Saskatoon real estate: Week in review (January 5-9 2009)
Following the two slowest weeks of 2008, the Saskatoon real estate market came out of the gate strong for the first full business week of the year as residential unit sales climbed to 45 units, up from just 16 the previous week. 34 single-family homes and 7 condominiums were reported as firm, topping sales for the same week last year by a total of three homes. That’s hardly a substantial difference, but just the same, it’s the first time we’ve seen an “up over last” year when it comes to units sales for quite some time.
Residential listings also came off the starting block at breakneck speeds as a total of 149 residential properties were offered for sale on the Saskatoon MLS including 100 single-family homes and 34 condominiums, 58% more than were listed during the same week last year. In 2008, we didn’t see these kinds of weekly listing numbers until March and given that our current active listing inventory is already at about 3 times what it was last January, I’m hoping this is one of those blips on the chart that sorts itself out next week, and not a sign of things to come. While I have no doubts that there are many more listings to come, I was hoping that it would follow the more traditional path showing its most aggressive growth closer to spring. Given the surge in residential listings this week, it’s no big surprise that total active listings increased. After falling to 1,121 at the close of December the active listing inventory reached 1,188 by the end of the week marking the first increase we’ve seen since they started to decline in September. There are currently 722 single-family homes and 395 condos displaying the “active” flag.
Click the image for a larger version of the graph.
Saskatoon home prices gained some traction and came in higher again for the second week in a row. The average selling price for the house/condo category was $284,563 for the week, up from $265,492 the week before. The six-week average fell marginally from $269,489 to $268,100 while the four-week median increased by more than $15,000, from $244,000 last week to $259,900, and settling roughly 13.5% lower than it’s peak of $299,900 in June of 2008. I’m not at all surprised to see this upward adjustment following this particular measure’s poor performance through December when it declined a whopping $26,000 over just a few weeks after sticking fairly close to the $270,000 mark thirteen weeks in a row.
Click the image for a larger version of the graph.
50 price changes were recorded over the course of the week, not including the 29 properties that were canceled and re-listed during the same week, most at a new price. The average underbid increased to $16,405, up close to $1,000 from the week before. The percentage of buyers who paid a price within $5,000 of the asking price saw a huge increase to 27%, up from just 7% the week before. The $5,001-$10,000 discount range shrunk just as hard falling from 31% last week to just 10% this week. The $15,001-$20,000 discount range also softened significantly, while the $10,001-$15,000 saw some huge growth, as did the largest discount categories.
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.
Norm Fisher
Royal LePage Saskatoon Real Estate
125 comments so far. We'd love to hear your thoughts.
April 21st, 2009 at 2:21 PM
Norm,
>> I find it baffling that everyone continues to think this market is going to play out in a rational manner and comparable to years past
> ‘Are you getting that impression from “everyone” here?’
Not exclusively, but there is sure a strong sense of denial in the media and the real estate profession as a whole. There’s a Saskatoon real estate magazine (sorry, I forget the name offhand) that ended their full page editorial alluding to the fact that there was a) never a better time to buy and that b) buyers could potentially miss out on a limited buying opportunity.
In addition to being incredibly misleading, it’s also completely irresponsible. This is akin to the rhetoric/hype throughout 2007 and early 2008. It’s obvious to anyone who’s been involved in the market that we’ve experienced the first signs of a burst housing “bubble”, and that these are only the preliminary signs of a massive correction that’s beginning to unravel.
April 21st, 2009 at 2:22 PM
Norm, I can’t say as that I’m surprised with the huge surge in listings. There was a general feeling among sellers that Spring was going to see a lot of inventory and potentially large price corrections. I think we’re going to see this trend continue over the next few months, and I’d hazard a guess that we could be looking at close to 1,500 MLS listings for Saskatoon by March 1. I would not be surprised if we surpass 2,000 MLS listings by the end of the Summer.
April 21st, 2009 at 2:22 PM
‘Not exclusively, but there is sure a strong sense of denial in the media and the real estate profession as a whole. There’s a Saskatoon real estate magazine…’
Sigh. This attacking real estate association releases and real estate magazines for hyping what they sell is getting a little tiring no? That hardly qualifies as ‘media’ in any sense. Get over it. Next you’ll be upset that McCain’s ads are misleading you into thinking you need to eat more pizza?
That said, how do you know for sure it isn’t a good time to buy a house anyway? Can you see the future so clearly? Lots of selection, incredibly low interest rates, and with the right offer on the right place, you might be able to get a house a good 25 percent off its peak pricing. Prices might be cheaper in a year, might be, but I can’t be so sure about that, nor can you, and I bet interest rates will be on the way up. If I had a relative that could afford a house and wanted to get out of an apartment, settle down, build a family in a nice neighbourhood, and they found the house they wanted, I’d probably say, what are you waiting for? If you’re there for at least five to seven years, you’ll be fine anyway. Housing isn’t always about making the perfectly timed investment anyway.
‘I would not be surprised if we surpass 2,000 MLS listings by the end of the Summer.’
Maybe. But back in September, that’s what most people on here thought we’d see by the end of 2008. Instead, we ended up with almost half that.
April 21st, 2009 at 2:23 PM
Jason,
“There’s a Saskatoon real estate magazine (sorry, I forget the name offhand) that ended their full page editorial alluding to the fact that there was a) never a better time to buy…”
This is actually true, if you are willing to exclude almost every single day prior to 2008.
When pushed for my best case scenario comments, as I often am, the most I’m willing to say is that conditions continue to improve for home buyers. There is certainly a greater selection of better homes available at better prices, and at better terms than there have been for quite some time, but I agree, that does not make this time “never a better time.”
I tend to agree with your general points about inventory. There will be no shortage of homes for sale this year.
Mark,
“Instead we’re at half.”
True, but taking into account normal seasonal fluctuations inventory is just as high as it has been at any point this year. We are literally kicking off the new year with three times as much inventory as last year, and with 600-700 expired listings over the past few months I can’t imagine that we won’t see numbers similar to last year. On the other had, we may see stronger demand than we’ve seen over the past six months with lower prices, lower rates, etc. No question that “affordability” has improved significantly.
April 21st, 2009 at 2:26 PM
Mark, what I have a problem with is the extent to which the real estate community continues to do itself (and sellers) a disservice by continuing these selective editorials that highlight only one aspect of the market. When said markets correct, those on the “hype” end of things tend to lose a tremendous amount of credibility. I think Norm does a great job of representing both sides of the equation, although he’s more the exception rather than the rule.
In response to the question you pose, I’d ask this two-part question: Do you have enough financial resources to offset any negative equity in the event you have to sell your home (for whatever reasons), and if so, are you prepared to do this? If not, then you should be prepared to continue to rent and remain on the sidelines until such time as either better deals materialize or you’re confident you can either ride out any subsequent economic downturn.
2008 was the peak year to sell, and anyone still considering a sale in the near future might be well advised to not wait until as late as Spring (historically). With the recent new MLS listings report for January, indications are that more than a few people are already considering this. Incidentally, we did surpass 2,000 listings last year when private listings are taken into effect.
April 21st, 2009 at 2:29 PM
Mark: Yes, affordability has improved significantly; I’m certain it will continue to do so. So no, buying doesn’t seem like a fabulous idea quite yet.
The recession hasn’t started to really bite yet — although I do notice a number of hopeful little businesses biting the dust (always sad, and I’m serious about that). People are much less confident about taking on large mortgages when they are worried about their jobs.
I’m guessing 2,500 units on MLS as the high-water mark this summer: I suspect it’ll go higher than that, but 2500 is safe.
Happy New Year Norm and all…
April 21st, 2009 at 2:30 PM
Norm, touche.
I agree, conditions have (and will most likely continue to) improve for buyers. My cautionary advice is for those that can ill afford being in a negative equity situation to seriously consider the very real financial ramifications of having to sell a home at an economic loss. High inventory also tends to lend itself to improved rental possibilities – something which shouldn’t be easily dismissed.
April 21st, 2009 at 2:32 PM
If this isn’t just a “blip” on the radar it’s going to prove to be a very interesting spring indeed!
April 21st, 2009 at 2:32 PM
Mark said:
“Sigh. This attacking real estate association releases and real estate magazines for hyping what they sell is getting a little tiring no? That hardly qualifies as ‘media’ in any sense. Get over it. Next you’ll be upset that McCain’s ads are misleading you into thinking you need to eat more pizza?”
I agree with Mark in terms of association and real estate magazine releases. Their responsibility is to themselves as an industry and to bring more activity to it. I think the important thing is that when you read an article on real estate, you really need to consider the source in every situation as biases so often come into play.
The issue I have is when the newspaper prints an article on housing and they take the quotes received from people in the real estate industry and print them as if they are fact and do not attempt to find an independent source to confirm or deny the views of those quote. In particular, I tend to put more faith in the views of an economist who studies market factors and in general has no vested interest in the real estate market rather than the local real estate association president who benefits directly by having a hot, high priced real estate market.
The newspaper (I don’t read the StarPhoenix as I live in Regina, but I assume they are very similar to the Leader Post here) as a member of the media has a responsibility to the general public moreso than to their advertisers, represented by the real estate industry who provide the newspaper with a significant chunk of their ad revenues. In my opinion, that responsibility is often tossed aside, either through lazy reporting where an issue involving a significant amount of opinon (market speculation) is only looked at from one side, or through a concerted effort from the editor of the paper to ensure that only positive real estate news are posted in order to keep one of their main advertising partners.
This is the reason why I value and appreciate the work that Norm is doing with this blog. He consistently provides objective analysis, backed up by statistical facts, which presents the results without bias. I only wish that the local newspapers would attempt to do something similar each month by investigating through the MLS stats and preparing their own analysis rather than simply repreinting the one done by the local real estate association.
April 21st, 2009 at 2:34 PM
Here comes the wave of listings…
Maybe the Star Phoenix article about prices down $44,000 is enough to get the speculation holders to try to sell their properties now, instead of waiting for another $40,000 drop in price.
April 21st, 2009 at 2:37 PM
“” “Sigh. This attacking real estate association releases and real estate magazines for hyping what they sell is getting a little tiring no? That hardly qualifies as ‘media’ in any sense. Get over it. Next you’ll be upset that McCain’s ads are misleading you into thinking you need to eat more pizza?”
I agree with Mark in terms of association and real estate magazine releases. Their responsibility is to themselves as an industry and to bring more activity to it. I think the important thing is that when you read an article on real estate, you really need to consider the source in every situation as biases so often come into play. “”
The problem is the public seems to, used to?, see real estate associations objective experts. And news reporters seem to lazily go to these boosters for stories, instead of researching for themselves. The reason the public is still surprised by a $44,000 drop in prices, while everyone on this blog could have dropped that number after a 2 minute flip through monthly stats.
Yeah, real estate associations, the chamber of commerce etc are all Saskatoon boosters, problem is, unlike McCain, they have no competition, per se, to criticize their claims. And we have local “news” organizations, where loud mouthed boosters call anyone who questions our housing market “Saskawhiners” instead of Saskarealists.
We should all know that CTV telling us house prices are ‘up’ year over year means little, problem is, with mixed messages, will take some time for non real estate junkies to catch on that they can underbid more, and there are NO other offers.
April 21st, 2009 at 2:37 PM
the denial continues, with prices stubbornly high despite places not selling and looks like listings are back on their way up
as norm pointed out, there’s all those cancelled listings out there, waiting to be sold when prices go up, or owners who might now be trying to get what they can, po’d they missed out on the peak early last year
April 21st, 2009 at 2:38 PM
“the denial continues, with prices stubbornly high despite places not selling”
from what i read of norm’s summary, more places sold this week than the same week last year. that isn’t exactly ‘not selling.’ in fact, seems things are selling pretty well, right now anyway.
April 21st, 2009 at 2:42 PM
despite one week of a few more sales the graph above shows that sales are going down and inventory is significantly up
April 21st, 2009 at 2:43 PM
Moving,
At the risk of sounding too optimistic, we would expect to see sales declining through the final quarter of the year. While October and November unit sales were well below the range of what might be considered “normal,” December was quite a strong month. Below last year for sure, but again, the second best for unit sales on record. That strikes me as a good reason to at least be somewhat optimistic.
April 21st, 2009 at 2:43 PM
I think that with record inventory, and the potential of inventory going up further still with investors trying to cash out, even normal sales means a weakening market. Really, as long as inventory is growing, supply is out stripping demand.
To me, inventory greater than the past few years, means excess supply and a weak market. And just from the grape vine at work, a front page newspaper story, noting a $44,000 drop in property price, maybe make a lot of buyers hold off, for fear Saskatoon house prices will far further. Another $44,000? Still leaves average house prices far above 2 years ago, but 30% below peak.
No one wants to be the sucker who buys at peak, and with this much inventory, when they do bottom out, prices won’t be on the way back up too quickly
April 21st, 2009 at 2:44 PM
Nick,
from what I believe, the smart money left in 07, suckers bought in 08, and 09 will see some 07 pricing, but with better interest rates.
Inventory will be a big factor this spring, probably right up there with the economy, but demand is kinda surprising me. I thought sales would have fallen off a cliff compared to other years in Dec, but it didn’t. And this past week had decent sales. Should be a interesting spring. I think we may break inventory records or at least last years.
From what I see, properly priced properties are selling. Norm seems to selling his, but he is one of only a few realtors who get it.
For sellers who are hoping for spring 08 prices, be prepared to rent the place for 5-15 years, for sellers who are looking for a sale, be prepared to price ahead of the curve.
For buyers, with interest rates coming down, things are starting to go their way in respect to prices and will be that way for a few years ( as long as the economy does not crash some more).
I am thinking the average price will bounce around from 260-280k the next few months.
April 21st, 2009 at 2:46 PM
Nick
“I think that with record inventory, and the potential of inventory going up further ”
I don’t know where your getting your numbers from but this is not record inventory and let me see, inventory has now gone up for one week in a row … I agree with you the sky is falling!
April 21st, 2009 at 2:47 PM
Nick
Even if you add this week’s inventory gain of +61 units to week before’s inventory loss of -171 units, you still end up with a net inventory loss of -110 units… do I need to go back a few more weeks?
Positive or negative spin clouds the truth… you can live in the clouds if you like; I’m interested in the truth about the market, to make wise decisions. To that end you words amount to worthless spin.
April 21st, 2009 at 2:48 PM
Norm,
What is the record number for inventory?
April 21st, 2009 at 2:48 PM
Hiro,
We cracked 1,800 this fall and that’s the highest it has been as long as I’ve been in the business (15+ years). I’m told that inventory exceeded 2,000 units in the early 80′s.
April 21st, 2009 at 2:50 PM
Tim:
This is not record *all-time* inventory, but 1100+ units sitting on the market on Jan 1 is certainly unusual given historical conditions. Last year, there were ~350 units at the same time, which was much closer to historical norms. So while we’re not at record all-time inventories just at this moment, we did hit that mark just last year — a year that started out with ~800 fewer properties on the market.
For many reasons, spring is traditionally the time when prices bounce back up after the doldrums of winter, so for that reason the # of listings tends to go up as well. What people around here are anticipating is that a) a LOT of people who let listings expire in the fall and winter — couldn’t get their asking price, and didn’t want to lower it — will be bringing them back in the Spring to catch this Spring Bounce, and that b) there will be no Spring Bounce — at least in part due to the greatly increased number of listings.
April 21st, 2009 at 2:51 PM
So roughly 3 times the number of listings as a year ago means that prices should be at a third of the average price from a year ago, right? Wouldn’t that be nice! An average sale price of around $85,000. How’s that for voodoo economics?
April 21st, 2009 at 2:52 PM
“There’s a Saskatoon real estate magazine (sorry, I forget the name offhand) that ended their full page editorial alluding to the fact that there was a) never a better time to buy…”
Is it a good time to buy real estate right now? I suppose this has much to do with your won personal finances and your expected guess at the larger economic risk, but really, what’s the rush? There are more homes on the market, both new and existing, than at almost any time since they’ve been keeping track of these things. Interest rates can’t anywhere soon without causing a significant number of defaults on all types of both personal and commercial loans. I’m not saying that it’s not going to happen, but I think the government is well aware of the huge risk of raising rates in the near term and will do everything it can to avoid it. The US Fed has explicitly stated that interest rates will be held firm “for the near term” (whatever that means). The economy is clearly not going to turn around on a dime, and even if tit did, there would likely be a significant lag in the real estate market. There are more and more motivated sellers hitting the market every day, with no sign of a let up. I think my essential point is that unless I am missing something big that has changed recently, the market (and the economy) are still telling us that residential prices are not market-clearing…yet. It will be interesting to see what happens with both inventory and prices in the next few months, for sure.
April 21st, 2009 at 2:52 PM
Off topic, but interesting:
Last night “60 minutes” featured a story on the recent speculative oil bubble, fanned by investment houses and hedge funds. So much for surging demand in emerging markets explaining the recent run-up.
60 Minutes – The Price of Oil, part 1 of 2
http://tinyurl.com/9aeumj
60 Minutes – The Price of Oil, part 2 of 2
http://tinyurl.com/924xz7
April 21st, 2009 at 2:53 PM
Mark (and Norm), I believe Norm indicate that the way MLS sales were recorded has changed recently, ie: sales are now recorded at the time of transaction as opposed to previously when all conditions are removed, so I think this may skew some direct week-to-week comparisons (at least for the first few months).
April 21st, 2009 at 2:54 PM
Norm, December had a lot of unusual economic activity as a whole in Saskatoon, did it not? (increases in car sales, consumer spending) And we did see the Bank of Canada interest rate reductions translate into lower mortgage rates during the same timeframe as well.
April 21st, 2009 at 2:57 PM
Tim, I’m quite certain a lot of those -171 listings were not very active to begin with (a lot were probably set to expire month/year-end), and I’m fairly certain a considerable number of these will find their way back onto the market in short order as a new listing.
We’re living in very interesting times: we haven’t seen inventory levels like this since the 80′s (the last time the housing market collapsed), we’ve never (in history) experienced such a rapid housing boom and economically, we haven’t seen conditions like this since the Great Depression.
But as to your last point, I think George hit the nail on the head, ie: if you’re planning to sell, 2008 was the peak (and it’s gone), so either be prepared to have tenants for the foreseeable future or price (very) competitively. And if you’re planning to buy, I think Crikey is absolutely correct that there are more and more motivated sellers which will present more opportunities in the not too distant future.
April 21st, 2009 at 2:58 PM
I have been reading this blog long enough to know that George often writes as though he is far smarter than anyone else, but this latest gem really takes it:
“For sellers who are hoping for spring 08 prices, be prepared to rent the place for 5-15 years, for sellers who are looking for a sale, be prepared to price ahead of the curve.”
Good to know that when neither the banks, SRAR, world economists, Harper, Gormley, Norm, myself, or anyone else really knows what prices will look like 5-15 years from now, we can all turn to SRERC’s “George” for sage wisdom!
Norm, could we add a “block user” feature?
April 21st, 2009 at 2:59 PM
Jason,
“Norm, December had a lot of unusual economic activity as a whole in Saskatoon, did it not?(increases in car sales, consumer spending)”
I’m thinking that October, November were the “unusual” months given that we’ve been seeing the largest increases in retail sales for two years running.
“Mark (and Norm), I believe Norm indicate that the way MLS sales were recorded has changed recently, ie: sales are now recorded at the time of transaction as opposed to previously when all conditions are removed, so I think this may skew some direct week-to-week comparisons (at least for the first few months).”
Jason,
This change occurred back in February, March of 2008, but you’re right, if we were to compare these two weeks using the same measure it would be 41 sales in 2009 and 28 sales in 2008.
April 21st, 2009 at 2:59 PM
James,
I have never said I am smarter than anyone else, actually a few times I have mentioned that the reason I blog here is to surround myself with people smarter than myself. If anything, I think I am more informed than most. Instead of facebook, youtube, texting, I read blogs. Calculated risk, mish’s, wsj, to mention a few.
I’ll be the first to admit it was probably wrong to put a time frame, because nobody knows what prices will be like 5-15 years from now. But everybody knows that 2008 prices won’t be here again for some time and if sellers want to get a sale they must price ahead of the curve.
Geez, the last couple of weeks I have been less bearish about Saskatoon RE because I do see some optimistic things coming for buyers. Guess I have hit a nerve with a spec. How am I gonna sleep tonight?
Norm, if you choose to block me, can I still visit the site to read, please?:)
April 21st, 2009 at 3:00 PM
Well James, I believe Merrill Lynch, Scotia Bank and the Royal Bank all support George’s predictions at some level – of an ongoing drop in Saskatoon housing prices and further weakening of an over priced market.
Yes, Saskatoon boosters do include the real estate association, Gormley, the mayor, home builders, Home Depot, Tourism Saskatoon and everyone’s grandma – doesn’t mean they’re objective (or right).
April 21st, 2009 at 3:00 PM
George, I’ll also give you the benefit of the doubt and assume 5 to 15 years was a bit of a hyperbole to emphasize the long correction ahead
April 21st, 2009 at 3:00 PM
Okay, Tim, we were at record for Norm’s career a couple months ago, not for January (when listings are typically much lower) what is the record for the month of January?
If we have 3 times normal inventory for a normally slow time of year, I’d think for this time of year, we’d be at/near record available inventory.
April 21st, 2009 at 3:07 PM
James,
I find it hilarious that you include Gormley and SRAR to be in the same company as the Prime Minister and ‘world economists.’
Gormley! LOL!
I think you’re right about hitting a nerve, George…
Hey, and just like Gormley, he wants to silence opinions he doesn’t agree with!!!
April 21st, 2009 at 3:08 PM
You’re on the comments section of a blog. If you think the poster is blatantly wrong, have a laugh to yourself while thinking how much of a fool you believe the commenter to be. If they consistently annoy you with their comments, then don’t read them. But don’t ask for censorship unless they are purposely disrupting the board. To do otherwise makes people think question your motives and judgement.
Norm, I truly hope you are not considering banning any of the posters here simply because they have different view points. While most posters here tend to skew to the bearish side, in general I find everyone on both sides of the fence to raise intelligent points and I think that is an environment that should be encouraged.
April 21st, 2009 at 3:08 PM
Hey!! no sask A whining here!!
saskatoon is still booming
if you don’t think so you’re a big poopoo head
and get off my radio show
and stop with your numbers and facts showing saskatoon house prices are falling and inventory is really big
if we admit saskatoon’s housing market isn’t doing great consumers might save their money instead of spending it at our advertisers stores and restaurants and save by not buying that rapidly depreciating condo for their kids who should just share a basement suite which is still really affordable for first year university students
April 21st, 2009 at 3:08 PM
Forums across the internet have the option for you to block the posts of viewers that you aren’t interested in reading. That is what I was referring to, though I can see where the confusion came from. I am in no way trying to silence George or anyone else – just stating that I enjoy reading the blog, but not necessarily George’s comments. I’ll beat you all to it, and agree to just “scroll past” his posts from now on…
“Well James, I believe Merrill Lynch, Scotia Bank and the Royal Bank all support George’s predictions at some level”
What I was getting at, Nick and others, is that all you need to do is look at posts or news articles from a year ago, from those same sources, to realize just how wrong they were and how wrong they are likely to be in the future. The %’s they throw out there are meaningless, as far as I’m concerned.
guy_in_regina, I made a point in “grouping them all together” because it’s pretty clear that nobody, whether they sit high or low on the totem pole, really knows how this will all shake down. You get a cookie for missing the point entirely.
George, admirable debate tactic to assume that I am “a Spec” just because I’m calling you out on your impossible predictions. I eagerly await what news the Oracle has for us tomorrow!
April 21st, 2009 at 3:12 PM
Looks like another 1,000 laid off high paying jobs
This time from Mosaic
No pride in this, just wish people would “save their money” like the ING guy says
http://www.cbc.ca/canada/saskatchewan/story/2009/01/12/potash-mosaic.html
300 of these jobs at Colonsay, right by Saskatoon
Other 700 at Esterhazy, though hurts province’s bottom line
April 21st, 2009 at 3:15 PM
Crikey, touche on the Mosaic layoff post. I updated thebench from Balgonies’ comment here, and after posting the new story, noticed you had beat myself, Balgonie and CBC by an hour!
James, good to see what you want to get out of a free discussion of ideas is an ability to not have to read ideas that differ from your own. Why bother visiting a blog? You might as well just follow up on SRAR press releases. And a year ago, there were some very bearish forecasts about how over priced Saskatoon’s housing market was, none of it received any play in the “booster” happy media at the time.
April 21st, 2009 at 3:15 PM
Nick, some of his statements are so outlandish (5-15 years?!) that I’d personally rather not spend time with them. It’s like reading news from a shaky source – why bother?
I’m not even upset that he, or anyone else, is predicting prices are going to go down (infact i agree, they will), but to say that those unfortunate enough to unknowingly buy at the peak (many of which likely had honorable motives – not all of them are greedy specs you guys) will be landlords for the next 5-15 years is obviously ridiculous.
April 21st, 2009 at 3:16 PM
I think the greedy specs got out pre-peak, I think those who bought at peak ($44,000 ago) were the poor suckers who based their decisions largely on our boosterish media and trust in their real estate agent. It bothers me that such one sided information was presented, and many people I know personally made decisions on the assumption prices could/would not go down. Many now have their neighbours (identical in new condos) on sale for up to $50,000 less than they paid – and not selling. I definitely feel for these people. Maybe a hyperbole is warranted, but if a $315,000 condo is now $265,000 and goes down to $250,000 – maybe not so unbelievable it would take another 5 years to go from 250 to 315. That would actually be faster growth than prices experienced historically (ie before the past few years).
My real estate agent told me prices would only go up when I was looking in June – I moved to Regina for a raise, and cheaper housing, where house prices are surprisingly more stable, and a lot cheaper.
April 21st, 2009 at 3:17 PM
Cory,
“I truly hope you are not considering banning any of the posters here simply because they have different view points.”
You pretty much have to be hawking Viagra or anatomical enhancements to get banned here.
Nick,
“Well James, I believe Merrill Lynch, Scotia Bank and the Royal Bank all support George’s predictions at some level”
While all of these entities said Saskatoon real estate was “overvalued” I don’t believe any of them actually predicted a massive correction (at least not last year). In fact, Scotiabank and RBC both said that the chances were greater that a correction would occur through slower than normal appreciation. James is pretty much right. Nobody has been able to accurately predict the market. Even I am wrong sometimes.
“poor suckers… I definitely feel for these people.”
Uh-huh. It sounds like it.
James,
George is one of our “worst case scenario” dudes. Every blog needs at least one. He means you no harm.
April 21st, 2009 at 3:18 PM
Hey George,
Keep doing what you doing brother. The next shoe to drop at some point will be the US bond market. An auction is going to fail and rates are going to shoot up up up . . . goodbye US mortgage market. And from what I understand from a formal banker, rates in Canada will go up too, just not as bad as the US. It should still be bad enough to hurt the Canadian mortgage market. It could be the eighties all over again imo.
April 21st, 2009 at 3:18 PM
Tim
I could just as easily say that since the peak we have lost 700 listing in four months. That’s spin too, right. The point is this is a great site, but it is getting harder and harder to wade through all the spin to try and figure out what’s happening. I personally do not get past the first sentence or two of many of the posters and go spin…next. There may be some good points in some of it but, its not worth clouding the facts with spin. ie. If it starts with spin it’s all spin. I just here to tell those that live in a world of spin… you can keep on flapping to the converted but do not be naive and think everybody is listening.
By the way Tim I do not consider you the only or the biggest spinner on the site. The best decisions are based on accurate information that I as free as possible from self interest.
The information that Norn provides is the good stuff before it gets twisted.
April 21st, 2009 at 3:19 PM
I just heard an ad on the radio on the way to work this morning. I think it was Northridge, indicating that they don’t just build new houses, they do expansions and renos too. To me this would be a clear sign that builders are starting to look for work. I remember when we approached a builder about a year ago, we just got brushed off.
April 21st, 2009 at 3:19 PM
I think it’s okay to say some one feels bad for poor suckers. Like that gullible buddy we all had growing up. Unfortunately it goes from having their clothes stolen while skiny dipping to losing their shirt on a few hundred thousand dollar speculation condo
April 21st, 2009 at 3:20 PM
I’m not sure that the opinions of George, Crikey, me, Bookrat and the other bears in this cave of commentary actually count as ‘spin’.
Spin implies that you’re going to profit from the information: unless you’re suggesting that we’re all going to rush in and scoop up houses at pennies on the dollar. I’m not sure you can argue that.
I think the word you’re looking for is ‘opinions’. Which are based, you gotta agree, on a lot of nasty facts.
April 21st, 2009 at 3:20 PM
Fair enough, James. 5-15 is quite a ways out.
captcha = NATURALIZE Georg
April 21st, 2009 at 3:20 PM
5 years isn’t really that far out
george was probably exaggerating for effect
but really, if prices end up another 10% down, that’s over 20% down from June/spring 2008
on here, a lot were predicting a 20% drop from peak prices, but now actually kind of looks conservative, especially with all the potash lay offs, inventory growing again and houses everywhere else getting so much cheaper
not unreasonable to take 5 years to recover 20%,
especially since prices will likely stay bottomed out with buyers afraid to pay any increased price since they will now know what a price correction looks like
April 21st, 2009 at 3:21 PM
Brian S,
Good point, and I’m sure you’re right. Builders are just starting to get hungry for work. I don’t think now is a good time to build. Prices are still way too high, and builders don’t feel the need to be competitive… yet. I say probably by summer to early fall building costs will fall.
My husband and I are building in Willowgrove. (poss. date March 30) While we got a pretty fair price at the time, I feel if we had waited until fall this year we’d be saving at least $30K. Our house has recently been appraised by the bank @ 405K, and we’re building for $350K. We’ll see how well it retains it’s price. I’m prepared for it to take a hit over the next year or two. It isn’t a big deal as we bought something we can afford, and will be in for at least 10 years.
Captcha: level effect
April 21st, 2009 at 3:21 PM
Norm, how accurate is the information on realtor.ca in terms of ascertaining the number of active listings at any given time? For instance, if I center on Saskatoon at a scale of 7km I get 1,158 properties. Is that within a small percentage (±) of the actual real number that your system reports?
April 21st, 2009 at 3:22 PM
Jason,
I’m showing 1,192 actives this morning. It’s usually pretty close but status changes do take 12-48 hours to appear there.
April 21st, 2009 at 3:22 PM
I haven’t posted in a while, probably due to the fact that as a buyer I finally gave up and signed a 1-year lease on a rental, and thus haven’t been paying attention to real estate much. Anyone else have enough of this market and do the same? I found it very relieving to be honest.
I share a few posters’ surprise that the prices have remained rather stable – more stable than I would have predicted coming into the real estate slow season. I’m not going to speculate on the reason for the failure to drop significantly – it’s beyond my “bear” prediction powers. I will simply comment that I find the lack of greater price decline surprising and leave it at that.
I will stick my neck out and make one prediction for the spring season. Based on gut-feeling and my anecdotal “expert” opinion (*sarcasm*), I’m going to wager we see a sharp decline in the spring. It will start with listings gaining speed, followed by weaker than expected sales (a number of factors lead me to believe sales will not pick up), and then seller panic to offload property ahead of the other sellers. I’m hoping that this will push the correction we so badly need in this city, and make it affordable for young people to start building “real” equity in their homes.
April 21st, 2009 at 3:22 PM
I found this an interesting snippet. It’s a nice summary of some variables could affect the Spring market, but the list is by no means inclusive, of course. The actual data is based on the Calgary market, but many of the variables affecting that market are unlikely to be incredibly different from this one (please correct me if you think I’m mistaken on this point).
2009: Spring Bounce or Spring Trounce?
http://tinyurl.com/7emyws
Norm, do you happen to know how many units are slated as “under construction” in Saskatoon?
Also, from the FP yesterday:
New home prices continue drop
http://tinyurl.com/8njhy4
“In a sign that Saskatchewan is beginning to feel the bite of a recession it has largely avoided so far, home prices were flat in Regina in November while in Saskatoon prices continued to come down.
New home prices were down 0.5% in Saskatoon “confirming a trend of deceleration in this city,” Statscan said. “Builders continued to report difficult market conditions.”
This article is based on data from last November.
April 21st, 2009 at 3:22 PM
Just looking at some of the credit markets this morning. It does look better.
Libor rates are improving
http://www.bankrate.com/brm/ratewatch/other-indices.asp
So is the TED spread
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND
April 22nd, 2009 at 10:26 AM
Ryan, yes, we did the same after selling our home in the Fall (we’re renting for the next 6-12 months). We also found it more than a little unnerving trying and gave up looking for a new home shortly before Christmas (we’re much more relaxed now sitting the majority of this year out).
My feeling is that Saskatchewan was several years “late to the party”, and accordingly, has not seen the same kind of correction that cities like Calgary, Edmonton, Toronto, Victoria and Vancouver have. That being said, there’s no economic or fundamental reason that houses should continue to remain this artificially high. I don’t foresee significant pricing drops until early-mid Summer for several reasons:
a) I think a lot of people have (or will be) adopting the “wait-and-see” approach, b) I think it’s going to take sellers a few months to adapt to the new realities of selling their home in a very competitive market and c) I think the first quarter economic reports are going to be worse than anticipated.
I’m also going to go out on a limb and suggest that Saskatoon could in fact lead the country with the highest decline in housing prices for 2009. Aside from being a smaller city (and overall generally nice place to live), we have higher taxes (provincial, income and probably an substantial property tax hike) far less economic opportunities (vs. Calgary, Edmonton) and the weather certainly isn’t conducive (vs. Victoria, Vancouver). Forestry, oil and gas are all done, potash and uranium are in decline and commodities as a whole are finished.
People as a whole have been living way beyond their means for quite some time… And that, more than anything else, is going to drive the market.
April 22nd, 2009 at 10:27 AM
George,
Credit markets are thawing.
Smoke and Mirrors my friend. There still is no credit.
The Libor numbers are set arbitrarily by bankers overseas.
The problem has still not been solved. The banks are still insolvent, and home values continue to decrease. This will not end until the housing market is nationalized. Fannie and Freddie the worlds two largest landlords.
This of course will brings its own set of problems.
Nix
April 22nd, 2009 at 10:28 AM
Will be interesting to see how much is built in Rosewood with prices down. I still think builders are making a lot, since prices are way above what they were a couple years ago, though down from 6 months ago.
As well, when I moved, there were a lot of big condo buildings going up in Lakewood, given that there are already so many condos/town houses not selling in Lakewood, and elsewhere, I’d think that all these new condos are just going to sit vacant and add to the inventory.
April 22nd, 2009 at 10:29 AM
George,
You should take a look at this article:
Bank of Canada survey shows credit crunch growing…
http://tinyurl.com/BOC-crunch
April 22nd, 2009 at 10:29 AM
George is one of our “worst case scenario” dudes. Every blog needs at least one. He means you no harm.
I love it!!! That is creative wording!!!
April 22nd, 2009 at 10:30 AM
About the credit issue its a funny thing…Both my credit card companies hopped up the limit on the cc’s i own by 3k each and the bank wanted me to do a line of credit for 3.5% till july then its prime + 3%. So i dont know where this credit crisis is but they keep giving me credit i dont want or need.
April 22nd, 2009 at 10:30 AM
Crikey,
“Norm, do you happen to know how many units are slated as “under construction” in Saskatoon?”
I’m sorry but I don’t. I heard the other day that starts were down quite a bit in Q4. It’s my belief that virtually nothing has been started on spec in the past 5-6 months.
Credit crunch? I have to say I’m with Armoth on this. 162 buyers managed to get a mortgage in December. Around mid-October, we had a handful of fall thrus in our office. I wonder now if they weren’t more a case of cold feet than anything. Personally, I can’t remember the last time one of my deals went down over financing.
April 22nd, 2009 at 10:31 AM
The credit crunch in Canada is mainly affecting businesses. Banks will still finance mortgages because it is hard to lose money. If you put 25% down the bank has a nice cushion to protect their investment. If you are 90% financed they have CMHC insurance to protect them.
With businesses the stakes are much higher. If the business goes bust the bank is often left recovering a fraction of their loan. Also it is hard to finance new real estate developments now. Many condo developments are in trouble.
April 22nd, 2009 at 10:31 AM
“It’s my belief that virtually nothing has been started on spec in the past 5-6 months”
Thank you. That’s good news (or at least not worse)for future market stability. Not so good if you work in construction or trades, perhaps.
April 22nd, 2009 at 10:32 AM
I had some down time at work, flipped through realtor.ca, I completely believe Norm if he says no spec, but lots of new buildings where a token couple are listed, but description says more available. At least mid-end (Lakewood) to high-end (Broadway, College Ave) condo wise. So really the 2 sample listings under-estimate the dozens more in the same building. These were both likely started previously.
April 22nd, 2009 at 10:32 AM
Nick,
To be clear, I don’t mean to imply that there isn’t a lot of that stuff out there. I was specifically speaking to Crikey’s question about starts. There is no shortage of new product available and I’m sure there’s more of it that’s not on MLS.
That said, I do think that condos will be the larger issue. Some that have been on the go for a while are just getting wrapped up. Some are still in progress and moving pretty sluggishly. I do think that we will probably find our way through the single-family inventory this year. Condos could easily take some time. There will be more under $200K conversions, and lots of $300+ new stuff.
April 22nd, 2009 at 10:33 AM
Norm, I completely understand where you’re coming from, I was just saying that there is already a lot of stuff already underway, with a couple MLS listings for far bigger buildings, and that it will take a long time for these new and vacant condos to clear off the market, even if no new spec stuff is started.
Kind of tough to know the true number, when a huge new building only has 3 representative listings, but the whole thing is basically still available.
Sounds like the 2 of us are agreeing to agree, just with different wording.
Amazing too, when I flipped through some of those conversions, how many $160,000 2 bedroom and $200,000 2 bedroom with under ground parking, often in good location near U of S, options there are. Before I moved to Regina, similar units were all well above 200. Prices are definitely down. Still doesn’t mean time to buy. The shear volume suggests to me that prices will fall, a lot, more on condos, especially low end speculation condos that would have cost a mere $60 to $80,000 when I moved to Saskatoon initially 5 years ago.
April 22nd, 2009 at 10:33 AM
I wonder if the South Bridge project will soak up some of the free labour in the construction business… I get the vibe that everyone is just trying to make it through the winter.
People just love a good crisis don’t they? “We’re in dire straights!” “The sky is falling!” I was just reading CBC about the Potash layoffs and you’d think that no one has seen this before. I’ll agree that the numbers are rather high, but not long ago the mines laid off people every winter for a few weeks. My neighbours always used this as an excuse to go on a cruise. It’s the industry way of keeping the price where they want it by controlling output.
Most if not all of those people will be back to work inside of 6 weeks. Unless I’m totally out to lunch. I genuinely hope I’m not.
Real Estate wise, I’m glad the new house prices are coming down. All of the other houses should trickle down from there. I have friends and family that are waiting for their house to sell so they can build. If it looks like they can build for less, they can be more flexible on what they price their old house at.
If the average house price comes down 30-40k everything will settle down to normal. It might take a while though. People will bicker and whine that prices are too high, but people will still pay until its completely unaffordable.
On the plus side, the real estate boom saw a lot of improvements to houses that otherwise wouldn’t have got any. It’s kind of nice to see entire neighbourhoods get a face-lift. Especially if the people living there will have to stay for a long long time in order to pay for them.
April 22nd, 2009 at 10:34 AM
Laura –
I think a 40K reduction to the average price has already happened: the overall correction is likely to be a good deal more than that.
People *aren’t* buying, which is the reason for all the extra inventory. I suspect that the whining and bickering will be coming from the sellers for the next couple of years.
For the last year or two I’ve been saying I expect the big jump in values to be completely erased — that is, for the average to return to where it was at the end of 06, before the lunacy of the summer of 07.
April 22nd, 2009 at 10:34 AM
“For the last year or two I’ve been saying I expect the big jump in values to be completely erased — that is, for the average to return to where it was at the end of 06, before the lunacy of the summer of 07.”
jrochest,
I recall you saying that. Are you pegging that for a low for 2009, or for the trough (assuming you don’t think the trough will happen in 2009)?
April 22nd, 2009 at 10:35 AM
Crikey — It’s out there: I’d have to hunt, but yes, I’ve said it in the past a couple of times.
That’ll be the trough. When the trough comes is anyone’s guess, although it’s not going to happen in 09. I’d guess 3-5 years, at very least.
Most bubbles re-set to the original values; that’s the reason I’m assuming this. Condos will go lower, I’m pretty sure, because there are so many of them — at both the high and low end of the market.
April 22nd, 2009 at 10:35 AM
Mmm. That’s quite a bear suit you’re wearing, jrochest.
I’d also wager that the tough will not happen this year, but apparently I’m not quite as bearish as you on my guess as to the length of this thing.
FYI for people thinking of renovations from today’s G&M:
Plan offers tax credit for home renovations
http://tinyurl.com/7gzsdm
This plan could be fairly significant for flagging construction and trades. Could be particularly positive if used to increase energy efficiency, as well.
April 22nd, 2009 at 10:35 AM
Sorry, I meant *trough*, not “tough” above.
Freudian typing-slip?
April 22nd, 2009 at 10:36 AM
Just before we get into all this talk about the great fundamentals of potash, has everyone read these 2 articles (okay one commentary) from Maclean’s?
http://blog.macleans.ca/2008/10/02/potash-under-attack-from-short-sellers-yeah-right/
http://macleans.ca/article.jsp?content=20080827_54739_54739&page=2
Might suggest layoffs aren’t so temporary, and speak more to current potash prices and company valuations not being justified (granted stock for PCS is still only about 1/2 what it was at peak). These articles are worth a read. Of course everyone in Saskatchewan is optimistic on potash, but interesting to see what they think elsewhere and points out some good holes in the population argument.
April 22nd, 2009 at 10:36 AM
why do buildings with so many units only list 1 or 2 and then in the description say there are many more like it? doesn’t this skew the actual number for sale?
April 22nd, 2009 at 10:37 AM
On sale: $350M of real estate in Lower Mainland
http://tinyurl.com/94gytd
“Vancouver real estate developer is making an unprecedented move to offer a liquidation sale of $350 million worth of its condominiums throughout the Lower Mainland.
The marketing strategy by Onni Group of Companies is aimed at selling off hundreds of condos in its inventory.
About 375 unsold condominiums in cities such as Richmond and New Westminster will be offered at 20 to 40 per cent off, a real estate insider told CBC News”
Wow. Imagine buying one of these at the peak and seeing your new neighbor get one for 40% less…
April 22nd, 2009 at 10:37 AM
isn’t our market already down almost 20% in Saskatoon?
and didn’t our “correction” start later?
might be time to move to the lower mainland, as
unlike Saskatoon, aside from the last year, their prices increase steadily, and vancouver is a well diversified city, which exports a lot of the stuff any one produces, and will always be a immigration mecca
April 22nd, 2009 at 10:37 AM
from the Maclean’s article
“Rampant population growth doesn’t necessarily guarantee higher fertilizer prices either. Potash Corp. frequently cites UN projections that the world’s population will grow at a phenomenal rate in the future, from 6.7 billion people last year to 9.2 billion in 2050. That’s a lot of mouths to feed. Yet the world’s population is 2.7 times greater than it was in 1950, and during that period, the price of potash, adjusted for inflation, actually fell by half, according to historical data from the U.S. Geological Survey”
kind of common sense, farm products seem to keep going down, with occasional spikes for dumb ideas like ethanol, any farmer could tell you they make less in real dollars than their parents before them, back when the world population was a lot less
April 22nd, 2009 at 10:38 AM
I am surprised at some of the “booster” real estate blog out there, that I personally consider irresponsible.
“Here you go Saskatoon. Every listing is available to you. Now heres the catch, with the spring market already showing signs of heating up, DO NOT DELAY, in making a move”
Apparently listings are down (from a few months ago, not including this past week of course)!!
And prices are up (from a year ago, not the last 6 months)!!!
Buy NOW!! “DO NOT DELAY” or be for ever priced out!!
[I honestly didn't know this blatant, misleading boosterism still existed!!]
April 22nd, 2009 at 10:40 AM
Nick, that site is … disturbing. The saga of his own house sale and move reveals things that I think he did not intend to show.
I have left a comment of my own that entry combats his ‘truth’ with numbers gleaned from SRAR’s own statistics. It will be interesting to see if the comments stay, or are responded to at all.
Tim, if you were looking for ‘spin’, that link is a great place to start: technically, nothing stated there is factually false, but rather is selectively distorted through means reminiscent of a “MySpace angle” camera shot. (For those who don’t know what I’m talking about: http://celticagent.blogspot.com/2007/10/beware-dreaded-myspace-angles-pics.html)
April 22nd, 2009 at 10:41 AM
Bookrat, reposting your December numbers here, as I think makes an important point about how bloated inventory is for this time of year:
Check the line for TOTAL ACTIVE RES. YEAR END “AREAS1-5″, indicating the number of residential properties for sale as of Dec 31 of each of the last five years. I’ll synopsize here:
Dec ’04 = 534 listings
Dec ’05 = 449 listings
Dec ’06 = 253 listings
Dec ’07 = 346 listings
Dec ’08 = 1127 listings
Pretty safe to say by FAR the most inventory we’ve had over a December in recent memory. Hard to say inventory is “down” in any way.
April 22nd, 2009 at 10:41 AM
Crikey — re: the bear suit.
Yep. It’s a grizzly: got it at Holts. You like it?
Seriously, I’m not a bear for anything other than real estate: my knowledge of the market or investments is minimal. But I grew up with an appraiser for a father, so I grew up around real estate, valuation and the way markets work.
This sort of lunacy happens every 12-15 years or so, and it normally ends with values right down where they started. That’s why I’m making that call: but I won’t presume to know how long it’s going to take. At *least* three years, maybe longer.
April 22nd, 2009 at 10:48 AM
oil back down to $34/barrel country
http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=16836717
good thing we still have potash, right guys?
April 22nd, 2009 at 10:52 AM
Nick & Bookrat –
The blog is deeply, deeply amusing as well as disturbing: it’s not the best time to pull out the ‘PRICED OUT FOREVER HURRYHURRYHURRY’ rhetoric.
A couple of months ago I wondered where all the Bulls went — well, now we know where one of them is, at least.
April 22nd, 2009 at 10:58 AM
Soooooo,
I see that the five year fixed is now available just below 4.5%. Looks like that Feb-Mar renewal date will work out okay.
http://saskmortgages.ca/rates.asp
April 22nd, 2009 at 10:59 AM
jrochest,
I was thinking more Kodiak than Grizzly, really.
April 22nd, 2009 at 10:59 AM
LOL!! You are guys are going to crash their site with all the Saskatoon Real Estate Reality.
April 22nd, 2009 at 10:59 AM
Nick
What is important is which direction the inventory numbers are going. Graph the in inventory numbers for the last four months and you will see Inventory Is Trending Down. With a big dip at the end of 2008 and, a recovery of half those lost listings the following week (last week) so the listing inventory trend is still down. This week may indicate if we reversing the the downward trend, we will see on Sunday, Norm willing.
April 22nd, 2009 at 11:00 AM
Tim, they are ‘trending down’ only on a month-by-month basis… which is not a good way to look at something as cyclical as RE. Of course listings are down in December… listings are ALWAYS down in December. That’s just how the world works. It’s a ‘Dog Bites Man’ story; it’s not news. Acting like it is anything other than expected is deceitful.
It’s like comparing retail sales in September against those of December; the latter will be up, always, due to the effects of the holidays and end-of-year spending. Dog bites man. You can’t use that number to predict that January is going to be a banner month, though, or that March is going to break records… you have to look at the year-over-year numbers to get an accurate comparison.
And YOY, prices are flat, sales are down (although up compared to many years’ Decembers) and listings are waaaay up. That’s the Man Bites Dog story.
April 22nd, 2009 at 11:00 AM
Bookrat,
“Acting like it is anything other than expected is deceitful.”
That strikes me as a bit harsh. Could it not simply be a different understanding?
Seems to me that while inventory is “down” for four consecutive months, it’s not really down much when you look at it from a “months of inventory” perspective. However, even using that measure, it is at its lowest point since July 2008 when it was 4.3 months. It increased to 8.25 months by the end of November and declined to 6.95 months by the end of December. Bookrat’s major point is essentially correct. Even though total actives have been declining for four consecutive months, total months of inventory actually increased in October and November. Tim is also right that the situation is better than it has been for awhile.
Still, I think we need to be somewhat concerned that inventory is starting this year at three times the level it started at last year. Remember we opened 2008 at fewer than 400 listings, peaking at 1800+. Going in to the new year with 1100+ listings is scary for me.
By the way, I think you guys (Nick
) should also let up on the “year-over-year” comparisons as you all seem very willing to use them when it fits your argument. Year-over-year is a valid comparison whether your comparing prices, sales, listings or active listings. As Bookrat suggests, it takes into account all seasonal variances. Ignoring the in between stuff is misleading but there’s nothing dishonest about saying ‘This is where we were last year at this time, and this is where we are now.”
April 22nd, 2009 at 11:04 AM
“That strikes me as a bit harsh.”
Re-reading my post, I see that the comment could be taken as being directed toward Tim. That was not my intent; if it was read that way, I apologize for my lack of clarity.
“Could it not simply be a different understanding?”
Note that I specifically never said that there were any falsehoods or lies involved — I used the word ‘deceitful’ deliberately.
A magician deceives you at his show; he makes it appear that the lady changed into the tiger when in fact no such thing occurred. In the same way, the intended target of the comment (whose name and site have now been stricken from this blog, so I will not bring it up again) was attempting to make an illusion (“Everything’s different here – we won’t be affected!”) into reality by very selective use of facts.
I believe that it is possible that it could be a different understanding on the part of someone who is not knowledgeable in the ways of statistics, or the market, or trend analysis, or RE in general. I have no idea whatsoever what Tim’s background is, for example, which is why I endeavoured to explain the reason why it is more relevant to use YOY vs. MOM in some cases.
In the case of someone who makes his living selling RE to people, though, I think that it is fair to assume a basic level of comprehension in something like ‘seasonal cycles’. If they do NOT have this knowledge, then I have grounds to question the person’s basic competence at their chosen profession… but if they do, then presenting an expected seasonal downturn in inventory as signs of a strenghtening housing market smacks — to me — of deliberate deceit.
April 22nd, 2009 at 11:04 AM
Bookrat,
Yes, sorry. I did think you were speaking about Tim. I recall he took a bit of a kicking the other day for displaying some optimism.
As to the other personality, you and the others are free to challenge his ideas but I’d really prefer that you do that at his place, or anywhere else other than here.
By the way, if you ever have to make the call as to whether I’m stupid or dishonest I hope you’ll give me the benefit of the doubt and assume that there’s something I don’t know. I can live with that.
April 22nd, 2009 at 11:05 AM
My point was that if year over year shows price increase, year over year shows huge inventory gain (more than triple) and that various other (un-named) Buy Now or Be Priced Out Forever sites use the year over year for price gain (except for condos which are down) and monthly for decreasing inventory (except for last week, when inventory was up)
All fundamentals still point to further price declines, and year over year price drops within a couple months, and I think most of us would agree pretending listings are “way down” and we need to buy now or forever be priced out is deceptive, and manupulative pressure tactics. What kind of professional obligation do realtors have??
April 22nd, 2009 at 11:05 AM
I’d like to know what everyone’s take is on buying right now with decreasing house prices vs very low interest rates. On the one hand you could end up with negative equity in the short term (maybe a few years, who knows), but you could lock in at a low interest rate you might not (probably won’t) see again for a long time, saving a lot of money that way. I guess it depends on what you think interest rates will do. Some say interest rates are going to go lower still, other say they will jump to >10% in the later half of 2009. Any comments?
April 22nd, 2009 at 11:06 AM
Nick,
“What kind of professional obligation do realtors have??”
While I care deeply about the industry as a whole and how it is perceived by the public, it certainly isn’t my obligation to host a public discussion on statements which one of my competitors has made. I think I’ve mentioned on a number of occasions that there could actually be some ethical implications with that. I’m not about to tell you what you should think of those statements. I’m only asking that you don’t drag them on to my blog.
On YOY – Sorry, I am not completely in touch with what you’ve said on another blog. I was just thinking about your YOY analysis of the listing inventory posted above. You seem to be frustrated whenever that YOY price number comes up, but in fairness, I do realize that you feel it’s often used to sweep the truth under the table and I appreciate how wrong that is.
April 22nd, 2009 at 11:06 AM
I missed this story yesterday but my friend Fraser Beach from the Toronto Real Estate Blog didn’t.
MLS homes sales hit eight-year December low.
http://toreal.blogs.com/toronto/2009/01/canadian-real-estate-association-reports.html
Any thoughts on why Saskatoon’s December numbers were so good in comparison to Canadian numbers? Of course, I realize that one month’s sales stats are nothing to get too pumped about especially when we’re talking December but I do find it rather curious that we had our “second best December” in Saskatoon while the country hit an eight-year low for the month of December.
April 22nd, 2009 at 11:06 AM
Apparently we’re not the only ones who had a decent December, Norm. From the article you referenced: “However, seasonally adjusted activity was up in more than half of Canadian housing markets.” From context, it sounds like lots of places went up by a small percentage, but those that went down did so by a larger percentage, skewing the numbers as a whole to the negative.
As to why we in particular had a great December… my theory is that it was a semi-burst of pent-up patience. Comparing to the more normal sales curves of 2005-2006 and leaving out the aberrant 2007, we saw the same thing earlier in the year: May and June below those years, July coming in just above. August way below ‘standard’, then September right in line… October & November down a statistically significantly amount, and then December sales bang on 05/06 and even up a little.
The mindset of Canadians (vs. many European/Asian countries) still shows a preference to own vs. rent. Among other things, it is seen as a sign of maturity; one of the signs of being a responsible adult is that you own — or are saving to own — your own house. As such, many people still do… even in times where it might not make economic sense. And on the whole, my experience is that most people do NOT make decisions in a completely rational manner: some people remain oblivious, or are pressured by a spouse, or value other things over price/equity, or (feel that they) have no choice but to buy now; those people make up the core monthly sales numbers.
But some people do pay attention to the numbers, and they hold off as long as they feel they can. This is where the shifts come in… low here, rebound there. As you have said, there are much better deals now — compared to six months ago, at least. Compared to six months from now… who knows? Most people are not willing to bet on the future, but would rather compare with the past, and compared to that, now looks good. So having held off for a while, and done better than those who didn’t hold off at all, they make the plunge and are satisfied.
So, that’s my theory. And using that theory I’ll go out on a limb and predict decent January sales numbers (vs. rising inventory still), but a weak February and March as people see the equilibrium begin to shift lower again and decide to sit on their wallets … for as long as they can, anyway.
April 22nd, 2009 at 11:07 AM
Bookrat,
Thanks. Interesting thoughts. I had noticed that there were soon pretty “abysmal” months followed by some not bad months. At the same time I was surprised by fairly strong activity in December given all that has happened since then.
As Matthew suggests, rates may be playing into this as well. 4.5% on a five-year fixed is pretty attractive. Combined with recent price declines it does make a difference to the bottom line.
Matthew,
I’d be surprised if higher interest rates weren’t in the cards with the way money is being printed and thrown around. We’re up for renewal in February and plan to take the best 5-year offer we can find. That will include a decent rate and pre-payment privileges. I need to get myself in a position where I can handle that double digit rate if it does come to pass.
April 22nd, 2009 at 11:07 AM
“Any thoughts on why Saskatoon’s December numbers were so good in comparison to Canadian numbers?”
My guess is much less scientific than bookrat’s- my guess is that it’s because we are (or at least have been) a bit more isolated economically. It’s like trying to get a huge cruise ship going- alot of momentum and energy is required to get it going, but once it’s at a certain speed, it takes alot of time for it to slow down.
“I’d like to know what everyone’s take is on buying right now with decreasing house prices vs very low interest rates.”
This is a toughie, Matthew. I’ve spent some time thinking about it myself. My take is that interest rates are likely to stay low for awhile, as governments appear to be using using all the tools at their disposal to get money flowing. I think there is a far greater chance that you could benefit from a lower principal in the next few months than having to worry about interest rates rising.
I’ve been expecting the markets and the economy to “correct” for quite some time. What I’m waitng for, I suppose, is to see what happens with unemployment numbers. We haven’t really started to see the effects of this economy on jobs here, IMHO. If people can’t pay their mortgages because they are losing their jobs, the supply of homes for sale will keep growing, putting a continued downward pressure on prices.
That being said, if you can get a house under market value at these (historically low, I’d say) mortgage rates, it might be worth it for you. It sounds like you’re well aware of the risks involved.
Good luck to you.
April 22nd, 2009 at 11:07 AM
Oh, one other thing: while it’s definitely worth looking at the Big Picture and observing that we had a good December compared to the 5 year totals, the hard numbers state that we are down amost 23% YOY in December sales. As such, we are one of the places pulling that December MLS number *down*.
Just one of those anomalies, that even though it was a good December by most measures, it pales significantly compared to Last Year Country.
Oh, and just FYI – I called a TMG agent about that 4.5% rate yesterday, as mine is up for renewal in early March. Apparently, that’s the best possible rate in the best possible circumstance … meaning that there are conditions attached (e.g. first-time buyer) that would disqualify you or I from getting it. She indicated that the best she could guarantee at that time on a transferred mortgage was about 4.69% — still good, just not quite AS good. Since that’s much closer to the ING posted 5-year rate of 4.79%, I likely won’t switch; I like the UnMortgage options of paying off up to 25% of your mortgage balance every year either through a lump sum or increased monthly payments. If you’re interested in fast payoff, it might be worth you checking into it as well.
April 22nd, 2009 at 11:08 AM
Bookrat,
Yes, I understand. I was thinking about it from the “December eight year low” angle of the story.
Mortgage: Hmmm. Please let me know if you uncover anything better between now and the end of Feb. I will do the same.
April 22nd, 2009 at 11:08 AM
Norm,
WOOT! Glad to hear it’s at 4.5%, will have to call my mortgage broker today. Thanks!
April 22nd, 2009 at 11:10 AM
No-one’s answered Matthew’s question:
“I’d like to know what everyone’s take is on buying right now with decreasing house prices vs very low interest rates. On the one hand you could end up with negative equity in the short term (maybe a few years, who knows), but you could lock in at a low interest rate you might not (probably won’t) see again for a long time, saving a lot of money that way.”
I’d rather borrow less at a higher rate of interest: when rates are low, they can only go up, and we don’t have 30 year fixed rates in Canada. We’ll all have to refinance, sooner or later. The less you borrow, the better.
I’d rather borrow 120,000 at 8% than 210,000 at 4% — even if I’ll have to wait two or three years for prices to drop, and to build up a downpayment.
April 22nd, 2009 at 11:10 AM
OOps — just realized that Crikey had answered Matthew
April 22nd, 2009 at 11:11 AM
Help! I need advice!
This isn’t exactly real-estate oriented, but it concerns MY piece of real estate.
I think my weeping tile has bit the biscuit. There is moisture seeping up through the concrete floor of the basement in lowest corner, causing effervescence and major spalling of the floor. The walls don’t seem to be affected…yet..but some places look damp even though they don’t feel like it.
So much for insulating the basement next week.
We’ve never had any water in the basement, and didn’t think much of it until we put some furniture down of a plastic sheet and saw how much salt and moisture are building up under it.
*Sigh* My mother was right. Houses should be looked at as an expense, like a car, not an investment. Some are more expensive than others. I’ve got the K-car of houses.
So, my question: Does anyone know anything about these internal drainage systems and who puts them in? About cost? I have a lady from Basement Systems Saskatchewan coming to give me her pitch on Monday. Anyone hear anything about them? My husband is fairly handy, but in no way would he attempt something like this on his own. I didn’t even know how weeping tile worked
Also, please don’t chide me on how this is a crappy time to spend any money on my house. That’s just mean. I just want a place for my kids to play. I didn’t buy this place for an investment. It’s my home.
Thanks for your help.
April 22nd, 2009 at 11:13 AM
Laura,
Is this a fairly recent purchase?
If so, I’m going to guess that your home inspector would probably be happy to take a look at it and give you some ideas on how it could be addressed and who may address it, if it needs to be addressed. Efflorescence is commonly found in basements in Saskatchewan. I’m certainly not an expert on basements and moisture but this sounds more like humidity than drainage to me.
April 22nd, 2009 at 11:14 AM
Norm,
The inspector did see it. There was some spalling two years ago when we bought the house. He looked into the floor drain and the where the weeping tiles outlet into the drain, there were plugs. Why, we aren’t completely sure. He said it was a mistake commonly made in the seventies. During construction every time it rained, a bunch of muddy silt would have poured into the drain from the uncovered weeping tiles, so they plugged them during construction but were supposed to remove them when they finished.
The inspector thought that should be the end of it, but here we are, two years later and the problem is worse.
Also as a matter of policy, he wouldn’t recommend contractors.
I don’t think it’s humidity Norm, that I could fix. Humidity doesn’t cause concrete to crumble. Hydrostatic pressure does. And if there is pressure it means my tile isn’t working the way it should.
By the time I get my house fixed, I’ll have done enough research to build my own! Dang it, they are expensive lessons though!
April 22nd, 2009 at 11:14 AM
Laura,
I see. What about talking to someone like Lydale Construction? I’m not really sure what to suggest but they might be able to steer you in the right direction.
Good luck with this.
April 22nd, 2009 at 11:14 AM
Laura,
One other thought. You might find out if a sump pump is something that could work for you. They’re not all that expensive.
April 22nd, 2009 at 11:15 AM
Just saying don’t put up with any type of sales person any where who says “So you buyers out there don’t delay or you will be sorry”
April 22nd, 2009 at 11:15 AM
Whether you are selling or buying a home, our Saskatoon RE/MAX web site can help you. Our searchable home database, updated daily, can help you find the house you are looking for and give you access to our professional, honest realtors. RE/MAX currently handles at least 1/3 of the real estate market in Saskatoon, helping families to relocate stress free. We encourage you to discover why Saskatoon is the best place to live.
April 22nd, 2009 at 11:16 AM
Toronto Condo,
If that is your real name.
Your professionalism really does shine through in your spammy message.
While in the past I have typically removed discussions related to my competitors, whom I generally treat with respect, perhaps I should consider a more open policy in the future. It’s definitely something to think about.
Thank you for sharing how wonderful you are.
April 22nd, 2009 at 11:17 AM
Zing!
You’re *way* out of your league, TC.
LOL
April 22nd, 2009 at 11:17 AM
yet norm has no problem with saskatoon agents saying buy now or you’ll be “sorry”
April 22nd, 2009 at 11:18 AM
surfer,
How do you come to that conclusion?
Regardless of how I might feel about another agents comments or actions it’s unprofessional and unethical for me to comment. Hosting a public discussion would have the same consequence.
CREA CODE OF ETHICS ARTICLE 19 DISCREDITING ANOTHER REGISTRANT
The REALTOR® shall never publicly discredit any other Registrant. If the REALTOR®’s opinion is sought, it should be rendered with strict professional integrity and courtesy.
Interpretations
19.1 The REALTOR® should not comment in a derogatory manner as to the capacity, integrity, and competence of any other Registrant.
19.2 Where any REALTOR® is asked to comment on a specific transaction or the business practices of another Registrant, such comments should be given with strict professional integrity, objectivity and courtesy.
April 22nd, 2009 at 11:18 AM
…and article 706 of the “Saskatchewan Real Estate Commission Bylaws” which hold the same authority as the Saskatchewan Real Estate Act.
A registrant shall not publicly discredit a competitor.
April 22nd, 2009 at 11:18 AM
have to wonder norm if you’ll be “sorry” marketing fits with the same realtor (r) code of ethics
how would one go about reporting that?
assuming you could, weren’t you in charge of some sort of real estate association? couldn’t tell us of course
and who is on the professional review board?
other local boosters and gormley?
in edmonton, coverage is a lot more well balanced, realtors included, in a place with cheaper rent that still has a lot of really high paying jobs
April 22nd, 2009 at 11:19 AM
Dan,
“couldn’t tell us of course”
Lol. Well, yes. This is not a secret society that I’m a part of it.
Realtor Code of Ethics: http://www.crea.ca/public/realtor_codes/realtorcodejan08.pdf
The Real Estate Act: http://www.srec.ca/pdf/SRECAct.pdf
A person that has a beef with an agent can contact the SRAR or the Saskatchewan Real Estate Commission, though I highly doubt that “boosterism” as you might call it is an actual offense. To the best of my knowledge, it’s not illegal or unethical (in the context of these two documents) to have an opinion even if others think it’s completely unreasonable. You still have a number of interested entities suggesting that prices will rise in Saskatoon in 2009 (CMHC and RE/MAX). How is this any different?
April 22nd, 2009 at 11:20 AM
I don’t remember Remax and CMHC telling us “Do Not Delay” or we’d be “sorry”. Kind of threats, intimidation and fear mongering, which is why so much more infurriating than simple boosterism.
I don’t think the true boosters threaten us with buy now or be “sorry” as they don’t feel the need to scare people, since they believe there will be a turn around in the current housing slow down.
April 22nd, 2009 at 11:20 AM
Nick,
I understand where you’re coming from and it is obvious to me that “hurry up and buy” is not a good approach.
April 22nd, 2009 at 11:20 AM
Wasn’t there just some big rah rah over jobs being created with a potash company?
April 22nd, 2009 at 11:21 AM
Alex,
From November 27 Star Phoenix.
http://tinyurl.com/axw7sr
Near 1,000 lay-off notices from PCS since that time.
April 22nd, 2009 at 11:21 AM
“PotashCorp is going ahead with the project at a time many mining companies are cutting back on capital spending. However, the largest fertilizer company in the world by capacity has faith in its long-term plan”
Ah spin, as shortly after they did announce their 940 lay offs @ Potash Corp.
April 22nd, 2009 at 11:26 AM
So am I right to assume that November 27th announcement was all for nothing?
Sorry, I’m hoping that I don’t miss a connection here.