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.

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.

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.”

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.

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.

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.

“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.”

* 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.”

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.”

“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.

“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.

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

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?