Housing starts tumble across Canada; Saskatoon among the hardest hit
Housing starts across Canada continued to weaken through the month of February falling 59% nationally and 69% in Saskatchewan, according to “Preliminary Housing Start Data” released by Canada Mortgage and Housing Corporation today. Only British Columbia and Prince Edward Island showed larger drops as both provinces saw starts decline 76% in February compared to the same month last year.
On a year-to-date basis (January and February), housing starts are down 50% across Canada. Saskatchewan leads the provinces showing the largest decline, off 74% with just 152 starts this year compared to 578 for the same period in 2008.
Saskatoon’s year-to-date housing starts sit at 57 units, a decline of 85% over the same period last year. Kelowna was the only Canadian city to post a larger drop with starts falling 96%, year-over-year, from 735 last year to just 28 this year.
Paul Caton, CMHC senior market analyst told the Saskatoon Star Phoenix that new home construction is off to a slow start this year as developers work to finish and sell the houses they began building in 2008.
CMHC’s Preliminary Housing Start Data is here.
The Star Phoenix 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.
Norm Fisher
Royal LePage Saskatoon Real Estate
88 comments so far. We'd love to hear your thoughts.
April 14th, 2009 at 1:47 PM
Maybe part of the reason that Saskatoon shouldn’t have among Canada’s most unaffordable housing?
All the signs are there showing us Saskatoon’s housing is much weaker – buyers just haven’t figured out they should be paying far less.
April 14th, 2009 at 1:47 PM
And “off to a slow start” is somewhat of an understatement, is it not…? I think Warren Buffet summed it up eloquently today: “I’ve never seen the consumer or the Americans just generally more fearful than this. And they’re also confused. And you can get fearful very quickly, but you don’t get confident, you know, in five minutes.”
“Be fearful when others are greedy and greedy when others are fearful.” When the fear has completely set-in, shaken the real estate market to its foundation and prices have plummeted a further 20%+ that will be the time to consider re-entry.
April 14th, 2009 at 1:48 PM
“And “off to a slow start” is somewhat of an understatement, is it not…?”
Ya think?
Let’s be clear though that the final sentence in your comment is not a Warren Buffet quote.
April 14th, 2009 at 1:48 PM
Does anyone remember what CMHC was forcasting for starts? I can’t remember, but it seems to be that their forcasts are losing credibility.
April 14th, 2009 at 1:48 PM
I know it’s been attributed to him, but do you know who the originator is/was?
April 14th, 2009 at 1:49 PM
What are some private sellers thinking??? $414,900 for a new listing in Willowgrove on Saskhouses. In this market this is a 300-310,000 home and even at that price it is overvalued.
April 14th, 2009 at 1:50 PM
Michael,
In their fall 2008 Housing Market Outlook, CMHC was predicting a total of 1,800 starts for Saskatoon in 2009 (1,000 single detached & 800 multiples).
Jason,
It was Buffet who said, “Be fearful when others are greedy and greedy when others are fearful.”
When I said it wasn’t Buffet who said the last sentence I was referring to, “When the fear has completely set-in, shaken the real estate market to its foundation and prices have plummeted a further 20%+ that will be the time to consider re-entry.”
It may have appeared to some that you were attributing that to Buffet. Just wanted to be clear that it’s you, not Warren Buffet predicting a further 20% decline.
April 14th, 2009 at 1:51 PM
I know these numbers may be shocking and painful for some, but is this reduction in inventory not the way to eventual recovery?
April 14th, 2009 at 1:51 PM
Crikey,
This is a good thing (I mean, as good as this kind of news can be). In some parts of the U.S. they were banging then up long after the nail was in the coffin. Seems that Canadian builders have caught on far quicker. I’d be very concerned if starts were anywhere near last year’s numbers.
April 14th, 2009 at 1:52 PM
Norm, ah, gotcha. Note that I did say 20%+ (emphasis on “+”)…
I think Warren’s “Economy has fallen off a cliff” comment today had the desired effect, anyway. CHMC was *way* off the mark (nothing new there).
Crikey, absolutely. I still think we have enough inventory to last well into next year, though (based on current sales demand).
April 14th, 2009 at 1:52 PM
I am thankful the builders had the foresight to slow supply and keep things stable. Much like OPEC, it is in their best interest for the long term.
April 14th, 2009 at 1:53 PM
L.oki said:
I am thankful the builders had the foresight to slow supply and keep things stable. Much like OPEC, it is in their best interest for the long term.
The foresight? Have you not noticed how many vacant homes there are in Saskatoon? Norm has given us that info a few times now.
If they have the same foresight as OPEC, we’re in for a lot of trouble. They haven’t slowed supply and they haven’t been able to manipulate the prices upwards. There are oil tankers in the Persian guld as far as the eye can see filled with oil waiting for the price to go up….eventually.
You might want to check out how well they are doing over there with real estate as well. Real estate values have dropped north of 50% this winter. Check it out…
http://www.mirror.co.uk/news/top-stories/2009/03/08/celebs-losing-80k-a-week-on-their-dubai-mansions-115875-21180367/
April 14th, 2009 at 1:54 PM
“If they have the same foresight as OPEC, we’re in for a lot of trouble. They haven’t slowed supply and they haven’t been able to manipulate the prices upwards. There are oil tankers in the Persian guld as far as the eye can see filled with oil waiting for the price to go up….eventually”
Oil is now nearing 50 a barrel, mostly due to the fact that Opec has slowed supply, and plans to do it again this month. They have cut back, and members have complied. It is speculators storing oil off shore, because they know the price (the futures) for the rest of the year see oil higher. I read a few days ago that inventories have levelled in the states (actually dropped last week) and that inventories world wide are now dropping daily. Due to Opec cuts. Many oil analysts easily see 60-75 dollars oil by the second half of the year. Now, that kind of oil price is a windfall here. Remember, prices were only up at 140 very briefly. A lot of our surplus was raked in at 80 dollar oil.
As for oil and house prices, well, if oil does well, and drilling continues, our debt will dissapear, our provincial income tax and pst could melt away, and who knows, maybe we’ll be getting checks in the mail! Anyway, a richer province means more government works, more jobs, and less tax. That can affect housing affordability, and demand, no question.
April 14th, 2009 at 1:54 PM
I also agree that the crash in housing starts is good news here. Not a sign of poor demand for housing, just a reaction to high inventory. If housing starts dropped right to zero, it might be a bullish indicator for the current housing stock, especially if your city keeps growing.
April 14th, 2009 at 1:54 PM
Saskatoon population predicted to rise 50,000 by 2026
http://www.thestarphoenix.com/Life/Population+boom+eyed/1372176/story.html
April 14th, 2009 at 1:55 PM
If it takes 4 man years to build one house, there is a lot of work being wiped out as well. Housing starts and jobs need to have a fine balance and we have not seen that in the last couple of years and that balance will not be there until new home inventory is eaten up either by being bought or rented out.
As for high oil, it does no good for the majority. Wife and I spent over 7000 on the high priced fuel last year( a few trips to BC helped that) At todays prices that would be under 4000. Unless the PST was cut out, I will not get 3000 back from the tax cuts. High oil benefits the few who get jobs and the corporations that line their pockets. The government does benefit with higher oil but the people are worse off by having less disposable income at the end of the day.
If we have the oil, why do we continually pay close to highest at the pump in North America?
Oil would be beneficial to the people if we owned or controled it, but we don’t. And we never will.
April 14th, 2009 at 1:55 PM
“The government does benefit with higher oil but the people are worse off by having less disposable income at the end of the day.”
When the government benefits, and drops taxes, people have more disposable income.
And we do own the oil in a way. What exactly are royalties if not a stake in the ownership.
April 14th, 2009 at 1:55 PM
Well said mark, well said.
April 14th, 2009 at 1:56 PM
“When the government benefits, and drops taxes, people have more disposable income.”
Yes, they would have more disposable income … *IF* the government drops taxes.
Are you seriously implying that only (or even natural) response of a government with additional revenue is to take in less revenue? From what I have seen, that’s not the case. Usually they spend more (hire more people, start more projects, create more regulation) and taxes remain the same.
(Or, if you’re a Republican, you cut taxes *and* spend more. Who cares about deficits anyway?)
April 14th, 2009 at 1:56 PM
“Are you seriously implying that only (or even natural) response of a government with additional revenue is to take in less revenue? From what I have seen, that’s not the case. Usually they spend more (hire more people, start more projects, create more regulation) and taxes remain the same.”
I think our current government has just shown that it uses a surplus to do both. The infrastructure spending seems like a pretty good use of money not used to pay down debt. Alberta has done the same for years.
April 14th, 2009 at 1:56 PM
NDP typically increased spending to offset surpluses. However, as Mark points out, our current Sask Party government was wise to start paying off large chunks of the debt.
SOME believe, deep within the NDP ranks, they never wanted to pay down the debt anyway. Why pay off that debt when you can let it linger around so everyone remembers that it was those scary Tories who put it there in the first place. To support this theory, people like seeing their money in action, it is historically easier to win political ridings with wide spread spending. I’m not saying I believe all of this…but it makes a guy wonder.
——–
Check this out…a lil’ biased, but hey…hehe
http://news.sympatico.msn.ctv.ca/abc/home/contentposting.aspx?isfa=1&feedname=CTV-TOPSTORIES_V3&showbyline=True&date=true&newsitemid=CTVNews%2f20090310%2fHarper_speech_090310
April 14th, 2009 at 1:57 PM
Sorry Mark,
you are right with lower taxes people have more disposable income. What I meant to say, is after having tax cuts but also paying for higher fuel prices we have less income at the end of the day. Kinda like robbing peter to pay paul.
I know for myself, I would need to see about a $3000 difference from tax cuts to offset the higher gasoline prices. At best I will see a $1000 improvement.
April 14th, 2009 at 1:57 PM
Credit cards ‘next shoe to drop’ for Canadian banks
http://www.financialpost.com/news-sectors/story.html?id=1373406
Canadians have almost $50bn of credit card debt (40% increase since 2004) with 71.6m credit cards; banks put away 51% more cash to cover losses. CIBC has the most consumer credit card loans at $10.5bn (6.3%) followed by RBC, TD, BNS and BOM.
April 14th, 2009 at 1:57 PM
ok guys need advice. I’m renegotiating my mortgage. i’m not a gambler and I need to know my monthly budget so I’m going with a fixed rate.
look into your cyrstaball which one would be best:
5 yr – 4.25%
10 yr- 5.25%
April 14th, 2009 at 1:58 PM
I wish it were true, bubble-thinking like drilling for oil and other resources isn’t going to bring broad wealth and prosperity to any province. It will simply further the divide between wealthy and poor. Just like it did in money-drunk Alberta.
The idea of a wealthy province is pretty good, I’ll admit that. Lots of potential for social spending and equal growth, but that’s a plan that has to have the right government to actually happen. Not these oligarchs.
That crisp and tempting tax cheque all of blue collar Canada keeps drooling over isn’t worth a hundred times what we give up to get it too.
Saskatchewan is in the unfortunate position of having some of the worst provincial party options available in Canada too.
It’s the 1980s in Saskatchewan still with trickle-down paranoid conservatism. I guess Saskatchewan will have to get its cues from the next idealism-import from Alberta to get a clear understanding…After it’s too late.
Try following your more social neighbors to the East for once, Manitoba sustained smaller hits through a steadier, less money obsessed market.
I am living the proof…
April 14th, 2009 at 1:58 PM
Ahh, you guys are talking about something close to my heart: crude futures.
Crude has been trading in a range of 48 to 33 since January. Until it closes above 50, I will fade all forecasts of 60 plus or 25 or below (most of these MSM “experts/analysts” no nothing.
Remember, as long as governments around the world are trying to “stimulate”, that means massive borrowing (from capital markets). The result: liquidation of futures (oil, stocks, other commodities) and other items for stimulus funding.
April 14th, 2009 at 1:58 PM
Jason,
$50 billion in credit card debt is really not a big deal for this economy. Canada’s GDP in comparison is $1.2 trillion, so $50 billion is about 4.2% of one years GDP. When you compare $50 billion to our national debt, which at $458 billion itself relatively mild compared to our neighbors, you see that its’ just not that big on a relative scale.
Or another way to look at it, per person, there are maybe what 20 million adults in Canada? So that would be $2500 per adult. I think many people out there could pay that kind of debt off fairly quickly.
This is not to say there won’t be hardship ahead for people who hold high credit card debt, I just don’t think it’s a significant concern.
Bill,
You might want to consider a variable open. Take that out for the time being and just set a lock-in target, such as 5% for a 5-year fixed rate. As soon as the 5 year fixed goes up to or above 5%, lock it in.
Look at Japan, they have had rates down around 1% or lower since the 90′s. Now we are of course not Japan, I don’t think rates will stay low for 10+ years but it does give you a crude guide of just what can happen.
We are in debt deflation right now and unless the government significantly increases their outlays we will stay in debt deflationary mode for awhile. I don’t see interest rates going anywhere for awhile.
April 14th, 2009 at 1:59 PM
peter said:
Jason,
$50 billion in credit card debt is really not a big deal for this economy. Canada’s GDP in comparison is $1.2 trillion, so $50 billion is about 4.2% of one years GDP. When you compare $50 billion to our national debt, which at $458 billion itself relatively mild compared to our neighbors, you see that its’ just not that big on a relative scale.
Peter, Our neighbors also have 10 times the population. Their deficit is 1.3 trillion(National Post, Feb.23). I don’t find that comforting. Our GDP fell 3.5% in the last quarter of 2008(13.4%annualized)I see no signs of that reversing in the near future.
If there is no stabilization in the economy soon, you will see banks claw back credit cards and or limits on those cards. Not only is it regulated but fiscally responsible to reserve a certain % of income for bad debt. Banks use indicators such as GDP, bankruptcy trends, etc as well as current total credit debt to base those reserves. When those reserves increase coupled with tighter access to money from Global banks, something has to give.
April 14th, 2009 at 1:59 PM
Peter, “I think many people out there could pay that kind of debt off fairly quickly.” Maybe, maybe not. It’s a bit disconcerting that the amount of credit card debt has increased 40% since 2004. That means the average household may have between $5,000-$10,000 in credit card debt (nothing to shrug off). After all, you can obtain credit lines for 2.5%, so wouldn’t now be the time to pay down all high interest debt? Banks are anticipating higher default rates and their only recourse is to raise interest rates (already extremely high).
westcanguy, I would agree that the US is not a very good role model for comparisons right now.
Bill, I found this calculator that you might find useful (http://www.canequity.com/mortgage-calculator/). I believe the difference will be fairly negligible (using $200k amortized over 30 years it was about +$30/month). Myself I’d probably go with the 10-year option, accelerated weekly payments and the ability to make lump-sum payments to principal as often as possible.
April 14th, 2009 at 1:59 PM
Jason,
That is one nifty mortgage calculator- thank you for the link!
Bill,
It sounds like you’ve made up your mind on the fixed term, but I’m beginning to lean toward Peter’s idea about the variable. I’ve seen prime + 0.08 for such a mortgage recently, with the ability to lock in. If you think rates will stay low for some time (which I happen to), it’s something to think about.
April 14th, 2009 at 2:00 PM
$50 Billion in credit card debt is a big deal.
This is short term debt.
Not including mortgages, lines of credit and student loans. People shouldn’t owe anything beyond the monthly balance on high interest credit cards.
With Saskatchewan increasing spending right up until the Bank of Canada announced a recession, I would think our credit card debt is worse than most. Yet another thing we should get under control. Get a line of credit (usually prime to just above) and pay off the credit card. Than live frugally for a couple years and pay off the line of credit.
Wouldn’t it be nice to come out of the recession richer (well less debt) than when you went into it?
Then if you lose your job, as least you don’t owe money on the sports car you shouldn’t have bought in the first place, nor the big screen TV.
April 14th, 2009 at 2:00 PM
Crikey, np! Your suggestion is a very interesting alternative: it really offers the best of both worlds.
Nick, not only that, but higher default rates get passed along to the consumer in the form of higher interest rates; so your debt reduction suggestion is sound advice.
Alex, with wealth comes great responsibility, and I think we’ve seen enough shiny new toys, flat screen TVs and other examples of excess to demonstrate quite a bit of fiscal irresponsibility. At a time where housing prices were increasing everyone was cashing-in their “lottery ticket” in the form of home equity lines of credit. Now that the “housing well” has evaporated, consumers are left with even less equity in their homes and higher personal debts than they began with – entering into a prolonged recession. I’m not sure the valuable lesson has been learned yet.
April 14th, 2009 at 2:02 PM
Jason,
This valuable lesson is nowhere in sight as of yet unfortunately. We might be forced to learn quickly! Wealth is nice for people, but not for the planet. Things will right themselves one way or another.
bill,
Here’s a good article in regards to your question:
http://finance.sympatico.msn.ca/banking/mortgages/article.aspx?cp-documentid=18485477
For my mortgage of $280K I’d be paying an extra $170/mo for the safety of knowing what my payments will be for 10 years vs 5 years with a 25 year amortization. (Which is really 21 years with bi-weekly payments)
April 14th, 2009 at 2:02 PM
The endemic little brother syndrome Saskatchewan suffers from in relation to Alberta is too much to deny as well.
It has fueled a lot of the insanity people subjected themselves to. I’m glad I chose to get out once I saw that people were engaging in a rat race.
Indeed materialism has played a large part of it, bad ideals got them there too with greed. Big trucks, big houses and all other kinds of big-Texas lifestyle changes.
It’s actually quite comical.
Between when I was living in Saskatoon and my connection to small-town Saskatchewan through my wife, it’s a very clear picture. The huge swing from bring a social province to paranoid and wholesome (religious?) Neo-Conservatism speaks volumes.
We have similar issues with people “compensating” here in Manitoba too. But we’ve managed to recognize when we have a bunch of insecure children in a market and sequester their nonsense away from people who are still serious about life. It’s not intentional, we just have somewhere for everyone.
Saskatchewan only made room for people in crippling debt or gluttonously wealthy from other peoples’ crippling debt. It doesn’t take a lot to figure out the problems ahead.
The culture and mentality behind all this is fascinating.
April 14th, 2009 at 2:02 PM
Heather, I read yesterday that they’re about to announce a deep-ocean acidity study that shows we’re on-track for levels approaching the last mass extinction. You might find this article interesting:
http://informationclearinghouse.info/article22183.htm
Alex, yes, there’s definitely quite a bit of pent-up “Alberta envy”. For the past decade in the US you weren’t living the American Dream unless you were $1m in debt. We’ve seen how well that worked out there and it will be interesting to see how much people leveraged themselves here for the Canadian (or Saskatchewan) equivalent.
April 14th, 2009 at 2:03 PM
Somewhat off-topic (but entertaining nonetheless), Jon Stewart has taken aim at the financial networks on CNBC (and at Jim Cramer specifically). Some of the recent back-and-forth rebuttals have been quite hilarious (not posted here).
http://www.youtube.com/watch?v=lBI4LymBB8I
http://www.youtube.com/watch?v=V9d6HJXWjKc&feature=related
April 14th, 2009 at 2:04 PM
It is really difficult for me to understand why some think high oil price will do good for normal folks in this province.
Charge you 10 more dollars on the right hand, and give you 5 bucks back on the left hand. That is good?
April 14th, 2009 at 2:04 PM
Analysts highlight Canada’s gloomy economic performance
http://www.canada.com/news/story.html?id=1378111
April 14th, 2009 at 2:04 PM
Jason,
I love the part in the first clip where Mr. Ponzi (Stanford) was describing “how great it is to be a billionaire”. What bloody cheek! Jim Cramer’s supposed to be appearing on the Daily Show tomorrow… hopefully he won’t cancel this time.
April 14th, 2009 at 2:05 PM
Crikey, yeah, those ponzi schemers have a brass set, don’t they? The funniest thing with Sanford is that he did try to flee to Antigua, but the airline declined his credit card! How’s that for irony…?
I’ll definitely have to tune-in for that one; Jim Cramer being eviscerated live on Jon Stewart should prove quite entertaining…!
April 14th, 2009 at 2:05 PM
New home prices fall more than expected
First year-over-year drop in 12 years; Regina’s drop of 21.7% was the second highest in the country. Largest decline since 1991. “It said the figures were an indication that the housing market has continued its cooling period during the ongoing economic crisis.”
http://www.financialpost.com/news-sectors/story.html?id=1377502
April 14th, 2009 at 2:06 PM
Jason,
Regina’s new home prices “jump” was the second highest in the country.
April 14th, 2009 at 2:06 PM
Jason,
“St. John’s, N.L., at 24.1%, and Regina’s 21.7% jump were the highest increases in the country between January 2008 and January 2009 and helped boost the national figures.”
I believe the article is indicating that nationwide, yes, new home prices did fall, but Regina and St. John’s new home prices are still up YOY (between January 2008 and January 2009).
April 14th, 2009 at 2:06 PM
Here is Stats Canada’s New House Price Index.
http://www.statcan.gc.ca/daily-quotidien/090311/t090311c1-eng.htm
Saskatoon shows a 2.7% decline, year-over-year and a .8% increase month-over-month.
April 14th, 2009 at 2:08 PM
Norm, thanks for catching my error.
Unrelated, I read a small blurb in the Star Phoenix today about toxic drywall manufactured in China and imported into Canada between 2001-2007 (most went to construction in BC but some was apparently shipped to the prairies). Apparently the health effects are quite severe enough (nosebleeds, increased allergies, difficulty breathing, etc.) to potentially warrant *bulldozing* the entire house.
April 14th, 2009 at 2:08 PM
Jason,
That “Toxic drywall” story is pretty scary stuff.
Here’s a link for anyone interested in checking it out.
http://tinyurl.com/auf3ae
April 14th, 2009 at 2:09 PM
Construction Delay
http://www.thestarphoenix.com/Technology/Construction+delay/1379980/story.html
April 14th, 2009 at 2:10 PM
Jason,
The news I was expected to hear was that it was postponed due to financing or economic turmoil. But it says that financing is in place and that it is going ahead once the legislation is changed. Whether they are blowing smoke up our %$^& is another story. When I see a big shovel moving dirt, then I will believe them.
Saskatoon hot spot for first-time homebuyershttp://www.thestarphoenix.com/Business/Saskatoon+spot+first+time+homebuyers/1379993/story.html
Not surprised about this. Prices have come down, plenty to choose from and interest rates are at all time lows.
Just some rates
5.25 10 year fixed
4.25 5 year fixed
3.25 1 year fixed
3.30 variable mortgage
April 14th, 2009 at 2:33 PM
Stewart, Cramer get ready to rumble
http://business.theglobeandmail.com/servlet/story/RTGAM.20090312.wrfeud12/BNStory/Business/home
10pm ctv toronto
April 14th, 2009 at 2:33 PM
George, I’m not sure how much of a legislative hurdle this change is, but it would seem to be an important requirement to have the multiple strata titles. I can’t help but wonder if this is an “out” clause for the developers if the city and province fail to deliver? While Lake Placid indicates they have secured financing, they’re not disclosing any details and there is no indication that Stoneset has secured any financing to proceed. But I tend to feel the same way, when I see a shovel…
Noticed the second article, too. SRAR has been much more selective in their choice of words this time around by indicating that “2009 is a better time for first-time buyers than recent years”. I guess it’s apparent with the new housing starts decline that now is *not* ‘the best time to buy’ and they have to start qualifying these statements. Same wolf, different sheepskin.
Norm, can you get anything halfway decent for $190,000 in Saskatoon these days, or does the emphasis really need to be on “starting price”?
April 14th, 2009 at 2:37 PM
“Stewart, Cramer get ready to rumble”
Why don’t the both of them just admit they’re comedians and move on?
April 14th, 2009 at 2:38 PM
“I guess it’s apparent with the new housing starts decline that now is *not* ‘the best time to buy’ and they have to start qualifying these statements.”
Please explain whay a decline in housing starts indicates it is not a time to buy. An increase in housing starts would want me waiting for the additional excess inventory to pile in and push prices down more. Not the other way around. Doesn’t make sense. Drop in housing starts is good news for the existing housing market going forward. You’ll really try and spin anything to fit your hopes for a real estate crash.
April 14th, 2009 at 2:41 PM
A real estate crash is simply the opposite of a real estate bubble.
What exactly are you expecting?
Maybe after a “crash” sensible people will have access to home ownership again.
April 14th, 2009 at 2:41 PM
Wow, oil is allover the map, up $4.55 for the April contract. Hopefully it will barge through the $50 range and get this province booming again.
April 14th, 2009 at 2:42 PM
Mark, simple: we haven’t reached peak inventory yet, nor have we seen the end of real estate price corrections this year. We still have ample new and used units, this in addition to the hundreds of additional units coming onto the market later this year. Feel free to check any of my previous posts but I’ve been a strong advocate for waiting until late Fall/Winter, or even until 2010. It’s always difficult to time the bottom of the market, but it’s universally agreed that even if you buy when the market is moving up that’s still preferable to buying when it’s declining.
As for your last statement, I’m out of the real estate game and content to rent for the foreseeable future until some level of sanity and affordability (which translates into pricing stability) returns to the market. I’m merely attempting to offer an alternate viewpoint to balance out the equation with all the hype, propaganda and media brainwashing. But since we’re throwing insinuations around, anyone who owns and speculates on a handful of rental properties can hardly be considered non-bias, either.
April 14th, 2009 at 2:42 PM
Crikey,
I think that the Cramer and Stewart bout could be of epic status. I won’t miss it, I may even be late to my D&D game:) Don’t laugh, Thursday is the only night I leave my parents basement.
ha ha.
Mark,
The problem this market has is that there are too many homes on the market and specifically new homes. It does not matter if there is a rise in housing starts or a decline in housing starts, both will lead to lower prices. Here is why.
If housing starts did not decline and kept pace yoy, more inventory would suppress prices even further. But a decline in housing starts is that it leads to less jobs = less spending = less confidence = less buying of houses and prices dropping.
With that said, the market will achieve a better balance faster with housing starts declining and prices will not drop as much.
April 14th, 2009 at 2:42 PM
Jason,
“Norm, can you get anything halfway decent for $190,000 in Saskatoon these days, or does the emphasis really need to be on “starting price”?”
There are 79 SF homes priced under 200K. Here’s a list of homes priced 180-200.
http://www.saskmls.ca/Matrix/Public/Portal.aspx?k=38854X08D9&p=DE-746458-658
I thought the one on 31st Street looked like a good deal at $184,900. Kind of a cute house in a decent spot. A fairly limited selection though.
April 14th, 2009 at 2:43 PM
Bull market,
oil will continue to be a roller coaster this year staying between 30 and 60 bucks a barrel. Lower if TSX hits 5000, higher if say, Israel invades Iran.
Having 10% gains or losses in a day will not be uncommon.
Great website for stocks and news
http://www.bloomberg.com/?b=0&Intro=intro3
April 14th, 2009 at 2:43 PM
Norm,
I plugged in some of those houses into a mortgage calculator. With the low interest rates, some are beating rent, even a five year fixed. Before any of the bears attack one of their own, I am not suggesting everybody go out and buy, I am just saying. People wanting to buy should buy when it is affordable to them.
April 14th, 2009 at 2:43 PM
Norm, we’ll go with “starting at” then…
I think the biggest limiting factor is location. unless you’re prepared to spend substantially more than $200k (or instead opt for a condo) there’s basically zero availability in Areas 1, 2 or 3. Nothing against Area 4 or 5, but commuting distance (work) and proximity to family and friends (childcare, etc.) would certainly be considerations for anyone looking at their first home.
George, something to consider is that a lot of those listings are older homes and may have higher annual maintenance or operating costs than something newer (albeit, more expensive) yet comparable in size.
April 14th, 2009 at 2:44 PM
Jason I wanna hear a few positives out of you for once. Have you considered moving provinces or countries given the amount you found wrong with this one?
You can only drive the realist bus so far.
April 14th, 2009 at 2:44 PM
a Heads up,
if you think you have asbetos (Zonolite, vermiculite) insulation in your home the dealine for doing anything about it is August 31,2009
Details here.
http://www.graceclaims.com/
April 14th, 2009 at 2:45 PM
SK Supporter, you’d be amazed at how far you can go with oil at $45… Saskatchewan is leading the world with the largest pilot project in carbon capture and storage (CCS). A Sask-based partnership is also developing world-leading clean coal technology. Finally, Saskatchewan leads the world in Uranium production (23%), currently the cleanest energy source with the lowest emissions.
April 14th, 2009 at 2:45 PM
Jason, carbon capture and Bakken are great news for southern Saskatchewan.
Uranium is down and they laid off hundreds of workers
April 14th, 2009 at 2:47 PM
Even without the commodity crash, when it comes to
Saskatoon housing, Supply is Greater than Demand
April 14th, 2009 at 3:05 PM
George, it will be more affordable after house and condo prices fall over the next year. In 5 years, buyers will have to refinance on a house that may just finally have regained what they paid for it. Now is a bad time to buy.
Now is a bad time to buy at the listed price.
or close to it
April 14th, 2009 at 3:05 PM
FP article on BHP’s plans to build potash mine 90 miles west of saskatoon.
http://www.financialpost.com/news-sectors/story.html?id=1382178
April 14th, 2009 at 3:05 PM
The 2.7% drop in housing price index year over year seems significant. Aside from the whole “recession” talk, house prices were clearly over priced early summer 2008 purely from a supply stand point.
I will be interested to see how more and more “year over year” price drops will affect the psyche of the Saskatoon real estate market. In particular as they become increasingly large. Many sellers, especially those who likely bought at 1/4 to 1/2 the price they are trying to sell for, will likely realize the new market conditions dictate a much lower price to sell. This will likely accelerate the decline, and the ultimate recovery, with some reality checks for sellers. In the mean time, living in Regina is a nice alternative, though the cost savings has narrowed. The wonders of having a fixed rental agreement.
April 14th, 2009 at 3:06 PM
I sold my Lawson Heights house in July/08 and have been renting a $795 somewhat run down 600 sq. ft. 1 bedroom since that time. I think this east side apartment in a good location is now over priced. Everybody now knows we went through a boom last year and that prices are beginning to retreat as inventory grows. Calling a bottom would be as impossible as predicting a market peak was last year. Rather, if I was planning to buy I would set a strike price according to my own financial circumstances, accomadation needs etc. I seems that there may be room for prices to fall further, if you have the time it seems that paitience would serve a person well. Just as people were buying all the way up, they will also buy all the way down, albeit at perhaps a slower pace. Perhaps prices will pick up momentum on the way down just as they did on the way up, in any event it is impossible to predict. For now this is the best website I have come across. It will be interesting to see how month over month prices compare with last year, definitely I will keep my eyes open for better rental value, but have no intentions of entering home ownership during this softening market, I don’t make predictions but I think there is a good chance there is still a lot of air in the Saskatoon real estate bubble.
April 14th, 2009 at 3:41 PM
As well, rumour has it my letter was published March 4th Star Phoenix, any one able to provide a link? I always seem to miss them and can’t figure out how to find old letters to editor on line.
Crikey, as has been suggested a few times by a few users, you really should publish a “reality check” type letter to the editor. They accept my stuff, sure you’d be a shoe in. That said, editing “for space” always seems to soften (or dumb down) my original letters which were within the word limit.
Another bonus of Regina, the Leader Post publishes longer letters – so are typically better arguments, more interesting, and able to better convey a message. One of my favorite things to read in the Leader Post. Star Phoenix? Not so much.
April 14th, 2009 at 3:41 PM
I take it back, what the Star Phoenix website lacks, Google makes up for:
http://www.thestarphoenix.com/opinion/housing+bargains/1350743/story.html
and of course is lightly modified, taking away my decent sound bites!
April 14th, 2009 at 3:42 PM
http://www.thestarphoenix.com/News/housing+bargains/1350743/story.html
turned up twice
looks like they’re trying to pass off letters as stories too
short on content?
April 14th, 2009 at 3:42 PM
Good article on Greater Fool today.
http://www.greaterfool.ca/2009/03/13/on-ethics/
April 14th, 2009 at 3:42 PM
Jason,
speaking about ethics,
Stewart hammers Cramer
http://www.thecomedynetwork.ca/shows/videolist.aspx?sid=3350
We need more people like Jon Stewart. He kicked ass on the daily show last night.
April 14th, 2009 at 3:43 PM
Gail Vaz Oxlade has a great article posted today (March 13) on the actual costs of saving for, buying, and maintaining a home.
I appreciate that she promotes the reality of being financial responsible when it comes to home ownership.
http://gailvazoxlade.com/blog/
April 14th, 2009 at 3:43 PM
George,
You’re absolutely right! Stewart may market himself as a comedian, but he’s not a guy to underestimate. Extremely intelligent, and quick as a whip. He wiped the floor with Cramer.
Here’s an interesting tidbit of news- Stewart’s brother is Larry Leibowitz, the head of U.S. Markets and Global Trading at NYSE Euronext:
http://tinyurl.com/dhh3jd
cyn_d,
Thanks for that link. Something else people need to keep in mind is current interest rates- if you are at all stretched by a monthly payment with interest rates this low, IMHO you’re asking for trouble when you need to refinance in the future.
Nick,
Thank you. I’ll keep that in mind.
Here’s a link to today’s Labour Force Survey:
“Employment fell for the fourth consecutive month in February (-83,000), bringing total losses since the peak of last October to 295,000 (-1.7%). The February employment decrease pushed the unemployment rate up 0.5 percentage points to 7.7%”
http://tinyurl.com/chu9om
By Province:
http://tinyurl.com/dx4naw
By all accounts, Saskatchewan’s numbers appear to be holding up quite well so far.
April 14th, 2009 at 3:44 PM
George, Jon Stewart pretty much had him dead to rights (especially with that interview where Cramer described how to use rumours to tank Apple’s stock). I liked the bit with Martha Stewart, too.
cyn_d, the best suggestion in that article was to bank the difference between the current costs to keep a roof over your head and what it will cost with a new home. I think it goes without saying that if you can’t accomplish this you won’t be able to live on less disposable income when the time comes. I would also go one step further (taking Crikey’s cue) and suggest budgeting for a 50% increase in your home payment to reflect future interest rate increases.
Crikey, yes, and let’s not forget that with 1/10th the population of the US this is equivalent to 830k jobs lost in February or 2.95m jobs lost year-to-date. While the 18.3% increase in unemployment (year-over-year) is not as bad as some provinces, having the second highest increase from January-February at 16.7% is a bit more disconcerting.
Norm, anything exciting (statistics-wise) to look forward to this weekend?
April 14th, 2009 at 3:44 PM
what happened with jobs in Sask last month. Up or Down?
April 14th, 2009 at 3:45 PM
Jason,
“While the 18.3% increase in unemployment (year-over-year) is not as bad as some provinces, having the second highest increase from January-February at 16.7% is a bit more disconcerting.”
It certainly sounds startling when you put it that way but when you’re operating near full employment a small change can represent a large percentage. Keep in mind that the total number of unemployed represents less than one half of one percent of the total labour force. If you find that “disconcerting” you might need some time to relax and think.
“Norm, anything exciting (statistics-wise) to look forward to this weekend?”
Yes.
L.oki,
Crikey posted a link to those numbers up just a couple of comments. Labour force expanded marginally and so did the number of people who are employed. There was also a small change to the number of people who are not employed.
April 14th, 2009 at 3:45 PM
The labour force survey numbers are very encouraging for this province. If even half of the projects on the table proceed, we should quite well despite the circumstances. We are not booming, but we are not sinking as well. I don’t think there are too many jurisdictions in North America that wouldn’t trade to be in our position.
April 14th, 2009 at 3:45 PM
Yes, it is looking good here.
(L.oki is awaiting Jason’s doomsday prediction in response to my positive post)
April 14th, 2009 at 3:46 PM
while I can, i will sneak in one more positive. Stock markets up 4 days in a row, another upside day.
April 14th, 2009 at 3:47 PM
“Crikey, yes, and let’s not forget that with 1/10th the population of the US this is equivalent to 830k jobs lost in February or 2.95m jobs lost year-to-date. While the 18.3% increase in unemployment (year-over-year) is not as bad as some provinces, having the second highest increase from January-February at 16.7% is a bit more disconcerting.”
You are truly starting to get ridiculous Jason.
“Norm, anything exciting (statistics-wise) to look forward to this weekend?”
For a guy who doesn’t plan to buy a house for a year or two, why on earth are you so obsessed with week to week listing statistics? Maybe you should get a Wii.
April 14th, 2009 at 3:47 PM
Hey – what about a Wii game for buying a house? Wondering what a good name and outline for the game would be?
April 14th, 2009 at 3:47 PM
I think Jason is tired of all the mindless cheerleading and all the blind optimism that has gone on in this province the last year or so and is trying to bring a little bit of realism to light. To label the man as “ridiculous” sounds like an attack and I thought this blog was better than this. Peace out.
April 14th, 2009 at 3:48 PM
The_Chartist, thanks.
April 14th, 2009 at 3:48 PM
Jason,
I don’t find you pessimistic either, just realistic. It’s funny how often the two are confused on here. Our province rocks but like most other places has some problems that need to be addressed.
April 14th, 2009 at 3:49 PM
Thanks Heather. I think the old adage “just because you can do something doesn’t mean that you should” applies to our housing market. What a lot of people may not realize is that the current housing bubble is like that ‘perfect storm’ that comes along once in a lifetime; we are unlikely to ever experience the kind of dramatic price increases that we’ve seen in such a short period of time.
That being said, just because interest rates are low and it may be financially viable doesn’t necessarily mean that it’s a good idea or the right time to enter the market. Unless you have the three “L”s (location, location, location) you may find that you’re not able to sell your home in adverse market conditions should interest rates rise or your financial circumstances change. And if you look back over the past three decades interest rates can and have varied widely (from the historic lows we’re seeing today to double-digits in the 80′s).
When you’re buying a home today in this market it’s important to remember: you’re an owner.