Saskatoon housing market remains steady: SRAR
The Saskatoon Region Association of REALTORS® (SRAR) released the residential real estate statistics for May of 2010 yesterday, accompanied by this release.
The residential housing market remained steady in the month of May. Unit sales were down 4% with 354 units selling compared to 369 in May of 2009. Year to date, unit sales are up 5% with 1,501 units having sold.
Click the image for a larger version of the graph.
The average price in May was $294,516, up 5% from May 2009 when the average selling price was $279,287. Year to date, the average selling price is also up 5% to $289,324.
Click the image for a larger version of the graph.
REALTORS® have sold $434,275,000 worth of real estate this year, up 10% from this time in 2009 when $393,349,000 worth of real estate had sold. Listing numbers are up 8% from May of 2009 with 779 properties having been listed during the same month this year. Listing numbers for the year are on par with last year. 3,162 properties have been placed on the market in 2010. Home buyers had 1,403 homes to select from at the end of May.
Click the image for a larger version of the graph.
The market softened slightly in communities around the city. For example, unit sales in Martensville, Warman, Clavet and Dundurn totalled 86, down from 97 in May 2009. The average selling price in these communities was $271,192, up 14% from last year when it was $238,904. The number of new listings was down slightly last month with 272 properties being placed on the market, 4% lower than last year when 284 homes were offered for sale.
Consumers are expressing confidence in the local economy as evidenced by their buying patterns. New home construction is doing well, retail sales are strong and when coupled with low interest rates conditions are favourable for a vibrant market. Sales and listing activity is expected to remain similar to the end of the second quarter.
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
27 comments so far. We'd love to hear your thoughts.
June 2nd, 2010 at 10:18 AM
Is this where I get to say “Worst May Sales in 5 years?”
2010 looks a lot like 2008 so far on several of those graphs (although not so much on the “Unit Sales By Month” graph). I wonder if that means we’ll see a significant drop towards the end of the year again as well? If interest rates grind upwards, that wouldn’t be too surprising.
Mind you, I’m out of the prediction business since apparently I stink on ice at anticipating what the global factors will be (e.g. ZIRP for two years propping up borrowing of all sorts). Now I just engage in idle speculation.
June 2nd, 2010 at 10:30 AM
Ahh, you stink in good company, Bookrat.
It looks as if CREA is revising it’s outlook for housing:
House prices to fall next year http://bit.ly/cw9vxU
What surprises me is that they’re still expecting prices to go up for the latter part of this year, frankly.
June 2nd, 2010 at 10:35 AM
It could be that a lot of potential buyers were waiting to see what the interest rate hike would be; June sales should be somewhat of an indicator.
June 2nd, 2010 at 10:52 AM
Ahh, I spoke too soon. According to the CREA, the price forecast for 2010/2011 remains positive, although sales will decrease.
http://bit.ly/9mm9Da
Jason,
I don’t get the impression that most people thought much, if anything would happen with interest rates. 5-year-fixed rates, which most buyers are likely funelling into, won’t be directly impacted by the central bank increase anyway. It will, however, directly impact carrying costs on variable mortgages, HELOCs, and other forms of consumer debt.
June 2nd, 2010 at 1:57 PM
Jen said “What surprises me is that they’re still expecting prices to go up for the latter part of this year, frankly”
The report that you linked to says that the 1.6% number is above current levels, but the CBC.ca report says that the 1.6% is above 2009 levels, which would make a lot more sense.
From CBC.ca (linked below):
“The agency expects the average price of a home in Canada to be $325,400 by the end of 2010, a 1.6 per cent increase over 2009′s level.”
Since we’re already well above 2009 levels, moving to “only” 1.6% above those levels would indeed be a drop. I looked at the CREA report and the wording isn’t very clear, but I think CBC’s interpretation makes more sense
http://www.cbc.ca/money/story/2010/06/02/crea-housing-forecast-2010.html
CREA’s original press release: http://creanews.ca/
June 2nd, 2010 at 2:02 PM
Interesting info on the CREA forecasts, although I am always skeptical of numbers given out by interested parties. Find it surprising that sales are forecast to decline here when new builds have increased by so much over last year. Not good news for builders if it turns out to be accurate.
Also Norm, noticed quite a big single day slide in listings as you tweeted. Is this typical for months end proprtionate to listings(approx 1.5%)? In your opinion, do you think it has anything to do with yesterdays interest rate news?
June 2nd, 2010 at 4:09 PM
Jen, that’s entirely possible. The amount that consumers are taking on debt in this country is staggering; it’s beyond belief.
June 2nd, 2010 at 5:50 PM
Bookrat,
You nailed it. We’re a good bit off of the five-year average.
Jen and lawtalkingguy,
“The national average home price is forecast to climb 1.6 per cent in 2010, reaching a record $325,400, with average price gains forecast in all provinces.”
Yes, this would be average of all 2010 vs. same for 2009. The average has been up over $340K lately ($345K in April, $341 in March, $335.6K in February and $328.5K in January) so this will require a pretty good downturn to get back to a $325K average byt the end of the year. I expect that we’ll see a fairly fast decline in Vancouver and TO. The average slid more than 50K in Vancouver last month. It amazes me how quickly those large markets can turn.
Brian,
Active listing fell 28 units because of listings that expired on 5/30 and 5/31. Month end tends to be a popular date to wrap up a failed listing and this is not an unusually large number.
June 2nd, 2010 at 7:09 PM
Norm,
“so this will require a pretty good downturn to get back to a $325K average byt the end of the year.”
That would be about a 10% decline in price in the latter part of the year from the beginning of the year. That is a pretty significant number and would constitute a pretty quick downturn.
June 2nd, 2010 at 7:51 PM
Doug,
For sure. I was trying to get my eyes on the number of units already sold and the predicted amount to figure that out but you’re probably in the ballpark. I think it’s safe to say that somewhat more than 50% of this year’s sales will have taken place by now.
June 2nd, 2010 at 11:29 PM
The 0.25% interest rate hike might be small, but it is a hike.
And it shows the Bank of Canada is willing to raise rates,
so likely some more in the future, who knows how much?
Also interesting, as May was already an off month compared
to last 5 years. Rate hike may be small, but will be interesting,
if sales are already off, and listings up, what a small rate hike
does.
June 3rd, 2010 at 12:20 AM
Norm: “We’re a good bit off of the five-year average.”
And here we get an excellent example of the difference between ‘average’ and ‘median’:
– The median May sales for the last five years looks to be ~360, so we’re not too far off that.
– The aberrant spike that was May 2007 sales, however, skewed the numbers so much that FOUR OUT OF THE LAST FIVE YEARS are ‘below average’!
June 3rd, 2010 at 6:42 AM
Bookrat,
For sure. Take 2007 out of the equation and it looks like a fairly regular kind of May. Still the lowest number since 2004 but all within 10-12 points of the other. Nothing alarming.
Through the first four months of 2010, the Saskatoon real estate market has been up against pretty weak numbers and the “up over last year” mantra has been instrumental in shaping perceptions on the state of the market. We’re up against some crazy strong numbers for the balance of the year. The back half of 2009 generated record sales numbers most months (ahead of 2007 in five of the seven months) so we’re likely to be hearing lots of “down year-over-year” talk through the balance of 2010. It will be interesting to see how perceptions change as the news changes.
June 3rd, 2010 at 10:26 AM
What does lower level of settlement balance mean to the overnight interest rate?
The settlement balance is targeted to be decreased dramatically within half a month.
”
The Bank will conduct Special Purchase and Resale Agreement (SPRA) and Sale and Repurchase Agreement (SRA) operations as necessary to reinforce the target for the overnight rate (see Terms and Conditions). The targeted level of settlement balances will be gradually reduced to the typical level of $25 million according to the following schedule:
* 2 June 2010 – targeted settlement balances will be lowered from $3 billion to $1 billion;
* 9 June 2010 – targeted settlement balances will be further lowered from $1 billion to $200 million; and
* 16 June 2010 – targeted settlement balances will be lowered from $200 million to $25 million.
“
June 3rd, 2010 at 10:44 AM
“By providing significantly more aggregate balances than
required by participants in the Large Value Transfer System (LVTS
participants), overnight funds are expected to trade at 1/4 per cent – the rate
that the Bank of Canada pays on deposits.”
So I guess the Bank is not going to keep the interest low artificially but will let the market decide on its own soon?
June 3rd, 2010 at 2:13 PM
Hi Cindy,
I hope this helps:
A Primer on the Implementation of Monetary Policy in the LVTS Environment:
http://www.bankofcanada.ca/en/lvts/primer_2005e.html
I’m not an economist by any means, but’s my understanding that nothing is changing but the allowable level of settlement balances, which typically has been $25-50M. This level was increased dramatically during the recent financial crisis, but the BOC is now reverting back to pre-crisis levels. I don’t believe anything else regarding how overnight funds are traded is changing.
June 3rd, 2010 at 4:07 PM
Hi, Jen,
Thanks for the link. Many terminologies do not sound familiar to me, so I give up.
.
Is the settlement balance part of the means the Bank uses to enforce the overnight rate? I didn’t mean to predict that the decrease would lead to the increase of the overnight rate, I’m just wondering if that decrease can serve as an indicator of the Bank’s attitude or not. After all, this is a free market.
June 3rd, 2010 at 5:17 PM
Norm “so we’re likely to be hearing lots of “down year-over-year” talk through the balance of 2010″
Doubt it, when down year over year becomes evident, SRAR will switch its tune to “up month over month” or “stable” or something. You can use numbers to prove anything…
With the subsequent small increases I am expecting, as the Bank of Canada eases in market cooling measures, say another 2 or 3 increases of 0.25 or 0.5% in the next year or so, buyers just won’t be able to afford as much, unless they move to Regina
Regardless of what realtors say.
Norm ever consider over seeing a Regina blog?
For some reason, I know more about Saskatoon market than here at home…
June 3rd, 2010 at 7:43 PM
“Doubt it, when down year over year becomes evident, SRAR will switch its tune to “up month over month” or “stable” or something. You can use numbers to prove anything…”
Hmmm, that’s not the way numbers work in my world. Sales are either up, down or level no matter how you spin it.
Anyway, a quick look back at SRAR’s releases from early 2009 tell a different story.
01/2009 – “unit sales were down 29%”
02/2009 – “sold 211 residential units, down 42% from the same month last year when 365 properties were sold.”
03/2009 – sold 283 residential properties in the month of March, that number down 28% from March 2008 when 391 units were sold.
04/2009 – assisted 353 buyers to find their dream home. That number down 15% from April 2008 when 413 units were sold.
“Norm ever consider over seeing a Regina blog?”
Lol.
June 3rd, 2010 at 8:09 PM
Hey Cindy,
I think I’m missing something- how do you think a decrease in settlement balances might influence the overnight rate?
“I’m just wondering if that decrease can serve as an indicator of the Bank’s attitude or not.”
I guess it can insofar as there has been a re-establishment of “normal operating procedure”, as there is a return to the 50-basis point operating band around the overnight target. The BOC again will charge 25 basis points above the benchmark for loans, and pay 25 basis points below the benchmark for deposits. During the crisis the BOC narrowed its operating band to 25 basis points – which in effect meant the interest it paid on chartered banks’ deposits at the central bank matched its overnight rate.
The excess settlement balances were, I think, used in the hope market participants would use it to lend- which they most certainly did. I’m assuming the BOC does not want give the perception they’re willing to intervene during any more than they must during a crisis.
I apologize in advance if I’m not understanding what you’re getting at.
June 3rd, 2010 at 10:30 PM
Norm,
What has been happening with the high end market lately? I went to a couple of open houses priced from 375 to 399K and there was no one else there.
Are you seeing any signs of a slowdown in the Saskatoon market during the last few weeks? Maybe the rain is dampening buyer enthusiasm.
June 4th, 2010 at 12:57 AM
Nick, I liked the one I read the other day: ‘demand-driven downturn’. With the personal savings rate down to 2.8% this should get interesting…
June 4th, 2010 at 6:41 AM
Roger,
There have been 199 sales at $350K or higher in the past 60 days. Current inventory is at 531 this morning.
“Are you seeing any signs of a slowdown in the Saskatoon market during the last few weeks?”
Weekly sales chart.
June 4th, 2010 at 10:01 AM
Great post and graphs this inspires me to do something similar for my region. Things are slowing down here in Ottawa. Cant wait to see how things will look after July 1st when our GST will become HST.
June 4th, 2010 at 12:34 PM
Hi, Jen,
If I didn’t make you understand, it ‘s probably because of me, not you,
.
It’s just that on June 2nd some people were kind of surprised that the interest rate was only increased by 25 base points. I was wondering what the government really plans to do, so I went to its home page and found that quick and dramatic drop in the settlement balance that gave me another small surprise. It made me feel the BOC is actually getting well prepared for another probably bigger interest rate increase in later July and the action is probably gonna continue until the rate goes back soon to its normal level. But when I first read it I really had no idea if that decrease was something completely irrelevant, not to mention if it would have any direct impact on the rate. I just picked up some phrases that made me feel somehow they together make the BOC’s money stimulus package work.
Nice discussion with you, which I believe helps my knowledge about economy become a little more than 0,
.
June 4th, 2010 at 2:02 PM
Norm,
Thanks for chart. Sales look like they have taken a slight drop in the last few weeks. But sales don’t get reported until a few weeks after an offer is made and the sale has gone unconditional (house, inspection, financing etc.). So sales are a lagging market indicator.
I was curious about what has been happening with buyers now. Are you seeing fewer people at open houses, showings and calls to the office? Weather has been so dreadful one wonders if folks have not been looking lately.
June 4th, 2010 at 3:41 PM
Roger,
We (my crew of three) seem to feel that things have picked up some recently. For certain though, buyers are not feeling a great deal of pressure to act quickly unless they’re in that ‘close to average’ range of value. Properties that are priced above market are not moving in any price range.
We don’t do many open houses.
Oddly, the upper end market does seem reasonably strong. Two sales above $800K this week. Another very close to $1 million last week.
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