Saskatoon real estate week in review – Sept 7-11 2009
Like a bouncing ball on its way back down Saskatoon real estate activity fell off big following one of our strongest weeks for the year. It was short week, and sales reports almost always drop off after a long weekend but with just fifty-seven house and condo sales reported, this past week is the slowest on record since the week of March 13. Sales tumbled from an incredibly strong one hundred and two last week but still managed to come up even with the same week last year when fifty-seven Saskatoon homes also changed hands. It seems strange to say “we haven’t had such a quiet week since spring,” a time when housing sales should have been brisk. Real estate sales are about as mixed up as the weather has been lately.
An exceptionally slow listing week may indicate that the market didn’t just die, but rather, that people were busy and focused on other things. Just eighty-five new single-family and condominium listings made their way to the Saskatoon MLS service, down from one hundred and twenty last week, and well off of the one hundred and fifty-five properties listed during this week last year.
Click the image for a larger version of the graph.
Far fewer expired and canceled listings kept the inventory of active residential listings pretty much level through out the week. We finished the week with one thousand and eighty-four homes, up just two from the previous week, but down six hundred and fifty-three units from the same time last year when 1737 residential properties were for sale.
The system registered just twenty canceled and withdrawn listings this week, with about half of those resurfacing nearly immediately with a new listing flag. Forty-five home sellers made a price adjustment. Just thirteen home listings expired after a period of time on the market with no sales agreement in place.
Prices were skewed higher this week by five sales above the $500,000 mark including one Varsity View home that topped one million dollars. The average selling price of a Saskatoon home came in at $301,072, about six thousand dollars higher than last week while the median sale price slid ten thousand from the week before to $265,000. The six-week average increased just slightly on a week-over-week basis to $286,240, lower than last year’s number by roughly twenty-seven hundred dollars while the four-week median sale price slid fifteen hundred dollars from last week to $273,000, just fifteen hundred dollars higher than it was during the same week last year.
Click the image for a larger version of the graph.
The average underbid spiked higher climbing from $11,430 last week to $14,576 this week. That’s about a 4.6% discount, on average, a number which is higher than we’ve seen in awhile. There were a handful of large discount sales that definitely skewed the average higher but buyers did seem to bring more clout to the bargaining table. Overbids completely disappeared with nothing selling over list price.
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
11 comments so far. We'd love to hear your thoughts.
September 12th, 2009 at 12:03 PM
hi norm,
i wanted to ask a question re stats: week to week comparisons on average or mean #’s are easy to understand and comparable: apples to apples. that being said i wondered about the shorter weeks like this one and wondered if we’re doing apples to oranges??
here’s my concern: week A 130 sales of units over 5 business days
week B 120 sales of units over 4 business days
both are weekly totals but i wonder if for comparison purposes week B needs to be presented with a “pro-rated” amount. so, using this example week A has 26 units sold per business day and week B has 30 units sold per business day giving week B a new “pro-rated” value of 30X5=150 units. i realise that there are not an extra 30 units actually happening, but to compare apples and apples is this not, statistically speaking a more accurate method?
the whole reason i bring this up is that someone looking at week A and B statistics, may conclude that we’re having a reduction in the trend of unit sales in week B compared to week A, where in actuality we’re having a slight increase in the trend better reflected?? by the new “pro-rated” number.
thought i’d throw out this as food for thought. thanks again very much for this resource site; it is truly a superior product,
carla
September 12th, 2009 at 3:15 PM
Thanks for the feedback Carla.
The truth is that no single week of sales should be viewed as statistically significant whether the total number of sales is 50, 75, 100, or 125 and the weekly average selling price is certainly the least reliable. Some weeks you have a higher percentage of sales in area one, and the next week that higher percentage may be in less expensive area four. An unusually large number of luxury sales can skew the averages as well. In fact, think about what the $1.1 million sale did to the overall average this week. If that sale had been a $300,000 property the average selling price for the week would have been about $14,000 lower. This is why that particular measure moves up and down so wildly.
The longer-term averages are the more significant price numbers, and in my opinion, they get more significant when placed on the graph with a number of other weeks. Notice how they move far less erratically? One has six-weeks worth of sales and the other includes four-weeks. Those are the numbers that provide a bit of insight into what’s happening with prices.
Thanks for reading Carla.
September 15th, 2009 at 10:06 AM
Jason wrote:
“Mark, “Yah, you must be thanking your lucky stars you stayed in cash through all that.” As if you have the first clue what most of us did (appreciate your uncanny insight)… ”
I think your posts of the past several months speak for themselves don’t they? I hope they do. I mean you’ve been leaning on the depression, deflation, peak credit, stock market due for another leg down, etc….quite a bit. I’d be pretty surprised if you had actually been using your spare cash to buy stocks in the past six months. But am I wrong? Have you been wading into equities?
September 15th, 2009 at 2:12 PM
Mark, I think we’ve seen peak credit or are close to it here. Whether we’re in for a gradual or rapid tightening in the months to come really depends on the degree of consumer leverage (moderate) and exposure of our financial institutions (low, unless we see the kind of exposure that many of their US counterparts did). As for deflation and depression, I think both have hit home in the US, and the country as a whole is essentially bankrupt. Whether or not this will drastically effect Canada (and to what extent) really depends on how much we can unhinge our economy from the US. Recent Government outreaches to China and the rest of the world seem to indicate that we’re finally adopting steps in the right direction.
In Canada I think we’ve managed to successfully inflate our way out of this through increased consumer spending (much of which has come in the form of guaranteed mortgages), but I can’t help but think that these massive deficits and personal financial obligations won’t come back to haunt us sooner as opposed to later in the forms of a stagnant economy and prolonged recession. What impact increased taxes and higher interest rates might have under these economic conditions is open to speculation, but I suspect it would be less than ideal.
I’ve put forward (or endorsed) the theory that housing has already seen hyperinflation, so while we may seen general cost of living increases, I don’t think this will necessarily apply to housing (which I personally feel is still overpriced, unaffordable and precariously perched for another correction). I still feel that Fall and Winter (and possibly very early Spring 2010) will present some ideal buying opportunities for the savvy homebuyer, but I do believe this has been the last housing rally we’ll see in the foreseeable future.
Already there is considerable talk and speculation with respect to interest rates. Not whether they’ll occur, but by how much, and most feel the BoC will be looking at anywhere from 50-100 points (minimum) as an increase during the next 8-10 reviews. I think there will be some clear indications if banks begin adjusting 5/10-year rates upwards prior to any BoC announcement.
As for the stock market, I (like many others) were surprised this rally has continued for as long as it has in the absence of any real ‘recovery’ (the fleet of container ships anchored off the coast of Singapore would seem to reinforce this fact). The ratio of sellers to buyers and the number of insiders exercising options and selling en masse point to a market correction before the end of the year. That being said, I didn’t exit the market entirely, and I made some new investments – but I didn’t completely hedge my bets on equities, either. I feel I did ok with the investments I did make, but I’ve recently divested myself of the majority of my stocks in anticipation of an impending correction. It’s entirely possible there will be another sharp correction, an opportunity for buying, and another rally again in Spring (not unlike the series of corrections and rallies that occurred during the Great Depression).
Next year I think it’s very possible that we’ll finally see the materialization of a gold rally, and I think this offers some interesting possibilities (I don’t think we’re quite there yet, though).
And you – did you use this opportunity to divest yourself of any of your real estate holdings?
September 15th, 2009 at 5:57 PM
Just noticed, new banner. Nice.
September 15th, 2009 at 9:09 PM
“And you – did you use this opportunity to divest yourself of any of your real estate holdings?”
In March and April I sold a few of the houses that were very cheaply acquired in December, but other than that, no, doesn’ t make sense to sell them. When a mortgage payment on a three bedroom house is locked in at 500 a month and rent for such a house is minimum 1000 these days, it would take quite a drop in rental rates to make that unprofitable on even a monthly cash-flow basis, not to mention the equity paydown. It is a little strange, because if you keep your eye out, you really can buy a decent three bedroom character house on not a bad block for 120 thousand. And they seem to rent easily for over 1000 a month, somtimes 1200 or 1300. You can also buy houses, not as nice, on not as nice blocks, for as little as 60 or 70 thousand, and they rent easily for 800 or 900. It’s odd there aren’t more investors doing it here, or more renters buying them. It is changing, and there is far more home ownership in these areas, but there seems to be quite a disconnect between rents and home prices. But even if rents drop 30 percent, they aren’t bad investments.
As for the stock market, I’m thinning a bit now after this run, though how much I haven’t quite decided. It’s a little eerie how many are people are calling for a correction now and yet it keeps rising. I’m starting to think I need to discount whatever is now common knowledge about the future as the least likely outcome.
September 15th, 2009 at 9:25 PM
“As for deflation and depression, I think both have hit home in the US, and the country as a whole is essentially bankrupt.”
I of course disagree. The country’s debt to GDP ratio still isn’t as bad as many developed nations in Europe, and is better than Japan’s I believe. It’s not bankrupt at all and so far they’ve had no problem at all selling their debt. Also, to date, as far as I know, unemployment is no worse than during the early eighties. I also don’t believe the kind of deflation that economists worry about, the kind that hit Japan, has taken root there at all. Sure, some energy related stuff, but consumer prices and wages aren’t locked in a downward trend. And now everything is improving, consumer sentiment, manufacturing indexes, etc. This is a harsh recession down there for sure. But in the end, it will look far more like the early 80s, than the 1930s. That’s what I think anyway. I mean, just looking at unemployment, until we get an offical rate of 17 percent and an ‘real unemployment rate’ of 30 percent, comparing what’s going on now to the depression (cause there is no definition of a depression, only the ‘depression’ of the thirties as our benchmark for the term) involves quite a leap from where we are today. I mean a huge leap. Using the term also makes a prediction about the future, assumes things are going to get a lot worse over the next two years, and I’m not so sure about that.
September 15th, 2009 at 10:15 PM
Mark, “It is a little strange, because if you keep your eye out, you really can buy a decent three bedroom character house on not a bad block for 120 thousand.” You must really know this particular market well, and from what you’ve indicated, I suspect that your investments are fairly recession-proof – people tend to downgrade, so houses in the lower price ranges will typically hold their values more. And if we do see a housing correction, that could actually increase the demand for rentals. So I think you’re well-positioned either way.
“It’s a little eerie how many are people are calling for a correction now and yet it keeps rising. I’m starting to think I need to discount whatever is now common knowledge about the future as the least likely outcome.” It is indeed eerie, and I think you make a very interesting point with your last statement.
“Using the term [depression] also makes a prediction about the future, assumes things are going to get a lot worse over the next two years, and I’m not so sure about that.” If we take your thoughts concerning the future (above), if it’s common knowledge that we’re starting to see signs of a recovery, and expectations are that we’ll see a quick rebound in world economies, might it be possible that the recovery may not materialize as many anticipate – and that we may even slip into a second recession?
I read an interesting article today that examined the US debt per household, which is currently around $200,000. When you take into consideration social security, health care, etc. this number is actually around $1,000,000 per US household. I think obligations in Canada are around $100,000 per household (just to put things into perspective). So bankrupt? Definitely. They’re just prolonging the inevitable.
September 15th, 2009 at 10:29 PM
“If we take your thoughts concerning the future (above), if it’s common knowledge that we’re starting to see signs of a recovery, and expectations are that we’ll see a quick rebound in world economies, might it be possible that the recovery may not materialize as many anticipate – and that we may even slip into a second recession”
or ….we’ll rebound stronger than people are expecting, that’s what i’m hoping for. i think common knowledge a few months back is we were doomed…
September 15th, 2009 at 10:32 PM
” if it’s common knowledge that we’re starting to see signs of a recovery, and expectations are that we’ll see a quick rebound in world economies” …further to above, I don’t think that was the expectation, I think that is the surprise… people are adjusting now and suddenly revising things upwards, playing catch up to unexpected data
September 16th, 2009 at 1:18 PM
I found a couple of articles today, and thought I’d share them as they seem to be relevant to the discussion Mark and Jason are having:
Nouriel Roubini: Desperately seeking an exit strategy
Expert’s Podium: David Rosenberg on the aftermath of a bubble bust
Interestingly, David Rosenberg was one of the first economists to warn of a housing bust in the United States and the ensuing financial market and consumer spending collapse. He recently left his post as Bank of America Corp.’s chief North American economist to join Gluskin Sheff & Associates, the Toronto-based wealth-management firm. I’m posting a link to a daily newsletter they put out- I hope it works. What I find most interesting in today’s issue is what he has to say about Canadian housing (page 4):
Canadian Existing Home Sales: What Housing Collapse?
He has been and still is bearish on the US economy and housing market, but his thoughts about the Canadian market indicate a fair amount of current price support nationally.