Entry level homes lead the way for price increases in Saskatoon: Royal LePage
Royal LePage’s House Price Survey for the second quarter of 2010 was released this morning. Here is the release for the Saskatoon area.
SASKATOON, July 7 /CNW/ – The Royal LePage House Price Survey and Market Survey Forecast released today showed solid price increases across most housing types surveyed in Saskatoon. Price gains were strongest for the city’s most affordable homes while above-average inventory levels for higher end homes is leading to a buyer’s market in this segment.
Standard condominiums led the way with year-over-year price gains of 6.3 per cent, selling for an average of $232,833 in the second quarter. Detached bungalows sold for an average of $331,250, up 6.1 per cent from last year. Standard two-storey homes were also up, gaining 5.4 per cent year-over-year, and selling for a second-quarter average of $355,000.
“Standard condominiums experienced the strongest price gains because of affordability,” said Norm Fisher, Royal LePage Saskatoon Real Estate. “First time buyers are trying to get into the market before interest rates go up.”
After peaking in April, sales volume for the second quarter is down approximately 6 per cent over last year with declines accelerating towards the end of the quarter. Bidding wars are rare, and are typically selling below asking price.
“Predictions of a softening market – in terms of the number of homes selling – are starting to come true,” says Fisher. “Sellers need to be aware of that, and price their homes properly.”
This mirrors Royal LePage’s national forecast, which predicts Canada’s residential real estate market will start to slow in the second half of 2010 after two quarters of strong price appreciation and sales activity. While market fundamentals remain strong across most major centres in Canada, sales activity was overly ‘front-loaded’ in the first half of the year and is expected to cool off for the third and fourth quarters. Prices are also expected to steady in the second half of the year.
“We have seen an unusual pattern of activity in the housing market over the past 12 months, with the market experiencing a surge of activity and price increases that peaked in the fall of 2009 rather than spring. Early 2010 has followed a more typical seasonal pattern with prices and activity peaking in the second quarter,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “An expected increase in the supply of homes on the market will now bring stabilization in prices and in some cities we will see both prices and unit sales decline towards the end of the year. This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”
The surge of activity in the first and second quarters of 2010 corresponds to a number of significant regulatory and financial industry changes that affected homebuyers over the same period, including an increase in interest rates in the spring, tightening of mortgage lending rules for first-time homebuyers and investors, and the lead up to the introduction of the HST in British Columbia and Ontario.
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
6 comments so far. We'd love to hear your thoughts.
July 7th, 2010 at 10:59 AM
Standard condo average price is 232k. Wow! In 2000, I had a chance to buy the 3 bedroom condo I was renting in River Heights for 65k. I declined because I thought it was too expensive. Doh
I ended up buying a house just a couple of years later but wow, has entry level housing ever changed in the last 10 years.
July 7th, 2010 at 11:07 AM
Doug,
The “standard condo” as defined in the RLP House Price Survey is a bit more property than you could have bought for $65K. This is a decent 2-bedroom unit with underground parking. That typically puts it in a pretty decent location. This units is something like what you might find in Nutana or Varsity View.
July 7th, 2010 at 7:16 PM
So maybe not $65k a couple years ago.. more like $75k.. haha.
I think its all a buyers market right now.. I do know there are a ton of people that would like to buy rather than rent since it would actually save some money since rents are so insane now, but there is no qay they will qualify for the mortgage. TONS of builders are building in the lower end now so lots to choose from there too.
The city could fix this by selling properties for construction of starter homes at $35,000-$50,000 again but they want to make sure they get thier piece of the ‘boom’ pie.
July 8th, 2010 at 12:09 PM
The market will eventually correct itself towards long term averages. Give it time. In the meantime, the real estate industry is gonna pull out all the jargon it can to spin the data to look like prices are rising.
Latest headline today: Entry-level housing prices on the rise, condos gain most
http://www.thestarphoenix.com/Entry+level+housing+prices+rise+condos+gain+most/3249472/story.html
A fine piece of sheep leading media to east side, and to expensive condos. No mention of west side bungalows which are also entry-level!
It’s a very biased article from my perspective. It is in no way news, but more like marketing.
July 8th, 2010 at 12:20 PM
Steven,
I did mention to this reporter that there is an excellent selection of single-family homes available on the west side in that range. We also discussed the high cost of housing and the potential for a correction.
July 8th, 2010 at 1:25 PM
Doug, you’re not kidding! We bought our first condominium for $60k in the mid-90′s and our first house for less than the “standard” condominium today. Craig, the solution to addressing high starter housing costs is to eliminate CHMC-insured mortgages over 25 years and require a minimum 10% down (actual cash, no creative work-arounds through various financial institutions). Watch as a $50-$100k average price haircut ensues…