remember, when you put all these good points, you forget one thing. everyone that wants to get into the market and can’t right now is just being irresonsible and is expecting to buy a brand new house, suv, take trips and spend money at coffeebucks….remember, as some people say, u can save up enough for a down payment even while goign to school!….

back to reality….

I can’t believe I missed this but Pam, I have a question. So if everyone is just expecting too much, then your house price of 200-260k which you say is reasonable…would that be possible today for a couple, one in university and another working a gas station, to buy such a house?

very good points, all of them well grounded in reality which many people seem to forget when “their” asset goes up, and leaves people in the cold.

In the case that it doesn’t go down it just makes other places that we’ve ‘caught up to’ that much more attractive.

I don’t buy the notion that we were undervalued in 05-06. Builders were making money then and housing was still affordable for renters and buyers. It was a sellers and buyers market. Every housing bubble in the last few years whether local,national or international had fundamentals that justified increases at the beginning from job and wage growth but then things went crazy and many are paying for it now.

I have said it before that if we did not have the bidding wars, the looser lending in 06,07,08, fear, panic, and greed among other things, average prices would be around 180- 200k with historic growth. Not only do we have a real estate market in not too great of shape, there are hundreds if not thousands of buyers and renters that are in financial dire straits. Many are house poor and with house prices depreciating, it is over for the housing ATM. This is why Edmonton and Calgary do not have the retail sales growth they once had. People are feeling less weathly because their biggest asset is losing money.

The quicker that prices drop to historic levels, the better it is for the majority. Here is why:

Better affordability – not only for buyers, but renters as well.

This will also lead to more immigration which will help the labor shortage which leads to a bigger tax base,more house sales and more retail sales etc. Many people will move here if they can get a good job and an affordable place to live.

More house sales- This will clear inventory. This helps the real estate industry get more sales and it also help builders to keep building so they don’t have to lay off tonnes of staff like in Alberta. The construction industry is a big part of our economy. On average if it takes 4 man years to build a house, if we go back to building 500-600 houses a year, many jobs are gone.

Money left over each month- so they can go out and spend it on the economy or gosh, even save some of it!. The problem we have right now is that people have 0 savings and are resorting to using credit to finance their lifestyles. They are hoping for wage increases in the next few years to reverse that trend but I would not count on that with the world credit crisis.

The quicker the market goes 525k to 400k in the new areas and a average house goes 270k to 190k the

better for the majority of the real estate industry and the city economy as a whole.

For people to say 3x income for owning a home, make sure that includes debt. Rarely are there people with no debt buying a house these days. Student, car and credit loans are through the roof. Buying a 240k house with 80k income and a bunch of debt in the world credit crisis is crazy to say the least.

Owning a home has many hidden costs that most first time buyers are not told and or do not realise. It seems the real estate industry just wants to get people into homes no matter what the cost and once they are in, the home owners are left to fend for themselves. This is what happened in the states and it has crepted up into Canada. Not everybody in the real estate industry is bad. There are many great people there but they have been covered up by the

greed fear and panic that has swept this market place throughout the world.

The consumer is the biggest part of the economy.

The biggest financial purchase a consumer can make is a house and most people have to make this purchase with credit. Throughout the world at different times houses have been unaffordable big time. The consumer has no money and can’t get much credit.

Now prices throughout the world are declining, some are downright crashing. But it is too late, the biggest worldwide financial crisis since the Great Depression is upon us.

Affordable housing where builders still make money is great for everyone.This is my reasoning for prices to be at historic levels. Will they go there? Who knows where the bottom is. The market will do what it will do.

I’m not disagreeing. I think you’ll see that by spring. Unless house prices roll back to numbers like Alex and George are proposing, buying a home will still require some sacrifices for most of us.

George,

“150-210…good economy…low interest rates…”

When you throw out numbers like these, which are alarming to say the least, perhaps you could expand on your thinking a bit? If it were Callum predicting an increase to $325K he’d have already been called every evil name in the book.

Not many here would disagree getting into a mortgage requires sacrifice. I’m by NO means one who lives frivolously, I’m very frugal. This is why my husband and I can afford to build. (And have a downpayment of more than 20%)

That being said, housing IS too expensive, and that’s being realistic. Things need to come back to 3X income for sure.

1999 to 2002 prices would sure clear up that inventory problem we have.

While I agree that we are a ways from a housing bottom here; time and price wise, I don’t think we will see those prices. Time wise 2011? Average price wise 150-210k? This is with a good economy and low interest rates. Who knows with the worldwide credit crisis.

These are just guesses, I always believe the market will do what it needs to sort itself out.

Not nearly low enough. We’d need to see some 1999 to 2002 prices before people with student loans and rent will be at flight-speed.

Seriously – think about it.

Callum captcha: “Trust Sweden”

Absolutely. But they also make buying a home more difficult, as you have less capacity to save a downpayment and (in my case) pay down student debt.

P/R is a legit issue.

Amy Goldbloom, RBC economist wrote this last October about price to rent ratios. Of course, lots has changed since then.

“Housing markets across the major cities in the Prairies have long been the most affordable in the country. But, the recent pick-up in Saskatoon’s market has quickly changed conditions. Regina and Winnipeg have seen their price-to-rent ratios move up during the last few years after stable valuations through the 1990’s but are still at modest levels. The bigger story is Saskatoon where the recent pick-up has caused price-to-rent ratios to soar. In contrast to Calgary, Edmonton and Vancouver, the pick-up in Saskatoon has been very concentrated in the last year. The sudden and steep acceleration in price-to-rent ratios coincides with the sharpest deterioration in affordability on record. More expensive conditions already appear to be pricing people out of the market. Fifty percent price gains are starting to weigh on demand and softer demand should feed through to cooler price gains ahead.”

I guess it’s also important to note that soaring rental rates do make owning a home more attractive financially (not necessarily more attractive than renting, but more attractive than it would be if rents were stable).

I do agree that 16 times annual income is probably a good benchmark but I don’t think it makes sense in all instances. That formula would make Robin’s one-bedroom apartment worth $192K. Probably more of an example of how warped rents have become. Should be more like $130,000/16 = $8,125/12 = $677.

BTW, somebody should let Garth know that a five year mortgage can be found for far less than 7.2%.

“Perhaps withing a few months time it will once again make more sense to own than to rent”

I believe you are right. The lower prices go, the bigger the gate opens up to let more buyers into the pool. Price is the biggest factor in owning a home but not the only one.

Where and when prices bottom here I don’t know, only an educated guess but using the formula on Garths website we could get one idea especially if our economy in Saskatchewan keeps chugging along.

http://www.greaterfool.ca/2008/11/01/its-the-yield-dude/#comments

http://702.teamfisher.com

Way, way better than my first house for sure. Of course, my first house was about $75K but our total household income at the time was around $24,000-$30,000 (commission). Buying that house was far from a cake walk.

Even if prices fall back to the 3 times income standard, and they probably will, buying a home will require some sacrifices. Almost every big problem that we’re facing right now results from everyone wanting everything right now. I think we’re about to learn that life doesn’t work that way, at least not for long.

Future buyers can take some comfort in the fact that things are definitely moving in your direction. As others have said, a market which is unaffordable can’t sustain itself for long and we’re seeing those corrections occurring now. It seems that the rental situation is continuing to deteriorate. Perhaps withing a few months time it will once again make more sense to own than to rent.

I agree – when we bought our 1st house I was in University and my husband was working at a gas station – our houses needed work (LOTS) – but we assumed that our first house would need work. We were able to save for a deposit, by being realistic about our goal – we knew we wanted to buy a house and so that was our goal – yes it meant sacrifices – but that is what we expected.

I just did a quick search and there are 30 houses for sale in area 2 (houses not condo’s) between 200,000 – and 260,000 – no they are not perfect – but area 2 would be considered a decent “safe” neighbourhood – definately not the ghetto or the “hood”. Are none of those houses acceptable for first time buyers? Prices are coming down – but let’s also be realistic about expectations.

Hah, just got a rent increase of $150, WAY more than 1% inflation! Of course they state some BS excuses of why they “need” to raise it. It comes into effect February, we’re moving into our house at the end of March. I’d love to see these buggers forced to lower their rent when they can’t find a tennant.

Many friends and co-workers I know have bought in those areas in the last two years instead of throwing a pity party about not being able to purchase new in Erindale when they are at the start of their careers and married lives.

to answer your question,

Saving a deposit while going through school really isn’t that hard. But then again going through university I didn’t go our drinking every weekend with my friends – because really why do I want to spend $100 for a night out only to be too sick tomorrow to do anything?

because you only live once, and your only young once. Life is about living it to the fullest and enjoying everything while you can, not hording and saving your nuts like a miserable squirrel and then being a an angry old crazy when your 60 because you missed out on everything….I personally know a few people who currently suffer from this syndrom.

If everyone was to buy a house at the current prices in saskatoon..this would be a very miserable town with nobody ever having fun, needless to say local businesses would fail because nobody would have any disposable income.

So Im taking everyones negativity as positive and hoping it brings our little prairie town back under the international radar to a town that everyone thinks is just a berry that grows on a tree again, and not this fake metropolis that everyone has made it out to be.

we shouldnt even be in the same news article as the rest of thes million plus population cities, yet we’re in competition with edmonton who has 4 times the population as us…Am I the only one that finds this insane.

Acording to my basic math we should be 1/4 the price as edmonton just like we were 2 years ago, maybe even a little less as we dont have the oil surrounding our city like they do that empoyes thousands. We have a potash mine that employees a couple hundred if you include the truck drivers and various sub contractors here and there.

Dont forget about the blessed PST we all get to pay that increases our cost of living by exacly 5% compared to the cities in alberta that we find ourselves in competition with

peace

Please enlighten us with real numbers.

So sorry to hear that. I know my rent is at 850 as of last month for my little 1 bedroom apartment in 1960′s decor and i fully expect the company to up it again.. with no upgrades…i tell ya, if it wasn’t for my girlfriend that i love being here in school, I would be out of the province so incredibly quickly.

I agree that a HUGE catastrophic crash has to come to lower these prices.

I mean my place for example, they replaced some carpet in the hallways (which by the way is pilling and is showing movement, meaning it was CHEAP), but the rest of the units are sitting empty. The company says they have over 50% sold and have had that for 6 months…though no one lives in the units, and the couple of units that have been ‘remodeled’ haven’t sold for over 6 months. Yet they seem to keep raising the rent. I guess they have to pay for the emptiness somehow, why not charge the people that ARE renting more money.

I’m truly scared of what will come in the new year for rental increases. With everyone thinking these prices are justified nothing will happen. With gormley and other nutjobs that don’t think of things from other people’s points of view spouting thier garbage, nothing will change. Best change will be to leave, and i truly believe that.

Even people that I work with think the whole standard of living is good here are only saying that becuase they DO have money. What does a person do when they have no savings beucase hte costs are too high here…can a person even afford to propose to thier girlfriend? can they afford a wedding? money is a real worry for myself at least and i’m working my butt off. Is that the standard of living someone should hope for? I think not at least.

I haven’t commented in quite some time about the whole financial situation, as I dont’ have the knowledge to chime in on things in that respect. Have kept up the reading on things though. Very interesting conversations going on.

Saving a deposit while going through school really isn’t that hard. But then again going through university I didn’t go our drinking every weekend with my friends – because really why do I want to spend $100 for a night out only to be too sick tomorrow to do anything?

I read the article that you posted. I am not sure the author of the article really understands monetary inflation. For example the author stated:

“So if we assume a 20% contraction in the stock market we are looking at the NYSE and the NASDAQ dropping a little over $7 Trillion dollars in value.

So even if the government pumps $1 Trillion back into the economy there is still a net deflationary effect.”

The 7 Trillion dollars does not disappear it just changed hands. The original 7 trillion dollars that was invested by say Joe the Plumber no longer exists in his hands. However, somebody took the other side of the trade and bought the whole way down. Also something to think about how much money was made going short and how much of that original 7 trillion dollars is on the sidelines. Answer all of it. It however is true that a deflationary scare cannot take place without a true deflation backdrop.

Another way of looking at it is if I put 50 dollars in the savings account the money does not disappear it is just waiting to make a purchase in the future. I suspect at some point in the future something will be done by the government to increase the velocity of money. When this occurs deflation will no longer be an issue.

Think about it the Federal Reserve had to create a deflationary backdrop to scare the politicians into granting them and the treasury extraordinary powers to essentially print without limit.

Personally if I had to choose whether to live in an inflationary environment or a deflationary environment I would chose inflation. Wheelbarrows full of money to buy stuff sound better than cheap stuff with no money to buy anything.

Must be the fact that Regina is far more government (incomes). I am also at a loss to explain how Saskatoon can be so much higher than Regina. I really thought that Saskatoon prices would fall behind Regina’s at some point but that doesn’t seem to be in the cards anytime soon. Over the past couple of months there’s about a 17% difference in our median prices. As for Edmonton, I think we are in the process of sorting that out. Saskatoon has declined as much in the past few months as Edmonton did in a year so the gap is getting wider. They are about 14% higher (average) than we are. Their sales to listing ratio has been improving steadily over the past few months so there’s probably some chance that their declines will slow in 2009.

a bad choice of wording on my part.

Even though central banks are printing money like it is going out of style, deflation is here because there is less money in the system than before, but for how long?

This is how I understand it.

http://inflationdata.com/Inflation/Inflation_Articles/Inflation_and_Bailout.asp

Canada May Act Further to Aid Banks, Pensions, Flaherty Says

http://tinyurl.com/55lyef

Nov. 1 (Bloomberg) — Canada’s government may double its purchases of distressed loans among steps being considered to aid banks and private pension funds amid the worst financial crisis since the Great Depression, Finance Minister Jim Flaherty said.

The government is willing to buy more mortgages from commercial banks, after agreeing this month to purchase as much as C$25 billion ($21 billion) in real estate loans.

“We can do more dollar value if necessary,” Flaherty said in an interview late yesterday in New York. “We can go another C$25 billion; if we have to do more we will do more.”

Surprised by how much Regina has higher average wages

Saskatoon $76,000

Regina $82,000

Edmonton $87,000

Kind of funny with that much of a difference that Saskatoon house prices are higher than Regina. I know we’ve talked about this being historically the case, but just doesn’t make a lot of sense. And funny that Saskatoon prices can even be comparable to Edmonton, when they’re making $11,000 more a year, and pay lower taxes.

http://www.statcan.ca/Daily/English/080611/d080611c.htm

http://www.theglobeandmail.com/servlet/story/RTGAM.20081031.wtakingstock1101/BNStory/energy/home

“Too bad they weren’t paying attention to a veteran energy economist named Philip Verleger Jr., who insists oil never should have gone much above $70 a barrel; that it did so only because of “a perfect storm” of U.S. policy mistakes, European economic developments and currency shifts; and that it could well end up back in the low $20s before the global economy gets back on its feet.

“I think it will go a good deal lower, particularly next spring [when oil markets are traditionally weakest],” Mr. Verleger said in an interview. “If this thing follows a natural cycle, I think we’ll see something as low as $20 to $25.”

Mr. Verleger, who recently set up shop as a professor of strategy at the University of Calgary’s Haskayne School of Business, has been an adviser to U.S. presidents, as well as big energy producers and consumers. He has testified before Congress, debated with oil hawks and openly challenged their assumptions, which he says are based on a poor understanding of oil economics.

Forget about speculators or even peak oil, which won’t affect prices for decades. The reason oil prices shot so high, in a nutshell, has to do with a boneheaded U.S. decision in August, 2007, to put much more light sweet crude in the Strategic Petroleum Reserve.

This occurred just as European demand for the stuff, which is used to make low-sulphur diesel, was soaring thanks to truck traffic to the new Eastern European members of the EU. Currency issues also came into play, forcing up the dollar price of crude.”

“We all have been living in a fantasy world where credit was easy and cheap to get. The average family can not afford the average house. Most cars on the road are new and bought with credit. Student loans, credit cards, people are swimming in debt. Now credit is contracting and because of this we entering a time of deflation. Everything from house prices, gasoline prices, electronics etc will come down in price.”

Nice try George there is a difference between Deflation and Deleveraging. Deflation can only occur in an enviroment where the money supply is contracting. This is clearly not the choice world central banks have chosen. Once the deleveraging is done expect the sentiment to switch from a deflationary scare to inflation.