Saskatoon real estate week in review – Aug 31-Sept 4 2009
Following one of the quieter weeks we’ve seen since late spring (65 units) Saskatoon real estate sales bounced back with a total of one hundred and two detached single-family home and condominium sales reported. This week is one of about six that managed to crack that one hundred-unit barrier in the past couple of years. While this week was unusually strong, the same week last year was remarkably weak, so home sales nearly tripled on a year-over-year basis from last year’s miserable thirty-six-unit tally.
New listings pushed forward as a number of properties that expired from the Saskatoon MLS system at the end of August found their way back onto the market for another go. One hundred and twenty new listings made their way to the system, an increase of twenty-nine homes compared to last week, but well below the one hundred and sixty homes that were offered for sale during the same period last year.
Click the image for a larger version of the graph.
The majority of the seventy-three Saskatoon homes that did expire last week haven’t been relisted, at least not yet, so total active residential listings took a pretty good tumble, falling seventy units from last week to finish at 1082. Inventory is sharply lower than it was at this time in 2008 when a total of 1704 homes were showing an active status on our system. Included in the active residential listings are six hundred and twenty-three single-family homes (houses) and three hundred and seventy-five condominiums.
Forty-nine home sellers adjusted their asking price this week, and sixteen of thirty-nine canceled or withdrawn listings re-appeared wearing the “new listing” banner, most at a lower price.
The average selling price of a Saskatoon home took a pretty good bounce this week to reach $295,070, nearly sixteen thousand dollars above last week’s number, and ninety-five hundred dollars higher than the same week in 2008. The six-week average took a turn climbing four thousand dollars from last week to finish at $285,679, three thousand dollars higher than it was at this time last year. The four-week median selling price stayed level on a week-over-week basis at $274,500, but pulled ahead of last year’s number by ninety-five hundred dollars. This is the first week since March that all three price measures showed gains over last year.
Click the image for a larger version of the graph.
The average underbid on Saskatoon homes that sold for less than the asking price made its way back to five-figure territory after dipping below ten thousand dollars for a few weeks. It came it at $11,430, or about 3.75 percent of the asking price. The percentage of sellers who managed to make a deal within ten thousand dollars of their asking price fell from seventy-seven percent last week to sixty-five percent.
All three of the “overbid” properties were new homes, and two of the three had been on the market for two and four months so the extra dollars that the seller received likely resulted from some additional improvements made to the homes.
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
14 comments so far. We'd love to hear your thoughts.
September 5th, 2009 at 2:35 PM
102 sales?
Wow!
I am guessing last week at this time was the long weekend which always produces a small number of sales. Something to be expected for next week.
September 5th, 2009 at 4:46 PM
Steven
“While Canpotex is trying to sell potash below peak $1000 tonne at $750 tonne, Russia is undercutting at $530 tonne.”
Hmm.. It sounds like you’ve been reading the media, doesn’t that mean it’s time to buy by your logic? Stop reading the media and start focusing on the future buddy.
” Maybe I should go to Russia and find some positive cash flow property at a 50% discount “— they seem a bit distressed for $$$.”
Yeah, because Russia is known for being an investor friendly, corruption free zone. Then again, not reading the media you probably never picked up on that. Best of luck to you.
September 8th, 2009 at 9:45 AM
Norm, the inventory seems to be dropping rapidly. What are normal levels for a city our size? Do you get a sense that these home are simply being taken off the market (perhaps for rentals) or is this a true picture of the number of homes that are selling?
September 9th, 2009 at 5:42 AM
Is there a rationale for the recent drop in Canadian mortgage rates? ie: is this intended to continue to keep the residential mortgage market strong as we head into a historically-slower time period for housing sales?
Norm, do you know what we’re approximately at (inventory-wise) for housing supply in the $350-$400k range, $450k-$500k range and $500k+ ranges?
September 9th, 2009 at 8:40 AM
Home affordability improves, but recovery threatens trendhttp://www.financialpost.com/news-sectors/story.html?id=1975372
“Owning a home in Canada is getting more affordable but that trend could soon end as the real estate market continues to recover, according to a report Wednesday by RBC Economics.”
Moral of the story, buy now or be priced out forever….again.
September 9th, 2009 at 10:52 AM
“Is there a rationale for the recent drop in Canadian mortgage rates? ie: is this intended to continue to keep the residential mortgage market strong as we head into a historically-slower time period for housing sales?”
Jason, I’m not at all aware of changes to mortgage rates having anything to do with that- I think it has much more to do with less perceived risk and more liquidity (perception is everything!). Banks last raised rates in early June when yields spiked up a bit. Bond yields dropped in July and have been fairly stable for the last couple of months, and this was a period when the banks were keeping rates steady rather than trending back down. I’m not sure what the rationale was for that, other than banks wanting to see if the retreat in yields would be sustained. The fact that it helped to bolster their books probably didn’t hurt, either. As far as variable rates go, they’ve been inching closer to prime as well. I suppose the market is expecting there is less of a risk that the BOC will make any changes to the overnight lending rate in the near term (announcement tomorrow, btw).
George,
I’d like to think the moral of the story is “make sure you can afford the payments at historically normal interest rates”.
September 9th, 2009 at 11:44 AM
cyn_d,
While there are a good number of listings expiring each month, the red and black lines on the top graph really tell the story. The number of sales and new listings have been running neck and neck for about three months. Historically, we have typically hovered between 600 and 900 listings depending on the time of year. I’ve been saying for awhile that I think 1000ish is probably going to bring a fairly balanced market, but RBC’s recent report suggests that we are on the cusp of potentially entering a seller’s market again.
Jason,
Single-family/condo
350-400 62/27
401-450 61/10
451-500 48/11
501+ 93/30
George,
“Moral of the story, buy now or be priced out forever….again.”
Moral of the story: you can only be seen as credible if you don’t think prices may increase. Otherwise you are an evil pumper.
September 9th, 2009 at 5:00 PM
Norm, thanks – I inadvertently omitted the second half of my question, which was how many months of inventory do these numbers translate into for each price range? (SFH/condo)
How exactly did we move from the concept of returning to a “balanced market” to a “seller’s market”? Isn’t this a bit optimistic? After all, inventory levels are still about 50% above historically norms.
September 9th, 2009 at 10:57 PM
“How exactly did we move from the concept of returning to a “balanced market” to a “seller’s market”? Isn’t this a bit optimistic?”
Jason, I’m not sure RBC is making a value judgement here. RBC’s definitions of buyer’s, balanced, and seller’s markets are based on sales-to-listings criteria. The criteria looks like it’s been stable for at least since 1989 from the graphs on the document. Do you see something different?
September 10th, 2009 at 12:09 AM
Crikey – yes, actually. They define affordability as the “% of household income taken up by ownership costs”. Fair enough, but this isn’t even close to a balanced assessment, because they’re comparing 35/40-year amortization periods with historic 25-year terms and utilizing a 5-year fixed interest rate when this was typically 10-years. Adjust these and then we’ll see where the affordability level is… After all, this only works if you believe interest rates will remain low forever, and that the bank/CHMC will always insure terms in excess of 25 years.
September 10th, 2009 at 9:03 AM
“they’re comparing 35/40-year amortization periods with historic 25-year terms and utilizing a 5-year fixed interest rate when this was typically 10-years.”
No, Jason- I really don’t think so. Where do you see this? It states on page 8 of the report that “The measures are based on a 25% down payment and a 25-year mortgage loan at a 5-year fixed rate and are estimated on a quarterly basis for each province…”
Now you could certainly argue that not many people are fitting into these lending criteria, but these criteria haven’t changed. They’re not comparing 35 or 40 year amortizations, and I don’t see any indication that they’ve previously been using a 10-year fixed rate as a measurement, either. If you can show me where you see this, I’d be very interested in seeing it too.
September 10th, 2009 at 11:28 AM
Crikey, I stand corrected (thanks for pointing that out), although I would echo your sentiments that using this lending criteria (25% down, no CHMC) is unrealistic, at best. I’m not certain about the interest rates, but they didn’t include tables prior to 1999 (page 1), so it’s somewhat suspect. Even so, the affordability assessment is still skewed. Let’s take their Q2 2009 example of $302,500 for an average 2-story home.
Historic (unrealistic): 25% down ($75,625!!) over 25 years, 5-year fixed @ 5.55%
* Monthly mortgage payment is $1,391.44
Current (realistic): 5% down ($15,125) over 35 years (+CHMC), 5-year fixed @ 5.55%
* Monthly mortgage payment of $1,602.42
Hybrid (compromise): 5% down ($15,125) over 25 years (+CHMC), 5-year fixed @ 5.5%
* Monthly mortgage payment of $1,832.99
……….
http://www.canequity.com/mortgage-calculator/
They’ve also changed the criteria from family income to household income (page 8), which I don’t believe is necessarily accurate towards determining affordability. For example, would not the income of adult children, extended family members, room mates, etc. be included as “household income”? If so, while they may very well contribute financially (rent or otherwise), it would be less than their gross income – which is being used for this determination.
It’s also important to consider that it wasn’t that long ago when a fixed 5-year term was 9.75%, and while the impact of this on a 25-year/25% down mortgage would only be about +$400/month, on a 35-year/5% down mortgage it would be closer to +$750/month.
September 10th, 2009 at 12:15 PM
That’s an excellent point about the differing impacts of interest rate increases on different amortizations and down payment amounts. To be fair, the last time interest rates were near/over 10% was the mid-90′s, and the highest fixed 5-year term rate I could find in the last decade was 8.75% (2000), but I get your point. Rates this low are historically unprecidented and people ought to be careful they can afford the payments at a more historically-average interest rate.
My point is that the affordibilty assessment that RBC offers does *not* appear to be skewed. The criteria don’t appear to have changed, and according to their criteria, the measurement is valid as a comparision over the time period that they have been measuring it (some 20 years). I honestly don’t find any evidence that the “income” variable has changed, either. The argument that the criteria are not realistic or common among mortgagors is certainly well taken, though.
September 10th, 2009 at 12:50 PM
Hey Crikey, yes, with the exception of the income criteria (which they indicated they changed from “family” to “household”). While I can appreciate their reasons for wanting to account for “unattached individuals”, one can’t dismiss the possibility that household income may be inflated as a result (unfortunately they didn’t publish the data for family income, so we don’t have any frame of reference for a comparison).
The omission of interest rates from 1987 through 1999 can’t be a mere coincidence: imagine how the range on the interest rate graph would look from a high of over 20% to a low of around 3%; that would definitely seem ominous and foreboding…
Projections for 2010, anyone?