Saskatoon homes sales to decline while prices increase: CMHC
Canada Mortgage and Housing Corporation (CMHC) released their fall outlook for the Saskatoon real estate market today, predicting a decline in unit sales and an increase in house prices through 2009.
“Saskatoon resales will decline almost 20 per cent by the end of 2008 with a further 11 per cent reduction occurring in 2009. Notwithstanding 2008’s forecast decline, resales will still be in excess of the ten-year average of 3,170 sales.”
“Our forecast calls for the average price to reach $287,000 in 2008 and approach the $300,000 mark in 2009 as price gains cool from the 2007 pace. Higher listings and buyer resistance to higher prices will result in relatively weaker price gains compared to 2007 for the balance of 2008 and 2009.”
Hmmm.
Read CMHC’s Fall Housing Outlook for Saskatoon 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
17 comments so far. We'd love to hear your thoughts.
April 26th, 2009 at 11:31 AM
http://www.youtube.com/watch?v=bNmcf4Y3lGM
Hope you don’t mind me posting some RE humour,,,
April 26th, 2009 at 11:31 AM
That video is hilarious!
April 26th, 2009 at 11:31 AM
Daniel,
that is priceless.
CMHC,
Geez, I would have thought by now the Kool-aid would be sour. Gotta force it down, I guess.
Average price going up? Does that include the free cars, trips or free upgrades we see more and more?
These guys have proven in the past to be not even close. They forecasted something like 7% growth for 2007 and prices went through the roof.
They are right about sales, but prices are going down at least 15% by Dec 09. It is all about supply and demand and the credit crisis.
April 26th, 2009 at 11:32 AM
Deflation versus inflation: The battle is raging
http://www.theglobeandmail.com/partners/free/globeinvestor/international/sept08/online/battle.html
“The global financial market is a confusing place these days. A battle is raging between concern about deflation in the near term and inflation in the longer term.
Money supply (M1) has been rising at a rate of close to 9 per cent over the last year in Canada, compared with. an annual average of about 6 per cent in the last 15 years. In the United States, M1 has been rising at a 19.5-per-cent annualized rate the last 3 months and at 11.4 per cent over the last six months to September. And the numbers are getting higher.”
Quite the balancing act ahead for governments down the road. Will we see double digit interest rates in a few years?
April 26th, 2009 at 11:32 AM
Further to George’s point about CMHC predictions.
“In 2006, the Saskatoon resale market will establish a new record in total sales, breaking the previous record set in 1996. Total sales are expected to increases by 4.7 per cent this year and reach 3,400 total units. In 2007, although sales will not see a new record established, demand for existing homes will remain at high levels with 3,400 units expected to change hands…Average prices are expected to increase by 9.1 per cent from 2005 to 2006, the strongest price growth for one year since 2004-2005. A less pronounced increase is forecast for 2007, with prices rising by 7.3 per cent to reach &169,500.
CMHC Housing Market Outlook, Saskatoon, Fall 2006
Actual residential sales for 2007 – 4,446
Average residential selling price for 2007 – $232,754
Three month average residential selling price at December 31, 2007 – $253,718.
“Following a 30 per cent jump in 2007, Saskatoon’s resale market will see another 12.5 per cent increase in sales to 5,000 units in 2008, making this year the highest number of sales on record. Sales will moderate somewhat to 4,750 units in 2009…Our forecast calls for an increase in the average residential resale price of 18.1 per cent in 2008, with a slower increase of 8.2 per cent in 2009.
CMHC Housing Market Outlook, Saskatoon, Spring 2008.
Actual residential sales for 2008 YTD – 3,241
So, look out folks! We’re going to sell 1,759 homes during November and December. Yay!!! I better wish you a merry Christmas and a Happy New Year right now. See you in January.
April 26th, 2009 at 11:32 AM
n the “Major Centres” report, CMHC is predicting fairly significant declines in all British Columbia markets and modest to average increases for every other Canadian market.
Pages 29-31 of this report if you’re interested.
http://www.cmhc-schl.gc.ca/odpub/esub/61500/61500_2008_Q04.pdf
April 26th, 2009 at 11:32 AM
Norm,
there are some smart ducks on this board and I believe they know more than CMHC.
Have you considered having a poll for 2009? Average price, sales etc.
We have trusted financial experts, governments, banks etc for so long and now look at the financial mess the world is in. And now these “experts” say they are going to fix the system they created and abused. What a joke!
As more people get more informed through websites such as this, the better it is for the common folk.
These experts make 200k+ a year, probably work in an office in downtown Toronto and think that food is made in a grocery store. They just look at numbers that can be distorted to justify their reasonings.
They don’t look at what is happening to real people, the debt trap and the high cost of living people go through. They just don’t get it!
April 26th, 2009 at 11:33 AM
Another killer prediction by the “experts”. Well done.
April 26th, 2009 at 11:33 AM
Yet another example of:
BIZARRO WORLD
April 26th, 2009 at 11:33 AM
Good old CMHC, the eternal optimists, as of course declining sales should lead to increased prices. The old inverse law of supply and demand…
Why do these guys even bother?
Reach $287,000? Weren’t prices already into the 300,000s? Approach $300,000 in 2009?? They’ve already went above, and since fallen below that! Now on their way slowly down? Heck some times it’s aggravating to think some one is getting PAID to do make these predictions – in a market slow down, I know a way to save some labour costs
On second thought, maybe some one should just show the CMHC the pretty pictures Norm has in his October closer look – the ones that show prices going down from a peak, especially by square foot
April 26th, 2009 at 11:34 AM
George,
“Have you considered having a poll for 2009?”
Yes, but something is holding me back.
I’d like to get 2008 behind me before I start thinking too much about next year.
I’m thinking of applying for a job at CMHC.
Nick,
“Reach $287,000? Weren’t prices already into the 300,000s?”
I believe that CMHC always talks in terms of averages for a period of time, in this case, all of 2008. We’ve been hovering in the high 280′s for the past 5 months and I suppose that there is some chance that we’ll remain in the 280′s through this year as there will be fewer sales through November and December at the new lower prices. That said, they’ll probably be as close as they’ve ever been on the year end number but definitely out to lunch on unit sales and the general direction of the market.
April 26th, 2009 at 11:34 AM
Norm,
“I’m thinking of applying for a job at CMHC”
I’m afraid you would score far too highly on intelligence and logical reasoning testing for that.
I came across an interesting article about the falling demand for oil. It also nicely addresses why the recent spike in oil prices appear to have been largely speculative.
http://tinyurl.com/5wbhyy
“Three months ago, the world was running out of oil.
Everywhere you turned, you heard whispers that the day of petroleum reckoning was at hand.
Now there’s too much oil, prodding OPEC to cut production targets for the first time in two years. Last week, the Organization of Petroleum Exporting Countries, confronted with the halving of oil prices since July, announced a 1.5 million barrel-a-day cut in output.
World markets greeted the news of reduced oil supply by pushing prices down further. Crude oil fell $3.69 a barrel Friday to $64.15. Yesterday, oil dropped another 93 cents to $63.22, a 17-month low.
How quickly things change. Or do they?
All speculative bubbles have a kernel of truth behind them to justify their existence. This time around it was China and India. These emerging Asian giants were gobbling up all the commodities the world could produce to fuel their rapid industrialization.
It wasn’t that the story was untrue; it was old. Growing global demand probably was the reason for the gradual rise in oil prices from $20 a barrel to $40 earlier in the decade, and even to $60 by mid-2005.
It was the moon shot to $147 that took on a life, and a litany, of its own. Emerging nations didn’t start gobbling up crude, coal and copper all of a sudden in the middle of 2007.
Yet analysts on TV and in print told us with a straight face that the doubling in oil prices from July 2007 to July 2008 was a result of fundamental demand, not speculative buying or investors, including pension funds, “diversifying” into “alternative investments” in search of “uncorrelated returns.” (It sounds a lot better than admitting you got suckered into buying what was going up and are now stuck with a pile of stuff that no one wants.)
“It happens in every market,” says Michael Aronstein, president of Marketfield Asset Management in New York. “Once it goes up an enormous amount, creating unfathomable wealth for the fortunate participants, someone makes an ex-post case as to why we are only at a beginning and it’s not too late to get in.”
This advice is “generally formulated by someone who has a vested interest in selling the stuff,” he says.”
April 26th, 2009 at 11:35 AM
Peak oil my a$$. Now we find out they are drowning in oil! 1.5 million barrel a day cut and they expect more cuts to stablize the price.
http://inflationdata.com/inflation/images/Charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm
“All speculative bubbles have a kernel of truth behind them to justify their existence.
It happens in every market,” says Michael Aronstein, president of Marketfield Asset Management in New York. “Once it goes up an enormous amount, creating unfathomable wealth for the fortunate participants, someone makes an ex-post case as to why we are only at a beginning and it’s not too late to get in.”
How does this pertain to Saskatoon real estate?
Take a look at the real estate value chain
http://bp0.blogger.com/_5Unw8_SY09A/RnquWEGsayI/AAAAAAAAABU/S1XGE37RXJI/s1600-h/RealEstate_ValueChain.gif
In times of global credit bubble and real estate mania, the ones at the top generally become more exploitative of the others below them.
Mr housing bubble
http://i34.photobucket.com/albums/d132/Capresesalad/housingbubble.gif
April 26th, 2009 at 11:35 AM
George,
Just because oil prices were driven by speculation, doesn’t make Peak Oil any less real. The facts still appear to indicate major oilfields are peaking or in decline.
April 26th, 2009 at 11:35 AM
Dr. Cornwallis,
Peak oil myth
http://seekingalpha.com/article/82236-the-peak-oil-myth-new-oil-is-plentiful
The peak oil theory is a money making scam put out by the speculators looking for high commodity returns in a challenging market environment. Most of the above mentioned finds have occurred in the last two years alone. I didn’t even mention the untapped Alaskan oil fields or the recent Danish and Australian finds.
There are trillions and trillions barrels of oil yet to be found and slowly we will find and use alternative fuels that are cheaper and better.
April 26th, 2009 at 11:36 AM
Peak oil is not a “theory” by any stretch of the word. A peak in a finite supply is a fact, and an undeniable one at that. The literature I’ve read on the subject states that the “peak” is not necessarily when we’ve extracted 50% of the oil from the ground as one might expect, but at the point where it becomes increasing, and exponentially difficult and expensive to extract the same – which in turn causes rising prices. Most of the authors I’ve read hold the position that if we wait until the peak to find alternate energy resources we will be in line for a catastrophic failure of industry. The only thing that is going to motivate people to find such alternative energy supplies is devastatingly high prices – we saw that this year (check statistics on miles drive in the U.S.).
I assume what you’re referring to then, George, is that peak oil is not yet upon us. That may be the case, I’m certainly no expert on the subject.
When people saw the prices of oil and gas rising, I think many assumed we were seeing peak oil. Can you really blame people, though? Information on oil production and extraction(true and reliable information) is rather difficult to come by.
Back on to housing – CMHC is out to lunch on this one. Do we really need to list the factors that will contribute to a downturn? I think it has all been said before. I would like to see the numbers/factors they used to make this prediction – or was it the magic 8-ball this time?
April 26th, 2009 at 11:36 AM
Saskatoon homes sales to decline while prices increase: CMHC
Yeah that makes sense! Guess I’m not moving to Saskatoon any time soon.