58 comments so far. We'd love to hear your thoughts.

• SaskBound
  April 8th, 2009 at 1:04 PM

  Thanks for the update Norm.

  Being niave in the ways of real estate… do these numbers not reflect a fairly balanced market? Would you not expect half of houses to go at or above and half to go under? There appears to only be a slight bias ($6K) now between asking and selling price. Can we expect to see list prices now increase as sellers fear they won’t see a big increase through bidding?

• Norm Fisher
  April 8th, 2009 at 1:04 PM

  Hi SaskBound,

  While there are surely signs that the market is moving towards “balanced” we are clearly still in a seller’s market. Balance would imply that neither the buyer or the seller has a clear advantage.

  In a balanced market, homes selling above the asking price will represent a very small percentage, maybe two to five percent. We will see average sale prices which are below average list prices indicating that an actual negotiation has occurred. I would say that it’s “normal” for sellers to price their homes at least slightly higher than what they might expect to sell for. We can also expect to see a much higher percentage of listing “expire” without a sale, an indication that a seller has misjudged the market and buyers are not prepared to pay anywhere near asking price. While the number of expired listings is increasing slightly, we’re a fair ways off from what is more typical. Over the last number of years, it’s not unusual to see 35% of listings fail to sell. That’s more of an indication of balance when a seller can’t just ask any crazy price for their home and expect it to sell.

  All that said, I think we’re certainly seeing a trend in that direction. The only question for the speculators now is will it continue, or will it swing back? It’s not an easy call.

• Jen
  April 8th, 2009 at 1:05 PM

  Hi Norm,

  There seems to be a huge jump in area 2 from last week. Are there any notable sales to mention that may have skewed this data somewhat?

• Norm Fisher
  April 8th, 2009 at 1:05 PM

  Hi Jen,

  The weekly averages which are based on a fairly small number of sales can swing quite wildly depending on where the activity is. The numbers from the past week are unusually steep due to some higher end sales. We have two that sold for $330,000, one which went for $437,500 and one at $530,000. The week prior, the numbers were unusually low. The largest home sold was 1,330 feet and 6 out of the 11 sales were smaller than 1,000 square feet. The highest sale that week was $295,000.

• Jeff
  April 8th, 2009 at 1:12 PM

  Hi Norm,

  Just wanted to drop a note to thank you for the consistent week in review updates. It’s really a great resource for keeping tabs on the market and I just want to make sure you know how much it is appreciated.

  Have a great week.

• Todd
  April 8th, 2009 at 1:12 PM

  Hey Norm, you said that the avg price of a home went above a 1/4 million for the first time.. but in many of the previous reports you have posted, 250,000 has been passed many times. Are you talking about a specific area?

• Norm Fisher
  April 8th, 2009 at 1:12 PM

  Jeff,

  Thanks for reading them and I really do appreciate the feedback.

• Norm Fisher
  April 8th, 2009 at 1:13 PM

  Hi Todd,

  Thanks for raising that. I was referring to the average “list price” of all Saskatoon homes. Yes, average selling prices have been there before but it’s the first time the asking price (average Saskatoon) has been that high. Thanks again.

• Carrie
  April 8th, 2009 at 1:13 PM

  Like the “underbid” column. Was it just added this week or am I having a brain blank?

• Norm Fisher
  April 8th, 2009 at 1:13 PM

  Hi Carrie,

  Thanks. I included that column for the first time last week. It was a suggestion for a regular visitor.

• Jedi
  April 8th, 2009 at 1:17 PM

  Thanks Norm for the great blog. 3 Questions for you,

  1. You have mentioned a couple of times that July and August are pretty steady months. How, if at all, do people going to the lake and all the activities in the city (ex, fringe, cruise night, air show, folk fest, so on) affect the market?

  2. What info do the CMHC and Canadian Realators reports give us? It seemed not to long ago that the rest of 2007 was looking somewhat Bullish and a high single digit gain for 2008. Then the report on the economy here you posted was also encouraging. On cbc.ca today they are predicting modest gains for the province(it doesn’t specify Saskatoon). I understand these reports probably aim to give the most accurate info but they seem to change too frequently. Is the market too unpredictable?

  3. I thought that there was always a concern about alleys being unsafe. However, the new areas (Stone Bridge, Hampton Village, and Willowgrove) are brining them back. Is this to maximize lot availability?

  Thanks as always.

  Ps. Thanks Ron for your posts. It would be really appreciated if other out of province readers could share how booms in areas like edmonton and calgary yeilded both advantages and disadvantages and any suggestions for how to overcome those disadvantages.

• Norm Fisher
  April 8th, 2009 at 1:18 PM

  Jedi,

  Thanks!

  1. Serious shoppers who need a place to live don’t let the Fringe or the lake get in the way of finding a place to perch. I understand that we always hear that it slows down in the summer but I think it just feels that way after coming out of the spring. The numbers for these months often tell a different story.

  2. The Canadian Real Estate Association normally reports on what has happened as opposed to predicting the future. CMHC predicts but are rarely right. Everything I’ve read from CMHC has suggested that we’ll finish the year lower than were we are now. I don’t think they’re predicting a drop so much as they seem to be unaware of the current gains. Check out this post which I wrote on November 23, 2006. It’s full of predictions for 2007 and you might get a kick out of it.
  
  I’m Bullish on Saskatoon Real Estate for 2007

  Given that we entered the busiest period in the history of Saskatoon following the release of these predictions it’s pretty clear that nobody really knows what to expect most of the time.

  Following a 50% increase over the first six months of the year, more “modest gains” seems like the safe bet to me.

  3. Effective use of space is part of the reason. One of the other goals was to bring garages to the back instead of having them out front providing a barrier between neighbours. It’s kind of a community enhancement thing. A prettier streetscape and more opportunities to interact.

  Thanks again for reading Jedi.

• Doug
  April 8th, 2009 at 1:19 PM

  Hi Norm,

  Your first three bullets really caught my eye – especially the stat on 47% of sales overbidding versus 62% the week before. Average overbid may have gone up from the previous week but there are less folks in the market doing this (in fact they were the minority last week!). Always interesting – and each week makes me wonder what the next will look like

• Norm Fisher
  April 8th, 2009 at 1:19 PM

  Hi Doug,

  I feel the same sense of anticipation for one week to the next. At this point, I won’t be surprised to see things go either way but it is starting to feel like a trend in the direction of levelling.

• Doug
  April 8th, 2009 at 1:20 PM

  Norm, I really feel things are cooling – I’ve been watching the spread between average list and average sale price trending downwards for the last 8 weeks. The percent of people overbidding is trending down with it and so has the average overbid (not this week but overall its trending down).

  Personally I think the migration of people to Saskatchewan was brought on by the provincial media campaign. Since that campaign has ended, there are fewer people migrating here (thats an advertising fundemental). The market now is mainly driven by local people and they don’t like the prices. If I was a gambler I’d bet average list price meets average sale price by October. If the bubble bursts on the market I think it will start then.

• Norm Fisher
  April 8th, 2009 at 1:22 PM

  Doug,

  I was most impressed by the fact that we went below the 50% mark on overbidding. From 62% to 47% over one week is a pretty big change. If the next couple of weeks bring similar decreases in that activity, we’ll be down to a relatively small number of homes selling that way. Naturally, that will cause buyers to be a little more conservative on “bidding” but I do expect that we’ll see the average list price creep up as this happens.

  Has the advertising blitz ended? On April 26, Calvert said they were “gearing up for another blitz in Alberta.” I was through Calgary on August 4 and noticed a billboard promoting jobs in Saskatchewan.

  Campaign or not, I expect that migration will continue to be a bit of an issue for us in the coming years. Certainly we’ve lost the edge when it comes to affordability but how many people do we all know who had kids move away to Alberta? If we are able to create decent jobs I think it’s to be expected that some of those people are going to want to come home as their parents are aging.

• SaskBound
  April 8th, 2009 at 1:23 PM

  Norm (and others please!) I am looking for some insight/advice. My wife and I have been seriously looking at all the new homes now listed on the end of 33rd street in Confed Park and the new Hampton Village development. As it always seems with real estate, it appears we can get far more house for less cash if we are willing to commute a bit – or live close to the airport. Do you have any thoughts on why so many properties are available out there and appear to have been for some time?

  We are looking for a place to live for 5-10 years before ‘moving up’ when my wife returns to work. Many have given us the advice that it is better to buy less of a house in a ‘good’ area rather than reverse. However, we think this may be a great chance to own something new and avoid the risks of unanticipated costs that come with an older home. Any thoughts or advice on the wisdom or folly of such a plan?

• Jedi
  April 8th, 2009 at 1:23 PM

  Saskbound, I am not in any way licensed to give real estate advice, but everything I have heard in the last ten years is location, location, location. Also, I have heard/read on many occasions that it is better to get the “worst” house in a great neighbourhood than the “best” house in a crappy neighbourhood. If that area has hospital/medicare, shopping, transit, parks, police/fire, and schools, it is probably okay.

  Great question, I also look forward to Norm’s answer. Norm, if you may, please extend your answer to living in communities such as Warman, Osler, and Martensville. Personally I am not one for commutes, but with the announced community centre and golf course I must say Warman is tempting.

• Norm Fisher
  April 8th, 2009 at 1:24 PM

  SaskBound,

  Jedi makes some good points about location but it’s also important to have a home which will meet your needs as it’s not cheap to move if you end up having to upgrade too quickly, and who wants to live in the “worst” house in the neighbourhood.

  Over the years, homes in area 5 have performed as well as almost anything else in the market and as prices have increased these spots will continue to become more attractive to anyone who wants a little more for a little less. I don’t think I’d have a big problem living in Hampton Village. The area seems to be well accepted by buyers in general and I expect it will do well over the long term.

  I’m not sure what houses your speaking about specifically. I see a handful of new homes on the MLS, and most of them haven’t been listed for a long time. I’ll say that $340,000 seems like a big chunk of change for a 1275 square feet but I do see that others have already sold above that.

  Jedi, Warman and Martensville are not a heck of a lot cheaper than Saskatoon. Generally, homes in these communities are very marketable. People hardly see them as a “commute” anymore.

• SaskBound
  April 8th, 2009 at 1:24 PM

  Thanks Norm and Jedi! I appreciate your thoughts.

  I actually spent some of my teenage years living in Confed. Park and I recall a time before there was a Dundonald, let alone a Hampton Village.

  With respect to the Confed houses I mentioned, I was referring to all the new 2 stories on the end of 33rd street that are priced around $269,900. There are at least 5 of them.

  Also, Jedi – I would echo Norm’s thoughts regarding a commute from a town like Martensville or Warmen. I went to highschool in Dalmeny and Saskatoon was really just a hop skip and a jump away. My only potential caution would be that if you have children the schools are often smaller with fewer extra-curricular programs. On the flip side, you get a nice small town feel and there is less for kids to do to get into trouble despite their greater free time.

  Thanks again!

• fifthbusiness
  April 8th, 2009 at 1:24 PM

  is the downturn in overbids a sign of a more balanced market or is it a sign that asking prices are now more accurately indicative of property value?

• Norm Fisher
  April 8th, 2009 at 1:25 PM

  fifth,

  Great question!

  I think that there is more “accurate” pricing happening now and I believe that’s occurring for a couple of reasons.

  It’s now a little easier to come closer to pegging a probable selling range due to more available comparable sales. Prices aren’t jumping by five digits every week, or every other week. Further, more properties are failing to attract “bids” at the appointed time. If you price 20k low and nobody makes an offer on that date, where do you go from there as a seller? In some instances a seller will be better off to get the price right and wait the market out for an offer. In any case, higher asking prices do take a bit of the steam out. If I price a $300,000 home at $250,000 it attracts lots of buyers who couldn’t realistically buy the home. This puts additional pressure on the $300,000 purchaser who may believe that there is more competition for the property than there actually is.

  Inventory does see some marginal growth from one week to the next and that’s probably the main reason I characterize it as “moving towards more balanced” in another thread. Seems to me that all of these factors work slightly in the buyer’s favour but we’re still a long way away from balance.

• Johny
  April 8th, 2009 at 1:25 PM

  Hi Norm,

  I came across this article last night.

  http://www.cbc.ca/canada/calgary/story/2007/08/20/realestate.html

  Maybe I’m reading it wrong but have a look at the chart at the bottom of the article. Is that average house price per province? If so, is the CREA missing about $100K from their avg house price in sask?

  J.

• Johny
  April 8th, 2009 at 1:25 PM

  Ok, I realize that’s for the whole province but still seems pretty low compared to what’s going on all over the province, but in particular in Regina and Sask.

  I also found the following stats on income from 2K6 to 2K7:

  http://www40.statcan.ca/l01/cst01/labr69j.htm

  http://www40.statcan.ca/l01/cst01/lfss01c.htm

  Seems to me affordability in sask is really moving out of whack (if it’s not already) which will ultimately tell us where we’re going. I wish I knew more about the various variables contributing to cost of living between provinces but they are a contributing factor as well. I do know that income tax, PST, etc contribute to the deteriorating affordability in saskatchewan compared to other provinces. We can be as optimistic as we want about our boom but the bottom line is, we can reference the early part of this decade for reasons why people left sask in the first place… it truly all ties back to affordability… One major difference between then and now, is the fact that new homeowners are leveraged so much more now… if our economy proves to not be able to sustain where we’ve moved to, there will be some serious casualties… when is someone going to begin cautioning people who are coming into this market without equity?

  J.

• Todd
  April 8th, 2009 at 1:26 PM

  Johny, I think you made some good points but I just thought I’d point out a couple things that I think are incorrect.

  Other than Alberta, Saskatchewan has the lowest PST at 5%. We also don’t have the health care premium that is charged each year in Alberta. I also might be wrong, but I think we’re in the middle of the pack when it comes to the income tax charged. We are moderately taxed overall.

  I think people left Saskatchewan not because of affordability, but because of jobs. If we can keep generating new jobs and offering decent wages, people will continue to immigrate.

• Johny
  April 8th, 2009 at 1:27 PM

  What are the health care premiums in Alberta? I think it’s $50/mo. I also think we might be at the higher end of percent income tax spectrum across Canada rather than the middle but I can’t find anything on stats can to support that and don’t remember where I read it.

  I think people left because of good paying jobs, not availability of jobs in general. There’s always been employment here, that’s never been the question… the question’s always been what kind of job you’re willing to work. With a lower income job in sask, a lower percentage of that job goes to cost of living. Likewise with a higher income vs. higher cost to live in Alberta. A good paying job, therefore, contributes directly to affordability rather than indirectly.

  In terms of generating new jobs, have you seen anything to indicate job creation and decent wage increases? I think my previous links speak to statistics on wages as they’ve not increased proportionately to housing and increases have, in fact, remained on par with our previous percentages prior to 2K7. here’s another one but it unfortunately only goes to 2K6… this stat does, however, indicate low income growth prior to our boom and thus cannot be a contributing factor to the boom.

  I found this statistic on the SREB website regarding job creation… or more accurately job loss.

  http://creastats.crea.ca/sask/employment_trend.htm

  I’d love to see any stats that anyone has for reference on job growth, income growth, migration numbers, and speculative investment. These are the variables that concern me the most and will be the key indicators to which direction we’re heading in quarters to come.

  J.

• Jedi
  April 8th, 2009 at 1:27 PM

  Johny,

  Thanks for the link. Please tell us what these stats meant to you. They actually surprised me. I found the wages and change in hourly wage to be much closer than I was expecting (comparing Saskatchewan and Alberta). We are actually closer to B.C. in wages than Alberta. Given the cost of housing alone, I would have to say BASED SOLELY ON THESE STATISTICS that Saskatchewan is more affordable than either Alberta or B.C. I thought you were trying to argue the opposite. I admit I did do a rather quick analysis. I am basing my proposition using 2000 hours of work per year to calculate an average salary. If the average is as much as $5 dollars an hour higher in Alberta, that would translate into about $10 000 more a year for gross income and about 40 000 more to buy a house (I have been told that assuming no other major financial obligations the bank approves approx. 4 times one’s gross income). I think this would show us still to be more affordable.

  Practically speaking, as a new comer to the market with a decent occupation but normal bills and a student loan to pay, yeah, things are getting a little out of reach. Not so much as not being able to afford anything, but basically restricted to older houses or condos on the East/North sides and if houses get any more expensive soon to be priced out of the more desirable West side locations as well.

• Johny
  April 8th, 2009 at 1:29 PM

  Where are you getting your avg home price per province from? I was speaking more to saskatoon (granted using Sask income averages). Maybe norm can give us some more accurate stats on avg house prices between provinces. I’m not convinced that the stats listed on the cbc.ca from creb analysis are accurate and were the reason for my original question to Norm.

• Johny
  April 8th, 2009 at 1:29 PM

  Also, part of my argument on affordability index is that there’s no consideration for income tax variances and other cost of living variables between provinces… I’d brought up several above as examples but if we all though hard we could come up with many more… Gas at the pump, there’s another one.

• Johny
  April 8th, 2009 at 1:30 PM

  Sorry, I’d meant to include this link in my comment above: “here’s another one but it unfortunately only goes to 2K6… this stat does, however, indicate low income growth prior to our boom and thus cannot be a contributing factor to the boom.”

  http://www40.statcan.ca/l01/cst01/labr79.htm

  J

• Johny
  April 8th, 2009 at 1:30 PM

  One last comment before I retire to responses I was speaking to the deteriorating affordability compared to other provinces (Alberta) not the fact that Saskatchewan was now less affordable than other provinces (Alberta)… not that I’d entirely rule that out if we could nail down all of the aforementioned variables.

  J.

• Norm Fisher
  April 8th, 2009 at 1:31 PM

  Johny,

  These numbers may be correct. Keep in mind that the average price in Regina last month was only $176ish. No question that Saskatoon has seen the greatest gains. I believe Regina would be second for highest average and everything from there goes down quite a bit.

  Todd, add to that the fact that thousands have left over the years. I still think some of them will come home as their parents get older.

• Jedi
  April 8th, 2009 at 1:32 PM

  Johny,

  Is the problem that you ARE trying to use statistics to show less affordability. Example: Lets say I am looking for a house in Area 1. The average according to this weeks sales was 281 000. That would lead me to believe that I should be able to by a house in this area for 300 000. However, in reality, lets say I want to buy a house in Erindale, Arbor Creek, Willowgrove, Briarwood, or Lakeridge (I think Area one may include more than this). What can I buy for 300 000? I think on MLS today there was maybe one or two houses in Erindale for around 300 000. In reality, I am probably looking at between 325 – 400 and that is more or less entry level housing in these areas (Norm, please correct me on this if wrong). I think the problem with the statistics is that they show affordability when in reality they don’t capture the picture. How many people actually earn the average household income? Let’s arbitrarily say 80 000. My guess is few. There are probably a lot earning 40-60, alot earning around 120 000, and a small amount earning a higher income. The average number would have us believe that most people are earning a reasonable amount, when in reality it is probably significantly more or less for most people. (The numbers I picked were out of the blue. I expect my thesis would hold true for whatever the average household income is).

• Jedi
  April 8th, 2009 at 1:32 PM

  I know 4 isn’t a big number but two of my friends have moved back from Red Deer, one from Winnipeg, and I have another probably moving back in a year or so once his girlfriend is done school(Calgary). The age range is 26 – 34. The very reason is that they are starting families and want to be closer to parents and siblings. They very much did enjoy the opporutnities Alberta and Mnitoba gave them, but find that the combination of Saskatoon’s charm and being close to family outweighed other benefits. I also know of grandparents that moved from Manitoba to be closer to their Grandchild. I think Norm may be onto something.

• Julie
  April 8th, 2009 at 1:34 PM

  I agree with Johny re people being more likely to follow the money than their parents. We might like to think that the ‘kids’ will come home to help out their aging parents, financially or otherwise, but I don’t think that’s a common scenario. All 4 of my siblings live in Stoon, and all pretty much ignored the fact that my mother’s rent was increasing and that her building was likely to be converted into condominiums (which it was – the tenants received notice this week that they have ’2 years’ notice). Even with help with the bills from my husband and I, with an income of $1250/month a widow like her couldn’t afford the rent increases. So we applied to the Sask Housing Authority earlier this year, and she actually has a little more discretionary income now that she’s living in a very nice subsidized unit. The point is that parents shouldn’t hope that their kids will help them as they age – they’re too busy with their own lives and children. It’s nice if people actually are caring for their folks , but I think some just haven’t stopped to realize how this whole housing situation has affected their widowed parents.

• Johny
  April 8th, 2009 at 1:34 PM

  Jedi,

  Not sure I understand whether your argument is for or against mine but I’d venture to say in saskatoon there’s a significant low income population. I’m just basing this on the fact that there IS a housing crisis right now and there ARE significant increase in those dependant on social assistance.

  I truly have nothing to reference other than my own eyes… I really need to see some statistics that are long overdue to weigh against the Boom talk that people are throwing around… the talk that caused and perpetuates the frenzy we’re seeing in speculation and the overextended rushers to market (with the assumption that if they don’t buy now, they’ll be paying “avg 300K by next summer”).

  J.

• Johny
  April 8th, 2009 at 1:35 PM

  Norm,

  I see SREB reporting Sask Avg house price at $186,000 for Q1 2K7. That’s $31,000 more than CREB’s forecast for $2K7… I think it’s safe to assume that we’ve increased considerably in Q2.

  http://creastats.crea.ca/sask/mls_stats.htm

  J.

• sanna
  April 8th, 2009 at 1:35 PM

  I also saw couple of houses in erindale in around 300,000 but we have to keep it in mind that it is just a listing price bidding war is the main problem,which pushes the house price so high.Besides some realtors love to creat bidding war siuation by putting the houses in low price.

• Norm Fisher
  April 8th, 2009 at 1:35 PM

  Johny,

  The second set of stats that you post are for Saskatoon (average over the first quarter). The CREA stats are for the province.

  There can’t be much of a serious question that affordability has eroded substantially this year. RBC’s Housing Affordability report for Q1 made that pretty clear and things would have been equally bad in Q2. I expect we’ll see the Q2 report in September. It won’t be a pretty picture. I don’t think you’re going to find much for income or affordability stats that is very new.

  While I am hearing some positive stories about good wage increases I don’t know many who have had a 50-60% raise this year.

  552 active listings today! Just like old times.

• Johny
  April 8th, 2009 at 1:35 PM

  All of this is to preface the question, if we have no statistical data to suggest a boom, and an abundance of statistical data to suggest people are actually being negatively impacted by the state of things, why is there such a campaign to perpetuate this market?

  J.

• Norm Fisher
  April 8th, 2009 at 1:36 PM

  Johny,

  Please tell me what you mean when you say, “such a campaign.” I see a community that seems increasingly aware of the challenges created by this “boom.”

• Johny
  April 8th, 2009 at 1:36 PM

  http://www.canada.com/saskatoonstarphoenix/news/story.html?id=881652f7-2010-4e84-b00e-61590fe75146&p=1

• Brett
  April 8th, 2009 at 1:36 PM

  Norm :

  Regina Average Sale Price From WINIDS For July

  AVG Asking $181,149

  AVG Sale $184,697

  August Month to date

  Avg asking $189,526

  Avg Sale $190,769

  Brett

• Alejo
  April 8th, 2009 at 1:36 PM

  I don’t see how Regina’s Price can be so low??? Looking at the houses on the market, a lot of them are listed over $200,000 and there are quite a bit in the 300-500K range for sell. I also don’t believe there is underbid going on.

  I guess the data is probably heavily influenced by the sale of the units in the “hood” where the majority of them are houses for rent and for flip. They don’t go much above 70,000. I think if you take away the house sales in the central area,(the hood) our price will go above 200K easy.

  I am not sure if this is unique in Regina. Does Saskatoon has an area where the majority of the house goes below 70K?

• Norm Fisher
  April 8th, 2009 at 1:37 PM

  Johny,

  Ahh. Political campaigning. For the life of me, I can’t understand why the right is not taking exactly the opposite position. We have plenty of evidence suggesting that the Saskatchewan economy was in the tank in 2006. True or not, housing could easily be positioned as a big mess. The Calvert government is clearly on the record as “taking credit” for the big “boom.” Now that the media is on to some of the negatives I would think that the right could take the position that the NDP has supremely screwed up an opportunity for growth.

  I also know where you’re coming from on the rest of the economy but I have to say that I still believe we have a lot to look forward to here on that front. Everywhere I turn, I hear anecdotal evidence that things are good and I think it’s just a matter of time before that flows through. I spoke with a guy who works for a national construction company. He says “incomes are way up in 2007” for their company. In fact, he said, “I don’t have anyone who earns less than 6 figures.” I once shared some comments from another guy I know in disaster restoration who said they have about 2 years of work. A couple of months ago, their only concern was giving out big raises only to see things “return to normal.” I spoke with a woman who works for a well known home improvement retailer who said that business is just absolutely nuts. Her comment was, “people seem to have money.” Another couple I know where just quoted 15K to paint three interior levels of their 1,350 square foot four level split.” My water heater went about a month ago and it took four days to get someone to help me with a temporary solution and almost three weeks to get a new heater installed. I can’t find anyone to quote me on some shingle work. There is money flowing around out there. All that said, I am well aware that there are certainly some problems and that not everyone is feeling very flush right now.

  Brett,

  Thanks for that. I use the “provincial system” so rarely that I didn’t even think to turn to that. I wonder why the CREA stats are wonky. I just had a look at where Regina has been each month and I don’t see anything as low as 176K until April, when it was lower than that. Regina has sure seen some large increases since then. Do you sell Regina real estate or are you in Saskatoon?

• Norm Fisher
  April 8th, 2009 at 1:37 PM

  Alejo,

  Brett’s figures are correct. You’re probably right about the averages which are based on what’s actually selling and not what is for sale. The average list and average sale prices he quotes also indicate that a large percentage of listings are going above list. I suspect that activity in Regina is following a similar pattern to what we saw in Saskatoon as this thing got going. Lots of activity in lower end housing and an incredibly nutty condo market. Like you suggest, higher volumes of transactions in this range contribute to a lower average selling price. Perhaps Brett can fill us in on that better.

  The $70,000 house is almost a thing of the past here but there were some of them around at the start of the year. These cheaper properties are found in area 4, Saskatoon which has seen tremendous activity so far this year.

• Alejo
  April 8th, 2009 at 1:37 PM

  Not in Regina… We still have like 10+ houses selling at $29,000. We also have probably 50 houses selling below $49,900. I am always amazed at why would people buy those houses. To me it seems to be an extremely risky investment. But I guess it much be real profitable or there won’t be so many activities? Can Norm, or any kind soul here shred me the light on how these properties are profitable? I would really really appreciate it. I am not looking at investing into this myself but just really curious.

• Doug
  April 8th, 2009 at 1:40 PM

  Johnny,

  I’ve worked in economic development for a number of years and my assessment of Saskatoon is that it has a stable and growing economy but it is not ‘booming’. Over the past 5 years, employment has grown every year by an average of 2,587 while I believe Calgary averages 20,000 or so. (sorry I don’t have the link)

  In my opinion, Saskatoon will continue to grow but the housing ‘boom’ is more due to advertising and hype than job opportunites. Its also due to quality of life because I’d way rather live here than the rat race of Calgary – and houses here are more available and affordable.

  I should also note that there’s lots of potential here with diamond mining, oil deposits, and ethanol production but lots of this is speculative and down the road a few years.

  Norm, I also saw Calvert say he was going to do another advertising campaign in April but I haven’t read anything about it since. It was a good idea but Saskatoon doesn’t have the houses to handle growth and I think he’s gotten a bunch of flack on it. The NDP stronghold is with the underprivelleged and the unafordability of housing isn’t a good campaign platform.

• Doug
  April 8th, 2009 at 1:40 PM

  Oh here are those labor stats – they’re from the Saskoon Regional Economic Development Authority and Stats Canada so are pretty reliable.

  http://www.sreda.com/resources/pdfs/SREDA_Saskatoon_Labour_Force_Statistics_Jan-07.pdf

• Jedi
  April 8th, 2009 at 1:40 PM

  Norm,

  Before the boom there seemed to be consensus that houses were undervalued in Saskatoon. Now the consensus is that the pendulum has swung too far. Is there a way to put a number (avg price, or percentage) on what might have been a proper valuation of the housing market?

• Norm Fisher
  April 8th, 2009 at 1:40 PM

  Alejo,

  I guess a “landlord” gets into that $40,000 property with about 10K down. Taxes are only $500 per year. He or she is probably carrying it for around $300 per month. If it rents for $500 there’s a decent return there. Many of those “landlords” don’t spend a nickel maintaining the place so if they can keep it occupied they recover their total investment in 4-5 years. If there’s some price appreciation they’re even better off.

  Doug,

  It will be interesting to see if the NDP can make this work for themselves. I think many people feel that they created the problems.

  Jedi,

  I don’t think I could do it but half of the increase that we’ve seen probably would have been palatable.

• Alejo
  April 8th, 2009 at 1:41 PM

  I would think it’s rather risky considering the potential tenants. But then, I am not the expert heh.

• Norm Fisher
  April 8th, 2009 at 1:41 PM

  Alejo,

  I wouldn’t be interested either at half the price.

• Johny
  April 8th, 2009 at 1:43 PM

  Thanks for the info Doug, I found it most valuable of all.

  Norm,

  I have no doubt the any industry related to the real estate market is booming right now, construction, home renos, etc… I don’t think those industries encompass enough piece of our pie to say that we’re booming because of it. I’d like to see stats on other labor markets and their relative income levels.

  J.

• Brett
  April 8th, 2009 at 1:44 PM

  Norm,

  I do sell in Regina For Century 21. I’ve been following your blog since about january and it’s been very interesting to watch. Last year we seen calgary take off then edmonton followed suit a few months later. This year I seen Saskatoon take off and tiped off a few investor clients that I think regina will do the same. A month later we started seeing new condo’s that were being built at 130′s jump to 180 – 190′s within 5 weeks and they’ve cashed in big now with those condo’s now being around the 220′s. Your market is probably $50,000 higher then ours and as to why i’m not entirely sure. We are definately starting to see the market cool here with MTD Sale price now at 193,180 and asking at 192,124 so hardly $1,000 difference. I havent been delaying any offers since mid July as I don’t beleive in underpricing a listing trying to get more offers when you see buyers offering 200,000 on an asking of 189,900 and the seller really looking for an offer of 215,000. In my opinion your just wasting alot of peoples time when you could just list the property at 214,900 as similar homes in the area are selling for that figure. Some agents out there are in for a real shocker when we do level off here and up until this year you wouldnt go over to someones home for a listing presentation and try and get them to market their home at 20,000 below the comparable sales….doesn’t make any sense then, doesnt make any now in my opinion. Back to the question regarding why anyone would buy 30 – 50k properties. They are mostly sold in package deals Ie:10+ houses. If you buy a 40k home put 10k down your payment is $180/mo plus $40 for taxes and $40 for insurance your cashflow is at $260 for expenses and you can obtain guaranteed rent around $525 – $575 so multiply your $300 a month x 10, 20 or 30+ houses and some of these guys are making a 6 figure + income a year and these homes are dilapitated and in need of major repair but they just simply rent them with putting the absolute bare bones to maintain them and this is where the term “slum lord” comes in but owning several properties myself, nothing is more frustrating then fixing a window only to have it broken out the next day and nobody claims responsibility for it expect for you the landlord. Anyways Norm, Lots of great info and I have to say your best article this year was regarding cash offers and how it can come around and bite the seller back if things go south…I won numerous competing offers this year from that tip by putting that momentary doubt in the sellers mind when your only $1,000 apart or so with another offer.

  Brett

• Norm Fisher
  April 8th, 2009 at 1:45 PM

  Thanks Brett,

  Earlier in the year we were having a little trouble getting offers on homes priced with recent sales in mind. Buyers were automatically adding 20K to the list price and assuming that’s what it would sell for. Funny how perspectives change though. Right now, people (agents and sellers) get very concerned if their listing doesn’t sell in three days. I do look forward to seeing list prices start to make more sense. You see some around here that you can immediately identify as being 50K underpriced. Buyers call, but you know it’s out of the price range, even though it appears to be in it.

  You explained the thinking on those cheaper homes well and I would agree that there’s definitely money there, and someone has to do it. Though most of the people I know who have money made much of it in real estate, I’m lukewarm on it as an investment, at least personally. It’s all of the small hassles that accompany it that don’t work for me. You never have to break up a party at a mutual fund.

  Thanks again Brett. Nice to meet you. Hope you have a great fall.

• Susan
  April 8th, 2009 at 1:45 PM

  I think Johnny is the only person who can actually see the way things really are in this blog.He also provides links to back up his statements.Norm I feel the Saskatoon real estate started this whole damn mess and you guys should be ashamed of this whole scheme.

• Norm Fisher
  April 8th, 2009 at 1:45 PM

  Susan,

  How did we start “this whole damn mess?” Please, do tell.

  While your at it, why don’t you also tell me how I feel about the housing market, detiorating affordability and how it has affected to poor?

  Do me a favour Susan. Don’t pretend to know me well enough to know whether or not I should feel ashamed.