Lol. They do say imitation is the sincerest form of flattery. Apparently your words really sunk in for Amy.

Somehow this slipped by me but Amy is a spammer as evidenced by the web link behind her name. Very subtle, but pretty much as low as one could go to steal the words of others as a mask. I shall deal with her promptly now that you have exposed her wicked motives and bannish her to the blacklist.

Oh wait. I did …

Yeah, because we’re a big league American city with an ocean, pro sports and moderate winter climate for retirement.

ie we were over priced
and we’re late to this national “recession”

I’m not necessarily disagreeing with you; I just didn’t realize your time horizon was 2-5 years out. I thought you were focusing on the near term. For what it’s worth, I’m not sure I’d define prices tracking the historical rate of inflation as a “moderate price increase”. I’d call that staying dead even.

Hope you’re enjoying the fabulous weather!

I agree with all your points and appreciate those warnings which I have read from many sources. My post was a prediction. It put up numbers I made up based on local conditions including the trends mentioned in your post. In two to five years it will be obvious if I was right or wrong. If you disagree with my prediction why not post some numbers showing where you think prices will go in Saskatoon in the next 2 to 5 years? For clarification, I consider a “moderate price increase” to be the historical average which is 2%. When I said prices would not fall much below 250k I mean I am predicting they won’t fall below 225k. Hey I could be wrong, its just a prediction.

Although I wish for it too, the “health of the economy” is not going to be what correlates to house prices here or anywhere else, at least in the short term. The only thing that matters is that people continue to be able to service their current debt loads with available incomes.

That, my friend, is looking less and less likely. Take a gander at this article from the G&M: Canada’s brewing debt storm

“Household debt has surged three times faster than income in recent years and now stands at a record high of more than $1-trillion. Put another way, Canadians owe about $1.47 for every dollar of disposable income. Even more remarkably, they took on more debt during the slump – a first for a recession – because borrowing was so cheap. With debt levels this high, even a small hike in interest rates will be ugly for those whose incomes aren’t rising fast enough to meet their day-to-day expenses.”
Now, knowing the debt to disposable income ratio has never been so high and interest rates have nowhere to go but up, take into account the following:

• Recently, national house prices have surged well over 20% YOY. Data for March indicates a national YOY increase of 17.6%. Nationally, incomes have risen by a number that is perilously close to zero. Thankfully, although I’m not sure of the exact numbers, the YOY numbers for home prices in SK are much less silly. Prairie sensibilities? Perhaps.

• Come Monday, it’s going to be much more difficult to qualify for a new CMHC insured mortgage due to the new qualification rules. It’s also going to be much more difficult to finance a spec property (down-payment will be 20% rather than the previous 5% down. What will this do to the first-time buyer and spec markets? One can only wonder, but it’s sure not going to be serendipitous.

• Nationally, listings for the month of March have been the highest on record. This, correlated with the new CMHC qualification data, along with the fact that the prime rate looks set to rise and major banks have hiked mortgage rates twice in as many weeks, may indeed be a cause for concern for some folks.

Jason,

I think the correlation between Phoenix and Saskatoon is an extremely tenuous one. The thought that “it’s different here” is certainly not exclusive to Saskatoon- everyone thinks that.

Wonder how sales of River Landing will go?
They should have built it years ago, kind of missed the boat!

Bookrat, I was generalizing that the same type of ‘it’ll never happen here’ attitude is prevalent in both cities, and ultimately that new construction, speculation and massive homeowner defaults have the same potential to wreak havoc here as well. With the average housing price having more than doubled in just a few years, I’d certainly call that overvalued. A lot of houses have already dropped in excess of 20%; average price doesn’t tell the complete story.

With respect to hotels, with one of the lowest vacancy rates in the country I’m not sure why we’d want to add another 10% capacity (I thought I read 69% occupancy somewhere). And the Canadian dollar now over par with the US dollar, this has yet to impact tourism and travel in Canada – but it will.

Vancouver is definitely the mecca for Canada. But you can’t hand your keys back to the bank in Vancouver; CHMC owns you forever.

I am still doing those updates but I’ve moved them to a different account which will be dedicated to real estate information. I was having some issues with the twitter widget on the webpage and the mixture of “social/business” messages. You’re welcome to follow it if you like. It’s twitter.com/team_fisher.

Are you still doing the daily sales updates on twitter?

Bookrat, I think I saw the hotel occupancy rates on the star phoenix website the other day when they announced the new one going across from the TCUP. I don’t remember the numbers, but they did state that our occupany rate was up there. Enough to justify 4 new hotels (Stonebridge, 22nd, TCUP and River Landing) I am not so sure.

While Saskatoon and Phoenix may have experienced similiar %’s of price increases over a few short years, huge inventories of unsold homes decimated Phoenix. I think inventory is pretty tight here but starting to climb. Norm would know more on this.

here is a case shillerhttp://4.bp.blogspot.com/_nSTO-vZpSgc/Sl4UUuxx-LI/AAAAAAAAGd0/4I9Mr9T1pHY/s1600-h/Case-shiller-2009-06-TC1.png

Price wise, maybe we would end up more like Portland?

Still, having said that, comparing Saskatoon to Phoenix-2005 is pretty significant hyperbole, in my books. You’re talking about one of the most bubble-prone states… a place where (according to Case-Shiller) prices have fallen almost 60% since the period you mention — all while borrowing costs were still at all-time lows.

IMHO, it was those same low borrowing costs (plus an influx of out-of-province money looking for cheap(er) real estate) that led to the price runup in the first place… and things have stayed where they are because homeowners here — like homeowners elsewhere — like feeling that they are intelligent (to have bought before the runup) and wealthy (because their house is worth so much more now). Anyone buying since, however, has not been so happy I would think.

My prediction is that we’ll see prices come down, but not like they did in Phoenix. We just never got THAT overvalued. The reductions will lag behind the interest rate hikes by a couple of months, but I think we’ll see that six-week average line come back to 270 by fall, perhaps going as low as 260 by year-end.

Staying closer to topic… I have no idea how the ‘independent assessors’ came up with valuations of ~$11M for Parcel Y; that’s quite the jump in just a few short years. I can bet that Lobsinger would rather pay the price he originally agreed on … but then again I’d rather pay the prices that I saw in 2006 for local real-estate as well. He seems to be holding fast to an awful lot of ultimatums (I won’t bid if you open it for discussions again, I’m not going to pay what you currently think it’s worth) for a guy with as poor a track record of following through as he has produced.

Personally, I can’t see that $300-$400k condos are going to sell in Saskatoon, even by the river; we’re just not that built up or metropolitan, and I don’t see a development like this changing that fundamental fact. As to whether or not we need another hotel… honest question: does anyone know what sort of occupancy rates all the CURRENT downtown hotels are experiencing? Is there enough business to share with one more?

Those are all valid points, and no one’s really considering the stresses that home ownership are going to place on many of these young couples. What happens in the event of a breakup or divorce?

And what really makes us different (especially in Saskatchewan) is that a lot of new homeowners will have the option to simply walk away. As long as your friend doesn’t refinance or take out a HELOC, she has the option to just hand the house back to the bank through the Limitation of Civil Liabilities Act (also known as “jingle mail”). Some friends of ours bought at the peak in $2007, went through a subsequent breakup (housing stress no doubt played a factor) and are signing their home back to the bank as they’re over $50k underwater.

I think the project can be done, too. Whether the lender hangs-in there with financing through construction remains to be seen. And I think selling all those condominiums at the current asking prices (with only a token deposit) in a few years is unrealistic, at best.

Sorry to get side tracked from the post. I hope they go through with the project. I think it can be done.