Saskatoon real estate: Week in review (December 1-5 2008)
New listings in the Saskatoon real estate market fell to their lowest level since the week of December 31 – January 4 as a total of 70 properties made their way to the MLS system including 45 houses (single-family detached homes) and 17 condominiums. Additionally, just 13 of the 43 properties that were cancelled or withdrawn from the system this week found their way back on as a “new listing.” Total active residential listings took a huge slide falling nearly 8% in a single week to finish at 1,416 units, down from 1,534 the week before and reaching their lowest level since the third week of June. The current inventory includes 862 houses and 463 condos.
Unit sale numbers were fairly steady at 34 units, down 3 from the previous week, and off 14 units from the same week last year. Total unit sales consisted of 29 houses and 5 condominiums. Looking at the “Units Sold vs. Units Listed” graph, it’s somewhat encouraging to me that the right side of the graph looks an awful lot like the left side of the graph. Will we come out into January seeing numbers that are comparable to last year? Will new listings continue to trend closer to weekly sales, or will they spike higher like they did last year?
Over the course of the week 50 price changes were recorded on the Saskatoon MLS system. The average sale price for the week fell rather sharply to $270,226 from $293,424 the week before while the six-week average gave up just over $1,200 sliding from $285,086 to settle at $283,832. The median sale price for the week fell about $8,000 from the week before but the four-week median continued to display a stubborn attitude holding firm at $269,950 and remaining in the same general range as it has for the past three months.
Buyers continued to find motivated sellers, who were prepared to engage in an aggressive negotiation as the average underbid remained fairly steady at $15,319, up just slightly from the previous week, but still amongst the top five weeks this year. The percentage of buyers prepared to sign a deal within $10,000 of the asking price fell from 48% to 41%. The percentage of buyers who managed a discount in excess of $20,000 also came in lower falling to 18% from 24%. The $10,001-$15,000 category grew by 6%, and the $15,001-$20,000 category doubled from 6% last week to 12% this week.
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 @SaskatoonHomes.
Norm Fisher
Royal LePage Saskatoon Real Estate
27 comments so far. We'd love to hear your thoughts.
April 24th, 2009 at 10:35 AM
Norm, that is a pretty high overbid in this market. Was the property along the river or something?
April 24th, 2009 at 10:36 AM
Jedi,
That one was a new home in Stonebridge. I expect that it was likely a case of adding more features than what was offered in the list price but I can’t say for sure. Not many instances of multiple offers which might drive up the price. I did manage to produce two offers on a condo that I have listed last weekend, and I recently heard of one other situation where multiple bids occurred but it’s pretty rare right now.
April 24th, 2009 at 10:36 AM
“I recently heard of one other situation where multiple bids occurred but it’s pretty rare right now..”
And just for old times sake, I was involved in a multiple bid offer in Regina last week. Many over asking. Of course, asking was 50,000. Different world in those realms.
Congrats on the award Norm.
April 24th, 2009 at 10:36 AM
Sorry, a bit off topic but related to RE
Toxic cash?
http://www.greaterfool.ca/2008/12/06/toxic-cash/
our money is backed by the safest of securities, long-term government bonds and Treasury bills.
the Bank of Canada has sold off more than $11 billion of those secure T-bills, plus cashed in billions more of its bonds. As stock market researcher John Paul Koning discovered last week, the central bank now lists on its balance sheet a stunning $32.4 billion in “other” assets, which comprises a whopping 42% of everything it owns.
So if I get this right, our currency is now partially backed by high ratio mortgages? So if we see an increase of house price drops and foreclosures with it, our currency will continue to drop in value? And then the government can just blame the people?
April 24th, 2009 at 10:37 AM
Thanks for a very useful information Norm
From your text, average sale price seems to be $270,226 for the week while it shows the average sale price of last week 293.422 in the table!!
April 24th, 2009 at 10:37 AM
Hi Norm, just a question about the inventory numbers.
You said we started with 1,534 and ended with 1,416 for a net loss of 118 properties.
But with 70 new listings, 43 expired listings, and 34 sold, it would seem inventory should only have dropped by 7 listings?
Sorry if I’ve missed something (I probably have).
April 24th, 2009 at 10:37 AM
Jeff,
Thanks. I just realized that I inserted last weeks images (3 and 4 only). I’ve fixed the link. Thanks again for the heads up.
Brian,
The “43″ were cancelled listings. A cancellation removes a listing prior to its expiry date. The missing listings all expired. Most of those would have gone off as we moved for November to December. The last day and the first day of the month are often big expiry dates.
April 24th, 2009 at 10:38 AM
Her advice: ‘Sell your house’
Mortgage broker is telling some clients to move now before it’s time to renew http://thechronicleherald.ca/Business/1094474.html
Contrary to popular belief, Canada also has a subprime mortgage market that caters to higher-risk borrowers. It is much smaller than the subprime market in the United States, with more conservative lending practices.
But the subprime meltdown south of the border has created a chill everywhere, and spells trouble for those who hold subprime mortgages here, those in the industry say.
Mr. Murphy said it is an unknown how many subprime mortgage holders could be forced to give up their homes because of these recent changes in the mortgage marketplace.
“Hopefully we are not talking about a great amount of people.
New federal rules introduced for insured mortgages that are guaranteed by the government, ended 40-year amortizations, and no-money-down mortgages, but those in the mortgage industry say the most significant change was the introduction of new minimum credit scores for borrowers. The new credit score rules will also likely hinder a number of Canadians from getting mortgages or refinancing an existing one,
Mr. Tal, who is based in Toronto, says that he thinks subprime mortgage holders in Canada will have to pay significantly higher interest rates or they will not be able to renew. Many won’t be able to afford the new rates.
April 24th, 2009 at 10:38 AM
“Toxic cash?”
George, as I understand it, almost all of those ‘other assets’ are the insured mortgages the central bank took on. Being insured by CMHC, these mortgages are already completely guaranteed by the government. Essentially they are as safe a bet as possible for the central bank to take on. And have a decent rate of return.
April 24th, 2009 at 10:38 AM
George,
Yeah, I saw the original article in the FP a few days ago. Here it is: http://tinyurl.com/6rqrxy.
It’s worth a read, as it does point out how much the Bank’s balance sheet has changed, and how unprecedented this is. I’ve been digesting it for a few days, and I’m still not sure what its’ potential short and long-term implications might be. I suppose it all hinges on how long and protracted the liquidity crunch in the banking system is.
I have to admit I feel a lot less safe being in cash than I did a few short months ago. Somebody is always on the other side of a trade. Your position is only as good as your counterparties’ ability to make good on their obligations, even if your counterparty is the government, hmm?
Mark,
I seem to recall having the same conversation back in the beginning of October (although not necessarily with you in particular!) when Flaherty announced the government was injecting its first $25-billion of liquidity into the financial system through the purchase of insured mortgage pools. “No risk to taxpayer” was actually “No *additional* risk to the taxpayer”, because, as you say, the mortgages were already insured by the CMHC. If there were a large number of defaults on these mortgages, the government (i.e. the taxpayer) is out either way, no? I think the issue is that the BOC was previously not backing the currency with these assets.
April 24th, 2009 at 10:39 AM
“I think the issue is that the BOC was previously not backing the currency with these assets.”
Does it matter either way? I mean what exactly was backing the so called rock solid t-bills? Just the government at large. Same as the new assets. They are backstopped, same way a t-bill would be right.
April 24th, 2009 at 10:39 AM
Mark,
the problem I see is that if there is a rise in defaults, it will devalue our dollar. Even with price drops, it may devalue our currency. You are right, either way they are insured by the taxpayer. We will all own many homes this way. “We are richer than we think”
And I do not understand the swap of 75 billion the BofC and the banks did because a couple of the banks are now pulling back lending. And they say our financial system is OK? It just does not add up.
They are not stupid, so I have to think they are a bunch of crooks.
April 24th, 2009 at 10:39 AM
“the problem I see is that if there is a rise in defaults, it will devalue our dollar.”
if defaults devalue our dollar, it is because there is a rise in government debt insuring those assets on the bank of canada’s balance sheet. that debt would rise regardless of where those assets sat. rising defaults would be a problem either way, not sure any more of a problem if if the debt is accumulated paying the banks or backing the assets in the boc.
also, cmhc does charge premiums for those risks. so higher defaults don’t automatically mean taxpayer costs. cmhc presumably has a little cash of its own kicking around.
April 24th, 2009 at 10:40 AM
“And I do not understand the swap of 75 billion the BofC and the banks did because a couple of the banks are now pulling back lending. And they say our financial system is OK? It just does not add up”
Well, who knows, without that 75 billion swap, they all might have stopped lending entirely. some liquidity is better than none.
April 24th, 2009 at 10:40 AM
Another soft landing report out.
No U.S.-style housing collapse in Canada: RBC
http://business.theglobeandmail.com/servlet/story/RTGAM.20081208.wcanadahousing1208/BNStory/Business/home
April 24th, 2009 at 10:40 AM
The most significant part of that article is this one:
“The RBC affordability index shows a standard condo to be the most affordable housing in Canada, requiring 31.4 per cent of pre-tax income. A standard townhouse is next at 36.9 per cent, followed by a detached bungalow at 45.7 per cent and a standard two-storey home at 52 per cent.”
52% of pre-tax income is not a sustainable ratio.
April 24th, 2009 at 10:41 AM
Mark,
I’m admittedly a bit fuzzy on this, and I’m still trying to work this out. My wager is that it does matter what is backing the currency, but perpaps I’m to hung up on the “redeemability” issue if the finacial situation deteriorates. As far as I’m aware, until a couple of decades ago the currency was backed by a large gold and T-bill component. This is from the FP article referenced earlier:
“A liability is only as good as the asset that backs it up. The $20 you’re holding is backed by various assets held in the vaults of the Bank of Canada in Ottawa. In times past the asset side of the bank’s balance sheet had a large gold component. Over the years gold lost its popularity with central banks and was replaced by government bills and bonds. As late as August of this year, the bank held assets of $22-billion in government T-bills and $31-billion in long-term bonds to back the cash in Canadians’ wallets, under their beds and in their deposit boxes.
This has all changed. Over the last three months, the bank has sold off a large part of its government T-bill portfolio and replaced it with assets classified as “other.” In August this “other” category comprised a miniscule 0.4% of the bank’s total assets, or about $200-million. It has since ballooned in size to an impressive $32.4-billion. Last week “other” surpassed government bonds to become the largest component of the bank’s assets, about 42% of the total. At the same time the bank has sold off $11-billion worth of government T-bills, which now make up just 15% of the bank’s assets, down from a hefty 41%.”
I guess my issue is that if the currency is deemed to be less “redeemable” (ie. the assets backing it up are rapidly losing value), currency traders will dump their $CAD for other currencies. Treasury bills are backed by bonds, no? And bond notes are a claim to governmental/federal assets. I’d much rather know that my CAD was redeemable for bonds (an asset with a set value), rather than MBS whose value is questionable, and I’m sure most currency traders would feel the same way.
George,
I’d wager that banks in gereral are using these capital injections to cover their own “assets”.
Particularly in the US right now, because of rising unemployment, rising credit card defaults, rising foreclosures, and the need to increase loan loss reserves, banks are sitting on the money or using it for mergers. I actually think from a purely financial standpoint, this is quite a rational thing to do. From a social standpoint, however, it could be potentially disasterous, as credit isn’t flowing to the people, businesses, and municipalities who need it to cover even short-term funding.
April 24th, 2009 at 10:41 AM
This is from RBC 2008
Housing affordability the worst since 1990
http://74.125.95.132/search?q=cache:pjx0crc4sbAJ:www.rbc.com/economics/market/pdf/house.pdf+1990+housing+affordability+canada&hl=en&ct=clnk&cd=1
“Nationwide housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990.”
So 1990 and 2007 had same affordability and 1990 was a bubble and 2007 was not. Back then, soaring interest rates and a recession sparked much of the trouble.
“Today, however, a long upward trend in house prices driven by sounder macroeconomic fundamentals like job growth is primarily responsible.Adding more fuel to this housing cycle is mortgage product innovation that hasexpanded the market to more potential buyers since mortgage insurance liberaliza-tion began two years ago.”
The only difference I see from then and now is that interest rates have not climbed like in 1990. But we also had innovative mortgages like 0 down, 40 years, interest only and no more 25% down for 2nd properties that 1990 did not have.
In any event, interest rates going up ( 1990) and innovative mortgages being taken away (now) lead to many possible homeowners.. oops mortgage owners out of the buying pool.
All it would take is one of the big banks to say “we see the similiarities of 1990′s bubble to todays bubble and confidence would really be shaken. The way things are going financially for banks and consumers, don’t bet against it.
April 24th, 2009 at 10:42 AM
Crickey,
After reading your article I have several problems with your assumptions.
First of all the value of the Canadian dollar is not determined by what the Bank of Canada holds on its balance sheet.
You fist have to ask how those T-Bills ended up on the BOC balance sheet. They printed money to buy those T-bills. The almighty power all central banks have is that they can print an unlimited amount of money. They could print 500 billion dollars and buy all of the Canadian debt would this be a positive for the Canadian currency? No.
Don’t kid yourself the only thing that gives the Canadian dollar value is the future ability of our country to pay back our debts. Also you need to look at what Canada has to offer. We may no longer have a Gold standard, however the large size of Canada and our vast supplies of commodities in a way act as a currency backing. When commodity prices are high the currency is strong. When commodity prices are low the reverse.
All of this however can be destroyed by a central banks ability to print money without limits. That is why they needed to end the gold standard. The growth in money supply (M3) had to be tided to the amount of gold held. This tied their hands.
The weakness in the Canadian dollar as of late is largely do to the weakness in commodity prices due to the de-leveraging that is taking place. The U.S. dollar I believe is in the process of topping, which should put a bid under the price of all commodities and the canadian dollar.
The realization is coming from all central banks that they must inflate this debt away. A race to the bottom so to speak. However, as with currencies it is all relative. One thing is certain ridiculous inflation is coming down the road.
Nix
April 24th, 2009 at 10:42 AM
One other thing I should mentioned about 1990 and now is that real income has dropped ever year since then and people are in more debt now because of all the gadgets we have. In 1990 my parents had 1 tv and 1 phone. Myself, I have a cell phone, 2 phones, 2 tvs, surround sound, computer. Others could probably add MP3, video games, security system, ipod etc.. you see where I am going with this.
But the problem here is that we actually have less money to service this and that is why debt is at a all time high. With credit contracting, something has to give. Downward pressure on RE is a given with affordability on levels with the 90′s bubble.
April 24th, 2009 at 10:42 AM
Nix,
I believe inflation has been running at about 8-10percent the last few years but with gov manipulation with the cpi they tell us that inflation is in check, I agree that ridiculous inflation is coming. I don’t think they can inflate the debt away but possibly inflate their way out of trouble. Problem is, hyperinflation is a concern and the consumer is last to see inflation in their pockets.
US either inflates their dollar like crazy or default, the last couple of days I am wondering Canada is headed the same way.
April 24th, 2009 at 10:45 AM
Nix,
“First of all the value of the Canadian dollar is not determined by what the Bank of Canada holds on its balance sheet.”
You’re absolutely right! The value of any currency is determined by a lot of things, and what the government is holding on it’s balance sheet is just one of them. I’m just worried about this one in particular right now, but I’m trying hard not to overdo it.
That’s why appreciate the input.
You’re also right in that currency values must be relative to something. How Canada is doing relative to another countries is also very significant. As far as G20 countries go, I think we’re doing pretty well in terms of other things that contribute to currency valuation, although it’s certainly been better. Our political and economic situation, demographics, natural resources, as well as perceptions of the currencies’ stability will all have an effect. Since most G20 countries response to the debt bubble has been similar, perhaps it will all come out in the wash. I’m just trying to understand the longer-term implications of the BOC holding this stuff on both the currency valuation and the taxpayer. It’s complicated stuff!
April 24th, 2009 at 10:46 AM
Crikey,
Looking at the recent Bank of Canada weekly statistical report, I’d say that the majority of “other” assets are not mortgages but are made up of longer term “corporate securities”, whatever that means. That being said, I’d guess some of the “other” category includes mortgage assets – maybe about 25%.
The banks will not use the BoC to offload CMHC mortgages because they can do that through the finance department’s $75 million buying facility. The BoC provides them with an opportunity to offload non-mortgage assets.
April 24th, 2009 at 10:46 AM
George,
You don’t consider Guitar Hero a necessity?
April 24th, 2009 at 10:46 AM
AC/DC,
don’t people remember air guitar? Those where the days:)
FLORIDA HOUSING CRASH 50% OFF
http://www.youtube.com/watch?v=10WoQZKZkNs&feature=related
Brand new townhomes sold for 300k at the peak. Later sold for 145k.
April 24th, 2009 at 10:48 AM
Thanks, jp.
You did mean the finance department’s $75 *billion* buying facility, right?
April 24th, 2009 at 10:49 AM
That’s how you know our economy is good, a $75 Billion bank bail out from the CONservatives