Saskatoon real estate week in review–Oct. 12-16 2009
After eight weeks of bouncing up and down Saskatoon home sales declined for the second week in a row to finish the week with fifty-nine properties sold, three fewer than last week, but still ahead of the same week last year by fourteen properties. By this time last year we had pretty much headed into less than fifty territory, and we stayed there until the third week of January when things started to pick up again. We know now that all things are possible in the Saskatoon real estate market. While some kind of a slow down is normal and expected at this time of the year I will be surprised if we don’t continue to see sales exceed those of late 2008. Recent hikes to fixed term rates may very well get some people going and we’re up against a fairly weak performance in the closing quarter of last year.
New listings of Saskatoon houses and condos slowed even more falling to just sixty-four homes, down from one hundred and six last week, and fifty percent lower than the ninety-six properties listed during the same week last year.
Click the image for a larger version of the graph.
Active listings in the residential category fell by thirty-six properties over the course of the week to finish at one thousand and six, down six hundred and sixty-seven units from the same time in 2008 and getting close to breaking into triple digit territory for the first time in eighteen months. While unit sales were strong in comparison to the number of new listings introduced to the inventory, the decline was pushed along by thirty properties that expired without a sale, so we may see a number of those reintroduced to the Saskatoon MLS system next week. In any case, it looks nearly certain that the inventory level will find its bottom somewhere below the thousand unit mark, and nearly as certain that it will get there by the beginning of November as an additional ninety-five properties have a scheduled expiry date between now and then. As of today, there are five hundred and eighty-four detached houses and three hundred and fifty-three condominiums displaying an active status.
Just twenty-two listings were canceled or withdrawn from the market this week and nearly half of those came back around disguised as a new listing. Is anybody fooled by this game? Forty-four home sellers adjusted their asking price.
The average selling price of a Saskatoon home took another step higher this week, gaining over ten thousand dollars from the previous week to finish at $303,111, the second highest weekly average for 2009. The six-week average moved up just one hundred and thirty dollars to $285,424, about fifteen thousand dollars shy of last year’s number when it sat at $300,599. The four-week median price spiked higher, gaining ten thousand dollars on the previous week to reach $272,900, up from $270,000 for the same week in 2008.
Click the image for a larger version of the graph.
The average underbid on the Saskatoon homes that sold for less than the asking price fell slightly from $10,626 to $10,059, but the average discount as a percentage of the asking price was almost unchanged at 3.2%. Seventy-one percent of home buyers paid within ten thousand dollars of the asking price, on par with the week before. Fewer large discount sales caused the $10,001-$15,000 category to grow to nineteen percent from fourteen percent last week.
Map displaying the boundaries of Saskatoon real estate areas
Data collection and calculation for our statistical reports
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Norm Fisher
Royal LePage Saskatoon Real Estate
25 comments so far. We'd love to hear your thoughts.
October 18th, 2009 at 10:22 AM
I think with interest rates up, and suggestions they will go up even more, we will see down ward pressure on both sales and prices, as already expensive Saskatoon becomes even more so for the average income earner. Not even sure if I can brag about Regina being cheaper anymore, but with lay offs in both, I think the local economy has pretty conclusively peaked, and we are now competing with the rest of Canada recovering with cheaper housing prices, banks that are sticking to conservative lending, and higher and likely soon to be higher again interest rates.
I would predict another big drop price wise soon, failing that, another big drop sales and population wise as rising interest rates will make Saskatoon even less affordable.
October 18th, 2009 at 2:21 PM
You don’t say?
October 18th, 2009 at 2:50 PM
Nick, don’t forget what happened last October when the mortgage criteria changed. We could certainly see a throng of pre-qualified/first-time homebuyers hitting the market to snap up anything affordable if there are signs that interest rates are going to spike sharply.
This would have the potential to further reduce inventories and, at the very least, keep prices stable in the interim. We could also once again see multiple offers and even prices increase on properties in the most affordable ranges. Further out, I agree that we could see some price collapses (and certainly on mid to high-end properties).
October 18th, 2009 at 5:10 PM
Jason, not sure there are any excess buyers waiting in the wings anymore these days. Maybe a few more buy now instead of next month with rates going up. Then again, a lot of the problem in Saskatoon’s market is that prices are already pushing the envelope on affordability. I would doubt many buyers can afford to just jump in for even a modest $300,000 house in the east end for fear that it will become even more unaffordable in the months to come.
I agree with Nick, in that I see further unaffordability decreasing in migration and maybe causing some of those laid off in Saskatoon to go back to Ontario or the Maritimes for cheaper housing, which in those markets, may still be affordable with higher interest rates.
I would think that now may be a good time for some rental owners or speculators to list their properties, or take a bit of a drop in asking price now, rather than to wait for the inevitable drop in price and qualifying buyers in the near future.
October 18th, 2009 at 5:19 PM
Our landlord lost their property to the bank; one of my friends is close to the same situation. Anyone here heard similar stories?
October 18th, 2009 at 5:57 PM
Jason,
You’re comments sound remarkably more positive on future sales trends
This is understandable, I mean you would not have purchased if you were completely bearish on the future of the local housing market. Despite all the dire predictions over the course of the last year, all aspects of the local housing market have moderated and performed well. If a correction does occur it will likely happen in the same way as most corrections do, when everybody least expects it, and nobody see’s it coming.
October 18th, 2009 at 8:58 PM
We are going to see small gains this year…despite what the bears predicted. It has been a good post boom year.
October 18th, 2009 at 11:24 PM
“I would predict another big drop price wise soon”
“We are going to see small gains this year”
I suppose it depends how you define “big drop” and “small gain”, but I’m going predict that neither of those scenarios are plausible in the last months of 2009. Definitions, anyone?
October 19th, 2009 at 6:51 AM
Jason,
I don’t think that the “multiple offers” scenario is that realistic given that we’re pushing towards the end of October already. I suppose that it’s possible that inventory continues to decline and sets us up for an unpredictable spring, but again, if rates are up then, that will have some kind of a cooling effect on demand.
James,
“I agree with Nick.”
I would expect you would agree with Nick. Seeing that the two of you share a computer (or at least an IP address) your opinions are likely to be closely aligned, perhaps even the same. Please check out “the rules.”
Hi Alisha,
Thanks for the visit, and the comment.
The Canadian Banker’s Association releases a monthly report on mortgages in arrears (behind 3 or more months) and breaks them down as a percentage of all mortgages in each province of Canada. The most recent report was released in July shows that Saskatchewan was sitting at .23% in arrears which is very near our historical lows.
We have some software that will search names of property owners of the listings currently for sale. It can recognize a couple of hundred know mortgage lenders (Scotiabank, BMO, Concentra, etc.) Today, it’s not able to find a single foreclosure listed on the Saskatoon MLS. Not to say that this won’t grow but it’s certainly not an apparent problem today.
October 19th, 2009 at 9:16 AM
Rick, “You’re comments sound remarkably more positive on future sales trends. This is understandable, I mean you would not have purchased if you were completely bearish on the future of the local housing market.” On the contrary, this is only my outlook for the near to immediate future (and one influenced solely by the possibility of an increase in interest rates fueling a period of short-term demand). Long-term, as I’ve previously indicated, I fully expect expect prices to take between a 5-15% hit over the next year or two.
L.oki, “We are going to see small gains this year…despite what the bears predicted. It has been a good post boom year.” Sure, based on averages, that’s entirely possible. However, I saw more than a few houses that dropped in excess of $125-$175k from the peak in 2008 (by the time they eventually sold in 2009), so I wouldn’t say that all sellers would necessarily share your assessment of 2009, although there were definitely more opportunities for buyers – no question.
Norm, “I don’t think that the “multiple offers” scenario is that realistic given that we’re pushing towards the end of October already. I suppose that it’s possible that inventory continues to decline and sets us up for an unpredictable spring, but again, if rates are up then, that will have some kind of a cooling effect on demand.” I was more referring to the temporary housing bubble that was created last October with the elimination of 40-year/0%-down mortgages, rather than the specific timeframe. Also note that the ‘multiple offers’ comment was directed towards properties in a very narrow and specific price range. Regardless of when we may eventually see a rate spike, we sill see at least a temporary surge in demand as a result. Beyond that, as rates climb I agree wholeheartedly that this will definitely have a cooling effect on the market.
October 19th, 2009 at 9:26 AM
Jen, “I suppose it depends how you [Rick] define ‘big drop’ and ‘small gains’, but I’m going predict that neither of those scenarios are plausible in the last months of 2009. Definitions, anyone?” I’d agree. In my mind, a “big price drop” isn’t on the immediate horizon and more likely a year or more away. As for “small gains this year”, I’m thinking it will more likely be a small loss year-over-year from 2008. And again I’m referring more to average prices.
October 19th, 2009 at 9:29 AM
From the daily updates, Norm, I expected that this week would be near-record-breaking in terms of the average sale. Any insight into what caused it? High prices in general, or did a couple of top-dollar properties move in the same week?
(The high median indicates that it was more that the overall sales pattern was shifted towards the top end and away from the low market this week, but I always like verification. Thanks!)
October 19th, 2009 at 10:52 AM
Completely unrelated, but somewhat illuminating (from the US). If you thought credit was becoming expensive now, just wait…
No, You’re Reading That Right: 79.9 percent rate targets credit-challenged
http://www.nbcsandiego.com/around-town/shopping/No-Youre-Reading-That-Right-64173667.html?ref=patrick.net
October 19th, 2009 at 11:45 AM
Hi Norm,
Long, long time listener, first time caller.
I have been reading this blog since not long after we moved to Saskatoon from out of province in the summer of 2007. We had a horrible real estate experience (despite an excellent agent) and didn’t end up buying. But, I’ve kept coming back to this site because I find so many interesting things. So what has finally prompted me to write now? I just read for the first time your blog rules and they made me laugh – a lot.
I will now resume being the creepy lurker.
-Ginger
October 19th, 2009 at 2:02 PM
Chinese company signs deal to mine potash in Saskatchewan
http://www.thestarphoenix.com/Chinese+company+signs+deal+mine+potash+Saskatchewan/2120082/story.html
“China imported 3.18 million tonnes of mineral and chemical fertiliser, with a total value of $1.637 billion, in the first eight months of this year, according to Chinese customs data. The data did not include a specific figure for potash.”
“The deal will allow the private Chinese mining firm to explore potash in an area covering 96 square kilometres, with an expected annual production capacity of 3 million tonnes, Xinhua said, without naming its source for the information.”
October 19th, 2009 at 2:30 PM
Nick,
“with lay offs in both, I think the local economy has pretty conclusively peaked”
This is a pretty broad statement. I find that people lacking in evidence but strong in opinion tend to make such statements. Could you possibly back it up with some evidence. Here is what I found, the numbers do not “conclusively” indicate that the economy has peaked.
“According to Statistics Canada, the Saskatchewan unemployment rate for September 2009 was 4.0 percent. This is a decrease of 2.1 percentage points from the August 2009 rate of 6.1 percent but 0.4 percentage points higher than the September 2008 level of 3.6 percent. ”
http://www.stats.gov.sk.ca
Also, as far as interest rates going up, isn’t this giving anyone deja vu? Weren’t we having a conversation about rates going up in July? I remember the 5 year fixed rates went up to around 4.5% .. and then came back down again. In fact, rates have been going up and down between 4 to 6 % for at least 5 years. People need to be aware that there is a relation between the economy and interest rates. If rates going up chokes off growth, the resulting economic problems usually pull the rates back down again. So to say that rates are going to go up, housing prices will plummet and we are all screwed seems like wishful thinking to me. Long-term there will be inflationary impacts to what is happening, but I am not sure we are there yet.
October 19th, 2009 at 6:51 PM
Bookrat,
One sale at $625, seven between 400-500 and ten between 300 and 400.
Ginger,
Well, thanks for chiming in and I appreciate the feedback on the rules. I had fun putting them together. Please don’t be a stranger.
Peter,
“Also, as far as interest rates going up, isn’t this giving anyone deja vu?”
True indeed. Good point.
If I’ve learned one thing over the past year it’s that anything can happen, regardless of what’s happening. I am busy planning for 2010 and my plan is looking forward to a strong year.
October 19th, 2009 at 8:11 PM
Please note that Saskatoon has lost ground this year in relation to the national average which has risen. Average prices are about $40,000 below the national average at this point in Saskatoon. For a province with an average income per capita that is above average and unemployment well below average, and income and PST taxes below average, affordability doesn’t look to be a strong argument against price increases in my view.
One of the factors which limit price decreases is the cost of building new. What tends to be the range per square foot of building new at this point? Does anyone know?
October 19th, 2009 at 8:40 PM
Tim,
Roughly 240-280 for a two storey. 280-330 for a bungalow (location and features making the difference).
October 19th, 2009 at 11:00 PM
As a home owner what are the options available to protect from mortgage identity theft? I heard this fraud is an escalating concern at least in Ontario. More often a mortgage is written without the knowledge of the true owner of the house using the stolen identity documents, and the owner will come to know only when the bank calls for payment.
Does the Saskatchewan law protect house owners from this fraud…or something like title insurance should be purchased from Saskatchewan?
October 20th, 2009 at 5:35 AM
Jim,
This is a great question, and one which I have very little expertise in personally. I suspect that identity fraud, is identity fraud whether it relates to a mortgage, credit card, or any other type of loan and that the same general considerations for protecting oneself apply.
My understanding is that our Land Titles System is “absolute,” so to speak, and only the title holder can agree to charges against their own title. In other words, you can’t be held responsible for a fraud perpetrated against you. That said, if a lender alleges that you took a mortgage on your own property and produces evidence in support of the claim, you will be put in a position of having to defend the title. You’ll have to prove that a crime has been committed.
Title insurance can be purchased to protect yourself from fraudulent acts of this nature. Here is an excellent publication from First Canadian Title Insurance which addresses title fraud specifically, and offers some advice of how you can protect against.
Jim, this topic will make for an interesting post at some future point (soon) when I’ve had the opportunity research more fully. Thanks for the comment.
October 20th, 2009 at 8:29 AM
Jim, I’m not sure if these suggestions would be of help, but I’ve found them useful.
* It is apparently possible to apply locks to your title to prevent transfer and interest registration, amendment and assignment (not sure what the fees are or what this entails).
http://www.isc.ca/default.aspx?DN=622,564,80,16,1,Documents
http://www.isc.ca/default.aspx?DN=635,622,564,80,16,1,Documents
* If at all possible, ensure the title is in several names (you and your spouse, for instance), as this makes forging a transfer more difficult (since both parties have to consent).
* If you have a clear title, setting up a HELOC (even if you have no intention of using it) will allow you to register an amount up to (and occasionally more than) the assessed value of your home (even if the HELOC is for less than that), virtually eliminating the ability to fraudulently borrow against the title. The bank now holds an interest in the property, and any attempts of fraud with respect to the title are likely to raise a red flag at the bank first.
* If you don’t have a clear title (but do have equity in the home), a HELOC through another financial institution protects you in a similar fashion and registers two additional titles against the property – so now fraudsters need to run the gauntlet of two different banks (in addition to compromising your identities).
October 20th, 2009 at 8:46 AM
“Long-term there will be inflationary impacts to what is happening, but I am not sure we are there yet.”
I have to agree, Peter. We’re not there yet.
Today, as was largely expected, BOC leaves prime rate unchanged:
Bank will not ‘pull an Australia’
“The Bank of Canada left its benchmark interest rate at a record low 0.25 per cent Tuesday, stating that while the Canadian economy is recovering, the current strength of the Canadian dollar “is expected, over time, to more than fully offset the favourable developments since July.”
October 20th, 2009 at 5:16 PM
Norm,
Doing the math on the cost per square foot on new construction: Unless builders want to build a 1,000 square foot bungalow and sell at a loss the sales price is going to be about $300,000 plus garage, driveway and landscaping.
I was assuming that the price per square foot you mentioned does include the lot, but is that the case?
October 20th, 2009 at 8:55 PM
Sorry Tim. I could have been more clear as to where these numbers were coming from. I used the high and the low of actual new bungalows and two-storeys which are offered for sale right now on the MLS in Saskatoon. Yes, that would include a lot, and most of them have garages.
I have a 1034 bungalow in Willowgrove with a smaller double detached for $299,900.