Saskatchewan home values down from a year ago even after modest first quarter gains: Royal LePage
With residential real estate inventory above benchmark levels, average home prices in Saskatchewan showed year-over-year declines of 5.5 per cent, but increased 2.2 per cent in the first quarter of 2009. According to Royal LePage’s quarterly House Price Survey, the year-over-year value of key housing types – detached bungalows, standard two-stories and condominiums – were down 10.9 per cent in Saskatoon, while Regina home values increased 7.8 percent over last year’s average. However, most Saskatoon housing types showed increases in the first quarter of 2009.
“The decline in Regina’s housing market started in 2008 – later than some other cities – so we lagged behind other markets,” said Mike Duggleby, Manager of Royal LePage Regina Realty Saskatchewan. “However, average 2009 house prices have increased over last year.”
After posting price gains throughout 2008, Regina South’s housing market has seen little activity so far in 2009 – with average prices for detached bungalows up 21.9 percent year-over-year to $295,000, standard two-storey homes up 13.7 percent to $290,000 and standard condominiums up 12 percent at $196,500. In Regina North, standard two-storey home prices were unchanged from a year ago at $200,000, while bungalow prices were up 2.6 percent to $238,250 year-over-year. Meanwhile, condominium prices declined 3.6% year-over-year to $141,111.
According to Duggleby, Regina’s buyers are sitting on the sidelines. “People are waiting to pick up bargains,” he said. “They’re waiting to see if prices go down further. Right now, there is an over-supply situation.”
Despite a slumping global economy, Duggleby believes it won’t be long before the province’s vibrant resource and construction sectors help drive all residential real estate prices back up. “House prices are connected to our local economy,” he says. “Construction is starting on a global transportation hub that will take air, rail and trucking freight from Thunder Bay and Vancouver. Work is also starting on a new western Canadian distribution centre for Loblaws.”
Although Saskatoon home prices have dropped over the past year, values have started to rebound with average price increases of 3.5 percent for key housing types within the first quarter of 2009 (not exactly how I would have characterized the first quarter, but I did point out that average prices and cost per square foot increased in January and February).
Condominium values took the biggest hits year-over-year, with prices down 13.6 percent in Saskatoon North and a decline of 16.4 percent for condos in Saskatoon East Central. Across Saskatoon, the average price of a detached bungalow was down 8.1 percent year-over-year, to $312,500, while two-storey homes were down 11.8 percent to $348,500.
The number of homes in Saskatoon for sale in March – approximately 1,400 – was down from a peak of 1,800 last year – but current supply levels are still very high and well above average.
“Prices have seen downward pressure over the last twelve months,” said Norm Fisher, Sales Manager, Royal LePage Saskatoon Real Estate Ltd. “This is the first time in this particular cycle that we’ve shown year-over-year price declines – from 4.5 percent to as high as 16.7 percent in a standard townhouse in the West End. It’s definitely a buyer’s market.”
Most of the 2009 activity in Saskatoon has occurred in the lower priced housing categories. Home ownership has become more accessible, with an average first quarter house price of approximately $282,700 – down from last year’s peak of $318,300.
“Through 2007 and the first half of 2008, Saskatoon experienced the greatest deterioration of affordability in Canada, so we were due for a correction. We want our young people to stick around and build a future here. Some first time home buyers are starting to come back to the market because of low interest rates.”
At the other end of the spectrum, Fisher notes that very few of Saskatoon’s half-million dollar homes sold in the first quarter of 2009.
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Norm Fisher
Royal LePage Saskatoon Real Estate
9 comments so far. We'd love to hear your thoughts.
April 25th, 2009 at 12:29 PM
Now that what many of us have known privately for some time is finally being made available to the public at large, it will interesting to see how the market reacts. To the real estate market, this has to be akin to a day at the beach: the sellers are out frolicking in the surf and the buyers are just contemplating entering the water when you hear “SHARK!”. I think when the realization finally sets in, it may be too late to entice buyers into the market despite any last-minute incentives and price adjustments for sellers.
April 25th, 2009 at 12:29 PM
“Now that what many of us have known privately for some time”
We’re on the internet here dude!
I’ll be really surprised if this comes as a big surprise to almost anyone, except maybe some delusional sellers who are mentally blocking out stuff.
April 25th, 2009 at 12:30 PM
Norm, you don’t really believe everything you read on the Internet, do you?
I think it speaks volumes when people spend more time shopping and haggling over the price of their car as opposed to the price of their home. In that sense, not everyone is as knowledgeable, thorough or as well-informed as we might think they are (or what we ourselves may be), and what seems commonplace and prudent to us may come as a surprise to others.
I would place delusional sellers on this short list, along with anyone who bought in 2008 (peak or otherwise) expecting their property to continue to appreciate in value. If the current trend in falling prices holds, you can also add buyers who purchased in 2007 to the list. See interest rates hiked by a point or two and we’ll bring a whole new meaning to the term “underwater”.
April 25th, 2009 at 12:31 PM
No way interest rates are going up in the near future. Not a chance.
April 25th, 2009 at 12:31 PM
“No way interest rates are going up in the near future. Not a chance.”
If bond investors begin to shun government debt, they will go up . . .
April 25th, 2009 at 12:31 PM
The_Chartist – it’s already started happening; last month the UK government failed to completely sell their bond offerings and it won’t be too long before the US government finds themselves in a similar situation.
L.oki, how do you define “near future”? 3 months, 6 months, a year…? I think you’re going to see higher interest rates already by early 2010, and that’s only 8 months away.
April 25th, 2009 at 12:32 PM
the near future is the near future….silly
April 25th, 2009 at 12:33 PM
Althought house price in saskatoon declined a little bit in the past few monthes, it still keep high level in cities among Canada. Fairly. I think it will continues drop until affortable for working people. You make 11 bucks per hour, how do you pay off $200,000 mortgage. how do you think my opinion, Norm Fisher?
April 25th, 2009 at 12:33 PM
Dave,
I agree that lack of affordability is one of the factors that is causing house prices to fall. I doubt though that there’s ever been a time in history when a single wage earner making $11 per hour could have afforded to buy a home valued at 75-80% of the average, and I doubt it’s something that we ever will see. I think you’ll ultimately see the average house price somewhere in the range of 3 to 4 times average household income depending on how well an area is doing economically, how attractive rental costs are, and what kinds of interest rates are available to finance a purchase. Average household income was estimated at $64,254 for Saskatoon in 2006/2007. It’s probably somewhere in the range of $68,000 now based on wage growth estimates from Statistics Canada.