Saskatoon real estate: Week in review (April 20-24 2009)
New listing activity of houses and condos picked up this week as Saskatoon real estate agents listed one hundred and thirty-two homes including eighty-one single-family detached houses and fifty-one condominiums on the multiple listing service. That number represents a gain of eighteen units over the previous week but falls far short of the two hundred and four properties offered for sale during the same week last year. Total active listing gained some traction finishing the week at 1,472 and picking up twenty-eight units over last week, thanks in part to a new downtown condo conversion offered for sale, which added twenty units to the database. This morning, there are eight hundred and eighty-eight single-family homes and four hundred and ninety-two condos displaying an “active listing” flag.
Saskatoon condominium and house sales continued to show some strength falling short of last week’s number by just three properties for a total of eighty-eight sales. Unit sales did close below the one hundred and seventeen units sold during the same week last year when the highest number of sales for any week during 2008 was recorded but still came in well above the average compared to recent weeks. Total unit sales for April (in the entire residential category) finished the week at two hundred and eighty-one, leaving little doubt that we’ll fall short of last April’s four hundred and eighteen units, but positioning the Saskatoon real estate market within a realistic striking distance of the five-year April average of three hundred and fifty-nine homes.
Click the image for a larger version of the graph.
Saskatoon MLS sales versus listings for the week of April 25, 2009
Prices continued to strengthen marginally as the average sale price for the week moved up nearly $20K over the week before to $285,456. The weekly median grew far less but finished up $3,400 over last week. Three consecutive weeks of gains saw the six-week average up by just $1,600 for the week but finishing down nearly $27,000 from $301,000 on a year-over-year basis. The four-week median recovered the $3,500 that it lost last week to continue its sticky position in the $260,000 range. Still, that number is $26,450 below the number attained during the same week last year. Last week, the six-week average and the four-week median were down $30K and $35K respectively on a year-over-year basis.
Click the image for a larger version of the graph.
Average and median MLS sale prices for Saskatoon homes for the week of April 25, 2009
The average underbid for the week grew to $12,029 from $10,376 last week, but higher prices caused the average discount, as a percentage of list price, to slip just slightly from 3.8% to 3.7%. The percentage of sellers making a deal within $5,000 of their asking price remained steady at thirty percent while the $5,001-$10,000 category fell to thirty-one percent from forty the week before. That entire nine point change found its way to the highest discount categories with the $15,001-$20,000 category growing from nine to fifteen percent and the discounts over $25K category swelling from two percent last week to seven percent this week.
I expect that we’ll continue to see fairly strong activity over the next few weeks. My colleague Lyndon Neher, who does most of the buyer representation for our team, has been run off of his feet over the past few weeks. We are working with nearly two-dozen active buyers and he’s been out with more than half of them this week alone. Interestingly, nearly two-thirds of them come from out of town locations as close as Wadena and Regina, and some are coming from farther away places like Calgary, Spokane, Minnesota, and believe it or not, New York. All of them are serious about buying. A few did that this week and the others will likely do it soon.
Pamela, our powerhouse assistant extraordinaire has arranged over 100 showing appointments over the course of the week and we’re hearing, “sorry, that one is conditionally sold” on a fairly regular basis. Most of the strength appears to be in single-family homes priced below $300K but there is a heightened level of activity across the various market segments. Condos are even showing one hundred and twelve firm sales over the past thirty days. That’s double the number sold in any of the last eight months, and the highest level of volume for any thirty-day period since April of last year.
Clearly, some agents are feeling strongly that the good times are about to roll and there’s a certain cockiness that’s already evident from a few camps. In some cases, offers that should be treated with a measure of respect are met with an arrogant scoff, or flat out rejected without any consideration at all. One offer, written yesterday, about five percent below the list price was repelled even though our buyer indicated that she was prepared to negotiate. I’m told that the seller’s agent actually said he hopes our buyer goes elsewhere. This in spite of the fact that the listing is longer than thirty days on the market, in a neighborhood with sixty-five listings above $300K and a mere seven sales in the same price range over the past month. We humans are funny beings with unbelievably short memories. We will find a home for our buyer. Hopefully this seller can find a buyer for their home.
See a Google map displaying the boundaries of Saskatoon real estate “areas” here
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.
Follow our daily updates on Twitter @Norm_Fisher.
Norm Fisher
Royal LePage Saskatoon Real Estate
62 comments so far. We'd love to hear your thoughts.
April 25th, 2009 at 2:08 PM
Norm, I agree with your perception of some of the market attitude right now – filled with cockiness.
As potential buyers in this market we see this showing up as homes being priced purely on square footage. Homes are being listed with no regard to the work needed to be done or soon to be done. No regard to the level and quality of finish of the house or the yard and very little consideration of the location.
Until sellers realize that this “square foot pricing” model does not work, there will be many properties on the market for a LONG time. Smart buyers will hang out for those properties that are priced right.
April 25th, 2009 at 2:09 PM
Unbelievably short memories, indeed. Sellers who adopt the ill-advised approach to rejecting offers out-of-hand by holding the mistaken belief that we are returning to a balanced market are going to be in for the shock of their life. What we have is heavy demand and low inventory in the under $300k range, but that doesn’t necessarily translate into equal interest in every price point or category. We have now passed the 2008 sales peak, and with income tax season and property tax hikes just around the corner as well as the recently-released economic data, it will be interesting to see what happens with new listings and sales (the biggest surge in new listings last year occurred in May).
April 25th, 2009 at 2:29 PM
Good points Rick. This was probably more a case of an agent who wasn’t up for some hard work than a seller who was simply unrealistic. Like I said, this buyer wasn’t out too lunch and would have gladly come up, but the attitude left her feeling like she didn’t even want the place anymore.
Jason,
In my opinion, every seller has a right to reject offers but it’s his/her agent’s job to convey whatever message is appropriate with great respect and appreciation. In this particular instance the message that came back to us as agents was, “I am too busy to do any of the heavy lifting. If you can’t get your buyer to make a decent offer, don’t waste my time.” The buyer felt slapped in the face, but feels pretty confident that another day on the ground will produce a home that she’s just as happy to own. There’s still no shortage of selection.
“it will be interesting to see what happens with new listings and sales (the biggest surge in new listings last year occurred in May).”
That’s true, but the biggest percentage increase to the active listings inventory was in April when they rose 64% month-over-month, followed by a 50% increase in May. This April, we’re only up three percent from March so I am beginning to wonder if we’re going to see that huge glut that many (including myself) have been predicting. Obviously, my month end “active listings” graph will still show lots of listings but the trend will look much different compared to last year.
April 25th, 2009 at 6:21 PM
Norm, I agree – that’s what I meant by “rejecting offers out-of-hand” (which tends to be more of an abrupt dismissal with little if any consideration given) as opposed to the proper way of simply declining the offer – and politely, I might add (which still leaves the door open to future counter-offers and a possible sale). There’s absolutely nothing to be gained by becoming openly hostile towards buyers (that’s very much biting the hand that one hopes will feed you!)
April may have been the biggest % increase year-to-date, but compared side-to-side (using your graphs), it’s easy to see that from the last week in April to the end of May there were well over 1,000 new listings added with fewer than 500 sales. I still think we’re due for a huge “surge”, and it could well be that low interest rates combined with the potential for the market (and economy) to deteriorate further will force a lot of sellers into the market.
I think it will become obvious if this will be the case (or not) from your daily Twitters over the next few weeks.
April 25th, 2009 at 6:22 PM
Jason,
True that listing activity in May should paint the clearest picture of where we’re headed, and I agree that what’s going to happen will become more obvious as it happens.
April 25th, 2009 at 8:56 PM
Two random questions:
1) What is the lowest interest rate anyone has heard of since the latest .25% Bank of Canada drop?
2) Does the buyer of a home have any fees such as broker commision, inspection fee, appraisals,etc?
April 25th, 2009 at 8:56 PM
Potential buyer,
1) about 3% on a one-year closed and roughly the same on a variable closed at prime (2.25%) plus .75%.
2) in most cases the “brokerage commission” is included in the price of the house, at least if it’s a listed property and you wouldn’t have to pay your agent. A home inspection is a must and that would be your responsibility (roughly $400). Your lender may or may not charge fees including an appraisal. They can tell you exactly what to expect, but I’ve never paid for an appraisal.
You’ll have some fees to register your title and your mortgage. You’d probably pay a lawyer to do that for you. Seems to me that registration costs run about $2.00 per thousand of the purchase price plus $20, and the mortgage registration works the same, except it’s charged on the mortgage amount.
Your lawyer will bill you for “other disbusements” which will run $75 to $100. This would include a title search, tax search, other due diligence stuff, courier, etc.
Possible that you could need to pay for a “real property report” or “title insurance” which would run about $450 or $300 respectively. Ask the seller if they can provide a real property report (or surveyor’s certificate). If they have a legible copy of one that still represents the property accurately your lender will likely accept that.
You might have to do some deposits for utility connections. That could amount to a few hundred dollars.
You’ll need a home insurance policy. Mine’s around a grand.
That should be about it.
April 26th, 2009 at 9:23 AM
I saw a posting with my handle, no harm, I never had anything prolific to say in past blogs. House sales in Saskatoon are up, but spring fever may also be driving car sales higher to, not sure or not if this will save GM from bankruptcy. Add 280 homes from Saskhouses.com to the MLS and there is 1752 properties available in Saskatoon proper, add inventory from Martinsville and the rest of Saskatoon suurounding areas and there is quite a bit of choice. With rental inventory having increased from .6% vacancy to 3% and some rents decreasing, there is a lot more housing options then there was this time last year.
For the cocky agent, well hmmm! the Saskatchewan economy is slowing, and fundamentaly all of the economy in the U.S and Canada are out of whack. Government’s quick fixes, bandaids, bailouts, and borrowing from Paul to pay Peter, with the hope that a strengthened economy in the future will generate all the taxes to pay today’s borrowing is pretty dicey. Short term gain for long term pain, but I don’t think they hope it will work out that way. But here in Saskatchewan good things are happening, the whole world is having a tough time, but not here in good old Saskatchewan, were still just a rockin and a rollin, so big deal oil prices have crashed along with provincial royalties, but hey we still have potash, that’ll save the day. Oh sales there have been cut in half, ah lets change the subject, has anybody heard anything about the river landing hotel, I heard a rumour the developer can’t arrange financing, but we still have the new bridge construction. Speaking of bridges, has anyone noticed the number of vehicles running around with Alberta plates, used to be we were flooded with ex pats coming home for the long weekend, now there here 7 days a week. It used to be that people said we followed Alberta’s economy, haven’t heard to much about that lately.
I think every jurisdiction in the world from China to Saskatchewn and everywhere else in between was driven by the massive housing bubble in America. But since this was wealth built artificially rather then fundamentaly, the correction started where it began. Since Saskatchewn was one of the last cards added to the top of this house it stands to reason that we will be one of the last cards to hit the pavement, but like America we can’t defy gravity anymore then they were able to. They can’t borrow there way out of debt, what are they going to do when one of the great saver nations like China or Japan have no more money to lend, collectively we have been living way beyond our means for a very long time, rather then making purchases based on yeaterday’s saved earnings we have been making purchases based on borrowing based on tommorrow’s earnings. Nobody wants to bite the bullet and live within our means, nobody wants to deal with the financial pain. We all want granite counter tops and maple cupboards, oh yes don’t forget the stainless steel appliances and hardwood floors. If I hear granite counter tops one more time I think I’m going to puke. Yes Saskatoon appears to still have some projects on the go, but once the existing condos and conversions along with larger projects are completed we should see a real slowdown right here in good old Saskatchewan, sooner or later everyone has to pay the piper, the great economy’s in history past all rose and fell all for their own differant reasons. America really is trying to stop anorchy that they percieve will happen, would marhall law be needed if they did’nt bail out there economy, they think so. But keep going to the bank to borrow money to buy those overpriced homes, that you can’t afford because hey good things are happening right here in Saskatchewan.
April 26th, 2009 at 1:03 PM
I have been following housing prices fairly closely in Edmonton, Saskatoon, and Fredericton and I have noticed in all three the markets seem to be fairly stable. I am sure this happens every year (well, most years) but what I have seen is those starter homes priced reasonably well are gone and now the same starter homes that are listed are 10-20 k more.
As well people seem to be sitting on the fence and picking up those starter homes that get priced competitively. Those homes that are on the market longer and then drop their price to be competitive seem to get noticed less.
Anyways I am not trying to say that the market is stable for the long term, employment will factor in big I will imagine, however, in the short term at least (spring and summer) prices I think will be relatively stable.
However in saskatoon specifically it looks like there is a lot of fudging around in the 400-600k catagory.
April 26th, 2009 at 1:03 PM
I keep hearing about this separation between the under $300k range and over $300k. What about houses just over $300k, in the 310-325 range? The extra 20-30k seems to be the difference between an okay bungalow in a so-so location and a nice one in a good location. Is this close enough to 300k that there is still movement or is there a very hard line once you hit 300?
April 26th, 2009 at 8:41 PM
Winnipeg’s
market still looks good. They’re actually seeing gains over last year.
jan 08 $168k
feb 08 $179k
mar 08 $196k
jan 09 $184k
feb 09 $192k
mar 09 $207k
April 26th, 2009 at 9:10 PM
Hey – hate to get into the whole – where do you live debate – BUT – it is NOT only a financial decision. Many people chose to be where they have family and friends. Again, I’m not sure why it is necessary to cut down living in Saskatchewan and Saskatoon. Many, Many people CHOOSE to live here and have wonderful lives in a great community. If it is not your choice – I respect that – but saving $150.00 a week does not make up for having a grandparent to call in the middle of the night who can come stay with your sleeping 2 year old while you run your sick 5 year old to the hospital. Or having your children play regularly with cousins and aunts and uncles. Or not having to drive 5 hours at Christmas to be with your family.
Having a family helps to identify what really impacts on your quality of life and what really matters. Having someone ill in your family and being close enough to help helps you know you made the right choice.
April 26th, 2009 at 9:11 PM
Rick aka Rick,
Thanks for the thoughtful contribution.
Derek,
You’re right that activity is fairly strong right now, especially in the starter range. Time will tell if the market can get a foot hold and we are a long way from being out of the woods.
Peter,
No, there isn’t a well defined line. What you’re hearing is very general. Generally, demand starts to decrease, and supply starts to increase as prices increase. The opposite happens as you move to lower priced product. The market for homes 300-400 isn’t too shabby right now but you will have a little more competition than you would in the “up to $300 mark.”
April 26th, 2009 at 9:15 PM
Pam,
I really don’t think that it’s about the money as most of these Saskatchewan bashers actually live here. If they thought Winnipeg, or Calgary is so fantastic they’d be there but they’re not. I’m not really sure what the agenda is but it doesn’t seem to be a desire to be elsewhere.
April 26th, 2009 at 9:45 PM
“With rental inventory having increased from .6% vacancy to 3% and some rents decreasing, there is a lot more housing options then there was this time last year”
3 percent? Is this true? I just read a week ago in a cbc online article that vacancy rates are still hovering around 1 percent in saskatoon for apartments etc. Anyone have actual recent stats.
April 26th, 2009 at 9:46 PM
Mark,
CMHC’s most recent Rental Outlook if from fall of 2008 and it shows total vacancies for Saskatoon at 1.2%. I’m guessing that it probably has increased some since then but I have know solid proof of that, just what I’m hearing on the street from people involved in that end of the business.
April 26th, 2009 at 10:35 PM
Sorry Rick…didn’t know you were a poster here.
Anyway, we have been attending quite a few open houses recently and are seeing a new type of ‘speculator’. There are many people with houses on the market who are simply testing the waters hoping to sell in order to hopefully buy a new home that they may or may not necessarily need. They appear to be propping up an already inflated market.
It would be interesting to see how many of the homes on MLS and Sask Houses are true listings rather than the “I’ll sell if I can get xxx,xxx for it”
Norm, do you have a feel for the number of sellers who would be potentially serious about selling and is there any way to track this? ie] expired listings, etc?
That is, it may be interesting historically to see a line on your new listings / sales graph indicating expired/canceled listings if that is easy or possible.
April 27th, 2009 at 1:47 AM
I’d be surprised if Saskatoon’s vacancy rate is still that low. I’ve seen a tonne of townhouses and single houses on Kijiji alone that owners are trying to rent because they can’t sell for what they had wanted. Maybe it takes awhile to account for these?
April 27th, 2009 at 7:20 AM
Rick B aka not the original Rick,
I can tell you that 53 property listings have expired in the past ninety days. 409 have been cancelled or withdrawn during that same period. I really don’t know what to conclude from that. The way that business is done has changed so much an agent can’t tell the difference between a true cancellation and a price reduction, or even determine the average days that homes are on the market without a manual analysis. Of course, that’s not very practical.
I’m not sure that I understand how these “speculators” would be “propping up” the market. Would greater levels of supply not tend to bring the market down? That’s how I understand supply and demand to work.
April 27th, 2009 at 8:46 AM
“I’m not sure that I understand how these “speculators” would be “propping up” the market. Would greater levels of supply not tend to bring the market down? That’s how I understand supply and demand to work.”
I’ve kinda wondered that too, like if a bunch of people say I’ll sell my $350,000 house only if I can get $500,000, then the legitimate sellers asking $350,000 think they are asking too little, and up their price when they put it on the market. Then everyone thinks that what the houses really go for, and someone ends up buying. It’s a stretch, but who really knows. If someone has had their house on the market for more than a year, are they really trying to sell it?
April 27th, 2009 at 10:03 AM
Lanny,
That makes some sense, on the surface, but fortunately markets are driven more by what buyers are willing to pay than by what sellers are prepared to accept. In a market this size, you’ll always have a sufficient number of sellers that actually need to sell and they will price their properties to capture one of the relatively few buyers which are out looking. If the reverse were true property values wouldn’t have fallen 15% over the past year.
The existence of all of these “speculator sellers” is definitely working to the benefit of buyers. Let’s assume for a moment that one-third of the inventory was this kind of property and that they all gave up and removed their homes from the market. We would suddenly have just shy of 1,000 listings, about a three-month supply, and we’d likely see fairly balanced conditions fairly quickly.
April 27th, 2009 at 10:11 AM
Rick B, I think I understand what you were getting at: those speculators (who they themselves have listed their own homes) are actively “fishing” for a new home – so there may appear to be more interest from buyer than there genuinely is. The subsequent problem is that in the process of creating demand they’re also creating artificial supply, as well. My understanding of the whole cancel/re-list process is that while it’s not unique to Saskatchewan we tend to be the heaviest abuser.
Lanny, anyone who’s had their home on the market for over a year is not serious about selling. They’re “trolling” (holding out for the slim hope that they’ll be able to snag a buyer that pays their asking price). I’m sure their reasoning is that, after all, it only takes one. And some of the recent high-price sales probably reinforce that thought process (however misguided it may be).
Heather, I would as well. In fact, it wouldn’t surprise me if the vacancy rate isn’t actually higher than 3%. It does make one wonder why this hasn’t received more media exposure (if any at all)? After all, higher vacancy rates would eventually translate into lower rental rates, which in theory places more disposable income into the hands of consumers (which would be a good thing for the economy). On the other hand, it does make the whole ownership over rent argument much harder to sell.
Norm, somewhat off topic, but any thoughts on what impact this swine flu pandemic might have on the market, ie: reluctance from buyers to attend open houses or apprehension from sellers about showings to the general public?
April 27th, 2009 at 11:05 AM
Jason,
To be honest, I haven’t spent five minutes thinking about how the swine flu pandemic will affect me, or the Saskatoon real estate market. Short sighted? Perhaps.
Saskatoon condo conversion project “a nightmare” for building tenants, and the landlord.
http://tinyurl.com/c7xql9
April 27th, 2009 at 12:37 PM
Norm, fair enough. What a nightmare. “We’re done, we’re out,” Shumlich said. “The party’s over. No more charity.” Spoken like a true Calgary developer; speculate and over-inflate our housing market and then bail when the supply of naive first-time homebuyers dries up. And I don’t buy their excuse for one minute that they did proper ‘due diligence’ – what’s more likely is that their greed and desire to exploit the populace for their own gain blindsided them from doing a proper assessment/inspection.
April 27th, 2009 at 1:01 PM
Jason,
Yes, boo hoo. Ya win some, and ya lose some. That’s just the way it goes.
I couldn’t have said it any better myself. Thank you.
April 27th, 2009 at 1:35 PM
Norm said: “To be honest, I haven’t spent five minutes thinking about how the swine flu pandemic will affect me, or the Saskatoon real estate market.”
In case anyone reading this wanted to do so, I’ll point again to the very excellent Of Two Minds blog by Charles Hugh Smith. Today’s article:
Swine Flu and The Economy: Disconnect or Tipping Point?
http://www.oftwominds.com/blogapr09/swine-flu04-09.html
True, not relevant to Saskatoon specifically, but a good connect-the-dots on how it might affect the economy as a whole.
April 27th, 2009 at 1:46 PM
I wonder how much they’ll sell it for? Sounds like an opportunity for the right price, and could get 36 rental units back on the market.
Interested in a joint venture Norm?
April 27th, 2009 at 1:59 PM
Bookrat,
I don’t intend to be flippant about it. I realize that it is a serious issue.
Northstar,
Someone will definitely be looking to fix these problems and I will wish them well.
April 27th, 2009 at 2:07 PM
Re: swine flu
Apparently there 3 *suspected* cases in Saskatchewan, but none reprted in this health region so far.
April 27th, 2009 at 2:44 PM
@Norm: No harm/no foul. I wasn’t thinking you were flippant; I hadn’t given it five minutes thought either until I read that essay, and then realized just how much more connected things are than the last time we had a pandemic and how much it COULD affect things… especially right now.
My comment was just a way to try and get people to think and inform themselves by hanging it on the hook of your comment. If it came across that I was excoriating you (go look *that* one up!
then I apologize.
April 27th, 2009 at 3:07 PM
Crikey,
“Apparently there 3 *suspected* cases in Saskatchewan”
Yikes!
Bookrat,
I wasn’t feeling that way at all. Thanks for the link.
April 27th, 2009 at 3:53 PM
Twitter this: http://twitter.com/veratect. These guys have been consistently 24-48 hours ahead of any public announcements. And the WHO just raised the worldwide pandemic alert level.
captcha: “of vaccines” (you honestly can’t make this stuff up…)
April 27th, 2009 at 8:32 PM
Wow!
TMG has a five year fixed available at 3.59% today. Ten year is 5.15%.
http://mortgagegrp.com/site/SK/rates.asp
April 27th, 2009 at 9:47 PM
Thanks for the TMG update and the other answers to the questions I asked a few days back.
Wow the TMG rates all look great. The 1, 5 and 10 year rates look great. Depends how quick a guy figures rates will head up I guess…..
April 27th, 2009 at 9:56 PM
Often I hear we are in a more balanced market then we were before, but I don’t think so. 275 listings at one time certainly was’nt balanced and now 1750 listings seems to be imbalanced as well. For Saskatoon’s population do you have an opinion Norm as to what number of listings you think would be balanced ignoring economic forcasts. Once we return to fundamentals where all the speculators have either disposed of or rented their properties, would this level the field, and perhaps set a new floor price for motivated sellers to present their properties to motivated buyers? Some prices are starting to look cheap compared to what they were last year, $240k for a 2bed attached single garage townhouse in Briarwood, was’nt that closer to 300k last year? Now I think with 10% down a $800 a month mortgage payment including condo fees not including taxes, insurance etc. would probably be ok, and financed over 25 years. My guess is most people would say I’m crazy, if that’s the case, then I think the housing market is still very expensive, at least for me it is. Not that long ago there was 395 condos for sale now there is 492, seems like alot considering people were almost arm wrestling each other for these properties last year. I’m not saying now is a bad time to buy, but I don’t think I would advise anybody that now is a good time to buy. The last couple of weeks have had pretty decent sales, some would say this is a dead cat bounce and we will know for sure come August, if I was buying I’d wait till August and beyond, the dog days of summer could really begin to weight heavily on sellers especially those holding speculative properties.It’s possible we could still be a year or two away from seeing where prices will end up, but then of course anything is possible.
April 27th, 2009 at 11:05 PM
Rick,
Thanks for the comment.
“ignoring economic forecasts”
First of all, we don’t have 1,750 listings. We have 1,470 listings. What’s the difference? Nearly a month’s supply and that’s kind of a big deal right now.
Secondly Rick, we’ll probably have a pretty good idea of where we’re headed for listing inventory in the next 30 days. If I were you, I might ride out the month of May just to see what happens to inventory levels before I got real serious. Last year, the largest glut of inventory entered in April and May. This year, we came into April at 1,435 and we’re sitting at 1,470 today. If that holds through May, we might have seen the worst of our supply problems. There’s diddly squat going on for new housing starts, the most recent data suggests that more people are still moving in than moving out, and if all of those trends continue we may drop back into more balanced territory. I think we can handle an inventory of 1,000 properties and maintain some kind of balance.
Based on your comment, I’m assuming that you might primarily be interested in a condo. There is a very large supply of these units and there will likely be better prices in the near future. Single family homes are not as plentiful, especially those in the $300K range.
If I were a buyer (and a “buyer” is someone who has decided to buy, regardless of what motivates him/her to do so), I would be looking to buy while rates remain low (and I’ll say that rates aren’t likely to go up in the short term, or until the economy improves) and while inventory is higher that normal.
It’s starting to become obvious to me that the economy can be damned near ready to fall off a cliff and people will continue to do what they want to do if they feel they can afford to do it. Will the economy actually fall off a cliff? If it does, will it matter? These are questions that someone far smarter than me will have to tackle for you. I haven’t got the foggiest idea what to believe right now.
For me, at this point, I guess I’ve decided to keep the house I own. In other words, it’s worth as much to me (or my wife) as I could get for it today. On the other hand, I bought it years ago for half what it’s worth today.
A month ago, I think I was the most bearish when spitting out a prediction for the second quarter. I said I thought the average price would hit $260K, “perhaps even $250K.” I’m not feeling very confident in that prediction anymore, but with everything that’s going on I really can’t feel confident in making a prediction beyond that.
In other words Rick, “I dunno.” Sorry man.
April 27th, 2009 at 11:56 PM
Norm, one thing I’m unclear on: when we’re throwing “averages” around, are we all on the same page? ie: are we using the weekly, month or six week average? The six-week average would appear to be around $275k (+$7k for April) and the monthly not much higher at around $278k.
I don’t think $260k ending Q2 is that much of a stretch for a few reasons. First, if there’s going to be an inventory surge, it’s going to happen in the next 30-45 days. This has the potential to further depress prices. Second, all indications are that it’s going to take a lot longer than most people expected to get the economy back-on-track. More buyers may adopt a “wait-and-see” approach. And this pandemic couldn’t have come at a worse time. Finally, we have a lot of “cheap” inventory in the form of condos (close to a year’s supply if I’m not mistaken). All it will take is a few fire sales from nervous condo developers to make things a lot more interesting…
April 28th, 2009 at 7:25 AM
Jason,
We were talking about monthly averages for the residential category as reported by SRAR. It hit $266,720 in March. With three reporting days remaining in April it’s sitting at about $273,400 right now.
“First, if there’s going to be an inventory surge, it’s going to happen in the next 30-45 days.”
Agreed. That’s why I suggested to Rick that he may want to watch and see what unfolds there.
“More buyers may adopt a “wait-and-see” approach.”
They may, but I’ll remind you that people were warning that buyers would vanish when the 40-year mortgage did. Then they warned that buyers would disappear when it was clear that prices were coming down. Then they warned that buyers would take the sideline when the media started reporting prices are down year-over-year. I’m starting to think that there will be enough buyers around to create a decent demand as long as they have jobs and 3.5% mortgages available.
“Finally, we have a lot of “cheap” inventory in the form of condos (close to a year’s supply if I’m not mistaken).”
You are mistaken, yes. There is a lot of condo inventory (493 units in total). I’m not sure what you consider a “cheap condo” but there are 306 active condo listings priced up to $250,000 and 81 sales in the past thirty days. That’s about a 3.8 month supply in that particular segment. It goes to 4.7 months when you factor in the higher end units.
“All it will take is a few fire sales from nervous condo developers to make things a lot more interesting…”
Definitely open to the idea that anything could still happen but if we want to be honest we would certainly have to acknowledge that the Saskatoon real estate market looks a heck of a lot better than it did six months ago when you had a supply greater than 8 months (1495 listings vs 181 sales in November). The absorption rate has been steadily dropping since that time. In March, it fell to 5 months. Unless listings explode in the next three days it’s nearly certain that it will decline again to around 4.5 months in April.
I can see some pressure forming at the upper end of the market. Not sure how that falls out but my general impression is that it’s not too difficult to unload that $300,000 bungalow right now and since these homes make up the lion’s share of the market prices probably aren’t going to be falling off a cliff unless some really nasty stuff comes at us from somewhere. Still, I will not be surprised if we see a $260K average through this quarter (more condos are selling), and I won’t be surprised if we see a $280K average either.
April 28th, 2009 at 8:27 AM
Speaking of mortgages, there’s an interesting post on Larry Yatokowsky’s Vancouver real estate blog written by Rob Regan-Pollock of Invis (mortgage brokers).
Vancouver mortgages with irony
April 28th, 2009 at 9:42 AM
Hey Norm,
My apoligies for the incorrect listing total, I did’nt mention that I was combining Saskhouses.com with the MLS, which for clarity I should have.
At this point in time I’m not a buyer because I’m not motivated by lifestyle or price. After 20+ years of homeownership, selling last summer, I guess I could say that home prices falling would be better then rising from my vantage point. However I feel that often people base their predictions based on what they want or hope will happen, I think I would like to refrain from this type of biased opinionation, perhaps it’s just better to be opportunistic and make the best out of whatever the market and the economy offers.
On the graph side I’m watching the 6 week average and the 4 week median, at $250K and $240K support levels, higher condo sales could influence breaching these levels never the less for me these are significant benchmarks. If prices do touch these levels or fall below them what will be the next level of resistance or will there be any, who knows, certainly not me. But as prices rise buyers in numbers begin to remove themselves, and when prices fall buyers in numbers begin to re-engage. If I worked in real-estate I guess I would view falling or lower prices a good thing, the only people who really get hurt are momentum speculators, however the knife cuts both ways on speculation, so for speculators who made a bundle then cleared the table of their chips, well done! For those who are now sinking, that’s the way the cookie crumbles, I’m sure they will live to fight another day and quite possibly recoup all their losses in real estate or through another investment vehicle.
This is a good blog site, do you have any referals Norm as to other blog sites that you enjoy reading?
April 28th, 2009 at 9:43 AM
Rick,
“I feel that often people base their predictions based on what they want or hope will happen”
Conversely, people often assume that because someone thinks something might happen, that they want it to happen.
Clearly prices passed the point of what was healthy and sustainable here in Saskatoon, and yes, lower prices are good for nearly everyone, and especially the real estate industry. I am certainly not hoping to see increases.
A number of the real estate blogs I read are available on the side bar.
Best wishes Rick.
April 28th, 2009 at 10:56 AM
This condo conversion had many for sale signs.
Condo explosion result of arson
http://www.thestarphoenix.com/news/Condo+explosion+result+arson/1540596/story.html
Not that I want to say a speculator started it but someone did. Thankfully, nobody got hurt.
April 28th, 2009 at 11:12 AM
“Conversely, people often assume that because someone thinks something might happen, that they want it to happen.”
Whoa!
Dude,
you just blew my mind.
April 28th, 2009 at 11:26 AM
George,
Things are definitely getting interesting in the condo market.
Duuuude!
April 28th, 2009 at 1:31 PM
You know, George… only two of seventeen units were occupied in that building, and I recall thinking the circumstances were a bit suspicious. At the time I promptly admonished myself for being so cynical in my thinking, of course.
“you just blew my mind.”
LOL, Dude! No, to acknowledge something is not to wish it or to hope to assist it. Amazing, I know.
April 29th, 2009 at 4:00 PM
Quiet in here today.
Went to an open house last weekend where the agent wouldn’t let me see the house until I signed in. Anybody else come across that before?
April 29th, 2009 at 4:23 PM
Joseph,
Man, you’re not kidding about it being quiet.
“Went to an open house last weekend where the agent wouldn’t let me see the house until I signed in.”
Wow! Did they ask you for ID?
April 29th, 2009 at 5:52 PM
I have had the same thing happen to me a few times. The first time I told them let me go back to my Lexus and get some ID while I was at it – the agent quickly changed their mind and said it was ok. (I drive a Honda.)
The only other time I was told to sign in I used my old address when I lived in Edmonton, when the agent noticed there was no phone number, she questioned why and I told her it was unlisted. Agents quickly get the message when they try to hand me a business card after prying for info and I tell them to save a tree -keep the paper.
Note of interest – I have been to a few open houses Norm and his co-workers have held – all have been very professional and answered any questions I had.
MVA
April 29th, 2009 at 6:45 PM
MVATRAIL,
“let me go back to my Lexus and get some ID”
Oh, you’ve got us figured out don’t you?
I think I would be inclined to quickly adopt an alias and sign in under the assumed name. “Nice to meet you Mr. Mouse, ummm, Mr. Mickey Mouse.”
“I have been to a few open houses Norm and his co-workers have held – all have been very professional and answered any questions I had.”
You must be confusing me with someone professional.
Thank you.
Really, when you think about it, the idea of greeting a total stranger at the door and then inviting them to tour each room of the house unattended with no idea of who they are is a bit strange. Things occasionally go missing, and once in a while a creepy man comes out of the bedroom in woman’s underwear. Apparently, this is perfectly legal provided you bring your own woman’s underwear.
April 29th, 2009 at 9:59 PM
Norm, I can appreciate that a real estate blog needs a positive spin, but see it as a bit telling that a lot of local optimism seems to be from a lack of unbiased sources. The Star Phoenix seems to have tightened up what it will allow in letters to the editor, avoiding much that would point out too large of kinks in Saskatoon’s armor.
Saskatoon is a nice place to live.
I just don’t think it justifies being one of the most expensive places in the country to live. We can avoid that thought all we want as locals, but being expensive is going to make recruitment hard. Having average wages far behind adjacent Alberta will make recruitment hard. Those crime numbers we ignore or trivialize, annual features of Saskatoon and Regina as #1 and #2 (or #2 and #1) from Statistics Canada or Maclean’s are read by the rest of the country … and make recruitment hard.
It’s unfortunate we seem to need spin to sell Saskatoon. It is a perfectly liveable jem, just a bit of a topaz priced like a diamond. Prices went up too far too fast and I expect will be some time on the way down. I moved to Regina to save money. I suspect others will move away until living in Saskatoon makes financial sense, instead of just emotional.
That’s it for me then Norm, when I was considering buying in Saskatoon I would have looked you up. An agent who will be frank and honest is more valuable than a positive booster. You have undoubtedly helped many buyers find fair prices, and sellers sell at reasonable prices, in a reasonable time frame.
Nick Henselmeier
April 29th, 2009 at 10:17 PM
Hey Norm,
Everyday there seeems to be significantly more listings then sales yet total listings don’t increase proportionatly. Is this because sellers are cancelling, re-pricing, and de-listing. Whatever the case, it seems to provide some stability in the market by keeping listings from ballooning out of control. I know a lot of sellers did’nt sell for the price they had hoped for and reverted back to plan B, which includes staying put for the time being.
April 30th, 2009 at 9:47 AM
Financing from Canadian and U.S. governments will help car maker operate through Chapter 11 bankruptcy http://business.theglobeandmail.com/servlet/story/RTGAM.20090430.wgovs0430/BNStory/Business/home
Whew! I was getting scared, I thought the governments would let them fail, but they won’t. Good for me, my 90 Dogdge Shadow will keep its value.:)
April 30th, 2009 at 11:19 AM
I see and hear that the vacancy rate is higher than it was in the recent past…the thing is this. If the properties are still trying to rent for way too much money…does that give an accurate assessment that ‘hey the rental community is now fine, or better than it was’.
All it says to me, is that as many units that are now open (whether it was due to specs not being able to sell them and are now renting them) and trying to ‘rent’ for $1200 for a 1 bedroom ‘fixed’ up condo…and no one’s biting if they don’t have to.
It doesn’t say that the rental crisis is over-to me at least. They could have 100 new buildings of condo’s that are open for rent, but if they are priced way too high, people still aren’t going to rent or be able to.
April 30th, 2009 at 11:38 AM
Sales have been looking pretty strong. Lots of sold signs up in my area. Seems like houses are moving, glad to see people are getting over their winter gitters. The stock market is doing better as well. Good to see.
April 30th, 2009 at 12:52 PM
Jesse,
You’re right, until rent starts coming down the problem is still evident. I hear your apartment block switched property managment. I sure hope you and my brother will get $100 knocked off your rent once they get their $hit organized.
April 30th, 2009 at 12:53 PM
Just curious to hear some opinions on what people think reasonable prices for housing are. Before the boom, there seemed to be consensus that Saskatoon was undervalued. There was also consensus that Saskatoon was overvalued when things went completely out of whack as well. I am not sure what criteria people would like to use, maybe average price (suggestions welcome). What do people feel is a reasonable price for a home in Saskatoon? 220K? 250K? 150K?
April 30th, 2009 at 1:14 PM
Loki, I’ve got a question. How do you think both the housing and stock markets would be doing without the massive recent government monetary intervention and guarantees we’ve seen so far? What do others think?
April 30th, 2009 at 1:46 PM
Jedi, using average prices, I’d say <$100k for a 1-bedroom condo, $150-$175k for a typical used home and mid $200k’s for a newly-constructed home.
Crikey, toast. I don’t feel we’ve hit bottom with either the housing or stock market and at some point in the not-too-distant future (when we’ve exhausted our ability to borrow) the bill will come due in the form of taxes and high interest rates.
April 30th, 2009 at 4:10 PM
Jason,
Yes, that’s the thing. Most don’t seem to realize that the profits and bounces resulting from the recent government/monetary intervention are coming from our future selves. Let’s hope our future paychecks can cover it.
Btw, I think your guesses for averages may be a tad on the low side. What are you pricing in with those numbers, if anything? Thanks.
April 30th, 2009 at 6:31 PM
Nick,
Thank you.
I think I’ve learned first hand that a real estate blog doesn’t necessarily “need a positive spin” but a terribly negative spin certainly doesn’t help. People survive on hope, particularly when things are at their toughest.
I think most people are aware of the challenges this community faces and I never meant to suggest that they shouldn’t be discussed but when the same person shows up to reiterate the same points on every post (sometimes three or four times) they are guilty of propagandizing and it shouldn’t be any more acceptable than “boosterism” (I’m not talking about you, by the way). I can’t help but feel that I’m being taken advantage of.
Saskatoon is going through a healing process and I am encouraged that things do seem to be improving on the affordability front as each day passes. Yes, it’s still expensive but it’s improving. Yes, Albertans still earn much more than we do, but we are still seeing income growth at a faster pace than most. Things may be a little broken but they aren’t completely destroyed.
I hope that this province can find its way back to a place where smart young people like you will want to, and be able to make a future here. I’m not sure if you know Nick but I have a 23 year old daughter and a 20 year old son. More than anything else, and I mean anything, I hope that they’ll be able to make a future here. I wish you the best for a happy future as well.
April 30th, 2009 at 6:50 PM
Rick,
Listing categories include active, conditional sale, sold, cancelled, withdrawn and expired so there’s a fair bit more going on outside of those two major categories.
1,470 actives + 20 new listings – 13 sales – 3 conditional sales – 2 cancelled – 2 expired = 1,470 active listings.
As you know, cancelled and expired listings are often re-listed. Some conditional sales become active again (occasionally sold listings do as well).
FYI, today we finished at 1,471 units. I can’t recall off hand if SRAR reports actives effective after midnight at the end of the month. If that’s the case, we may actually finish down from March when there were 1,435 listings.
Jesse,
There is some movement in rents. I know of a number of 2nd Avenue Lofts that fetched $1500. More recently they’ve been going at $1,250-1,300. Someone at Lakeshore Estates (Stillwater) told me they were getting $950 easily several months again. Rent is now at $900 but they’re offering rental incentives (reduced to $850). Some of these vacant conversions are now making their way back to the rental market and I’m sure that some investors are hurting for cash flow. It’s definitely happening.
L.oki,
353 residential units for April. Again, way off of 2007 and 2008 but pretty much in line with the five-year average.
Crikey,
Exactly what I’m concerned about. Seems to make some sense that we should just take our lumps now and get this behind us. I cringe at the stories from out east about multiple offers and over list bids. It would be very sad to see the progress that has been made evaporate just to have to start over.
April 30th, 2009 at 7:15 PM
I think the move in the Dow and the other fraudexes will end at some point. There is a lot of wood to chop through on the Dow. We might get a pullback tomorrow, but it doesn’t look like a significant move down yet.
Ever since the Fed announced it’s treasury buying program, rates have been creeping up. Bond moguls are saying “take my treasuries please Benny boy!”
A 6% 10 year yield could be around the corner at year end. That is going to be catastrophic. Not sure what it means for Canada though . . . this story is just unfolding . . .