Maybe it really is different here
Posted by on August 5, 2010
There is one word that can be used to describe residential real estate activity for July in every major market in Canada – down. Some markets are down more than others. I could find only one that is down less than we are. Here’s a quick look at what I’ve been able to dig up today.
| Market | Down |
| Vancouver | 45% |
| Victoria | 44% |
| Calgary | 42% |
| Edmonton | 42% |
| Toronto | 34% |
| Halifax | 33% |
| Regina | 28% |
| Ottawa | 27% |
| Montreal | 26% |
| Saskatoon | 18% |
| Winnipeg | 13% |
So, you see, things could be a little better, but they could be a whole lot worse.
Maybe it really is different 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
19 comments so far. We'd love to hear your thoughts.
August 5th, 2010 at 8:40 PM
Hey Norm,
On the Rumley website click “video” you will find about half way through, their claim to 26 lofts. I dunno.
August 5th, 2010 at 8:44 PM
Somebody I don’t know who used to rave about Winnipeg at the expense of Saskatoon, I guess in the end they were at least partially right.
August 5th, 2010 at 10:17 PM
But Winnipeg has cheaper housing….
1. Interesting, today on Regina news, announced that Regina’s year over year sales were down 28% (Global) and response from Regina’s realtors’ association is sellers might have to lower their expectations on sales price!
Wow!
Granted Saskatoon sales are (only) down 18% YOY but I can’t ever see any official association up there suggesting sellers lower their prices. Norm, I’d say an 18% drop is still pretty similar, though a bit better than most.
2. Despite all the “growth” hype, I found this intriguing
Saskatchewan’s 0.36% first quarter growth was its fastest since 1972, and 2nd nationally
BUT
Alberta’s 0.35% (within margin of error?) was its SLOWEST since 1996
So… Alberta’s worst quarter of the past 14 years (56?) is about on par with Saskatchewan’s BEST in 38 years (152? quarters)
Saskatoon’s sales are still down – let’s not forget the 35% drop in surrounding (bedroom) communities
http://www.statcan.gc.ca/daily-quotidien/100628/dq100628a-eng.htm
So different?
Our record growth is about the same as Alberta (which is having a “bad” year) our sales are still down, and Manitoba still has nearly 200,000 more residents. To me, sounds like the only difference, is it took so long to catch up to the rest of the country.
And define “better” or “worse”, still seems pretty good for anyone selling in Saskatoon, despite a large drop in sales, for some reason, prices don’t go down much, just like they didn’t when listing ballooned to nearly 2,000. Wonder if it’s because you get realtor association hype, mayor hype etc., while in Regina, they are told to lower expectations because of a large drop in sales?
Seriously though, read the link, makes Saskatoon look pretty average compared to the rest of the west…
August 5th, 2010 at 10:24 PM
Population Growth in the first quarter by province
BC 0.37% 3 rd consecutive #1
Sask 0.36% best in 38 years
Alberta 0.35% worst in 14 years
Manitoba 0.30% has opened a 200,000 person lead over Sask (previously similar)
So, everyone else is growing about the same, sales “down” for these other areas?
Guess they are “down” to Saskatchewan’s level!
I’d worry more about population growth (glad to see Sask is finally positive) as creating fundamental demand for housing, and would suggest, an average growth rate, surrounded by a gigantic field (Saskatoon or Regina) should easily allow housing supply to meet demands.
August 5th, 2010 at 11:44 PM
Norm,
Those sure are some awful numbers. The pucker factor is surely settling in for some of those markets.
18% in sales is a big drop, but it remains to be seen how this market will fare. No doubt there are bubbles are over this country. Some are bigger than others. I think Saskatoon has one of the smaller ones.
August 6th, 2010 at 1:26 AM
Since roughly 1973, middle-class wages have barely kept pace with inflation and low-income earners are now worse off. Every single gain in economic productivity has went to the top income earners. Yet Joe Q. Public – despite stagnant wages – still thinks he is benefitting from economic growth.
Much of this belief is rooted in rising housing prices.
Consider that in the United States, housing was roughly 2.5 times median family income in 2000. The ratio overshot 5 by 2008. It was unsustainable. The bubble burst. The housing/median income ratio currently sits at 2.9.
http://www.ritholtz.com/blog/2009/02/us-existing-house-price-median-family-income/
In Saskatoon, the gap from 2.6 to 4.6 closed within the years of 2006 – 2008. It is currently at 4.4. This compares to a Canadian median of 3.7.
http://www.demographia.com/dhi-ix2005q3.pdf
Now consider that the first dominoes have fallen in the local housing market, as seen in the July sales slump, the $100,000 price reduction of the Rumley Lofts, and the unsaleable Ridley Manor condo conversions being turned back into rental units awaiting mythical buyers.
Given this, how can home values – currently at grossly inflated historical highs – continue to rise at rates beyond inflation, unless we start looking at intergenerational mortgages?
While an all-out “crash” is doubtful, it is even more doubtful to think the StarPhoenix and John Gormley have enough Pom-Poms to keep buoying this bubble.
Something has to give.
August 6th, 2010 at 7:27 AM
Nick,
“Granted Saskatoon sales are (only) down 18% YOY but I can’t ever see any official association up there suggesting sellers lower their prices.”
As we go through this correction period, home owners will have to recalculate their expectations when pricing their homes and expect a longer period of time for their home to sell. (SRAR – November 3, 2008)
There are fewer buyers and they are taking longer to shop, so the pricing environment is very competitive. (SRAR – December 1, 2008)
If Realtor associations could spin a good market we wouldn’t ever have bad markets.
August 6th, 2010 at 9:54 AM
Norm,
I was trying to find the worst yoy sales for the US market. I was not able to find a time period where the US market dropped as fast as Canada’s major markets in terms of sales yoy. But 2009 did see some record sales in some of Canada’s markets and going back to normal or below normal activity does result in some big declines.
August 6th, 2010 at 10:07 AM
One thing to remember is that last year at this time, many of those ‘other markets’ had already ramped up and were seeing 10% (heading towards 20%) price increases YOY. At this point last year we had a falling market in Saskatoon. In the comments section of the Q3 update (October 2009, http://www.teamfisher.com/saskatoon-residential-unit-sales-up-over-q3-2008-srar) Norm wrote: “The average sale price is down 6% year-over-year, while the median is down 3.5%. From the peak (June 2008), the average has fallen 13% while the median is down 10%.” I remember marvelling at how people were going nuts in the big markets (Toronto, Vancouver) while on this blog we were commenting that things were different around these parts … but they weren’t. They were just later… as usual.
The biggest ‘difference’ around here that I’ve noticed over time is that RE happenings seem to take longer to ‘filter through’ in Saskatchewan than in the bigger markets. Our bubble came later. Our post-2008 ‘bust’ came later. Our 2009 re-ramp came later. (Check out the curve of the graphs Norm just posted in the July roundup… they all tick up at the *end* of last year.) So it’s no surprise to me that everywhere else is falling, but we’re still running in the air waiting for gravity to kick in.
I still think that, based on fundamentals (things like population growth, average wages, etc.) Saskatoon housing is due for a correction. I doubt it will be as hard here as in many places (because we never went *quite* as crazy) but I have given up trying to figure out the ‘when’. As has been demonstrated elsewhere, July sales are eerily identical almost every year, but August (and even September) varies much more widely. I’m going to hold off judgment for another month or two before predicting the shape of the coming curve.
August 6th, 2010 at 1:53 PM
It is not different here. I’m sure every place says that to justify over valued housing. The only questions are when and how fast does housing tank. Looking at the sales crash, looks like the bubble has popped.
August 7th, 2010 at 10:57 AM
Hey Rick,
Thanks. They show a different number in two places on their site including the front page. Not sure what the deal is there, but thanks for following up.
Doug,
“But 2009 did see some record sales in some of Canada’s markets and going back to normal or below normal activity does result in some big declines.”
That’s a good point. The 438 unit sales that sold in July for Saskatoon was a record for that month. When you consider that the 5-year average contains numbers from the two largest July’s on record, coming in so close to the 5-year average is nothing to freak out about.
Bookrat,
All good points. Thanks.
All,
In case the little smiley face behind, “Maybe it really is different here” wasn’t enough, this post is completely tongue in cheek. I do think that the July sale numbers show some ongoing strength and that the bubble folks really have to stretch to use these as a sign of doom, but I don’t think we’re living in some magical land, insulated from the real world. The “we’re different” argument is somewhat amusing because almost everyone seems to use it before corrections and crashes occur. Apparently, Phoenix was different back in 2005. As Bookrat suggests, “fundamentals” will rule when it comes to if, when, how long, how deep. Jobs, income, migration and supply will all play a part. Perception and fear will also factor in to some extent.
Supply seems to be what’s affecting our market most right now. While unit sales are quite “typical” hovering around the five-year average, inventory is roughly thirty percent higher than the five-year average. that is making a big difference.
August 7th, 2010 at 11:03 AM
“As has been demonstrated elsewhere, July sales are eerily identical almost every year…”
I’m sorry to say that my July graphic for unit sales improperly displayed units from July of 2009. My spreadsheet contained a typo recording last year’s units at 338, instead on the 438 that actually traded. I’ve made the correction and replaced the graphic on that post.
August 7th, 2010 at 12:08 PM
“In case the little smiley face behind, “Maybe it really is different here” wasn’t enough… ”
Is *that* what that was supposed to be? I actually did wonder… on my screen it’s shaped more like a lemon-drop facing north-west, and has a couple of random pixels scattered in it.
Seriously, dood, get a bigger graphic. Some of us are humour/sarcasm impaired, and need big, bright signage.
August 7th, 2010 at 12:16 PM
Lol. I see. This was actually a cut and paste from word. I tried to make it lager when I posted but it messed with the rest of my text. I have replaced it with the WordPress emoticon.
This week’s review in an hour. There are actually some interesting changes this week.
August 7th, 2010 at 12:57 PM
Saskatchewan simply arrived late to the housing party, so we’re seeing a delayed result. It’s entirely possible that we’ll see numbers on par with what BC and Alberta are currently experiencing next year.
August 9th, 2010 at 10:58 AM
this huge run up in prices will come to an end. We will be left with a decline and then a stagnant period I’m afraid. There is no way people can make payments on these prices. Further more, the people that got in before the run up have been spending their new found equity in their homes on other items. As was mentioned earlier wages are not increasing enough to support the rising price of homes. should be buying opportunities in the next couple years. And then the cycle will start from the beginning again.
August 9th, 2010 at 8:32 PM
“There are fewer buyers and they are taking longer to shop, so the pricing environment is very competitive. (SRAR – December 1, 2008)”
That sounds like quite the opposite
Like SRAR is trying to tell us that inflated prices are a deal some how
August 11th, 2010 at 6:34 PM
So, when do we hear about Winningpeg or Winniboom?
With the smallest drop in housing sales?
With about the same unemployment rate?
Apparently it’s really different in
Winnipeg
August 24th, 2010 at 8:55 AM
Winnipeg is doing fine, we will continue to resist booms in the older communities, while the newer ones will succumb the insanity of boom-bust cycles. Creating all the casualties that go with them.
Which makes for lousy communities and an overall diminished city because of it.
Saskatoon chased me out because I couldn’t afford a home. I came back home to Winnipeg and it welcomed me with open arms. At my young age, Winnipeg gave me an opportunity Saskatoon wants to reserve only for the wealthiest. Or people with no standards.
Now? I own my home for less than what my friends are paying in rent. It’s all about having standards and a little self respect.