Saskatoon and Regina real estate to follow Calgary and Edmonton: RBC
In the latest “Canadian City Trends” report, released last week by RBC Economics, economist Amy Goldbloom makes the case for a “cooling” but fairly stable Canadian real estate market. Following six years of double-digit gains, sales activity is starting to moderate and listings are growing in most major cities causing sellers to “lose some bargaining power.” According to Goldbloom, “the risk of significant price declines is still low, and Canada’s housing market is expected to eke out modest price gains in 2008.”
Goldbloom does make some comments about western markets, and addresses Saskatchewan’s situation head on.
“The slowdown is not shared evenly among cities. The markets that soared well above their underlying economic fundamentals are the very ones with the most downside potential. Calgary and Edmonton have moved from chart-toppers to the bottom-of-the-heap in only a matter of months on a range of key housing market indicators, including house prices and sales.
“Saskatchewan jumped into the spotlight in 2007 as a commodity-led expansion attracted an influx of migrants and led to a major housing boom. 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 a similar fate to Alberta’s likely for both of these cities within a years time.”
Goldbloom made similar comments about Saskatoon in October of 2007 when she said Saskatoon homes were overvalued and “out of whack with the underlying fundamentals.”
Read the RBC City Trends report 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.
Follow our daily updates on Twitter @SaskatoonHomes.
Norm Fisher
Royal LePage Saskatoon Real Estate
42 comments so far. We'd love to hear your thoughts.
May 11th, 2009 at 3:48 PM
Finally, one of the “bullish” banks has become “bearish” on Saskatoon’s real estate markets, Norm seems to love those terms.
It’s really not negative. Just says the house prices went up in Saskatoon more than would be justified by our current low wages. So small but sure decline in Saskatoon house prices on the way.
Then again, the RBC economist apparently said the same in October of last year, but like usual, the local media only covers stories that would support the idea of a jusitified housing boom. Apparently, the public wants to hear news stories about how their houses are going up in value. Not 2 sided coverage. Sob stories about expensive rent do not count, they just perpetuate the myth that everyone should buy now or be priced out. Apparently no one should actually buy now, they should rent and wait for the now more widely predicted “softening” or “correction” of Saskatoon house prices within the next year.
‘Goldbloom made similar comments about Saskatoon in October of 2007 when she said Saskatoon homes were overvalued and “out of whack with the underlying fundamentals.”’
May 11th, 2009 at 3:48 PM
I think the key here is houses will go down a bit in price, but if you bought more than a year ago you’ll make money and if you plan on holding onto your house for a while/live in Saskatoon it will get back up to this level some day.
Sucks for the speculators who don’t sell soon enough/have already missed out on the peak.
I feel bad for those who have to move in a year or so for work or family and just recently bought, but even with prices down 10%, they’ll make a lot if they bought back in 2006 or earlier, so tough to feel bad for the majority of home owners. The RBC just confirmed what we all said,Saskatoon housing is overpriced. And over the next year that will correct itself.
May 11th, 2009 at 3:49 PM
Food for thought, we are coming upto the slow part of the year for house sales, so let’s not be shocked to see inventories grow.
Norm, my memory may be slipping, but did our inventory of houses peak around july or august of 2007, followed by a decline of inventory?
What are the chances that the speculators will take their properties off the market?
When the media reported a housing boom, and the prices went up, I saw many comments on here that scorned the media for attempting to make the news, rather then report the news. How is reporting predictions of declines of housing prices and unit sales any different. Is this another form of trying to make the news, and not report it.
I know there is alot of self interest, and some people would like to see the market take off again, and some want to see the market take a decline. The forward looking statements from each side is only meant to sway the masses. The conflicting data gets difficult to listen to over and over.
May 11th, 2009 at 3:49 PM
Carl, I think Norm pointed out that last year this time there were about 300 houses available, now it’s closer to 1,200, so we have an increase in inventory of 4 times what was available a year ago. And now we have the RBC predicting a price drop, which they weren’t doing a year ago.
May 11th, 2009 at 3:49 PM
Also, I believe there was a decrease in house prices last August (probably from an increase in inventory at that time) and that was after a much lower inventory before that than we have now. So likely a much bigger price drop this August if the same thing happens.
May 11th, 2009 at 3:49 PM
Everyone should check out this blog, it seems to ignore any negative predictions in favour of constant
promotion of housing in Saskatoon. Very one sided postings usually or at least an always positive spin. Never any that would suggest that *gasp* prices would drop. I try to infuse it with a good dose of Norm’s postings, heavily referenced, no plagiarism here. Not bad to post your ideas there. Make it a more balanced 2 sided affair.
http://saskhouses.blogspot.com/
May 11th, 2009 at 3:50 PM
Carl,
Inventory peaked in October at 650 and dropped by half around December. October also brought the highest average selling price of any month last year.
May 11th, 2009 at 3:50 PM
The article basically stats that sky high % increases per year are over.
I agree with it.
Anybody who took the “Yay the market is going to implode” view needs to learn to read.
Either way, I still think that the very high end prices will come down this year and anything in the $200k-300k is basically bullet proof.
May 11th, 2009 at 3:50 PM
Mithan,
I haven’t seen you on here before. Just curious who these people are you’ve talked to who think the market is going to “implode”? (Was it anyone on here?) Almost everyone around town I spoke to less than 6 months ago said Saskatoon’s real estate market won’t soften and is bullet proof. (They all thought I was crazy for thinking otherwise) Those are the people who are just starting to get a reality check.
May 11th, 2009 at 3:50 PM
PS:
Um, bullet proof is probably a strong word hehe.
I would say that if things go down, you are probably going to lose much less if you own a good, solid $200-300k home than those who bought in the $400-500k range.
Either way, I absolutely hate what happened to our housing market over the last 2 years. It wasn’t right.
I don’t want things to crash obviously since that is horrendous for the economy at large and the people that drive the economy, but at a minimum, I hope things level off for years to come until wages catch up.
May 11th, 2009 at 3:51 PM
Heather:
It just “seems” like some people here are rooting for a market implosion so they can buy a home.
May 11th, 2009 at 3:51 PM
Jim, reread my post, I am not talking about inventory right now.
”
Norm, my memory may be slipping, but did our inventory of houses peak around july or august of 2007, followed by a decline of inventory? ”
Thanks for your response Norm
May 11th, 2009 at 3:52 PM
Heather, you cheer every week that the inventory levels go up, which you believe will get you a cheap house. How do you know when the right moment to buy is?
May 11th, 2009 at 3:52 PM
I just bought a home in regina and I must say that after reading this blog, i almost want to sell the damn thing or opt out and lose my $10000 deposit.
The house cost 254000 and i can afford it at less than 30% of my wages, but i am also a first time home buyer who has been trying to buy in for 3 years but keeps getting scooped by others.
I wanted to wait longer, but the way everything has gone up, how long can you wait? up until 2 weeks ago, everybody was saying homes are going up more! More people are moving in, etc. Eventually you need a home to buy since you cant live with your parents forever. (I am 33)
Now i am all depressed the market will crash and i will be paying mortgage on a home that isn’t even worth what i payed for it, while my down payment is wiped out whereas i could of waited 2 or 3 more years and maybe things would have gone down more, I could of borrowed less and had a much better lifestyle as well.
Am I wrong here?
Do you guys think we are going to see a massive correction in the next 2 or 3 years that sees an across the board cut in prices in the 10-20% range?
I am really scared.
May 11th, 2009 at 3:52 PM
Prices aren’t going to crash , they will just plateau at worst , so everyone who’s bought a house can relax. Unless you overbid and paid a ridiculous amount , I’m pretty sure you’re ok. I work where a lot of new migrants come through and there are still people moving into Saskatoon, just not as much as last year. I especially see a lot of East Indian people moving here from Ontario as it’s easier to sponsor family.
May 11th, 2009 at 3:53 PM
Lou,
I’ll give you $210,000, right now.
“massive correction?”
No, but then I wouldn’t consider 10% massive.
I think you’ll kick yourself later if you walk on your deposit now. This “correction” will come and go and you’ll barely know it happened by the time you’re ready to sell. Hopefully, you don’t have a short term move plan. Just move in and enjoy your home knowing that nobody can give you the boot or serve you with a rent increase. Housing is going to take a bit of a break, and yes, it may experience some declines but Saskatchewan is sitting pretty right now and the province will maintain a strong economic performance for the next decade, at least.
May 11th, 2009 at 3:53 PM
Norm,
I just gotta know when the concert is on. I got a summer of sailing to plan, prawns to catch and I really want to make it to the show, especially when our girl starts to sing. .>)
May 11th, 2009 at 3:53 PM
Out of curiosity what do people think the possible correction would be? 10% gets thrown around a lot, but I don’t really see 10% impacting affordability that much. If I can’t afford a 450K home, I can’t afford it at 405K either. Same for 400K to 360 K, even 350 down to 320. 320 would be a stretch. Its doable, but I would rather not be house poor.
Don’t get me wrong. It is nice to not see another 50% increase. However, for mostly the first time home buyers, I don’t see a 10% decline opening the flood gates. Maybe if wages catch up.
May 11th, 2009 at 3:53 PM
Sorry Jedi, like the rest of us, wages catching up means 3 or 4% a year. My best advice, go into nursing, when you’re done if 4 years, you’ll reach the peak of their 35% wage hike!
Seriously, I think 10% is more of a immediate thing. Not sure I have seen anyone back it up. But, have heard a lot of reasons we should follow Alberta/Edmonton’s price decline, so maybe take what prices have went down there percentage wise and apply that here too. Or compare to a similar sized city with similar wages (tough, since our wages are less than most) but wages in Winnipeg aren’t that much higher and a few years ago were about the same, and prices there are up to 30% less, so if they go up 15% and we go down 15% that seems logically acceptable.
Or… if you can’t wait, just move to Red Deer or an Alberta city that will pay more, have similar amenities, cheaper housing and cheaper taxing, no provincial debt, and don’t worry about Saskatoon. I kind of envy that guy who used to be on here who moved to Alberta for a big raise and cheaper house…
May 11th, 2009 at 3:54 PM
Lou;
Join the club. Every damn time I buy something no matter how much I’ve shopped around I’ll see it advertised for less a couple weeks later.
The best advice is to enjoy your home. There will always be market changes and overall economic ups and downs. If you have stuck to the fundamentals, bought what you needed at what you could afford with some wiggle room (not balancing a no down 40 year mortgage) you will be ok. The situation there seems to be mirroring what happened here in Alberta.
Lots of inventories and sales returning to more normal historical levels (I presume). I haven’t seen a crash here. What I have seen is a market that doesn’t accomodate anyone trying to sell quickly at last years prices.
There are a lot of detatched houses for sale in the mid to high $200,000 range where last year you wouldn’t have seen them anywhere below $300,000-$325,000.
I think it all depends on a seller’s need to sell. I know peole sitting on a price they are never going to see again. But they don’t need to sell.
Others are reducing weekly but unfortunately those don’t seem to be moving either.
The problem is that if you are trying to sell to rebuy it’s tough to find a price point. If I was to find a place where I could drop the price on my house I frankly wouldn’t care as long as I could do what I want. But there doesn’t seem to be an across the board reduction.
I disagree that the low end houses will experience the lowest impact. It seems to me these have the lowest sales to listing ratios here. That would make sense as this would be the buying group that pricing and affordability has the most impact on. That group probably has the most to gain by waiting.
May 11th, 2009 at 3:54 PM
I’d agree with Ken, that the impact on lower priced houses will be as much, if not more than higher end houses. Last month, $300,000 bought you a junky small house, and $400+ bought you one 50% bigger, 30 years newer and in a better area. I think the 400 for a house you’d live your life in is more justified than 300 for a 800 to 1,000 sq ft circa 1950 house in a pretty average area, likely in need of new water heater or furnace or shingles etc.
The lower end houses are relatively more over priced, and there seem to be lots of them. Given, that within the past month they seem to have dropped off to the mid 200′s (my observation from cruising MLS only) this would suggest people are realizing old, smaller houses just aren’t worth the 300 they were being listed for, especially with added maintenance costs, not offset by the new paint or new counters.
That said, the problem with the 400 or 500 houses, is even if they ARE twice as good as the now 250 (prev 300) houses, most people in Saskatoon just can’t justify a 500,000 house on a 40,000 to 50,000 a year job, so unless those nurses with their 35% all go and buy new houses, demand for decent houses from the 1990′s or newer will be limited by a limited ability to afford them by middle income earners. As well, if you make 50,000 a year, the risk of losing 10% or 50,000 off your 500,000 house is likely more risk than you’d be willing to take!
May 11th, 2009 at 3:54 PM
Carl,
You have to have a game plan in mind. If you don’t you’re just like a gambler who goes to a casino, wins a large sum of money, and puts it back in again just to end up losing all of it.
My game plan for instance is to wait for things to fall 15% from where they are currently. If this happens I would definitely consider buying resale. If things start “recovering” after only about a 10% drop then I would have to make a decision: buy right away, or wait to build new. I’d probably end up waiting because it’s really hard for me to justify the value of resale homes right now. I do have a builder lined up who would build a decent price house for me once I get my hands on a lot. (Which there is going to be a larger lot draw come fall)
Lets get real,
You are the furthest from reality. “they (prices) will just plateau at worst”. Sorry to burst your bubble, but things are already plateauing, and with the amount of inventory there’s no place to go but down. SK is the little brother of AB, whatever they copy cat.
Lou,
It’s what Norm said. If you’re sticking around for 5+ years you have nothing to worry about. Enjoy your new home! :’)
May 11th, 2009 at 3:55 PM
I left Calgary at the height of the boom and bought a house here pre boom , so I consider myself more an expert at predicting what will happen than someone who whines about not owning a house and waiting for a drop in prices that wont happen.
May 11th, 2009 at 3:55 PM
Lets get real,
Awesome… so what are you doing next?
May 11th, 2009 at 3:55 PM
Hackensack , I’m going to spend the rest of the summer fishing , now that I have to work far less hours with no mortgage.
May 11th, 2009 at 3:56 PM
Lets get real,
Sounds nice, enjoy the fishing, but that’s not quite what I meant.
Being “more an expert at predicting what will happen”, I want you to tell me what will happen next. Make a prediction. I dare ya!
My prediction is tulips. Get in now people, the tulip market is set to explode! Then take your profits from the tulip market and let it all ride on beaver pelts!
Remember, you heard it hear first.
May 11th, 2009 at 3:56 PM
Lets get real,
You are as much an expert as you are modest. It’s a shame you won’t be returning here (with your “current” username) when the market proves you wrong. I’m sure you’ve already jeered me a couple times under different identities – please keep it up, I’d miss it too much if you didn’t.
Hackensack,
I like tulips, but what will I do if the market inflates beyond my means, might I be shut out forever?!?! ;’)
May 11th, 2009 at 3:56 PM
Found this excerpt from a story in today’s SP on the RBC report interesting. Amy Goldbloom, the economist who wrote this report was interviewed.
“During the next year, Goldbloom expects market activity in Saskatchewan to mimic what’s now happening in Alberta. Overvaluation in that market has made it impossible for potential homeowners to buy, leading to more moderate price gains.
“We think more moderation is ahead for Saskatchewan, similar to what is going on in Calgary and Edmonton,” she said in an interview from her Toronto office. “We’re not looking for any sort of U.S. style correction, but we are looking for those markets that have heated up the quickest to have the most downside in terms of slower prices ahead.”
By the end of 2009, she said, price gains should moderate to a single-digit pace, meaning no more 39 per cent year-over-year increases.
Sounds like she’s not banking on any actual decreases. Hmmm.
The whole story is here.
http://www.canada.com/saskatoonstarphoenix/news/business/story.html?id=c5db7352-7a4b-43ae-a09a-50bca6dd4080
May 11th, 2009 at 3:57 PM
Norm,
Anyone who needs to put their real name on the line will usually err on the side of caution. Only when softening starts to happen will people like Goldbloom acknowledge it in a statement. Besides, if she really thinks Saskatoon will follow Calgary/Edmonton trend, doesn’t that mean a recession will likely occur?
May 11th, 2009 at 3:57 PM
Heather,
There’s no recession in Alberta, it’s booming more than ever. Real estate declines isn’t a sign of recession in this province. Also people here are getting raises like crazy, the trades just got a 6.5% raise and will receive 25% over the next 4 years and then they go to the bargaining table again. In addition to the 25% their increases are minimums and if inflation is larger than their year over raises they will follow the rate of inflation.
May 11th, 2009 at 3:57 PM
Wesco,
I strictly meant recession in real estate, I wasn’t saying anything about economics.
May 11th, 2009 at 3:58 PM
Yeah i figures so, I was just clarifying for you.
May 11th, 2009 at 3:58 PM
Wesco raises a few key points. Alberta’s economy still trumps ours. They have more and superior oil reserves (ie quality and quantity NOW). They have far superior natural gas, which last I heard, still contributes more royalties to Alberta than oil. With no sign of decreasing fuel costs, given an emerging Asian middle class, Alberta’s fuel centric economy is superior to our diversified one. New report aside, their GDP economic growth still exceeded Saskatchewan’s, again, last year, as it always does.
Oh and they have NO provincial debt, lower taxes, and a median wage $15,000 more annually, and ongoing huge wage increases, depending on sources, still percentage wise, greater increases than here (ie widening the Alberta Advantage). With a far greater wage advantage for skilled professionals (except nurses apparently).
And their real estate is more affordable in Edmonton and many other Alberta communities. And actually dropping because of increased supply. In a place that added 36,000 new jobs (not typo) in 2007
Doesn’t help you if you live in Saskatoon unless you sell your house, get a raise and move to Alberta, except… will likely decrease immigration from elsewhere, as young professionals and tradespeople look to move to higher wages, and now cheaper housing, in Alberta. Our housing will need to drop, as otherwise, why would anyone move here?
(Yes quality of life, but we had that 5 years ago when no one was moving here with half priced housing)
Going with the 15% initial real estate price decline in Saskatoon, followed by changes to keep us related to, but lower than major Alberta centre’s for foreseeable future.
See what you’re missing:
http://www.edmonton.com/portal.asp?page=1
May 11th, 2009 at 3:58 PM
Jim,
I have mentioned this before, Saskatoon homes are still cheaper than Edmonton. Just because the media says something, does not mean it is true.
Until the average SFH in Saskatoon reaches 400k we are still not as expensive.
Edmonton SFH May 408k
Edmonton condos 262k
http://www.bobtruman.com/Edmonton_SFH_stats/page_1918017.html
Remember these are actual sales not listings.
May 12th, 2009 at 8:52 AM
It wasn’t the media, it was Royale LePage saying Saskatoon was more expensive for housing than Edmonton. The media’s largely ignored it or anything that suggests the Saskatoon boom is unsustainable, or that housing here is over valued.
You have to read about it in the Vancouver paper.
May 12th, 2009 at 8:53 AM
Jim,
I remember that report, I questioned Norm about it. Royal Lepage used areas 1-4 in Saskatoon, leaving out 5. (Pleasant Hill, Riversdale, etc.) And the average was 330k.
In Edmonton, some areas were left out as well, I can’t remember which , but if they cut out the crappier neighbourhoods like they did in Saskatoon the average was over 400k.( but they didn’t and the number was less than Saskatoon)
If stats are played around with, you get can get any result you want. I don’t think Royal Lepage has any bias either way, but it would have been best to have used all areas in every city and that would be true number.
May 12th, 2009 at 8:53 AM
Jim/George,
I believe that article on Saskatoon being more expensive than Edmonton was comparing overall affordability. (ie. wages AND average house price)
The same article also said we were nearly as unaffordable as Calgary.
May 12th, 2009 at 8:53 AM
Well, the Saskatoon’s area 5 is pretty sketchy in a lot of areas… maybe left out areas no one would have wanted to live, so that a decent area of Saskatoon is more expensive than a decent house elsewhere. Averages aren’t fair, as really we’ve only experienced a couple years of growth, where other places, ie Red Deer, have apparently had a very large portion of their population added over a 5 to 10 year period, ie. newer, better housing supply.
May 12th, 2009 at 8:54 AM
Well looking at the top places to live in Canada paints Red Deer as the not so rosy picture every1 is protraying it as. But who knows I always thought Red Deer was a crappy drug town but I might be wrong.
May 12th, 2009 at 9:13 AM
Armoth,
I do know that Red Deer is the STD capital of Canada. And I can prove it. Damn beer night!
May 12th, 2009 at 9:15 AM
There was a billboard in Regina, corner of Sask Drive and Winnipeg I think, that said it was the “Chlamydia Capital of Canada”. From planned parenthood. Assuming they would have researched that.
May 12th, 2009 at 9:16 AM
well being that I currently live in Reddeer and have for the past 7 years. Originally moved to AB from Sk because of an income difference of 25 thousand a year. Was actually thinking of moving back this year went and looked at the housing and the housing market in March was 100 thousand dollars difference then what it is here. So my wife and I looked at it weighed the options. we would both take a very substantial pay cut, pay 179 dollars more a month in land taxes, and live in a smaller shittier house. Not to mention the PST and the higher deductions on each cheque Nope don’t think so. We decided to stay in the cheaper city of red deer and make the higher income.
I have actually had 3 different couples of friends that moved back to SK and then decided to move back to AB because the cost of living is that much more then AB, and the wages are that much less.