Saskatoon real estate week in review: August 9-13 2010
Saskatoon real estate sales were up from last week, and listings were down, but a large gap remained between the two in spite of the slightly improved numbers.
Local real estate agents reported sixty-six sales of single-family detached houses and condos during the past week, a gain of thirteen from the previous week but well below the ninety-one homes that changed hands during the same week a year ago.
New listings finished the week with 113 houses and condos being placed on the market, down from a whopping 130 the week before, but still ahead of the 102 homes offered for sale on the Saskatoon multiple listing service® over the same period in 2009.
Click the image for a larger version of the graph.
For the second week in a row total active listing inventory showed some gains, moving higher by twenty-one properties to close the week at 1371, thirteen percent above where it was at the same time last year. Though the numbers added were small, the increase was enough to eat away at all of the losses that we had seen over the past six weeks, returning us to levels we were at in early July. As the week came to a close there were 810 single-family homes and 488 condominiums showing an active status on the Saskatoon MLS®. At the same time last year, the total inventory amounted to 1213 properties including 723 single-family homes and 395 condos. On a year-over-year basis, condos are clearly up the most showing a twenty-three percent increase. Duplexes, semi-detached homes, mobiles and vacant lots have actually dropped off falling from ninety-five at this time in 2009 to seventy-three today.
Click the image for a larger version of the graph.
Cancelled and withdrawn listings moved higher to thirty-nine properties with twenty-one of those immediately returning for another go at the market, most at a lower price. An additional sixty MLS® listings saw a price adjustment last week.
Saskatoon real estate prices continued in the wild up and down dance that we’ve been experiencing over the past three months. After reaching its highest point this year just last week, an absence of higher end sales saw the average selling price of a Saskatoon home fall to its lowest point since early March to settle at $268,038. The median price tumbled nearly thirty thousand dollars compared to the previous week and none of the five major Saskatoon real estate areas were spared. Area 1, which typically sees a large share of the upper end sales saw its median price decline by $75,000 as just one sale above $500,000 made the board. Still, the six-week median managed to maintain some traction slipping just eight hundred dollars from last week to $292,739, about seven thousand dollars higher than it was during the same period in 2009. The four-week median fell hard losing ten thousand dollars on the week to finish at $272,250, a drop of $2500 compared to the same week last year.
Click the image for a larger version of the graph.
Overbid sales nearly vanished as just two Saskatoon home sellers closed a deal above their asking price. The average overbid was just $100. Eight sellers managed to secure a full price offer while fifty-six of sixty-six buyers ground themselves a bit of a deal and negotiated an average drop of $8,214, or a discount of about three percent of the asking price.
Click the image for a larger version of the chart.
Highlights from the news this week
Kay factors for the housing market
Canada sees ‘dramatic’ housing slowdown
Why real estate slowdown is ‘most dramatic’ in Canada
Global housing rebound loses steam
Demand remains strong for home builders in Saskatoon (local)
Housing starts slip in July
Housing starts ahead of ’09 (local)
A map displaying the boundaries of Saskatoon real estate areas is here.
An overview of data collection and calculation practices for our statistical reports is here.
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.
Our Saskatoon home search tool offers MLS® listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.
Norm Fisher
Royal LePage Saskatoon Real Estate
29 comments so far. We'd love to hear your thoughts.
August 16th, 2010 at 12:03 AM
So here’s the really interesting possibility: is inventory for 2010 going to cross the blue (2008) line at any point this year?
August 16th, 2010 at 7:01 AM
It already did in June. But I am thinking you meant if it will cross over again. I think it may get close but not cross it.
August 16th, 2010 at 10:40 AM
@ Jason
Nah… this is completely a WAG but no, I don’t think inventory will reach 2008 levels again this year. Perhaps quite late in the year, but not soon.
Canadian home sales sink 30%
“Canada’s housing market stalled in July as sales sank 30 per cent from the same month a year earlier, the Canadian Real Estate Association said Monday.”
National avg. price dropped 3.5 per cent from June, but still up 1 % YOY.
Seasonally adjusted number of months of inventory in July was 7.3 months… the highest level since March 2009.
Call me crazy, but I think another outlook revision from CREA may be in the works.
August 16th, 2010 at 9:51 PM
More from the article in Jens link
“We expect a downward correction of nearly 10 per cent in the monthly average prices, followed by several years of stagnation of price growth at the rate of inflation, in order to bring Canadian house prices back to balance,” Toronto-Dominion Bank economist Grant Bishop said.
10 percent is about $30,000 on an average house. Not chump change, but not a collapse either.
August 16th, 2010 at 10:24 PM
Doug,
I don’t care what TD says they have a lot of invested interest in the housing market.
Their outlook for housing a year ago was much more upbeat. The same thing happened in the USA, where thoughts of a measured correction danced in their heads and we all know how that ended. I watched numerous interviews on bnn.ca today. One was a guy from Royal Lepage saying that it is nothing to worry about and by fall things will bump up again. They are worried. Pretend and extend.
Home owners are still a number of years from puking on their shoes, but it will happen.
August 16th, 2010 at 11:15 PM
Doug, yes – I meant cross (again). Jen, I think 2008 levels are probably a stretch, too; I was alluding to the possibility that we might end Fall (or the year) at a higher level than 2008. Nix, I agree with your assessment: there’s definitely fear in the air. The evil “d” words are floating around (depreciation, deflation and depression).
August 17th, 2010 at 10:21 AM
Including closing costs, cmhc fees, anybody who bought at the peak with less than 10% will have lost their down payment. Assuming this market is about 7% down in prices since the peak. With prices so high, confidence in rising prices allowed prospective buyers to jump in. Now with sales slumping, that confidence is gone. And soon the air in the bubble will be gone as well. The investors and first timers won’t buy in a declining market. I have about 10% saved for an average house, if I buy now that money is lost by next summer.
August 17th, 2010 at 10:26 AM
One can understand the negative assessments discussed here on a national level, especially in areas that just underwent hyperinflation(TO, Van) for interest rate reasons only, but we have a few things working in our favor locally that are directly tied to RE as in lowest unemployment rates in the country and positive inmigration.
As far as the number of listings go, my guess is that there are a lot up from sellers that don’t have a need to sell but rather are worried about all the uncertainty of values and interest rates. I suspect a lot of these listings will expire if they don’t retrieve the top dollar they had hoped for by winter.
True that there are not a lot of buyers remaining because of the fear put out in spring of rising interest rates, along with mortgage rule changes but I wouldn’t expect those looking to hold off too long in the current interest rate environment. I would bet that listings stay directly in between the red and blue lines.
August 17th, 2010 at 10:56 AM
Brian,
Edmonton and Calgary have oil. Vancouver has nice weather, Victoria is the retirement capital of canada. You can come up with reasons housing should go up in every market. Saskatoon and Regina are no different. The problem is people are out of money. Whether you live in Winnipeg, Regina, Saskatoon or any other Canadian city housing has peaked. People are out of money and as soon as housing is no longer seen as a sure that only goes up it is game over.
Demographics also play an important role. I was born in 1982. My parents are baby boomers. The cohort that was born as a result of the baby boomers is the largest generation since the baby boomers. We wanted all the same stuff as our parents without having to wait for it. Pushed by our parents who have known nothing else, but increasing housing prices. The boomers have encouraged all children to purchase a house and in some cases even helped provide the down payment or co-sign. Something I have noticed lately is all my friends have purchased houses. There is no one left to purchase a house. Houses are too expensive period. The funny thing is none of my friends can actually afford the houses they live in.
They are in debt up to their eyeballs. Seriously to the point where they can’t go out unless they take back the pop bottles. The housing ponzi scheme is over.
August 17th, 2010 at 11:30 AM
Brian,
I’m sorry, but I don’t think there are many people just “fishing” for high prices by listing their home. Selling a home is a huge committment for the realtor and home owner. I really have no idea the work a realtor does but it is more than just snapping pictures, loading it onto MLS and cashing the commission cheque. Courses and meetings, showing houses, studying the market, phone calls, missing the kids ball game, etc, I’m sure it is not easy. Most realtors would not be thrilled with the idea of having a seller wasting their time. When we listed our house, we had to make sure it was neat and clean everyday. With little ones, that is a part time job in itself. Meals were delayed, or we ate out. We were also ready and committed to leave in a moments notice. Nevermind the few days I had off to run to Home Depot and fix or finish the little things the realtor pointed out. Packing, moving, finding another place, lawyer and bank meetings are other things sellers would need to think about as well.
August 17th, 2010 at 11:58 AM
Nix, “There is no one left to purchase a house.” Truer words could not be spoken. Not in the literal sense, of course. But generally speaking, we accelerated the natural sales process that would have occurred over the next 10-15 years (or more) and compressed it down into a few single years at vastly hyperinflated prices.
August 17th, 2010 at 2:43 PM
To be honest, I’m quite surprised when my baby-boomer colleague told me that we should stretch ourselves to get our dream house NOW. I’ve been always thinking older people would be more conservative.
Let’s see for the next couple of months, with the interest rate being still so low, if there’ll be another round of enthusiasm in RE…
August 17th, 2010 at 2:54 PM
Hey Nix, agree with a lot of your points especially with babies of the boomers and their lack of control with debt levels, as well as being pushed into real estate by their parents as in their opinion an asset that always goes up and had for them. Had the April mortgage rule changes had any strength to them at all such as increase in down payment or lower debt servicing ratios, then I would tend to agree that prices would fall. But they are still willing to go into debt up to their eyeballs and I don’t foresee any changes with the next generation to come who will be wanting to come of age. Just want to make clear that I am not saying I believe prices will continue to rise, in fact I don’t think they will keep up with inflation.
Doug, it is a lot of work to go through to sell but worry will put people to work some times if they are not comfortable. I know if I was carrying limit debtloads and thought interest rates would be jumping by 2-3% as forecasted I may consider getting out if I could break even, and I don’t think many realtors would turn down an opportunity to sell a home if they were asked regardless of motivation, unless maybe their ask price was far out to lunch.
August 17th, 2010 at 3:21 PM
Brian,
Just reading your post again and to be fair, if we did not sell we would have had two mortgages. There are sellers out there that have listed their house and if it sells they will buy, if it does not sell, they can’t and won’t buy. In todays market I would be selling first or having the condition of my house selling before buying. I wouldn’t want to have a house lingering on the market for 5 or 6 months which is possible right now.
August 18th, 2010 at 9:25 PM
Looks like sales are continuing to fall, but the average price is crazy high. No more first time buyers, is it just trade up buyers now? Or is it just a few high priced sales that have skewed the number up?
August 19th, 2010 at 8:32 AM
Nix,
TD was not much “more upbeat” about Canadian housing a year ago. In fact, their spring report was titled, “Overpriced and Overbuilt” and opened with, “Looking back on the boom in Canadian homebuilding from 2002 to 2008, it is now clear that unsustainable price increases drove unsustainable levels of building. This overbuilding will weigh on markets over at least the next three years.”
Doug,
You make some good points about the hassles of marketing an overpriced listing. Unfortunately, there is always someone who is willing to take them on. Truth is, buyers will reject about 75% of the inventory this month. At least half of that is likely priced well enough above market that it will never sell, at least at the current price.
Jason,
“There is no one left to purchase a house. Truer words could not be spoken.”
At the risk of appearing argumentative, I believe that three out of seven commenters on this post are not presently home owners. One admits to having saved a ten percent downpayment and one other has repeatedly expressed a desire to eventually buy.
bubble,
“Looks like sales are continuing to fall, but the average price is crazy high. No more first time buyers, is it just trade up buyers now? Or is it just a few high priced sales that have skewed the number up?”
The median for August is $287,000 compared to $273,800 in July while the average is up 15K to $305,000. Definitely some skewing in this months numbers. We have one sale above a million and several between 600-800K.
August 19th, 2010 at 9:53 AM
Gene,
you may enjoy this article.
Canada’s housing market can’t stay hot forever
http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20100913_10006_10006&page=1
August 19th, 2010 at 1:37 PM
I don’t understand why some people want so badly to MAXIMIZE their profit. They’ll probably simply make even less…
August 19th, 2010 at 5:21 PM
Definitely. There was a house on the market I was interested in, but it was overpriced. six months later, it sold for $65,000/ less than the original asking price
August 19th, 2010 at 6:34 PM
@Cindy
“The most important single central fact about a free market is that no exchange takes place unless both parties benefit.” – Milton Friedman
August 19th, 2010 at 11:17 PM
Jen, so both parties in this example would be… the seller and the bank?
August 20th, 2010 at 12:20 AM
@Jason,
“Jen, so both parties in this example would be… the seller and the bank?”
Ha! Funny….
Arguably, there is no such thing as a free market; especially not in housing. Wiki definition of a free market will get you this:
“A free market is a market without economic intervention and regulation by government except to enforce ownership (“property rights”) and contracts. It is the opposite of a controlled market, where the government regulates how the means of production, goods, services and labor are used, priced, or distributed.”
Who-boy. I’d like someone to point out to me how the government has NOT intervened in the housing market, especially as of late. Doug’s “Canadian Business” link up above gives a nice outline of how much CMHC has influenced what is “affordable” in this market by systematically lowering lending standards and lengthening amortizations. Don’t even get me started on interest rates.
Will all of this intervention leave *buyers* any better off? No wonder they’re exiting the market in droves. Listen, I currently have a house and of course have no wish to see the value of it “crash”, but this is just nuts! How should (usually two) fully-employed young buyers be expected to assume decades of debt servitude to pad someone else’s wallet…particularly when the seller has seen their “equity” explode in recent years, thanks to the aforementioned governmental intervention?
This graph represents the effect of the credit boom on Calgary, but one could make a comparable chart essentially anywhere.
The thought of bailing these idiots out when they discover that they’ve spent all their “equity” makes me shudder with horror.
Apologies for the late-night rant, all, but one does get sick of subsidizing the reckless and foolish.
August 20th, 2010 at 8:44 AM
Great site! Just stumbled upon it yesterday. You clearly put alot of time and effort into your analysis.
From what I’ve seen of comments, on this site and others, the sentiment across Canada about real estate has clearly started to change. It seems that alot of people believe that the prices are too high and are willing to put off purchasing for at least a couple years to see what happens. This is the single most important factor for the market of real estate. Of course higher interest rates, tighter lending standards, more taxes, ect, are going to make an impact, but it all comes down to confidence in the market. As soon as people begin to see real estate as a bad investment, nobody buys. Look at the US. They have had the lowest interest rates possible, government paying people to purchase houses, and their market is still in the pits. Why? Becasue people down south see real estate as a terrible investment. Its going to be a very interesting next few years.
August 20th, 2010 at 10:35 AM
Apologies for the broken link: http://bit.ly/anDrzn
August 20th, 2010 at 10:46 AM
Jen, the majority of buyers today have never experienced a housing correction (let alone a crash), and the past decade has only seen prices increase. It’s a somewhat artificial bubble. Eventually all things will return to some sort of balance – particularly when boomers start to retire en masse, downsize and flood the market with houses in an effort to tap into the equity they’ll so desperately need.
August 20th, 2010 at 11:03 AM
Jen,
It’s just as likely that the software blew your link to shreds. I’ve fixed it.
Brett,
Thanks for the feedback and for joining the conversation.
Confidence is definitely a key factor in a strong housing market but it’s rare that “nobody buys” as you’ve suggested. Let’s take a close look at existing home sales in the United States. I believe that unit sales peaked in 2005 somewhere around 6.18 million sales across the nation.
Here are the National Association of Realtor’s numbers for the past few years.
2007 – 5,652,000
2008 – 4,913,000
2009 – 5,156,000
Unless there’s something really wrong with the numbers, and I doubt that’s the case, the worst annual drop from the peak is just under 22%. That’s a big drop, no doubt, but there’s still a lot of homes trading in America every year even though things are clearly bad down there. I don’t have inventory numbers handy but we’re certainly led to believe that the supply side is way out of whack with approximately 5% of American households in, or near foreclosure. Seems to me that a gross abundance of supply has been a larger factor in the slaughter of U.S. housing.
August 20th, 2010 at 9:22 PM
@ Jason- “Eventually all things will return to some sort of balance”
I’ve come to the conclusion that all of this governmental meddling is doing nothing but prolonging whatever correction might be coming. Frankly, I don’t have much faith that the government will do what it takes to set things right, but I do absolutely believe that they will do what it takes to get re-elected. I had to laugh at my quote above, “The thought of bailing these idiots out when they discover that they’ve spent all their “equity” makes me shudder with horror.”- if they’re getting the bailout and we’re all doing the paying, who’s the idiot?
I’m not sure what’s coming- I’m just trying to keep myself as financially safe as possible while still trying to live life as fully as I can. I’m not at all sure the housing market will “crash”, but some sort of correction certainly seems due. I found a quote (from the Herald, I think) that illustrates what I was trying to say yesterday much better than I did:
“We were all corrupted by the housing boom, to some extent. People talked endlessly about how their houses were earning more than they did, never asking where all this free money was coming from. Well the truth is that it was being stolen from the next generation. Houses price increases don’t produce wealth, they merely transfer it from the young to the old – from the coming generation of families who have to burden themselves with colossal debts if they want to own, to the baby boomers who are about to retire and live on the cash they make when they downsize.”
August 21st, 2010 at 1:05 AM
Jen, not just prolonging – potentially making it a lot more severe than would have otherwise been the case. I have a good idea what’s coming; history is replete with examples of civilizations that have failed to recognize and learn from their mistakes. The only question is what stage we’re at: are we at selfishness… or have we moved to complacency or even apathy?
August 31st, 2010 at 11:18 AM
Jen,
I’d say if everyone has your thought, there would be no housing bubble…
Norm,
From the figure you gave for the States, I have a feeling that 20% more deals make a bubble, and 20% less make a crash,