that people have a right to their opinion Norm but when we’re paying an expert for their representation (in any market) their opinion, frankly, doesn’t matter… what matters is the application of their experience and market analysis to provide objective information to their customers/readers to MAKE THEIR OWN DECISIONS. Not blast a headline every second day in the paper that basically translates into “nothing but up up up, get in now and profit” or guarantee over the phone that the market will explode in spring. Eventually someone will have to pony up to these claims.
Interesting comment about bearish advice and lost opportunity. I wonder what kind of conversations we’ll be having when the overextended are on here detailing their recent foreclosure horror stories.
Ofcourse this isn’t aimed at you norm and continue to feel that your advice and overall participation in this forum has done exactly as I request above in providing readers with expert information to make their own decisions.
J.
May 22nd, 2009 at 1:31 PM
Johny, I’m wondering whom you are actually talking about when it comes to a bad realtor. When we used an agent last spring (whom was excellent by the way), she took us around and showed us what comparables had sold for. Not once, even when asked, did she give us any counsel on what we should bid for. She told us that the amount was up to us and that she could provide us with comparable properties and their sale prices.
When we talked about conditions, she explained the current state of the market and how it would likely work against us to have a condition of a home inspection done. However she *did* manage to get a home inspector into a couple of properties we wanted to bid on BEFORE we bid on it.
Maybe my experience was unique, but I don’t think there are too many of realtors out there telling people the prices will go up. I’m aware that the real estate board said they expect prices to go up. Maybe that is their real opinion or perhaps they should’ve said ‘no comment’? I just don’t want real estate agents as a whole to be blamed for the uptick in prices.
Everyone needs to make their own decisions. If you plan on staying in your home for a long time and not sell, you’re probably fine, even with the recent appreciations. If you think you might need to sell in the short term, be wary. But I’m not an expert and even experts couldn’t have predicted what happened last year, so caveat emptor.
May 22nd, 2009 at 1:31 PM
Johny,
I understand where you’re coming from and I agree.
As much as I’d like to think I know where the market is going, I have to take care to qualify all of my statements about the direction of the market. I don’t want to be responsible for someone paying too much. Nor do I want to answer to someone who takes the sideline on my advice while prices rise around them. I am just as nervous about that.
This is what I’m doing lately. I discuss the RBC Affordability surveys. I cover Scotiabank’s “overvalued” comments. I throw in TD’s bullish prediction, CMHC’s more conservative predications. Lately, I’m telling buyers that I am more inclined to agree with RBC and Scotiabank.
All that said, it’s pretty clear to me that those who took the advice of the bears early last year have missed an opportunity that could take them a lifetime to make up for. If these prices prove to be sustainable, they may pay an extra $100,000 for a home if they plan to stay here. They’ve not only lost that opportunity for equity, but they’ll have to pay an extra $100K plus the interest over the next 25 to 40 years. So, all I’m saying is that there can be serious consequences either way and we should all be careful about how we represent the future.
May 22nd, 2009 at 1:31 PM
This is an interesting article – as it brings to mind a story from some friends who live in Saskatoon and just purchased their house last year. He sold his Condo to put a down payment on the house. This took place in August last year’s frenzy in the real estate market.
During the sale of their Condo, they had estimated that likely they may get $180,000 at best (east side). But their agent told them, he could probably get them more. The opening day only had about 6 to 7 people walk through the place, but none of them made an offer. Finally someone called to make an inquiry about the condo – and asked the agent what the competition was for the condo. The Agent apparently told the “potential buyer” that there was “A Lot” of interest, and traffic through the place on opening day and that the market was hot, and if this person wanted the place, they would have to act fast. Of course the person did cave and made a higher offer after viewing the place – of $230,000, based on the fact the agent said there was a lot of interest – when in fact 6 to 7 people walked through the place.
- This is a classic case of “unscrupulous & reckless” real estate agent creating a hype to their advantage. Although he was the selling agent, the buyer still depends on accurate information from the Selling or Buying Agent to make a sound decision. Where are people left in this if they can’t trust what their agent tells them? Or if the agent is not representing their best interest? In every profession there are people who truly represent their industry with high regard, but there are the few bad apples. But this is also a great example of a person making a purchase decision based on panick – which they may regret later.
When this couple went to make an offer on the house they liked -after selling the condo, they were faced with the same issue. The house they wanted was about $420,000 but to make sure they would get the house they made an offer of $450,000 with an inspection. The Selling Agent came back to them and said they had to “do better” with their offer and remove the inspection or they may consider some other offer. The saving grace here was the couple pushed back to the Selling Agent, and said no. They said they made a very fair offer over the asking price, but the inspection was not negotiable. The Seller did actually accept the offer.
I think buyer’s thinking of purchasing their first house should not rush, and really consider every aspect before purchasing (cost, long term plans, etc). The responsibility, is ultimately the Buyer’s when they make the house purchase. So yes the house is overpriced – but as a buyer I think I would make sure that after the mortgage is paid monthly, I would still have money for savings, and other things – in case the market ever tanked – as it is in the U.S now.
May 22nd, 2009 at 1:33 PM
hmm, I dunno about all this, ie. the article and the comments… To me anyway, a real estate deal is a negotiation that I, ultimately, as the buyer or seller sign off on. The professionals are there for there for their advice and help with details, but if I paid too much or sold for too little the only one to sue, if that were possible, would be myself. And this “checks and balances” stuff Johny mentions would only add layers of complexity to the real estate market. And complexity means bureaucracy which means expensive which finally would mean higher prices, the very thing you were trying to avoid.
May 22nd, 2009 at 1:33 PM
Or it could make it easier for a customer to sue a realtor for providing them with misinformation or for misrepresentation. There would be consequences for that type of behavior. In a free market, that’s how the good eggs are separated from the bad. Think Enron.
J.
May 22nd, 2009 at 1:35 PM
Todd,
I think your experience is most typical. I am certainly proud of the changes that have happened in this industry over the last ten years. A very high percentage of buyers and sellers are quite happy with their agents. Unfortunately, the old stereotypes will take a long time to fade away and there are still agents out there that don’t have respect for “agency.” Most people think their agent is great, but that the rest of them suck.
People do have access to more information that they ever have had and most people have a pretty good idea what their home is worth. Buyers spend more time researching then they ever before and for the most part, consumers are pretty well educated. Watch the new listings on the internet for 30 day and you can have a pretty good idea what your money will buy. Naturally, when things go crazy like they did, and homes are selling 20-50K over list, nobody, including the realtor really knows what’s going to happen. During that period of time, I saw offers that were $50,000 apart on the same property.
Ex_Saskatoon,
This is an example of being sucked in by the hype (just as Johny is describing), and it is unfortunate. The problem here is that the agent was not “their agent” he was everybody’s agent, and therefore nobody’s agent. When the same person “represents” both parties, nobody is really represented.
Countering on an inspection clause is plain stupid!! If I were that seller’s agent, I would have advised against is strongly. In fact, I did just that on more than one occasion when a seller requested it. If a buyer accepted such a counter, and there were problems with the house, the refusal to accept an inspection would have looked very bad for them as an effort to conceal defects.
Johny,
Again, the system of checks and balances is sound and reliable. We have a strong real estate act in Saskatchewan and “misrepresentation” is not usually hard to prove. When an agent is brought before the Real Estate Commission there is a very high standard applied. If there’s a weak link, it may be consumer reluctance to take action. Further, the courts in this land are still pretty fair and just when it comes to civil suits. Here also, the consumer gets the benefit of the doubt as they should.
May 22nd, 2009 at 1:35 PM
Johny,
You going to love this. Seems that CREA is also very concerned about “self-fulfilling” prophecies. Found this release in my inbox yesterday.
CREA Press Release 01-23-08
May 22nd, 2009 at 1:36 PM
Just some food for thought
“An economic bubble (sometimes referred to as a “speculative bubble”) occurs when speculation in a commodity or asset class causes the price to increase, thus producing more speculation. The price of the good then reaches absurd levels (that no longer reflect utility of usage and purchasing power) and the bubble is usually followed by a sudden drop in prices, known as a crash or a bubble burst. Both the boom and bust phases of the bubble are examples of a positive feedback mechanism, in contrasts to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate chaotically, and become impossible to predict from supply and demand alone.
“Economic bubbles are generally considered to have a negative impact on the economy because they cause misallocation of resources into non-optimal uses. In addition, the crash which usually follows an economic bubble can destroy a large amount of wealth and cause continuing economic malaise as was the case of the Great Depression in the 1930s for much of the world and the 1990s for Japan.”
For more interesting reading – this was from a blog out of Calgary ’06
http://calgary-housing-bubble.blogspot.com/
What I find interesting is for all those who made the argument that Saskatoon is the next Calgary. Hmmm. Hope not too many buyers get stuck in an equity trap. When I was shopping around, I did find that there was certainly a lot of fear mongering out there. I wonder how much of that alone was the result of the irrational prices? If most of us stop and think for a second – How is it that if it is difficult for a couple earning 110 a year to purchase a home – who is it that is affording the houses in Saskatoon? Speculators created a shortage, people that are actually moving to Saskatoon got scared and started to make irrational buying decisions.
Look at the Calgary real estate market today. Look at all the markets today.
Glad I am not in a 300 grand mortgage in Saskatoon!
May 22nd, 2009 at 1:37 PM
Norm, priceless.
You know the CREA is scrape’n to support a false argument when the only sources they site are CREA’s CEO and CREA “chief economists”. That’s like me claiming I’m the smartest man in the world because my mom told me so. Thanks for the chuckle.
J.
May 22nd, 2009 at 1:37 PM
Norm,
That article makes me think all of my protesting is starting to pay off. I’m glad unbuzzers such as myself are making some people squirm in their seats. Now they know what it feels like! ;’) Fair is fair, sellers had their market last year, it’s not unreasonable to make ’08 the year of the buyer!
Cindy,
I still can’t believe some young couples making $60,000 a year combined are getting into $300,000+ mortgages!!! Additionally they’ll need to support their drinking problems from the stress of it all! :’/
May 22nd, 2009 at 1:39 PM
Cindy,
Great comments. When prices rise at a pace which seems unreasonable, given our history, we are either borrowing some from the future or making up some from the past, or both. As many have said, sooner or later the fundamentals come back into play. I’ve said before that I thought Saskatoon homes were relatively cheap, pre-2007 but there’s little doubt in my mind that prices were driven up by speculative activity over the year. Sadly, it seems that may not yet be over.
My wife and I had dinner with a client last night and we got to talking about a house I had sold for them at the middle of last year in Meadow Green. They did well on it and the sale allowed them to make a nice upgrade which was timely. They’re mid-30′s with two growing kids. There have probably been some minor increases in the price of this home since they sold it, and they seemed very surprised when they considered that a first time buyer with a 5% down payment would have to be able to afford close to two grand a month to service debt, pay taxes and utilities on that property. That’s twice what it would have been a couple of years back. The buyer for that home doesn’t make 100K between them either. Probably more like 60K. Truth is, if you were already in a home, you’re sitting pretty with plenty of options. You can affrd to move up or down, if you need to. It’s the first time buyer market that is completely shut out and we can’t operate forever without a first time buyer market. As Alex suggests, these people need a raise very badly or they have to find their future elsewhere, or those prices won’t be sustainable.
Ultimately, the sustainability will hinge on whether or not people continue to come this way. I could be wrong, but it’s hard for me to understand how the market might suddenly become flooded with inventory.
All that said, I’m still keeping my place.
May 22nd, 2009 at 1:39 PM
Johny,
I thought you’d like that, and you Mom is not far off.
Heather,
Fair is fair. I say, let the market go where it will go.
Cindy,
What’s scary is that they could actually qualify for that. Your bank would likely say, “it’s affordable.”
May 22nd, 2009 at 1:39 PM
Norm,
I doubt too that the market this year will become ‘flooded’ but I feel the inventory levels will be substantially better than last year. In some of the newer areas there are rows of new houses sitting there vacant. These shoebox houses are two floors stacked on a 32ft lot, no garage, a small backyard with a cement parking pad in the back, and most of them are over $300,000 in price! Since I keep hearing how backed up builders and all the tradespeople are with new construction, I imagine coming up there will be even more of these new houses sitting around, either until demand increases dramatically, or the seller puts a more reasonable price tag on it.
May 22nd, 2009 at 1:40 PM
Heather,
Are you under the impression that these new houses are for sale? There are 16 new homes on the MLS and the quickest possession date advertised there is June. I could be wrong, but I’d be very surprised if there is a single new home which is available to be purchased and ready for occupancy. Qualifier: I suspect there is some which have been sold to speculators and are currently for sale, but not many of those either.
May 22nd, 2009 at 1:41 PM
I started up a website for analysis of the Calgary real estate market. It’s at:
Calgary Real Estate Market Blog
I fully don’t expect recent irrational exuberance conditions to last in Calgary. History has been unkind in previous circumstances.
Also, thanks Norm for having such an open and honest website forum.
May 22nd, 2009 at 1:42 PM
I guess I shouldn’t say ‘new’ as some of these houses built in 2007 have been sold to speculators. Then there are ones from 2005/06 that are ‘like new’ but lived in briefly.
Some are listed on Point2Homes, and I’ve walked through a few of these in the past two months:
http://homes.point2.com/CA/Saskatchewan/Saskatoon/Willowgrove/1493669-Real-Estate.aspx
Yuck, are these houses ugly or what? Why couldn’t the construction companies at least rotate between a couple different exterior designs and colour schemes to help perk up the neighbourhood. All the houses look the same. :’(
May 22nd, 2009 at 1:42 PM
I wonder if there was a design requirement on what the houses look like. I actually like it if the houses blend in better together, with some variations of course. I think it also looks ‘ugly’ because the landscaping is really immature. Fill that in with some shrubs and grass, put a few flowers around and I’m sure it’ll look a lot nicer.
May 22nd, 2009 at 1:44 PM
Heather,
I have to go with Todd. I have seen uglier houses this year.
A little landscaping and some life inside will make a difference. I certainly get your point though. At less than 1200 square feet, one could make the case that you don’t get much for $300K.
This one was on the market in September and then withdrawn. I can’t tell when it came off. Just put back on Tuesday and reported conditionally sold today. I don’t think there’s as much as you think hanging around out there. From where I’m looking, I’d be pretty surprised if you could find a new home out there that you could move into in the next sixty days. I do wonder if the builders couldn’t be doing more, but I don’t have a good grasp on the labour/land issue other than what I hear on the news.
At the close of business today there are 154 single family homes in all areas, and in all price ranges. Not exactly ideal for buyers.
May 22nd, 2009 at 1:45 PM
Yun for the NAR predicts great and wonderful turn-arounds in the market this year. Duncan, of the Mortgage Bankers Association was downright gloomy in his predictions. If these two camps with their economists who spend hours watching every little twitch in the market can’t agree, how on earth would a non-economist REALTOR be able to look in a crystal ball to know what the future market is? IF, however, the agent didn’t provide the clients with a complete set of listings for the area at the time of writing the offer, the buyer might have a case. In that price point, why not look at all of them? A few hints existed in the story: former agent was fired and two deals were canceled. Those scenarios combined would make me think twice before taking them on as clients.
May 22nd, 2009 at 1:45 PM
Bonnie,
You make some excellent points. As I said, I can’t make a judgment on this one and I realize that things are rarely as they might appear, especially if it’s appearing in the news.
I also appreciate your point about warning signs. Over the years, I’ve encountered some potential clients who have nothing nice to say about anyone. This is the top warning sign of trouble as far as I’m concerned. If you choose to do business with reasonable people, and in turn, behave in a reasonable manner, there are really no problems which can’t be solved at the kitchen table.
May 22nd, 2009 at 1:49 PM
Heather, the home you posted looks cheap. Paper thin walls.
New homes support my notion that they are built first for profit and second as homes.
It’s like there was fine print somewhere saying “while we will build a home, it’s not really going to be one worth having”.
Houses are evolving to nothing more than a box with no character. It’s like putting care and quality in has just been cut as a budget liability.
May 22nd, 2009 at 2:00 PM
Hi Alex,
Homes are built to the standards of the “National Building Code.” Minumum standards would probably be far better today than anything built more than 25 years ago. The walls might look paper thin but 2×6 construction is the standard today.
“Cheap” houses are usually cheap houses because size, location, inexpensive finishing and fixtures. You’ll see some of these places needing new carpets after three years.
That said, it’s still pretty sad that an 1150 two-storey can fetch almost 300K.
May 22nd, 2009 at 2:00 PM
Norm,
It would be a true delight to go through a new home built today and actually see those codes put into practice. I don’t disagree that they are in place and you are right: the finish is cheap. But in a lot of ways I just don’t have as much faith in the newer homes.
When I was looking for homes, it was typical that the larger two storey homes ended up feeling a lot smaller.
Is this still the case with homes built today?
Either way 300k for a new home which likely is to require a lot of tweaking and possibly even repairs is a huge rip.
http://money.cnn.com/2008/01/23/news/economy/how_bad/?postversion=2008012315
Again, the prices and the fact that if you concentrate your market on investors, you leave little to nothing for the people.
Prices have got to come down if we’re going to solve problems.
P.S.
Sorry for linking CNN, I’m already feeling bad.
May 22nd, 2009 at 2:01 PM
A 1150 two-storey house for 300k that still needs to be finished. Factor in sprinklers, lawn, fence, landscaping, sidewalk, garage. Also, basement is only roughed in. And if you furnish this house with newer furniture, it all adds up. When it is all said and done you could be looking upwards of 30 to 50k more to complete this house.
I think this is something that some buyers overlook when buying new, because their focus is on the house and not the extra cost of owning it. When my wife and I bought our house, we had a pink couch and grey sofa from our basement suite, needless to say we bought something new.
May 22nd, 2009 at 2:01 PM
Alex,
An 1150 square foot, 3 bedroom, two-storey is going to feel small no matter what you do with it, but again, it’s not going to be too hard for a buyer to hold a builder accountable to the NBC standards. George makes a good point that the asking price is only the beginning. A deceny driveway and walkways will probably easily run 6-7.5 K.
No question that the US economy is tanking big time and we’d be foolish to think that it won’t affect us at some level.
May 22nd, 2009 at 2:02 PM
At the speed these houses are built, you can’t help but wonder about quality. I’m sure shotty workmanship is conceivable even with standards and codes being met.
I’m still optimistic about the spring market. I think a higher number of listings will be available in March, and I doubt there will be as high an influx of people moving to Saskatoon this year – so basically it’s going to be sunshine and lollipops! Hah.
On the news yesterday Atch declared a rise on property tax, while trying to comfort us by saying how much Calgary, Toronto, yada yada are raising theirs. Well thanks Atch for your compassion, you’re a great guy. *cough* So now all these people with their $300+ mortgages that they locked in (prior to interest rates being cut .5% over the last month) will really be sweating when their property tax increases. This will prove to be a very interesting year indeed.
May 22nd, 2009 at 2:02 PM
Heather,
No doubt that corners are cut when they’re being built as fast as you can put them up. I suspect that the inspectors are equally swamped and it’s probably not that hard to get stuff by them.
I did see that news article, and it is too bad.
On the positive side of things, RBC is predicting that mortgage rates will fall .5 to .75% over the course of the year.
Further on the negative side,
they’re saying that prices will rise here again in 2008. Given their comments in recent months regarding deterioration in affordabilty, I’m surprised that they have such a bullish outlook.
May 22nd, 2009 at 2:03 PM
Not sure if it is who you are referring to Norm but in Star paper today RBC (same guys who said affordability is way eroded) is anticipating 12% for Sask. As has been pointed out, these professional predictions can be as relaible as those of the weather
May 22nd, 2009 at 2:04 PM
Jedi,
Yes, I got that from the actual report and I am planning to post on the whole survey a little later.
The text of the report actually says 15% but the forecast is for the province which they state increased 30% last year.
May 22nd, 2009 at 2:05 PM
Ooh! If another .5-.75% is cut within the year that should benefit me nicely if I can get my house built by the end of the year. This will help to take the ouch out of property tax. :’)
I’ve given up looking for resale homes. If they increase an unreasonable amount this year (unreasonable being >5%) it’s going to shut out many first-time home buyers. There’ll be no turning back for me if the market inflates.
May 22nd, 2009 at 2:05 PM
Well, it’s not huge Heather but it should more than offset any tax increase that we’ll see. You’ll save roughly 14 cents per thousand of your mortgage amount for every quarter point reduction on a 25 year mortgage.
Good luck. Lot draw coming up next month.
May 22nd, 2009 at 2:06 PM
Heather,
The first time home buyers were gouged in 2007. 2008 is already out of the question for most of them.
That’s why all the listings for dilapidated holes in crime-ridden areas read: “great starter home”. And of course in case that didn’t hook: “investment property”.
If you flip back a few months on the posts here, you’ll find my tirades on it. Mostly talking about how first time buyer prices for homes less than 700 square feet can’t shipwreck someones’ finances.
It’s hardly a deal when you’re paying so much for it and locking into such a high unlikelihood of recovering enough money to move on to something bigger!
A first time buyer home has a promising future value, a low amount of total interest to pay and does not require major to severe repairs and renovation.
The best description for a functional starter home is small and simple.
First time home buyers are making 30k – 40k a year. Anyone need proof? Don’t take my word for it. While I can’t predict where the market will go, I will (and have) certainly tell you what’s going to happen as a result of any current trends we are experiencing.
I will also be the first to tell you what’s happening without having to get a time consuming study.
But of course we all know that studies are just a nice way to defer an issue.
May 22nd, 2009 at 2:07 PM
Norm,
Thanks for the luck! I’m going to need it for April’s lot draw. I’m not entering this February draw because it’s for Hampton Village, and I’d like to stay on the East side.
Alex,
It’s a crying shame that first time home buyers are getting screwed. With the recent affordability reports, can anyone still argue that Saskatoon is affordable? Perhaps 2008 will surprise us and SK will join the softening trend with the rest of the country, rather than go up 15%. I like to think at least condos will see a decline, rather than houses going up further. Condos are the only hope for young single people to get their foot in the door.
One person on here already pointed out that the “fixer upper” homes that people were asking a “mint” for last year have perhaps started coming down in price, while nicer homes are holding their value. This is the key, because last year these “starter” homes weren’t going for starter prices. Not all young couples can afford $300,000 for their first home. As it is my husband and I will be looking at a $240,000 mortgage including our downpayment by the time our house is built – and that’s more than enough for me to chew on. :’)
May 22nd, 2009 at 2:07 PM
Heather,
Have you heard what those lots might be running at in April. My broker was telling me that he thinks they’ll start around 90K for the smaller, busier locations and quickly rise to as high as 140 for the real premium stuff. If so, the city ceratinly isn’t wasting any time cranking those prices up. I’d be interested to know what you’ve leasrned if you’ve made any price inquiries. Thanks.
May 22nd, 2009 at 2:08 PM
I have recently made inquiries with the city Land Branch. They thought maybe a $10K increase, but of course it was hard to get a straight answer out of them.
The small lots (32′ wide) were going for $55K last lot draw, I don’t see how they could raise them another $30K! (Of course with Saskatoon nothing is ever out of the question) To tack on that much more to the mortgage I already envision, it’s making me ill just thinking about it. The last lot draw saw prices rise dramatically. The city is NOT “supposed” to profit from servicing lots…
GAH! Is there ANY silver lining to this whole real estate black cloud for first time home buyers? I’m having trouble finding it.
May 22nd, 2009 at 2:08 PM
Heather,
“Is there ANY silver lining to this whole real estate black cloud for first time home buyers?”
You only have to do it once?
Daryl may have got bad information from whoever he spoke with. Hopefully, it won’t be near that bad. I almost fell off my chair when he told me that and it seemed like a big stretch to me.
Good luck.
May 22nd, 2009 at 2:08 PM
You know the one thing that bothers me most about society today is lack of accountability. Primarily, lack in accountability of ones own actions. For example, I got ripped off on my house by paying to much. Who am I going to blame for this? Certainly not myself, no, I am not possibly responsible for that happening. I mean I made the offer, and signed the contract, and wrote out the down payment cheque, but surely there is some way to divert responsibility away from myself… Oh I know! My realtor told me he thought the price was fair, REJOICE, the blame falls squarely on their shoulders, I am vindicated!!!
Checks and balances allow more lawsuits was something I saw in a comment. Boy that’s exactly what our society needs is some more lawsuits eh? Personally the less we align with the american way of life the better, lets keep the lawsuit happy folks south of the border…
New houses are built cheap? Interesting theory, but knowing a decent amount about construction I have to say I don’t give that argument much merrit. As long as the foundation is solid and the framing is decent there’s not a whole lot to go wrong. The area’s that you might notice problems with are likely to be things like the mud and taping job and flooring/trim installation etc. Really problems with that are more of an inconvenience than anything else. There aren’t corners to be cut on electrical or plumbing because those are huge insurance liabilities if something were to go wrong, so they have to done to a reasonable level of quality. Really I have a hard time giving much credit to an opinion being thrown out about a house/condo having “paper thin walls” just from a couple pictures, when one of the pictures clearly shows a window frame in a 2×6 wall. Is that really any worse than a banker or realtor giving their prediction of the market in the spring when in actuality they have no idea? Somebody might take that opinion as the truth, so if we want to talk about spreading market propoganda, lets try not to practice it ourselves.
Of course none of that changes the fact that regardless how it’s built, it IS ridiculous that a house like that would sell for almost 300k. It definitely will be small, i’ve never been a fan of the small 2 story houses. 1150 divided over 2 floors makes for some tiny floors. Maybe 600 on main and 550 upstairs, tight.
I do think the first time buyer is screwed right now. However as the old saying goes there’s more than one way to skin a cat. We can all sit and complain about house prices and keep on buying them anyways, meanwhile watching first time buyers stuck out in the rain. Or, we could just stop buying houses….madness isn’t it. If nobody was buying houses then prices would have to fall. Investors would quit buying as well eventually because if nobody is buying it’s hard to make money flipping a house. Apartments would stop being turned in to condo’s because once again, nobody is buying them… So really once again it’s about accountability. If I complain about house prices being so high, but then i help prop up the market by buying a house at that high price, then i’m just making myself part of the problem. Proclaiming that somebody else should be fixing the situation for us is just another way of shifting accountability away from ones self.
If people really want things to change, they have to suck it up, take accountability, and start working towards change!
May 22nd, 2009 at 2:10 PM
Demand for houses can’t be controlled.
While I underbid on my house (not by much), there’s nothing you can do. Why are people being expected to put their lives on hold because of greed?
I would love to see the market regulated because housing is something you can’t mess around with. It isn’t a luxury to have a roof over your head and we don’t advocate spartan lifestyles.
This is a situation where the only reason you’d disagree is because there’s oodles of money to be made stretching people to their limits.
Free markets don’t work today, it will just find the highest price point that the market can bear which is more than the other portion can afford – get it?
You can’t call owning a home or even renting at this point a luxury just because financial status dictates so. This has more to do with ensuring people have the opportunity to accumulate their own wealth and building healthy equity throughout our economy.
Not just little islands of it.
May 22nd, 2009 at 2:12 PM
Soap Box guy,
Good stuff. Thanks!
Alex,
Interesting comments. Reading the Demographia report caused me to wonder if the existing problems we’re facing aren’t caused by too much government regulation. I wonder how much “wealth and equity” would be created if the governments regulated prices.
May 22nd, 2009 at 2:12 PM
The housing market as it is now is fish in a barrel. Those holding the guns are those with the money.
There needs to be more regulation, no doubt about it. If we opened up the market and deregulated everything completely it would just empower the rich even more than they already are.
This isn’t what society is about. Status has no right to exist, government and society is about assurance and collective benefit. It’s what sets us apart from a pack of wolves.
On the other hand, if you support society you are not a communist. I wish people would stop thinking this. You simply understand that all people are entitled to the same minimum quality standard in this society.
The rub right now is that the rich are getting away with actually lowering this standard. Generations now are poorer than those before them. At the same time, the rich also feel an entitlement to continue getting richer without justification. That means holding back wage increases, yet they can see fit to give themselves the ludicrous salaries! Salaries that if they were even cut in half these people would be better off than over half the population of Canada.
Regulate. Spot the non-team-players. Find the sponges in our economy. You don’t have to be broad or general about this. It simply takes the government going to the corporations and saying “You seem to be charging a lot more money for things nowadays, and yet things seem to be getting worse? Why is this and why do you pay your employees so poorly?”
(Funny captcha: “Mr CAMBODIAN”)
May 22nd, 2009 at 2:13 PM
Alexander:
You might like this it kind of illustrates how some people don’t get it.
The company I work for recently had some meetings. Kind of a good news things to let everyone know how we had turned an economic corner and things were looking up. After about 20 minutes of managers letting us know how well off we were with all the work coming up; how tight deadlines would be; how everyone would have to pull a little harder to make sure we stayed the course the GM said We’ve managed to put alot of money in the shareholder’s pockets so things are looking good. Let’s keep it going.” He didn’t even seem to realize or care he was speaking to a room full of people that had already worked hard to do just that. AND most were paid under market value and had been losing ground for several years due to wage increases that were less than half the increase in the cost of living. I guess some don’t care as long as it’s not them.
May 22nd, 2009 at 2:14 PM
Shareholders seem to be the only people allowed to contribute to a company’s success. Them and the upper crust.
Most businesses today can afford to pay more, they simply don’t. The higher ups have backed themselves into a corner.
If employee wages go up, theirs would have to go down…
If you ask me, it’s a perfectly fair trade. The livelihood and wealth of 10 people over 1 is a no brainer. When you understand that the pay cut a CEO or other near-the-top sustains still leaves him/her with enough to live well above most.
The biggest payoff is that the pressure is lifted off of the people and we can start affording things like compact florescent light bulbs, mortgages, food, heat, water… You know, normal things.
May 22nd, 2009 at 2:14 PM
Alex,
I can’t help but agree that it would be nice if things were more fair to the “employee,” but man, it still scares the hell out of me to think that the “government” might force a solution on us. Let’s face it. The governments full time job seems to be screwing things up.
Ken,
Great story, and further proof that some people get so pumped up on their own BS that they have no idea what’s going on around them. “Yes, we’re doing great, thanks to you, and you should pull up your bootstraps and work a little harder so that someone else can get a raise.” LOL!! I’ll bet that really makes you feel like making a contribution, hey?
May 22nd, 2009 at 2:15 PM
Well I don’t often find I have much to complain about. I love what I do and take pride in doing it well; money issues not with standing. But I’m finding it hard to accept the term “shareholder value” as a reasonable argument for stiffing employees, reducing capital allocations for work place improvements etc. Share holders are often portrayed as faceless and anonymous serf lords that; unless their demands of more and better ROI’s are met are going to displace everyone and shop the global market for more profitable peons to rule.
What should be kept in mind is that the officers of the company are often shareholders with vested interests in selling the idea of “upgraded shareholder value”.
The fact is that many people who a few years ago would have considered themselves well paid are finding it harder to get by with no real improvement in lifestyle or standard of living.
Answers: Sorry I don’t have any. Just try to meet these challenges with a sense of humor. Which helps when I consider what “government intervention” accomplishes. Read higher costs, increased taxes. Scares me too.
Thanks for the space. This is a good one.
May 22nd, 2009 at 2:16 PM
Norm,
I totally agree. I think current governments are too backwards in their thinking to come up with the intervention based solution. It would likely go through a very long design process that by the end of it would see the people it is designed to help be hindered.
It almost always is an assurance that once all the appropriate hands have touched an issue, the rich will have been sufficiently protected.
What we need is a government who isn’t afraid to point the finger at the sponges and say “enough is enough”.
Again, it wouldn’t be done through some clever taxation and reallocation. It could just be done by saying “you are being paid too much” and forcing them to be paid less.
It doesn’t devalue the rich. It doesn’t impoverish them. All it does is it takes redundant dollars and puts them somewhere where they won’t be redundant. Where is the harm in that?
A man who makes more than enough money to cover the cost of his most extravagant lifestyle can’t possibly justify to me his need for extra cash. Not when there’s somebody else out there who needs it more – not communism, but sensible thinking.
The rich are still rich at the end of this, just not gluttonously so.
May 22nd, 2009 at 2:17 PM
Ummm . . . am I the only one who’s darn happy I bought a house in 2004? And I can now sell it for 300% what I paid? Yup, I have to pay a lot more for our new home, but that’s life. Whining isn’t going to change that. Boycotting home sales? Have fun. Pay more when you decide to be sane again. 40 year mortgages? Really sucks. Maybe parents should help their kids out with down payments on their first homes. Especially since mom & dad’s home has appreciated 200K over 2 years ago. Consider it an advance on your inheritance. The market is crazy. Government can’t fix that. You just have to live with it. Being afraid to step into the market is costing folks dollars. I can’t see prices dropping any time soon, as there’s been no real points in history that housing has gotten cheaper. That’s why your largest investment should be your home, right? Shoulda bought a more expensive home when we bought this one. Oops!