Saskatoon real estate: Week in review (July 16-20 2007)
Following a couple of weeks which showed some signs that the market may be cooling off, Saskatoon real estate buyers came out in a big way and resumed the aggressive bidding which we’ve become accustomed to seeing here.
The average selling price of a Saskatoon home crept above to quarter million dollar mark again this week after dropping to $242,413 the week of July 2, and further to $237,032 the week of July 9. Average overbids bounced back above the $25,000 mark.
Area 3 home buyers were most eager to purchase property. The average overbid in the area which begins at downtown Saskatoon and extends north to the city’s edge between Idylwyld Drive and the river valley came close to hitting $50,000, albeit on a fairly small number of total sales. Prior to this week we haven’t seen this number break the $40,000 mark in any area.
Notable sales
- Lakeview apartment (867’) listed at a whopping $189,900 finds a buyer at $225,000
- Forest Grove one bedroom apartment (635’) listed at $129,900 sells for $145,600 (Consider that I sold one of these units on July 1, 2006 for $64,000, and then resold the same unit on March 27, 2007 for $120,000. This recent sale represents a 129% increase in just over a year)
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
65 comments so far. We'd love to hear your thoughts.
April 7th, 2009 at 2:49 PM
Great post and timely as usual Norm. Just wondering what the inventory levels are like right now? Previously you had indicated they were in the 400 range.
April 7th, 2009 at 2:49 PM
I want your time machine Norm.
(double check the years up there…)
April 7th, 2009 at 2:50 PM
Hi Sam,
There are 386 actives today. We seem to be sticking closer to this range at this time. Previous months we’ve hovered around 300.
April 7th, 2009 at 2:50 PM
Jeff,
Thanks for the heads up. That would have been truly remarkable.
April 7th, 2009 at 2:50 PM
I just want to ask one question. Is the bidding war is a healthy attitude? In my openion, there are certain factors which are taking this market up and now it has touched it peak. This bidding should be stopped so that market may come to some stability levels.
April 7th, 2009 at 2:51 PM
Just an FYI: That was NOT me posting under an alias!
April 7th, 2009 at 2:51 PM
Nadia, how would you ‘stop’ people from bidding higher?
If someone wants to offer more money that the next person, they are entitled to do that. It’s just the market we are in, and this is a free country after all.
April 7th, 2009 at 2:51 PM
Jeff is right. As much as we may not like it, how do you control it Nadia?
April 7th, 2009 at 2:51 PM
Norm, actually this is surprising for me. I and my family are living in North Alberta and I have seen that in Ft. McMurray, the house can be sold in 15 minutes but there is no such trend of overbidding as we are observing in Saskatoon.
The second thing I want to share with others is the location of Saskatoon. If you take the distance of Saskatoon from Ft. McMurray, it is almost same as Ft. McMurray to Calgary. I know here number of people in Ft. Mcmurray who are thinking to buy property in Saskatoon because from Saskatoon the oil workers can easily commute to their jobs in North Alberta.
The last thing which is becoming a vital factor in coming future and may be a challange for housing and renting market is the flow of immigrants. Saskatchewan is the only province in Canada which is offering the best provincial immigration policy. If someone lives in Saskatchewan for a year, he can sponser all his brothers, sisters etc. This is a major attraction for the immigrants and this is the reason in spite of few job in Saskatoon, the number of incresing number of immigrants can be observed in the city. I want to sponser my brother and sister and I am also moving to Saskatoon in September.
Thanks Norm for providing us a place where we can share our views and keep on writing.
April 7th, 2009 at 2:52 PM
The condo that was sold in Lakeview for 225…where can I find this link? I just bought a condo in Lakeview for $170K in April without even seeing it. I moved back to Saskatoon from Calgary and just commute to do my 3 week on 1 week off rotation.
I just want to know how much I can sell my place for lol. For me to get a realtor to look at my place and determine it’s market value, do I really need to be a seller, or can they just inform me.
The place I have has been totally repainted, 2 brand new bathrooms, i mean everything is redone to the 9′s.
April 7th, 2009 at 2:52 PM
Nadia,
Maybe tax the for-profit house sales to the hilt? It’s a rotten solution, but how else have business entities and private personal been distinguished to date?
Usually it’s in how they are recognized as a tax-paying entity. If you reduce the amount of money taken as profit of house investment, you decrease the frequency of investment home purchases.
I still say there needs to be a system where people can buy homes on priority over businesses. That is, specifically – someone who intends on living in the home. When you see new lots opening up and all of them getting gobbled up, you’re not solving the problem.
*holds up a police riot shield*
April 7th, 2009 at 2:52 PM
Alex, sale of personal residences is non-taxed. Sale of houses when they are not your personal residence are taxed as capital gains.
I know it kind of sucks if you’re trying to buy but take some comfort that all these speculators are going to get burned if things are as overpriced as you say they are.
April 7th, 2009 at 2:53 PM
i just wanted to agree with Nadia about the bidding process. I think it may be detrimental to the sellers though too. After looking for a house for 1 1/2 months we were totally frustrated with the bidding process. There is nothing logical about it. You just pick a number and hope it will win. What I never understood is why they never gave you a chance to counter offer. We lost out on one house by $1500!! If we had been approached we would have been willing to go above that, but I just didn’t like thinking I could be going 10,000 over the next person. So Norm I guess my question would be for you as to why it is just bidding with no chance to counter? Wouldn’t it possibly make the buyer more money? I know when we sold our place we took bids, but also gave them a chance to counter and it drove the price up in the end, so why don’t they all do that?
April 7th, 2009 at 2:55 PM
Sunny
Personally I had a chance to counter offer on a house, but decided to step away because at the time I thought it was a dirty business. The problem that I see with that is that it is like a blind auction, where you do not know the numbers you are dealing with, to use your judgment and come up with an offer you can afford. If you do not know the numbers you are dealing with, you could be going way higher that the previous person.
I have mixed feelings with counter offers in a market/auction that does not allow you to know how much the others are bidding.
Good luck Sunny
April 7th, 2009 at 2:55 PM
Sam,
They should be taxed more then. To the point where it becomes a less alluring prospect. I mean, realistically if the goal is to make homes affordable for those who want to live in them, the logical step is to get people who just want to gouge with them off the scene.
In terms of bidding…what garbage. If I see a price for a house, that’s what I’m going to go by. I will never offer any more than that, and hopefully less. If it doesn’t get me in a home then fine.
“It’s a dirty business.”
April 7th, 2009 at 2:55 PM
Hey Norm,
What caused the big jump in area 3? 8 Sales and an avg overbid of 49K?? Was there a very large purchase?
Also, any comment on what inventory’s looking like? It helped put things into perspective the other week when you made mention of how many active listings were on the market.
The biggest variable out there right now is how many purchased homes are primary residences. With the Calgary market showing cooling indications (very uncharacteristic for this time of year and that market), knowing how many holdings are “investments” will be the biggest indicator as to how hard this market will be hit by a market correction… as well as how soon. The “investment” will be the first asset dumped when things start bearing down.
J.
April 7th, 2009 at 2:56 PM
Here the house market is not sustainable if you consider the income of locals. It will cool off shortly.
April 7th, 2009 at 2:56 PM
Sunny, the problem with allowing counter-offers is it encourages smaller bids in the first place. For instance, a house is listed at $250K and so you, desparately needing a house, put in an offer of $285k with no counters. If there were counters would you have gone that high? Well I wouldn’t. I would put in, say $270K and then just wait for the other bidders. Worst case, I counter as high as $285, best case I’m the only serious contender and i get for $270k. Why put in a high bid if you can counter? Also to do large rounds of counter offers takes time which is a problem for everyone.
April 7th, 2009 at 2:57 PM
Jonathon,
These units come off the net after they’re sold. This particular sale does stand out as “notable” and sold well above others. I thik there have been a few to sell around the 200 mark though.
April 7th, 2009 at 2:57 PM
Sunny,
Sellers can, and still do counter. In some instances they feel they want to accept the high offer. Of course, if they do counter it’s normally one of the better offers that gets the action.
April 7th, 2009 at 2:57 PM
Johny,
Yes, more single family homes and fewer condos than normal. Pretty much everything which sold in area 3 last week went over pretty big.
Actives around around 400.
April 7th, 2009 at 2:58 PM
Hope this question is acceptable for this page. My girlfriend and I are considering a move from Ontario to Saskatoon. We have been looking for a 2 bedroom apartment to rent in the East side, but having a small dog we have had limited success. What we are finding is that to rent a nicer place we would have to pay amounts that are nearing mortage payments. We are now considering buying either a condo or single family starter home. As it likely that we will only be in Saskatoon for 2 years, we are wondering if this is a wise investment, and if so, is a condo or small home a better investment. I have done some reading on the real estate market there, but not having been there or having any contacts in the city I am limited to internet research. I realise that this is a broad question that begs a lot more details but any advice/suggestion would be greatly appreciated.
April 7th, 2009 at 3:01 PM
Hi Steve,
Finding a pet friendly place in Saskatoon can be a bit trying. I found that all of Real Star’s buildings allow cats and small dogs, and I havenothing but good things to say about their management. They have two buildings here in Saskatoon, Victoria Place, and Saskatoon Towers. Both buildings are in quite desireable locations as well, situated close to downtown, the university, and the riverbank. I just took a look through RealStar’s inventory for Saskatoon, and it looks like their two bedroom units are going for around the $900 mark, which includes all your utilities save for phone and television. There website can be found at http://realstar.ca/
April 7th, 2009 at 3:01 PM
It’s truly a gamble Steve. People out here seem to be split. My feeling is that there is a real danger to buying in the present sask market. There’s a lot of speculative buying right now (from equity rich out of province investors) which has created an inflated market. If the economy can catch up (which is becoming less and less realistic) we may see ongoing stabilization, if not, you may be stuck with an investment worth 25% less than what you paid for it a year prior.
That’s my two cents
J.
April 7th, 2009 at 3:01 PM
Hey Johny, just wondering why you think stabilization won’t occur and a huge dip is coming? Current housing stocks are still historically low and we are still having migration occurring from the latest stats I saw. We might have a bit of a dip I’d think, but 25%? That I think is unrealistic.
April 7th, 2009 at 3:02 PM
Thanks for the input. We have spoken with some people that have suggested an increase of 12-20% per year. Still have a lot of reading and thinking to do. However, have to be living in Saskatoon by middle of September, so little time to sit on it. Just want to make sure we don’t loose money on this. Breaking even is acceptable…a profit is great.
April 7th, 2009 at 3:02 PM
Hey Todd,
Ultimately your guess is as good as mine but these are the facts as I see them (and my response to your comments). Housing stocks are actually high based on historical data. According to Norm they’re up over 400 listings which is very high. Demand is also very high. Where’s the demand coming from? who’s buying? This is really only my opinion so take it for what it’s worth but I’ve seen a lot of interest in sask by the flipper community, we’ve all seen the “flip this house” shows on A&E. I also think there’s quit a bit of demand from the equity rich who are buying and holding or buying with the intention of being landlords. I seriously doubt that the aforementioned demographic suddenly got $100K raise so I’d venture to say they’re purchasing with equity. The problem with that kind of purchase is their assets become very volatile and dependent on economic fluctuation. Right now we’re obviously at an economic peak… where we’re going only time will tell. It’s no secret, however, that our economy is very dependent on that of the US (becoming more so every day Harper drives the boat), and it’s no secret what’s going on down there, look at the dollar. If the economy dips… hell if Alberta’s economy dips, saskatoon will be very close behind when we start to see those who purchased, based on the perceived value of their assets, dump all non-essential assets (rental properties, property holdings). That coupled with the starts (and those who purchased starts to resell post construction) coming onto the market end of summer.
I won’t go into interest rate hikes, over extended first time buyers, loose lending being tightened up, all resulting in foreclosures. Again, have a look south to see the affects these variables have on a depressed economy.
It’s my feeling that the buzz around saskatoon is mass speculation that natural resource demand will rip through sask turning our province into a ripe treasure chest. There are quite a few factors coming to play very soon to cool the buzz. Kyoto commitments are very real and the conservative government is going to be under a lot of heat for not meeting those commitments, this means there are very few alternatives to power a mass tar-sand extraction (if coal is out). Nuclear? Given what just happened in Japan, we hopefully are going to be a little less excited about building a 5 billion dollar nuclear power plant in northern sask. There’s also the water requirements to separate the oil from the sand… another factor that I hope Canadians (in particular saskies) will consider before digging up the tar.
So then what does Sask have left? We have a very steadily growing tech/science market. We have a strong and diverse GDP that is growing year over year. What we don’t have (in the near future) is a massive short-term cash infusion from fossil fuel filth. This means steady/managed growth. A type of growth that is not represented in the current state of speculation.
If we grow to fast we have to scramble for support beams. That means cutting corners for power, infrastructure, construction, etc. This will typically mean a stray towards the easy route (oil). When Alberta realizes how sadly dependent their economy is on non-renewable energy, it’ll be too late and the damage will be very VERY detrimental to its future. I personally am crossing all fingers and toes that our gov’t (or any alternative) will not force us into the same state of dependence. We’re certainly at a fork in the road. I personally am absolutely shocked that it was an NDP gov’t that got us here… truly! The sad thing about where we’re at now is that the NDP party will likely not be reelected and the only alternative is the sask party… and we all know which road at the fork they’ll take.
I hate to be the pessimist, as it’s truly not my nature, but ultimately, I am an educated realist. My predictions will not happen overnight and will most likely be felt, if we take the Albertan road, in a decade’s time. So why don’t we be the after party rather than the latecomers to the party that’s almost dead… nobody likes to be that guy
I would like to see your stats on migration though, I’ve seen very little come out about who’s coming and in what numbers, where did you find stats? This is a very important. If the migration is for jobs, and not a quick buck, I could be dead wrong
J.
April 7th, 2009 at 3:03 PM
Hi Johny,
There was an article in the Regina Leader Post that says very much the same as your post above. Like yourself, I would like to see the numbers showing how many people have migrated into Saskatchewan over the past year, and some detailed information as to which age demographic these individuals fit into. The returnees I have talked typically baby boomers; selling their Alberta properties and moving to Saskatchewan to retire and making a good chunk of coin in the process. I can’t help but be somewhat concerned for the future of the province however when all the young people are being driven out by these huge housing increases, and being replaced by an aging population about ready to enter into their retirement.
Like I have said before, I absolutely love Saskatchewan, and even though I have made the choice to move out to NH this fall, I will be eagerly watching the market in hopes that one day down the road I will be a financial position to return home again.
http://www.canada.com/reginaleaderpost/news/letters/story.html?id=154165aa-84de-435d-bb47-08cfd84ee185
April 7th, 2009 at 3:03 PM
Indeed,
Mr. MacNaughton makes a very good point. I came to this board several months ago to make the same point when Sunshine and Lollipops Percy (and those in his boat) started throwing around buzz-word boom-talk without fact. I think this effect is also playing a role in the speculative market we’re currently swimming in.
J.
April 7th, 2009 at 3:03 PM
Wow Johny, excellent post! I agree almost 100% with everything you said (have to disagree with you about being sad that the NDP will not be re-elected; I was a huge fan of Romanow – a Liberal in orange clothing if there ever was one, but that garden gnome Calvert is part of the reason that I left Saskatchewan).
I was wondering the same things about demographics in Saskatchewan and came across this page in my website wandering:
http://www.stats.gov.sk.ca/pop/popindex.php
If you click on the bottom chart, “Saskatchewan population by 5 year age groups, 1996 to 2006″ you can find some great stats on the demographic increases and decreases. To be fair, this is an aggregate of all of Saskatchewan, not just Saskatoon, and it’s now two quarters behind (only up to date until the end of 2006), but it’s the best that I’ve found.
To summarize the stats; ages 5 through 25 are down year over year, 25 to 29 is up slightly, 30 to 49 is down, and 50 to 69 is up. None of these are huge movements, but I think that it’s indicative of the general trend. As I stated in another posting, I cannot understand why Calvert and crew do not work on keeping the youth in the province (the people who will work and grow the economy), but rather keep trying to lure back middle aged boomers for an early retirement.
April 7th, 2009 at 3:04 PM
I guess I should’ve worded my statement better… The sad part is that the sask party seems to be the most popular alternative… I’m a man who believes in siding with the lesser of two evils.
that’s a nice new car in Lorne’s driveway though, ahhh I get it, he’s concerned about the environment… good timing.
I think we should hop in the Delorean, take er over 88, and go bring Romanow from the 80′s… or just convince him to get back into politics. Obviously, I’m also in the Romanow boat.
J.
April 7th, 2009 at 3:05 PM
Next year Saskatoon & Saskatchewan will start to reap the consequences of its indifference to this situation.
There’s still too much profiting going on right now for anyone to stop and go “oh crap”.
I’m past the panic, retalliate and acceptance stages at this point. Now I’m at the disgusted phase. I moved to Saskatoon with a job not in any construction or resource industry. It’s a job the kind of which Saskatoon needs to see more of to survive.
I came because I remembered Saskatoon from when I last lived here, and liked it.
Now? Forget it.
I’ve been burned because there’s no opportunity for me to progress forward as I had planned and could get elsewhere.
To the dude moving from Ontario, figure something else out. Seriously. Moving here is just walking into a trap. You get paid less and it’s just a wannabe economy. The people are getting worse and worse by the day from the mass import of Albertan mentalities & attitudes. That means high stress, high prices and soon: higher crime.
All the prices of Alberta, none of the “being bigger” benefits. On the flipside of that, you don’t get the “being smaller” benefits anymore either. Saskatoon has traded what it had as merits for the semblance of merits for another place it so desperately wants to be like: Calgary.
Everyone here is treating it as a cash grab, and none of the money is getting turned back into the people & the economy. It’s stagnating amongst the richest who are soaking up this pseudo-boom for themselves.
April 7th, 2009 at 3:06 PM
Alex – I’ll ask again. Where is better? You can’t seem to answer that question. Where is the quality of life and overall cost of living better?
April 7th, 2009 at 3:06 PM
If you take into account income tax, higher salary, available housing, landed incentives, recreational availability, etc, just about any major metropolitan center that saskatoon is being compared to offers a better overall cost of living and (by standard definition) quality of life… I think, however, those partial to saskatoon (myself included) might have a different definition of “quality of life” than the standard though
J.
April 7th, 2009 at 3:06 PM
Todd,
Right now? Even Winnipeg is better, and that’s where I came from. Your statement assumes that Saskatoon still offers the same benefits.
It doesn’t anymore. So now? Anywhere is better bud.
April 7th, 2009 at 3:07 PM
Johnny, I don’t think you are seeing the full resource picture here.
First the oil-boom is not going away anytime soon. I don’t quite believe the peak-oil fanatics but at the same time it is going to take years, maybe over a decade even, for oil prices to come down. In the meanwhile there is going to be tremendous pressure and interest in harvesting Saskatchewan’s oil sand reserves. In fact there already is a company, Oil Sands Quest I believe, which has bought up a big chunk of land rights and is currently building roads and infrastructure to mine the oil sands. I realize you believe this is an environmental nightmare. I will not argue with that since we are speaking of economics. The fact is, it is going to happen.
Also, food prices are headed up and Saskatchewan stands to benefit from that. There are some real food shortages projected as the ethanol initiatives in the US kick in. Again, I don’t agree with Ethanol but this is what I see happening, like it or not. Add to that a growing population and loss of farmland in many other areas of the world and you have the perfect storm looming for food stocks. Saskatchewan will benefit.
Uranium, like it not, will continue to be mined in this province. The commodity is up 15 fold as are Cameco and other Uranium producers. If nothing else, that will inject a lot of money into the provincial goverment in the form of income taxes off the producers.
April 7th, 2009 at 3:07 PM
I agree that Saskatchewan is an extremely resource rich province, but let’s leave oil out of it please. The province has officially missed that train. You don’t have to believe in peak oil for it to be true and more than you have to believe in gravity for it to be true. The fact is that we (as a world) are running out of (cheap and easily accessible) oil at a much quicker rate than 95% of people want to admit.
It’s very simple; oil is a non-renewable resource, so (literally speaking) from the day the Egyptians started to burn the strange gooey substance that was bubbling to the surface in torches – we have been “running out”. Imagine that you have $2 trillion dollars in the bank. You live in a world without interest or inflation. And you spend $1 a day. Technically speaking, you are running out. It will take you 2 trillion days to ‘run out’, but you are running out nonetheless. This only becomes a problem when you start spending, oh, let’s say $84 million a day.
This has been the situation we’ve found ourselves in since the discovery of oil. The reason it’s a problem now is not because there isn’t any more oil left in the world, by most estimates we’ve only used roughly half of the world’s conventional recoverable crude (ignore both the Cambridge Institute and the USGS, any oil geologist will laugh at their numbers). The problem is that our demand is now outstripping our supply. We can still produce millions of barrels a day, we just can’t produce enough millions of barrels a day quick enough to satisfy world demand. There is a reason that oil has quintupled in price over the past five years, it’s a simple supply and demand curve.
80% of the world’s oil is coming from fields discovered before 1973. All five of the worlds largest fields have now peaked in production, and if you want to read up on something scary, follow what’s happening to Mexico’s Cantarell field (the second largest field in the world). A recent study headed by Exxon’s former CEO determined that we will have to find and bring onstream and additional 4 million barrels a day just to offset declining production, not including increased demand. We will never ‘run out’ of oil (there will always be oil in the ground, because eventually the oil that remains will take more that a barrel of oil’s worth of energy to extract, making it a negative EROEI and pointless to mine as an energy source), we will though run out of enough cheap and easily accessible oil to supply the demand.
What’s saddest about this situation is the complete lack of transparacy by our business and government leaders. While virtually every non-OPEC oil producing nation has peaked in conventional oil production (Russia’s really the only holdout and with the lack of care they take of their wells, expect their peak within 5 years), do we worry or begin to plan for a world without oil? Of course not, because Saudi Arabia will save us (lol). I highly recommend Mathhew Simmons’ book “Twilight in the Desert : The Coming Saudi Oil Shock”, for a better of understanding of why OPEC is seriously jeapardizing our future.
The reason this is a problem for oil sands is because oil sands can only exist in a very narrow band. If the price dropped back down to $18/bbl tomorrow, you would see the most massive shut down in Canadian economic history as every project in development at Fort Mac would be put on hold. Current estimates (for new projects, which is what Saskatchewan would be looking at) for a ‘break-even’ price are around $50/bbl. Now add in the fact that Saskatchewan heavy crude is much more difficult and expensive to extract, and you’ve got an even higher break-even point.
So what if oil goes to, say $200/bbl? I don’t think this will happen in the next five years, but $100/bbl is certainly going to pass (briefly at least) very, very soon. The problem with prices that high, is that oil itself is no longer economical. You would start to see massive support of alternative energy sources as they would be much cheaper by the GJ. Why fill your car up with $5/litre gas when you can buy an electric and drive it off the gas/coal/wind grid for less than a nickel a mile?? Why heat your acreage with heating oil when you can buy electic heaters and run them for 1/4 as much? It just wouldn’t make sense. Oil companies will be the guys selling pagers when all people want are cell phones.
I know that this is a gross simplification (we’re unfortunately still going to be consuming some oil in fifty years), but the fact is that the oil sands can only prosper in a very narrow band. Northern Canada isn’t Saudi Arabia, you aren’t pulling the crude out of the ground for $1/bbl.
What’s really sad is that most peak oil deniers have never heard of the economic theory of “lowest hanging fruit”. Imagine that you live under a tree that makes fruit. You’re hungry, what fruit are you going to eat? You’re going to grab whatever’s closest to you on the ground, you’re not going to expel a bunch of effort and risk climbing to the top of the tree to get the fruit there, it’s much easier to just grab the stuff at the bottom. Well, the oilsands are not the lowest hanging fruit, and the fact that there is $100 billion of investment going into them over the next decade should be a huge red flag to anybody that there is obviously nowhere left on earth that the oil companies could be spending that $100 billion to get oil out of the ground cheaper. That is the proof of peak oil in a nutshell.
This all being said, I think Saskatchewan is seriously underdeveloping their Uranium resources. It’s a complicated subject, but it’s more and more looking the lesser of available evils and we are on the cusp of a nuclear ‘renaissance’.
What’s really funny, is that in the “let’s be like Alberta” mad dash, nobody stops to look at the government’s books to notice that roughly 75% of the government’s resource revenues come from natural gas, not oil. The oil sands get all the attention, but the government doesn’t give a crap about the price of oil compared to the price of gas. Now the fact that conventional gas production here has peaked while at the same time, prices are falling through the floor due to increased LNG imports, consistent weak weather demand and immense drilling activity south of the border…that’s a different story.
April 7th, 2009 at 3:07 PM
Great discussion going on here.
Johny, I would just point out that the number of active listings couldn’t be considered “very high” by any standard. Today, the Saskatoon MLS shows 422 actives in the single-family, condo and duplex categories. While this is considerably higher than the 300 or so we’ve had for most of this year, it’s far lower than the 600-800 which is more normal for this market. In fact, in recent years we have always been more of “sellers market” with those higher levels. With the increased demand I think we need to see 1,000 listings before we could say, “very high.”
April 7th, 2009 at 3:08 PM
Hi Sam,
If we’re going “full picture” on oil development in sask, we should take a very close look at Calgary’s growth and the common variables (we’ve discussed) that directed Calgary’s real estate jump a couple of years ago. In 2005 I owned a condo in calgary. It was a 600 sq ft condo in mission. If you know Cal, you know that mission is one of the most, if not the most, desirable areas in Calgary. I purchased it for $140K. Within a year it was worth over $250K. speaking in percentages, that growth is pretty much directly comparable to what’s going on in sask today. Now, it’s very important to consider Alberta’s infrastructure during that time of growth. Prior to the boom, Alberta had been developing their oil sand projects for nearly a decade. For several years before that boom, Calgary was experience an annual migration averaging 60000 people per year. 60000 people walking into good paying jobs with the income to afford real estate… creating enormous pressure on inventory.
If we go with your scenario, Sam, and accept the fact that we’re walking down the Alberta path (“It’s going to happen”), we can take your analysis of saskatchewan oil sands development. One company buying land does not represent infrastructure required to sustain our boom. Petro-Can, Encana, Huskie, etc had all been driving roots into Calgary long before their real estate boom (proportional to sask). Do you have any idea of the enormous power requirements, transportation infrastructure, water, etc is required to support the Alberta oil sand project? Northern Alberta had that in place before their boom.
I’m not even going to get into the 60000 people per year moving to Calgary… What’s sask getting? 600 retirees?
I stand by my claim that demand is based on speculation. People saw a boom in Cal, they have the means (equity) to make an investment in the “next Calgary” with the assumption that we’re going to jump.
It’s pretty simple, if a real estate market grows following a boom, it’s the result of a healthy economy. If a real estate market grows before a boom, it’s speculative and based on assumption.
Have a look at the Venture. Exploration companies move all over the board with speculation, pumpers/dumpers, word of mouth, etc… no foundation behind market value, just speculation. Watch a company that is actually mining its holdings and generating revenue and you’ll notice a steady growth with little fluctuation.
J.
April 7th, 2009 at 3:08 PM
But are the consequences for Saskatchewan going to be felt overnight?
House prices can’t just drop back to what they should be. Although if things are going to be “fixed”, they have to.
If you ask me, the damage is severely long term.
April 7th, 2009 at 3:09 PM
Sorry for the double post, but I think this is well related:
http://edmontonrealestateinvestorabroad.blogspot.com/2007/07/saskatchewan-land-of-jobs.html
She really hits some of my points on the head, tracing a realistic look at how Saskatchewan has done more harm than help.
Lorne Calvert has traded all the virtues of Saskatchewan in for all the costs and greed of Alberta. All with none of the benefits of being so afflicted.
It’s just disgusting how blind he is.
April 7th, 2009 at 3:09 PM
Consequences will definitely not be felt overnight. But the longer we sit in denial and call this kind of skepticism just a “failure to accept” the fact that we’re finally eating at the big boy table, the more severe the consequences will be. I just wish people could be more realistic… I guess that’s why we trust the “market analysts”
J.
April 7th, 2009 at 3:09 PM
Some questions that probably can’t be answered: How many homes have been sold more than once during the past 6 months? Four homes in a small area (Area 2)have been sold and then resold – higher price and no work done (one with open house on Sunday that has been marked up $70,000 from the April sold price – never lived in; only work done – grass cut once a week.) How many homes are currently vacant as new owners wait for market to climb further and then they will relist? How many apartment blocks have been sold in the last 6 months and are being converted into condos? Occupants of a downtown highrise have been given notice of condo conversion as well as more than 15 other apartment blocks. This will create scarcity of rental properties, rents will rise and these higher prices will be “reasonable” for investors that have purchased. When the large investors have moved in and are purchasing large blocks of property, we must realize that while most of us can’t play this game, it is nonetheless our new reality.
April 7th, 2009 at 3:10 PM
I found it kind of amusing that the NDP community resources minister was not aware until pointed out to him by a Sask party member that there was a housing problem going on in Saskatoon. According to him, he was shocked to find out that there are people having trouble finding houses in Saskatoon, and that if it were not for the latest media reports he would not have noticed. With competent individuals like that in charge, how can we go wrong?
Here are a couple more relevant articles to the Saskatoon housing market. Most disturbing is the one article which tells of two families, construction workers employed in Saskatoon, who are living out in a campground because they are unable to find affordable housing in town. Couple this with the overflowing list of people trying to get shelter at the YMCA, and it sounds like we’ve got a bit of a mess on our hands.
I wonder whats next on Calvert’s “lets transform Saskatchewan into Albert” list. Is he going to get drunk and wander around town shouting obscenities at homeless people like King Ralph once did?
http://www.canada.com/saskatoonstarphoenix/news/local/story.html?id=0f69c159-d12e-4a0e-bc99-609941889f5f
http://www.canada.com/saskatoonstarphoenix/news/story.html?id=a589df2a-9631-4e7a-bfba-cbe6b037cd90
April 7th, 2009 at 3:10 PM
What a tragedy.
“The poor stay poor while the rich get rich, that’s how it goes… and everybody knows”.
The only opposition to our pessimisms are those who stand to lose their new found equity. It’s understandable, I stand to lose it too but think longterm people, your investment will grow regardless, very few get rich overnight… those who are getting rich over night here are those who’ve come in for the quick buck and will just as quickly run when the market turns… then we’re all stuck holding our “equity”.
J.
April 7th, 2009 at 3:11 PM
wow, what a bunch of gloomy guses, i guess you would be happier if you had a crap economy and your houses were worthless…
April 7th, 2009 at 3:11 PM
lol, I rest my case. I’ve had it, if you can’t beat em, join em. I’m going straight to the dealership, equity in hand, to buy my jaguar xk8 coupe today!
J.
April 7th, 2009 at 3:11 PM
Woah, wait a sec Sdude, this is your site http://www.jurock.com Looks to me like you might have a little something to gain from promoting this type of speculative environment. I now add you to the Percy category.
J.
April 7th, 2009 at 3:12 PM
fine, add me to that category, whatever that means. i guess making money is a bad thing for most people on this blog. real money, large amounts. well you guys founded the first socialist govt in north america, i shouldn’t be surprised.
April 7th, 2009 at 3:12 PM
Warren, great post. I agree with you in general but disagree on a few things:
1) Oil sands development will happen regardless of cost/benefit analysis. Speculators are going to go after it as the oil supply problems continue. Is it a good investment over the life of the investment? It doesn’t matter. Look at the American tel-com’s that nearly bankrupted themselves overbuilding network capacity that wasn’t utilized for years. That was back in 2000-2001 time frame. It was a poor investment but they did it anyways. Oil is actually a LOT more lucrative than fibre ever was. Here the return is immediate. Also, don’t forget that Saskatchewan has abundant supplies of water which are one of the critical factors in extracting the oil.
2) Uranium already is happening. Despite some setbacks Cameco is still a force to be reckoned with. It is still a $14 Billion company (based on stock market capitalization).
http://finance.yahoo.com/q/bc?s=CCJ&t=5y
China has plans to build 50 nuclear power plants and despite the price increases it still still vastly cheaper than conventional energy
April 7th, 2009 at 3:12 PM
Sam:
Very good point about the oilsands (although I’m glad that the fibre-optic capacity was installed – it’s not like it’s going to go bad any time soon – yes, that was a gigantic waste of time and money; but hey, how else would we have been able to keep up with the massive traffic to pets.com, lol). You may be right and I may be wrong, speculation may drive activity in Saskatchewan’s oil sands, but I hope it doesn’t (there are better things the province could focus its resources on).
I agree with your basic premise, but I just don’t think it will be able to happen in time. As Johny pointed out, Alberta has had development in the oilsands for decades. Great Canadian Oil Sands (what is now Suncor) has had their fingers in the oilsands since the sixties. The province has been encouraging this for years, and only in the past decade has progress really started to happen.
Like it or not, nothing will happen in Saskatchewan in regards to heavy crude as long as the NDP are in power. I’m not saying this is right or wrong, I’m just saying that large corporations are very leery of the NDP (look into the nationalization of Saskatchewan’s potash and the creation of PCS to understand why). So that takes time. Then there’s years worth of environmental assessments, possible land claim issues, etc, etc. If the Mackenzie pipeline ever gets going, it won’t be up and running for nearly a decade, and it’s been on the books for 30 years (and it’s environmental footprint is miniscule compared to oil sands development). And at the end of the day, if you remember the economic concept of “lowest hanging fruit”, oil companies aren’t going to come to Saskatchewan unless it’s more profitable than Alberta (which is highly doubtful given the double whammy of existing infrastructure in Northern Alberta and easier extractable bitumen than in Saskatchewan).
And as I stated last post, by the time this has all started to get the ball rolling, our entire view of oil and energy could be changed. The most unfortunate thing about ‘peak oil’ is that there are a lot of doom and gloom ‘wackos’ who are pushing the idea and get pegged as poster boys for it. The science behind it is ridiculously strong, and there are a lot of intelligent people in the industry who are now (finally) starting to talk about this. Read about T. Boone Pickens (with a name like that, you know he’s from Texas), and his claim that “The big fields have been found and the smaller fields, well, there’s not enough of them to replenish the base”; referring to ‘super-major’ fields like Ghawar in Saudi Arabia and Cantarell in Mexico. Read about how Kuwait overnight last year slashed their proven reserves by half, a difference of over 50 billion barrels (!!!). Ignore the people who say it’s the end of world (it’s not) and that we’ll all be living in mud huts with yaks in our yards in ten years (we won’t), and just look into the science and some of the people in the industry sounding alarms.
But this is digressing, what I’m trying to say is that Saskatchewan is a province with tremendous opportunity. But I don’t think oil is one of them, uranium should be where they focus their energy on. I know how huge Cameco is, but unless anything has changed recently, all that’s done in Saskatchewan is mining. Why not processing and value-adding? Hell, why not build a reactor in Northern Saskatchewan and sell the power to the Athabasca Oil Sands? The answer to these questions is because Lorne doesn’t like nuclear. Well, neither do I, but it’s a hell of a lot better than coal.
And if you want a scary alternative to China building reactors, do you know that China adds the electrical generating capacity of the United Kingdom, every year, from coal? Yikes!
Just my two cents.
April 7th, 2009 at 3:13 PM
And wow, ‘sdude’, wow. “I guess you would be happier if you had a crap economy and your houses were worthless…”. What I think a lot of people on the board are trying to express to you is that (no offense intended here to the board) Saskatoon HAS a crap economy and yet houses are skyrocketing in price. Yes, there is some economic growth in Saskatoon, but as I’ve stated on other posts, is it strong enough to justify 50% plus price increases YoY? No. And why is Saskatoon outpacing Regina when Regina households have such a higher median income? I urge people to take a close look and examine what segments of the economy are growing. Are you keeping more Commerce grads, more Engineering grads, more doctors and lawyers? Or are you recruiting more carpenters, drywallers, and waiters. Not that there is anything wrong with those positions (I’ve done some of them myself), but you need to have a balance in your economy.
“I guess making money is a bad thing for most people on this blog. real money, large amounts.” Lol. Although I know the internet cloak of anonymity leads to all sorts of exaggerations, take my word on this – I make real money. Gobs and gobs of ‘real money’. I have been very blessed with my good fortune (although to not be completely humble; I did work very hard for my two degrees) and my cheques would make the average person’s (including likely yourself) head spin. No, I don’t want to get into a pissing contest and hear about your millions and millions of assets, just know that I sleep easy at night knowing I’m in the top 5% of earners. I don’t think it’s a bad thing or have a problem with it at all.
What people are having a problem with are spec investors making ‘gobs and gobs (lol)’ of money in what is looking more and more like a Ponzi scheme. Wikipedia it, you’ll learn something. A Ponzi scheme that’s starting to have real effects on real people (read the articles about the dude and his family living out of a camper). Caring about the rest of society…there’s that damn socialism again, lol.
And please don’t call this ‘real money’ (no offense to the board). Look up the difference between realized and non-realized gains. Maybe you’re one of the many people who are now ‘home rich, cash poor’. Your house has doubled in value, but you can’t really do anything about it (it’s not like you can go the bank and cash it in).
Although given your comment on “you guys founded the first socialist govt in north america” (which we did, thank you very much) – I’m guessing you’re not local. Out of town speculator? In which case I advise you to leverage it all and buy more property – housing only ever goes up!!! (please pay no attention to what’s going on south of the border)
April 7th, 2009 at 3:13 PM
C o m p l a i n e r s Suck! Help to grow your Saskatoon economy if it blows so hard. Complaining anonymously on a blog is, quite simply, for losers.
April 7th, 2009 at 3:14 PM
sdude, wow.
Your idea of making money costs people more than you gain.
But what do you care, you have your security blankets now, yet nobody thinks better of you for it. You’ve asserted your insecurity very clearly.
I know how people like you grew up and it makes me laugh.
April 7th, 2009 at 3:14 PM
Ah whatever, losers are losers. I won’t argue with you anymore. It’s disrespecful to the great blog Norm has created here. As a parting shot – go out there and make your own life, don’t worry about the sdudes of the world. You are all smart enough, you just need the motivation. You can have anything you want.
April 7th, 2009 at 3:14 PM
If the “help to grow your Saskatoon economy if it blows so hard” was directed at me – I don’t live in Saskatchewan anymore; so that’s a little difficult.
April 7th, 2009 at 3:15 PM
What are the new statistics? Is there any link where I can get statics of sale?
April 7th, 2009 at 3:15 PM
Not everyone disagrees with you sdude.
April 7th, 2009 at 3:15 PM
I am an Alberta investor and am interested in Saskatchewan properties, but not in the larger cities like Saskatoon. IF the oilsands in La Loche were exploited, which area in Saskatchewan would see the resulting benefits?
In Alberta, there was a crascading effect once the major centres boomed. Properties in relatively small towns increased in price due to the increased costs in building new properties. Has anyone researched these types of smaller centres? I’ve been gradually gathering data over the past few months but any insight would be welcome.
April 7th, 2009 at 3:16 PM
Eric,
You’re too late for that.
Regardless, why would you want to inflate the economy by doing that? Just keep out and let people get what they get.
Saskatchewan doesn’t need you driving up costs even more for a quick buck – be happy with what ya got bud.
April 7th, 2009 at 3:16 PM
One thing that doesn’t seem to be mentioned is that young Albertans are coming to Saskatoon, WITH money, not looking for money (like Alberta). My wife and I will net about 150K if we sell our Calgary condo, but we STILL can’t buy a decent house in this city. Fact. The mortgage we need on top of our GIANT downpayment, leaves us at the bottom of the starter homes. House poor for years to come as we toil away in Calgary, paying another mortgage. No thank you.
In Saskatoon, we can buy a house for cash, we have jobs we can start “tommorow” according to one company I spoke with. Wages are only slightly lower than Calgary. We can have a house, a garage, a chance at a future, a family etc. None of this is possible in Calgary, even for second-tier buyers like us. And there are a lot of people just like us.
Regina and Saskatoon are the only large urban centres that are affordable in Western Canada now.
Beleive it or not, we would never buy a house from a “flipper”, regardless of how much we like it. I would certainly want to know some background on who owns the house and why its for sale. Also, real estate gains are taxable, (and so is mortgage interest) unless its your primary residence, so I don’t think there is nearly as much US style “flipping” in Canada.
April 7th, 2009 at 3:17 PM
Saw an empty house this long weekend with a “For Rent” sign in it.
Disgusting.
Mike, move to Saskatoon and ruin it just like everyone ruined Calgary. That makes perfect sense, relocate the problem, don’t speak out or anything.
I think it’s sad that we live in a society where the major theme is passive acceptance.
April 7th, 2009 at 3:17 PM
Alex,
It is that type of unwelcoming attitude towards business that restricted Saskatchewan’s growth. Maybe individuals who own property would like to see their prices rising a bit.
Yes, I am a speculator. However, even a novice investor should know that there is no such thing as a quick buck. I am looking for quality hold investments on the faint hope that the NDP government in Saskatchewan doesn’t scare off big business.
Eric
April 7th, 2009 at 3:19 PM
I am looking to move to saskatoon in the next month or so. I have been offered a research position for 2 years and it is the chance of a life time to work in the best lab in the world in my area of interest. Basically, I would be a fool to not work with him. However, my grilfriend and I have a dog, and with the rental situation it is very tough to find a place to live . We have found a few rental places (2 bedroom) where rent is 1200 plus utilities/month. Thats nearly 30,000 over 2 years. Sounds crazy so we are now looking into buying. We can afford a 10% downpayment on a condo (I will have no time to upkeep potential problems with a older house)costing 300,000 or less. The upside is that buying will give us euity. However, after 2 years I may be on the move again. I realise it is impossible to predict the market 2 years from now, but what are the chances I will resale at a loss greater than the loss form renting? I am not looking to make money. Braking even would be fine … and I could even handle a small loss. Any thoughts or insight?
April 7th, 2009 at 3:20 PM
Wyse,
Tough questions to answer but I think your better off looking at a condo today than you were 3 months ago. There’s more selection and prices have likely dropped a bit. You’ll see predictions of a big crash from some on this blog and there’s no question that these homes have seen significant increases. Having said that, some of it was long overdue. If we do see some value coming off, I doubt it would be to the degree that it wouldn’t recover over the course of a couple of years. All speculation of course. If I had a few condos I probably would have sold them back in May or June, if not sooner, but I’m feeling confident enough that I’m keeping my home.
Good luck.