Saskatoon real estate week in review – August 10-14 2009
Following one of the quietest weeks that we’ve experienced over the past couple of months the Saskatoon real estate market picked up a bit of steam again as sales of single-family detached houses and condominiums bounced back to finish the week with ninety-one homes sold. That represents an increase of fourteen properties compared to last week’s production, and a more impressive gain of thirty-two units when compared against the same week last year when just fifty-nine homes changed hands.
New listings remained steady this week with one hundred and two properties being offered for sale on the Saskatoon MLS system, up just one from last week, but down by fifty-five properties from the same period in 2008 when one hundred and fifty-seven Saskatoon homes were listed.
Click the image for a larger version of the graph.
After eight consecutive weeks of losses the inventory of residential listings refused to slide further and finished the week at 1213 units, up one from last week’s close. Still, this year’s active inventory is twenty-two percent lower than the 1555 residential properties that were available at the same time last year.
Through the course of the week, forty-nine home sellers adjusted their asking price in hopes of attracting a buyer before fall sets in. Additionally, seventeen of twenty-nine canceled or withdrawn listings made a second appearance on our system wearing a “new listing” flag.
The average selling price of a Saskatoon home remained steady on a week-over-week basis at $281,095. The six-week average took a small gain from the week before to finish at $285,337, not quite seven thousand dollars shy of last year’s $292,285. The four-week median held firm at $275,000, coming up just seven hundred dollars short on a year-over-year basis.
Click the image for a larger version of the graph.
The average underbid on properties that sold below the asking price inched up to $10,734, from $9,173 the week before. That represents an average discount in the range of 3.7%, about a half of a percentage point higher than last week. The percentage of sellers who managed to secure an offer within $10,000 of the asking price rose from sixty percent last week to seventy-two percent this week. Discounts of $25,000 or more returned to the chart after being absent last week for the first time that I can recall as four percent of Saskatoon home sellers gave up a pretty big chunk of change in exchange for a sold sign.
See a Google map displaying the boundaries of Saskatoon real estate “areas” here
Data collection and calculation for our statistical reports
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Norm Fisher
Royal LePage Saskatoon Real Estate
19 comments so far. We'd love to hear your thoughts.
August 17th, 2009 at 10:22 AM
River Landing project faces payment deadline
http://www.thestarphoenix.com/business/River+Landing+project+faces+payment+deadline/1900727/story.html
“An end-of-day payment deadline looms today for Lake Placid Developments’ proposed $200-plus-million hotel, condo, retail and office project at River Landing. The company is paying interest on the $4.55 million still owed for the city-owned site, which was due in January… If payment is not made, it will be at the discretion of city council on how to proceed.”
At this point, having spent or committed to spend close to $65M and heavily promoting this as the ‘crown jewel’ of the River Landing project, and with no other developers interested, do they really have anything to lose (except perhaps credibility) by extending it again?
“The amount already invested in marketing the condominium development and concept drawings and other costs mean it will be a difficult project to walk away from, said Coun. Myles Heidt. There has been high demand for the condos, Heidt said.”
Naturally, which is why still have approximately 400 condos on the market (in addition to the hundreds of ‘phantom’ condo conversions either incomplete or withheld from market) and why essentially all new condo development has stalled in 2009.
August 17th, 2009 at 10:26 AM
Women make home-buying decisions faster than men: survey
http://www.calgaryherald.com/business/Women+quicker+homebuyers+survey/1901459/story.html
“A national survey of homebuyer intentions shows that while couples make real estate buying decisions together, women make up their minds significantly faster than men when it comes to purchasing a home. In a report released today, the company said that when asked how long it took before they knew their home was “right” for them, almost 70 per cent of women had made up their mind the day they walked into the house versus 62 per cent of men. Conversely, significantly more men needed two or more visits: (32 per cent of men versus 23 per cent of women).”
August 17th, 2009 at 10:29 AM
Commercial real estate activity remains down: CBRE
http://www.calgaryherald.com/business/Commercial+real+estate+activity+remains+down+CBRE/1901420/story.html
Despite the Bank of Canada’s most recent economic forecast that the current recession is over, diminished transaction volume in the country’s commercial real estate sector remains a key indicator that Canada is not yet on the road to recovery… Canadian commercial real estate transaction volumes from January through June shrunk by 51 per cent, year-over-year, from $10 billion halfway through 2008 to $4.9 billion halfway into 2009. Mid-year through 2009, the number of commercial transactions was 1,569, down from 2,542 transactions completed half way through 2008.”
August 17th, 2009 at 10:33 AM
Toronto stocks plunge in global rout
http://www.financialpost.com/news-sectors/story.html?id=1901140
“Markets tumbled Monday as the price of oil fell almost US$2 a barrel at the opening bell as investors around the world speculated that a rally in riskier assets has outpaced the prospects for economic growth. The Toronto Stock Exchange’s benchmark, the S&P/TSX composite index, was down 340.44 points, or 3.14%… With no major data in Canada Monday, investors are looking to July’s consumer price report on Wednesday. It is expected to show a second month of negative inflation(*), with the CPI dropping 0.7% from the previous year, or a 0.1% decline from the previous month on lower fuel and home prices.“
*Deflation (the other ‘d’ word).
August 17th, 2009 at 4:00 PM
Pretty gloomy postings Jason…
Saskatoon commercial activity is still up. And it looks like the residential market is hot again.
August 17th, 2009 at 5:13 PM
L.oki, RLV delays are nothing new (par for the course this year)… commercial real estate has been the $2 trillion hippo hiding in the room for the past 6 months… correction in the stock market was inevitable (with many insiders selling off over the past few weeks)… and, it sounds like women are having more influence in real estate purchases (interesting development).
August 17th, 2009 at 5:59 PM
“and, it sounds like women are having more influence in real estate purchases (interesting development).
Nobody seems to want to admit it but women have been the dominant “decider” in the home purchase as long as I’ve been in the business. All is not lost if he’s not crazy about about the place, but if she doesn’t like it, we’re done.
August 17th, 2009 at 6:33 PM
Saskatoon residential real estate listings fell below 1,200 by the close of business today for the first time since since the first week of February.
An overview of inventory vs. the month recent months sales (inventory/recent months sales = months of inventory)
Houses up to $230K – 171 active listings with sales of 55 units – 3.11 month supply.
Houses $231K-$330K – 186 active listings with sales of 138 units – 1.35 month supply.
Houses over $331K-500 – 233 active listings with sales of 82 – 2.84 month supply.
Houses over $500K – 101 active listings with sales of 17 – 5.94 month supply.
Condos up to $200K – 176 active listings with sales of 51 – 3.45 month supply.
Condos $201K-$300K – 107 active listings with sales of 65 – 1.65 month supply.
Condos $301K-400K – 68 active listings with sales of 11 – 6.18 month supply.
Condos $401K-$500K – 19 active listings with sales of 1 – 19 month supply.
Condos over $500K – 34 active listings with sales of 0 – seemingly infinite (only 3 sales this year, and nothing since May).
August 17th, 2009 at 11:21 PM
Norm,
“All is not lost if he’s not crazy about about the place, but if she doesn’t like it, we’re done.” !!!
“Condos $401K-$500K – 19 active listings with sales of 1 – 19 month supply… Condos over $500K – 34 active listings with sales of 0 – seemingly infinite (only 3 sales this year, and nothing since May).” I think it’s safe to say we’ve established which price points are not supported in the condo market… Really, though, it sounds like anything over $300k is at least a 4-6 month sale. Defies belief that we’re still hammering away with all these new $300k+ condominium projects, though…
August 18th, 2009 at 7:00 AM
“Defies belief that we’re still hammering away with all these new $300k+ condominium projects”
Over the longer haul one can see that there is clearly a market (110 sales over a one-year period) but it’s certainly limited. I still believe that a River Landing could sell, but it would happen at the expense of other projects. There isn’t much you can really do to expand that market in a big way.
August 18th, 2009 at 10:11 AM
Project misses deadline
Lake Placid requests extension to pursue funds for development
http://www.thestarphoenix.com/news/Project+misses+deadline/1903607/story.html
“Lobsinger sent a letter to city council requesting an extension to Oct. 31. He repeated his commitment to the project and said he is having difficulty getting access to the financing needed for the project… The company is paying interest on the $4.55 million still owing for the city-owned site, which was due in January. Lake Placid still has not paid the City of Saskatoon the interest owing, thought to be in the neighbourhood of $250,000.”
So much for the statements of financing not being an issue… (apparently the sole issue).
“Addressing a $6.3-million River Landing cost overrun that administration asked city council to approve, …many of the land values at River Landing rely on the delayed Lake Placid project going forward. The city is banking on the increased land values of private lots to cover the cost overrun once the land is sold.”
I’m all for an extension (since the City really doesn’t have another developer or any other options at this point), but shouldn’t one condition be that they pay the interest owed to-date and remain current going forward? I also think that it was extremely ill-advised of the City to plan to offset the cost overruns of the River Landing with (presumed) higher land value sales that would result from RLV being constructed.
“Coun. Tiffany Paulsen raised concerns about relying on future land sales to fund the project, particularly given the unknown status of Lake Placid’s project. ‘The funding formula is based on maybe, probably, maybe fictional (estimates),’ she said. ‘We don’t know what is going to happen.’ Paulsen said the cost overruns may eventually increase taxes if the land sales don’t net what the city is expecting. ‘You spend the money as you earn it,’ she said.”
This was the only member of city council that seems to be thinking and not looking at imaginary dollar ($) signs, so kudos to her for sticking to her guns! This City is spending and making financial commitments at a rate which cannot possibly be recouped without future property tax increases (which is bad both for consumers and business development).
(sorry for the lengthy post)
August 18th, 2009 at 10:47 AM
Norm, “Over the longer haul one can see that there is clearly a market (110 sales over a one-year period) but it’s certainly limited. I still believe that a River Landing could sell, but it would happen at the expense of other projects. There isn’t much you can really do to expand that market in a big way.”
Agreed. I’d point out that average condo prices have now been flat for 2 months (and dropped every month for the preceding 11 months). And when we say sales of condos in the $200k-$300k price range, we’re really taking about sales in the $200k-$250k price range.
When condo fees are factored into the equation, a $300k-$325k home is going to run about the same as a $225k-$250k condo (higher utility costs and taxes for the house aside). And for that you receive the benefit of the additional privacy, fewer neighbors, a yard with fence and landscaping (eventually, anyway), 2-car garage with driveway, and of course, all that potential undeveloped basement space (ideal for kids, pets and storage).
Condominiums are overpriced by about $25k-$50k (for this market, which I still feel is overpriced as a whole), and the longer it takes developers to realize this the more inventory they’re going to have to contend with (which will ultimately force prices down anyway).
August 18th, 2009 at 7:54 PM
Norm,
Just wanted to say that the inventory breakdown was great. I look at the inventory and sales numbers which is one thing but having it broken apart by price range gives completely different perspective to the market.
August 18th, 2009 at 8:07 PM
Jason,
“And when we say sales of condos in the $200k-$300k price range, we’re really taking about sales in the $200k-$250k price range.”
Not really. More than one third of the 200-300 condo sales for this year are above 250K.
Peter,
It does provide some perspective. Unless sales fall off the map, there really isn’t a lot of inventory in the price ranges where most of the activity occurs. We’ve obviously got a pretty good glut above 500K, but even that range has seen a substantial reduction in “months of inventory.” It was around 10 months a few months ago.
August 18th, 2009 at 11:52 PM
Months of inventory by price range is very enlightening, isn’t it? I’m surprised how quickly how these numbers have changed in the last year. Thank you for that, Norm.
“It (CPI) is expected to show a second month of negative inflation(*), with the CPI dropping 0.7% from the previous year, or a 0.1% decline from the previous month on lower fuel and home prices.
*Deflation (the other ‘d’ word).”
Jason, tomorrow’s headline inflation number will almost certainly be negative, due to the aforementioned massive runup in gasoline prices in the summer of 2008. Last summer, gasoline prices were rising and taking the headline CPI with it. A negative year-over-year reporting of this particular number will not necessarily be indicative of deflation. Core CPI, as flawed as it may be, excludes fuel, gasoline, fuel oil, natural gas, and transportation- all clearly affected by the volatility of last summer. Core CPI will be the number to watch.
The BOC has actually been able to keep core CPI very close to their stated 2% inflation target this year. It’s amazing what a massive monetary stimulus will do, huh? The future tax increases it’ll take to pay off that massive monetary stimulus… now that’s another matter altogether. :0
I remember discussing the prospect of the River Landing project having difficulty securing financing last autumn/winter on this blog. Too bad it’s come to pass. If it’s financially feasible, it
August 18th, 2009 at 11:55 PM
…would be a fantastic addition to the city.
Man, it’s time to get some sleep.
August 19th, 2009 at 12:41 AM
Norm, “More than one third of the 200-300 condo sales for this year are above 250K.” Exactly – the majority of condo sales are still below $250k; the average target market for condos is below $250k, because above $250k and one runs into more direct competition with houses.
……….
Crikey, true, but a few more months of negative inflation and it will be hard to deny that we’re experiencing (at least) a brief period of deflation. Honestly, I don’t know why deflation is a bad thing: The longer we see negative inflation the longer these ultra-low interest rates will last. I’m not sure how lower prices (or more affordability) is necessarily a bad thing at this point. Cost of living is such that salaries really can’t go down that much more before people fall into lower tax brackets (which is, quite frankly, what scares governments about deflation). After all, we’re still going to have a challenge replacing all the boomers who’ll be retiring starting in a few years.
Yes, it’s too bad about the RLV (but if they’d been upfront with the financing challenges from the very outset they’d have more credibility at this point). I do agree with Norm in that RLV not going ahead will only benefit the other high-end developments. I’ll settle for an IMAX, though.
August 19th, 2009 at 7:27 AM
Canada’s inflation rate drops to 56-year-low
http://www.financialpost.com/news-sectors/story.html?id=1908237
“Canada’s overall inflation rate fell by 0.9% in July, according to Statistics Canada data released Wednesday.”
August 19th, 2009 at 9:13 AM
When the Feds lowered interest rates, it was to help the entire economy stay afloat, variable lines of credit would fall and hopefully qualified borrowers would contintue to seek financing. Although this strategy was aimed at the entire economy as a whole prospective homebuyers are jumping on this low interest bandwagon in a big way, the housing bubble has been extended courtousy of the Feds.
I really doubt that Mayor Atchison has the financial prowness as a Sid Buckwold or Cliff Wright, he’s the kind of guy that could really dig a deep financial hole for Saskatoon taxpayers, my guess his days as Mayor are numbered. As for Brad Wall, he walked into a financial windfall, and he’s really nothing more then a glorified cheerleader. Even the average Saskatchewan Joe who pays attention to nothing knows that things are a little differant then last year. The day to day all day log jams on 42nd street aren’t as frequent anymore not to mention the contractor pickup trucks that nearly ran you over last year on Circle are thinning out a bit. Saskatchewan like the movie Awakenings (you Know) Robert Deniro and Robin Williams, well same as the film we came out of that deep coma and shon bright, but it does feel that we are starting to slip back into that comotose state again. And even though it’s so hard to figure out the ying and the yang of economics you can’t help but feel that maybe were not on rock solid financial ground long term.