Saskatoon real estate week in review–November 9-13 2009
Saskatoon real estate sales slid again for the second week in a row to hit their lowest level since the week of March 16-20. Just fifty-two Saskatoon houses and condominiums were reported firmly sold this week, a drop of seventeen properties compared to last week, but still ahead of the same week last year by twenty-one unit sales.
New listings dropped even more significantly, falling to just fifty-nine homes, down from eighty-eight last week, and less than the same week in 2008 by seventeen homes. New listing activity came in at its lowest point since the first week of January 2009 when just twenty-two Saskatoon homes were offered for sale on the MLS system.
Total active residential listings fell again this week, but just modestly. As of this morning, there are eight hundred and sixty-three properties showing an active status, down just nine from last week, and six hundred eighty-one fewer than were available at this time in 2008. Presently, there are just five hundred and twenty-one houses and three hundred and eight condominiums offered for sale on the Saskatoon MLS system, down from nine hundred and forty-eight and five hundred and twenty respectively for the same time last year.
Cancelled and withdrawn listing came in at just thirty-one units, with just over half of those (seventeen) immediately re-entering the system as a new listing. Thirty-one sellers made an adjustment to their asking price.
Strong sales activity in the higher priced categories, including one condo sale approaching a million dollars, pushed the average selling price of a Saskatoon home to it’s highest weekly level this year. It reached $307,444, a gain of $15,177 compared to last week, but still below the average for the same week last year by about thirty-five hundred dollars. The six-week average moved higher to hit $283,603, about forty-three hundred dollars ahead of last week, and about thirty-four hundred dollars shy of last year’s levels. The four-week median sale price advanced by seven thousand dollars on a week-over-week basis to reach $277,076, finishing roughly six thousand dollars higher than the same week in 2008.
Click the image for a larger version of the graph.
Average underbids on homes that sold for less than the asking price remained steady at $11,081, however, higher prices brought the average discount as a percentage of the asking price lower to 3.4%, down from 3.7% last week. Still, the lower discount ranges remained most active with nearly seventy percent of Saskatoon home sellers completing a deal within ten thousand dollars of the asking price.
Map displaying the boundaries of Saskatoon real estate areas
Data collection and calculation for our statistical reports
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.
Real estate geeks can follow our daily updates on Twitter @norm_fisher.
Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.
Norm Fisher
Royal LePage Saskatoon Real Estate
22 comments so far. We'd love to hear your thoughts.
November 17th, 2009 at 8:34 AM
Norm and others,
I am getting ready know to renew my mortgage and have been offered 3.59% for 3 years or 4.24% for 5 years. Any advice or comments?
November 17th, 2009 at 12:08 PM
Al,
This is always a tough call but personally, I’m wishing I had done a 5-year renewal when mine was up a few months back. I have a feeling rates will be significantly higher in 2.5 years when I have to renew again.
I think that there are slightly better rates available. TMG is offering a 5-year closed at 3.99%. – http://www.mortgagegrp.com/site/SK/rates.asp
November 17th, 2009 at 12:20 PM
Is this a balanced market?
November 17th, 2009 at 3:42 PM
Can someone please explain/help me understand how house prices in S’toon are still so expensive. We were thinking of moving back from AB (Red Deer) in May of 2008 at the height of the boom but realized prices were out of control and it didn’t make sense. Fast forward to today and we’re looking at comparative housing in S’toon and it still seems too high compared to Alberta. Now what I don’t understand is, once again, how people are affording these houses. Yes, S’toon has been booming, I get that, but the reality is still that the average household income is quite a bit lower than in Alberta. Property taxes are way higher, you have the provincial sales tax to deal with and personal income taxes are higher as well. We bought a fully finished 2 story (1900 sq ft above grade) in a very nice area of Red Deer for $446,000 in May of 08. Our taxes are about $3000 per month, we have a nice yard, super quiet cresent, no rail of highway to back onto etc. Comparable in S’toon and we’ve got to be a lot closer to $500,000. I simply do not get it. Someone please help me out here…
November 17th, 2009 at 4:23 PM
Scott, “I simply do not get it. Someone please help me out here…” Those of us who live here don’t get it either, so don’t feel too bad… The reality is that historically low interest rates and 35-year amortizations combined with as little as 0% down have made housing (temporarily) affordable for all (note that I said ‘affordable’ and not ‘reasonable’; paying close to 3x the cost of the home over 35 years is just insane). Add to that the mass hysteria of a ‘rapidly diminishing window of opportunity’ of being able to qualify for buying a home (or for that matter, finding one in a specific price range), and the stage is set for an unusually high demand.
“Now what I don’t understand is, once again, how people are affording these houses.” Fast forward a few years when mortgages are back at 6-8% (not too mention a good chance of reduced amortization periods) and it will be an entirely different story altogether.
November 17th, 2009 at 8:19 PM
Daniel,
“Is this a balanced market?”
Looking at average price performance over the past few months one might assume that the market is fairly “balanced” right now. We saw a bit of an uptick early in the year but single-family home prices (averages) appear to be pretty stable over the past few months. That said, I think there are some real contrasts depending on price ranges. For instance, if you’re looking at single-family home priced between 250,000 and 350,000 you’ll see a fairly limited supply and very strong demand. Based on recent sales, there isn’t enough inventory to satisfy demand for two months. Moving up to higher end housing we see start to see some differences. $351-$450K has about a three month supply. Moving above the $450,000 mark we have about nine months of supply. You can see that buyers are clearly going to have more clout at the upper end of the market than they are closer to the typical mid and lower ranges.
Even in the 250-350 range, it seems to me that there is very little upward pressure on price. In fact, I think it’s surprisingly balanced given the higher demand and low inventory in that range. The average selling price of a home in Canada is up nearly 20% year-over-year. We are still down slightly in Saskatoon.
Scott,
I agree with Jason that “affordability” is largely supported by today’s low interest rates. I think the fact that prices haven’t moved up here, in spite of the fact that conditions are rather ideal for sellers, may be an indication that people are operating at their limit already.
I suppose we are fortunate to have a relatively strong job market. Rates will probably rise and have some impact on values (my statistical wild-ass guess) but my gut tells me that jobs and incomes will continue to be strong here. A commercial associate told me today that one of our major construction companies has $800 million in non-residential contracts in the bag for 2010. If that’s true, we’re going to have one helluva a year for non-residential construction and may continue to attract new people who are looking for work. We may even see incomes continue to grow.
November 17th, 2009 at 9:20 PM
Jason,
There is an article in the Globe and Mail about these very issues today, titled “Are you ready for higher mortgage rates?”
Now, the folks at the G&M aren’t what I’d characterize as quick on the draw- we’ve been talking about these issues for awhile. Aren’t we smart.
This is, however, a decent article, and it makes some good, if not fairly obvious points. It is good to see this issue getting some of the attention in the MSM that it deserves.
“The cost of carrying a mortgage will absolutely shoot higher in the next few years. Nothing is more certain, so let’s get you prepared.”
Five ways to prepare for higher mortgage rates:
• 1. If you’re buying, don’t borrow as much as lenders will allow you to have.
• 2. If you have a variable-rate mortgage, where costs rise along with your lender’s prime rate, set your payments higher than they need to be to create a cushion to absorb rate increases.
• 3. Make a lump-sum payment on your mortgage or increase your regular payments.
• 4. Find out what your mortgage balance will be on renewal and use an online mortgage calculator to project what your payments could be if you were to renew at higher rates.
• 5. Remember that higher mortgage costs will limit your ability to carry other debts.”
November 17th, 2009 at 9:39 PM
…and this from today’s FP. It’s like everybody is talking about the “bubble” all of the sudden.
November 17th, 2009 at 9:42 PM
…and this.
November 18th, 2009 at 11:05 AM
Jen, “Aren’t we smart.
This is, however, a decent article, and it makes some good, if not fairly obvious points. It is good to see this issue getting some of the attention in the MSM that it deserves.” Or perhaps just overly cautious. 
Agreed – great suggestions, but I have a feeling that most were not given any consideration at the time of purchase. Here are some more:
* Focus on paying any higher interest debt down first (credit cards, student loans, etc.) This will also help improve your credit score, which may benefit when refinancing in the future.
* Ascertain any hidden costs in ‘converting’ a variable rate mortgage to a fixed one, and budget accordingly.
* Before refinancing or taking out a HELOC, research whether this voids your consumer protection under the liabilities act.
Norm, opinions on housing range from a ‘booming rebound’, a situation that ‘bears watching’ or an ‘over-valued asset class’; I think the latter two are more likely. This particular point was not lost on me, though:
“Is Canada in a housing bubble? Probably, but low rates, mortgage innovation and a relative shortage of new supply are likely too keep it going for a while yet… Now that last fall’s pent-up demand has been released, the three forces of low interest rates, transferring future sales to the present via mortgage innovation, and modest new supply can keep Canadian housing markets humming for some time yet before the eventuality of a softer market on rising rates in a future relative demand vacuum set in.”
November 18th, 2009 at 11:30 AM
I loved the guy’s suggestion of keeping your DSR to 28% instead of 30-32. That will really keep you out of trouble.
November 18th, 2009 at 11:45 AM
Norm, indeed. And how much will one’s DSR jump if interest rates even go up a smidgeon?
November 18th, 2009 at 4:17 PM
Hi Scott, you raise a good question. A few years back, yes, saskatchewan was very affordable to live in. Then when the economy showed some signs of sputtering then there was an influx or people moving back to where it ‘was’ cheap. But I still think the major factor in housing boom is due to inexperienced first time buyers with 5/35 mortgage. Quite frankly I think it will be a death sentence when it comes time for them to renew at high rates. My best guess is you will see interest rates rise in 0.25 increments every few months starting in July 2010, then you will see the herd panic and any last remaining buyers who are currently sitting on the side lines scramble to lock in at a lower rate and buy whatever they can. People don’t seem to care what the actual home price is or what the long term negative effect is, as long as the monthly payment is right and ‘right now’. Once all these people are out of the way, then you will start to see a long steady decline in housing across canada. Just my opinion, but I would sell, and then rent in the short term and take all that tax free money that you made and a year down the road buy when (and where) it is most realistic.
Im curious to see other peoples views on this, but just want to post to let you know that I think you instincts are correct.
Cheers, good luck for the future.
November 18th, 2009 at 7:34 PM
Thanks tech4. That’s kind of how I felt, I know if things align properly, we could see and do quite well here and make the move. Renting for a year, possibly more while the market sorts itself out would probably be the smartest play. Just a matter of convincing my wife of this plan if it is what we decide to do…
November 18th, 2009 at 9:41 PM
tech4monkies,
In general, I wouldn’t be surprised at all if you are correct and we do eventually start to see prices erode.
That being said, when the boom first happened two years ago, interest rates were higher than they are today. Somehow house prices manage to get to levels which were similar or slightly higher than those today. At the time you were looking at 5.5 – 5.75 for a 5 year fixed. That’s 1.25 – 1.5% higher than today. So I don’t think that rate increases are automatically going to kill home purchases because we’ve been there before. I can see scenarios where interest rates go up so that a 5 year fixed is at 6% and the market staying more or less stable (within 10% of current prices). Now if rates go up by 3,4,5% well yes, that will do it. Ultimately I think we will see 7,8,9 % interest rates and maybe much higher but the timing of that is a huge topic of debate in and of itself.
November 18th, 2009 at 10:24 PM
Scott,
My own personal opinion is that the way a lot of people (a pretty high majority I’d say from the people I know personally even) are actually affording to keep buying and paying these prices are that they are getting help from their parents whether it be in an outright gift of a loan they’ll never need to pay back, having lots purchased for them etc… I’ll probably end up getting a lot of flack but hey I’ve seen it personally time and time and time again.
Sure people can afford it when there are 2 of you, and both of you have decent paying jobs (Say at least 20 an hour each) and such, but almost anything short of that and it isn’t affordable for most that don’t get this help.
Other way’s would be living at home and saving a significant amount of money and ‘finally’ moving out. Would give a person a good start on things but then again not all people can do that. Also helps when people have thier schooling paid for, or thier cars paid for etc to be able to afford it.
I am not one of these people that can afford one and so am still renting a 1 bedroom for 850 a month. Not lookign for sympathy here, just answering with my opinion and everyone has to seriously assess what they can and cannot afford.
November 19th, 2009 at 9:57 AM
The booming economy certainly isn’t a factor anymore… Is anyone really surprised that we’ve now (officially) joined the ranks of other provinces running massive deficits? We are not anywhere near a recovery yet.
Saskatchewan deficit projected to reach $1.05 billion; [Economy shrinks 2.9%]
http://tinyurl.com/yeesoed
“The release of the government’s mid-year financial report Thursday shows it now projecting it will take in only $109 million from potash royalties and taxes – $1.8 billion below what it forecast in its spring budget. That has required a drawdown from the reserve Growth and Financial Security Fund of $564.3 million and a special dividend from Crown Investments Corp. of $460 million from the sale of the government’s share of SaskFerco.”
“However on a summary basis – which includes all of the operations of government including the Crowns – a deficit projected at $25 million at budget is now pegged at $1.05 billion. Economic growth projections of 2.1 per cent for 2009 at budget have likewise been revised drastically downward to the extent the government says the economy will have shrunk 2.9 per cent by the end of the year.”
November 19th, 2009 at 1:19 PM
Here’s a related article about SK’s budget woes from the ROB:
Saskatchewan potash sales hit 37-year low
A revision in expectations of potash revenue from 1.9 billion to 109 million… well, their projections were only 1.79 billion off. I think we should give them a break and call it a draw.
“The province said it is still on track for a $424.5-million budget surplus by offsetting the loss of potash revenue with a combination of moves, including spending cuts, a dip into reserves and with expected higher revenues from other sectors such as oil.”
Apparently expectations for 2010 are that potash sales will more than double from this year’s level. Mr. Gantefoer is still maintaining the province will not add to its debt.
November 19th, 2009 at 3:09 PM
Jen, yes, only $1.79B off. What does it say about the times we live in when provinces look to California’s example with respect to deferred spending and cuts? Brace yourself for further service reductions and higher taxes…
November 19th, 2009 at 3:11 PM
“A revision in expectations of potash revenue from 1.9 billion to 109 million”
Oops. Just a little off. Perhaps it is reasonable that they hadn’t expected to worst potash year in 37 years, but man, they really didn’t miss the mark on that one.
November 19th, 2009 at 3:25 PM
Anything over and above the historical average (for commodities as a whole) should have gone towards a) paying down the deficit, b) eliminating the PST, c) income and property tax reduction and d) creating a heritage fund – in that order.
November 20th, 2009 at 12:55 PM
I was of tech4′s train of thought, thought I would sell and wait for things to cool off while interst rates rose. I was one of the suckers who bought at peak in June 07 and thought I had better get in whilst I could – uneducated as I was then. Was hoping that I could try to sell my rather modest property next spring when the anticipation of interest increases would peak the market again – especially for starter homes, and hope i could get what I paid at peak for it, but this shrinking provincial economy could throw a wrench into the plan. Might have to hang in there for the long haul, but also have a variable mortgage to deal with. Have been enjoying my 2% rate for the past year but now am wondering if I should switch to fixed at 3.99%, was able to pay half of it off but still over 100k to go. Is it just me or is it getting more and more difficult to even attempt to forecast what is going to happen?