CMHC Housing Outlook for Saskatoon still fairly rosy, or not?
The latest Housing Market Outlook for the Saskatoon area, which was released by Canada Mortgage and Housing Corporation (CMHC) last week predicts that the Saskatoon will experience its “highest number of sales on record” during 2008 before sales begin to “moderate somewhat…due to rapidly escalating prices and weaker speculative demand.”
Based on February statistics, CMHC notes that the average selling price of a resale home in Saskatoon had already reached $262,000 and predicts further gains of 18% through 2008. That would bring us to about $275,000, easily $25,000 behind the roughly $300,000 averages that we’ve seen posted over the past three months. According to CMHC, we can expect to see prices rise another 8.2% in 2009 to nearly $300,000.
At the end of April, the second consecutive month where sales were down over the previous year, resale unit sales were just slightly ahead of last year (for the year). May is likely to show some larger declines in total unit sales. It seems overly optimistic at this point that we could finish 2008 ahead of 2007.
Read the CMHC Housing Outlook for Saskatoon here
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Norm Fisher
Royal LePage Saskatoon Real Estate
9 comments so far. We'd love to hear your thoughts.
May 12th, 2009 at 9:19 AM
I don’t get it?
It says feb avg price is $262,000 and they expect a further gain of 18% to $275,000? Isn’t $262,000 + a further 18% make an avg price of around $310,000?
CMHC should hire me to do all their predicting of house prices. Whomever they have doing it is obviously completely out of touch with reality. A further 8.2% in 2009… Come on!! I think they left out the – before 8.2%.
May 12th, 2009 at 9:19 AM
I particularly like their assertion that “a scarcity of resale listings is also contributing to the robust level of single-detached demand”.
By my count (doing MLS searches, nothing more than that) there are 1180 properties listed today.
It’s a measure of how quickly things have shifted that they could print this with a straight face.
May 12th, 2009 at 9:20 AM
Well, according to Norm’s next story, the CMHC view is not universal.
RBC Economics apparently thinks ‘Saskatoon homes were overvalued and “out of whack with the underlying fundamentals.”’ and that “Regina and Saskatoon continue to clock year-over-year price gains that are several multiples above the pace of their local wage growth. This lends evidence that the current momentum is unsustainable,” with real estate markets in Saskatoon and Regina set to decrease in price like Alberta within the next year.
It’s what everyone on this blog has been saying.
But now the Royal Bank of Canada agrees with us,
that Saskatoon is “overvalued” and that the current market is “unsustainable”. This from a source that previously had predicted a stronger Sask economy.
http://www.rbc.com/economics/market/pdf/citytrend.pdf
I enjoy chart 6. It has Saskatoon as nearing a “buyer’s market” of the balanced market section, though Regina still borders on a seller’s market.
Worth a read. 3 rd party support for increased inventory, and calling Saskatoon prices unjustified.
Now we don’t have to take just Norm’s word for it.
May 12th, 2009 at 9:21 AM
I was speaking to a Broker today (ya ya, what do they know
) and I asked him about this and the very mixed signals we have seen.
Last week one group said that we can expect another 25-30% increase this year and 12% next year.
His take was this:
-The economy is strong and a lot of stuff is scheduled to start production in the next 2 to 3 years.
-Sasks population is supposed to grow about 1.7-2.3% this year, keeping demand strong.
-There is a big push to bring people in from other provinces, if this is successful, even more people could come in 2009 as Ontario and Quebec slow down economically due to less US exports.
-The LOWER END homes are what will see the % increase for 2008, NOT the high end homes, which are priced out of the demand range.
-High end homes will probably see a bit of a roll back as inventory rises and sellers can not ask for an arm and leg.
Take that for what you will.
May 12th, 2009 at 9:21 AM
I just read the “Wealthy Barber” one of his first lessons, don’t use a broker, they consistently underperform the market! Royal Bank says market is “overvalued” and Norm says inventory is way above last year, so that cancels out your broker anyway.
Also, all about paying off debt fast, ie. a 40 year mortage, not a good idea, unless big guaranteed wage increase down the line … maybe if you were a nurse and knew you were getting 35%.
A good read, I’d recommend it.
May 12th, 2009 at 9:22 AM
northstar,
I’ll have to revisit this report. Must be a total gain of 18%, because, you’re right, the math ain’t makin’ sense.
May 12th, 2009 at 9:22 AM
I feel that the Saskatoon market is heading for a huge flop. If you look at the prices, they have surpassed Calgary in some cases, but this price increase has taken 2 years, not 8 like in Alberta. The numbers for migration dont make sense to me as well. Alot of people try and compare the growth to Alberta and Calgary in particular. It is like comparing two completly different entities.
A broker we had spoken to before we moved to Saskatoon said that approx. 5000 people moved to Saskatchewan last year, but when that is how many people move to Calgary in a month… so no way these markets should be compared….. period.
When I was looking to buy (decided against it due to unrealistic pricing) in Saskatoon in April I found it very scary that most show home people were asking me if I was buying to invest, before asking if i was going to live in it. A real indicator of a speculative market, and a dangerous one at that. With alot of the decent houses being in the 350-450k range there is not alot of people that would qualify for this type of house, unless there were coming in with 1. Alot of cash or 2. A well paying job…..
Now based on wages in Saskatoon, I would be making about 15k less than I did in Alberta for the same type of job (I am a software developer) which is also a sign of a wage/cost of living gap.
So now after this huge rant all I can say is from my evaluation (not speculation) I can see the Saskatoon market doing a big nose dive like Calgary/Edmonton but worse….. Just my 2 cents…. any feedback on this would be great.
Brad
PS – As a side note, can anyone tell me what an average house price was for a home in Briarwood/Erindale/Willowgrove areas say 3-4 years ago? As compared to a house in the 420-550k range today…. thanks!
May 12th, 2009 at 9:23 AM
Hey everybody, I bought a house in Calgary last year and I have now run into some legal problems, if you have 320k you can have my property. Even comes with a starter kit for the home business!! Thanks.
http://tinyurl.com/p5e2fj
May 12th, 2009 at 9:23 AM
btechpc,
I truly don’t believe the Saskatoon market will actually “flop”… unless you consider a 15-20% drop flopping, hehe.
George,
HOLY HECK! Maybe there’s oil, gold, diamonds, AND potash in the ground under that property! Those “house plants” that come with the house are just icing on the cake! ROFL