Saskatoon real estate: Week in review (July 20-24 2009)
The Saskatoon real estate market continued to operate at levels far stronger than one might expect given the current economic conditions, and the time of the year. Agents reported ninety-eight firm sales to the MLS, an increase of just six units compared to last week, but a gain of thirty-nine home sales compared to the same week last year.
New listings of Saskatoon houses and condos dropped, falling from one hundred and fourteen homes last week, to just one hundred and two, down twenty-two properties on a year-over-year basis. Thirteen listings in the same categories expired this week without a successful sale.
Click the image for a larger version of the graph.
The total number of active home listings available to Saskatoon real estate buyers edged down again, falling twenty units from the close of last week to finish at 1290 properties, the lowest level we’ve seen since the week of February 23-27 when 1298 homes were for sale. Active listings are down fourteen percent on a year-over-year basis. During the same week in 2008 there were 1506 Saskatoon homes for sale.
The next few weeks will be interesting, and somewhat telling with regards to where our market is headed as we move into fall. Last year, active listings grew aggressively through August and September climbing from 1500 to 1756 over an eight-week period. Will the current downward trend continue, or will failed sellers of the past year who have been waiting for better days resurface to try again?
In prices, fifty-seven home sellers adjusted their asking price over the course of the last week. A total of thirty-three Saskatoon MLS listings were canceled or withdrawn from the system, with eighteen of those homes re-appearing as a “new listing,” most a new lower price.
The average selling price of a Saskatoon home slipped again for the second consecutive week and settled at $273,128. Meanwhile, the six-week average managed to make some small gains climbing from $281,555 last week to finish at $283,520, a mere eighty-nine dollars off of the peak price for 2009, but down just under $20,000 compared to the same week in 2008. The four-week median selling price took a pretty good dip sliding nine thousand dollars from last week to $270,000, which is $15,000 lower than the same week last year.
Click the image for a larger version of the graph.
The average underbid grew from $11,605 last week to $12,014, or roughly 4.2 percent of the asking price. Home buyers ground a slightly better deal in some instances as the percentage of sellers bagging a deal within $10,000 of their asking price fell to fifty-eight from sixty-five last week. The percentage of buyers who managed a discount of more than $15,000 grew from fourteen to nineteen percent.
See a Google map displaying the boundaries of Saskatoon real estate “areas” here
Data collection and calculation for our statistical reports
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Norm Fisher
Royal LePage Saskatoon Real Estate
50 comments so far. We'd love to hear your thoughts.
July 25th, 2009 at 3:45 PM
Deficit hits $7.5-billion in first two months
http://www.financialpost.com/news-sectors/story.html?id=1825112
“Revenues fell $2.6-billion; Corporate income tax revenue fell 23.5%… Revenue from the GST dropped 37.9%… Program expenses rose 13.4%… EI benefits rose 50% to $3.74-billion”
Recession ain’t over ’til the consumer sings
http://www.financialpost.com/news-sectors/story.html?id=1821312
“There are at least 1,592,000 Canadians who don’t believe the recession is over… This is a technical economic recovery and something only economists get excited about.”
Unit sales and the six-week average were both surprising this week. I wouldn’t have thought there was still that much (seemingly) pent-up demand for houses this late in Summer. If I had to hazard a guess, I think inventory is on the path for a steady but gradual reduction to about 900-1,000 listings by year-end. Unless we see a surge (could the BoC’s recent announcement have any impact?). The only thing I’m sure of at this point is that August will be interesting.
July 26th, 2009 at 10:15 AM
Benefits to unemployed workers and government aid for car companies would be responsible for a good chunk of that deficit, too. Among the reduction in revenue numbers you showed above, program spending rose 13 percent and jobless benefits rose 16 percent.
I’ll venture a guess that sales will remain “surprisingly” strong for the next few weeks, at least. Why would you think the recent BOC announcement might cause a surge in listings, if you don’t mind my asking, Jason?
July 26th, 2009 at 3:07 PM
Crikey, I think it’s unlikely that we’ll see any surge in listings, unless there were quite a few buyers waiting on the sidelines for the right time to re-list (and this announcement could be viewed as the right timing for them). This could, of course, be influenced (±) or offset by continued demand from buyers – unless they decide that better prices await them in the Fall or Winter. One other thought is that if our economy is set to take-off again, could this mean the possibility of higher interest rates arrive sooner as opposed to later? And if so, would this prompt more people to buy now before a potential rate increase, as well as encourage more sellers to list as housing will become less affordable later on (with higher rates and a booming economy)?
July 26th, 2009 at 3:54 PM
I think we’ll see sales slow up as we hit the traditional slower fall season. While the recession sounds like it may be over soon for the rest of Canada, the posts about potash prices falling substantially on last week’s blog make Saskatchewan look like the local economy is still on the way down.
Once all the buyers who think current elevated prices are a bargain have jumped in, bet prices dip, since the rest of us think we’re far from a bargain.
July 27th, 2009 at 3:23 PM
I’d be curious to hear from some recent buyers or sellers out there. Specifically, what was your motivation and/or rationale for buying or selling in the current market, what were some of the deciding factors and what if any future plans you might have, ie:
Sellers – sold at the peak to lock-in profit (don’t anticipate prices rising), work/relocated, downsized, etc.
Buyers – low interest rates (or concerned with rates increasing next year), found dream home, growing family, downsized/upgraded, work/moved here, once-in-a-lifetime financing opportunity, cheaper homes here, etc.
Future plans – rent for foreseeable future, plan to buy in the near future, etc.
July 27th, 2009 at 3:53 PM
Jason,
We are currently building a home. Why now? We have been planning on moving for several years. our current home is too small for our family and the location is not great for a young family. We have some pretty specific needs and so planned on building rathering than buying another home. We started meeting with builders last May – we walked away several times because we did not think that the builder was lowering the prices as we thought they should (given the market conditions). We signed the contract this June after the builder came down in price and offered to make several additions to our plan of choice at the price we had negotiated.
Basically, since we are selling and buying at the same time we have made the best decision we can at this point in time. I don’t think there is ever a “perfect” time and so we carefully considered the financial issues and ensured that our housing budget will not make us “house rich and life poor”. I also follow Garth Turner’s real estate blog and we took everything into consideration.
Sure the interest rates are nice – but when we budgetted for our house we calculated the payments at a substantially higher interest rate – at this lower rate – we will just be paying off the house faster. We also only considered a 25 year mortage and plan on living in this home until the kids move us to the nursing home. We are not looking to get rich through housing and if the market does continue to correct we are OK.
Is there ever a right time to acquire new debt – probably not – but then no one would ever make a decision or a life choice – we have and are confident this is the right choice for our family.
July 27th, 2009 at 4:21 PM
Good question Jason. I would also like to hear some responses.
Thanks for playing Pam, and good luck building the new home.
Interesting story on Saskatoon’s population today – Saskatoon’s population increase largest in last 20 years
July 27th, 2009 at 6:31 PM
Jason, we arrived here from Vancouver a couple of years ago. We found the cost of living to be very high there, and combined with the financial realities of raising two children and paying off student loans, we decided that we needed to find a decent place for our family that didn’t force us to commit to 8x annual income to find what we would consider “decent”. With a bit of research, some good friends and a fair portion of luck, we made our way here. Yes, it was a bit of an adjustment, but I’m quite certain we made the right decision. This is home now.
We initially looked around in 2007, just as the market was hitting its peak. After a fair amount of deliberation (and anxiety) we decided to wait. It just seemed too speculative and unstable a market for us. As it turned out, continuing to rent gave us a good amount of time to get to know the city, its neighbourhoods and schools, as well as giving us more time to pay down our student loans. As it turned out, this time also allowed us time to ride out quite an incredible downturn in the economy while staying fairly liquid, which seems to have worked out pretty well so far. I was, and still am thankful to be in a place that seems to be weathering this particular storm fairly well.
Lots of things went into our decision to buy now, and I’ve talked about many of those things here. Like Pam states, yes, very low cost of financing our current purchase was nice, but it wasn’t the primary consideration. We’re luck enough to have good, well-paying jobs in an area that traditionally has been pretty recession-resistant. We’re paying less than twice our annual income for a very nice home, the payments are essentially equivalent to rent (amortized over 25 years). We’re not sinking so much into the purchase that we’ve lost all liquidity. We certainly have enough “room” monthly that even if rates are significantly higher 5 years from now, we should be okay. Like Pam also points out, we are buying the home as a primary residence and not as a speculative bet, and we’re not planning on going anywhere soon.
In short, even though I’m concerned about the economy’s short-term stability, I feel that we (and the place we reside) have enough resources to weather those shorter-term fluctuations. I hope I’m right.
July 27th, 2009 at 9:10 PM
Jason, I sold last summer after living in the same Northend Saskatoon home for 12 years, they say everything has it’s price, and last year was it for me. Eighteen months prior anybody including myself would have thought the price I recieved was crazy and never would have thought it was attainable. I think the prices in Saskatoon are expensive and because of that just don’t fit into my plans. Rent is also getting expensive and I’m not sure that it will contine to fit my plans either. However property in other parts of North America are cheap, and may fit my investment plans. As for purchasing, other regions of Canada may be more interesting, Penticton comes to mind, although Saskatoon real estate is tied to jobs and income, Penticton’s market is tied to retiring and net worth, I don’t think people are going to stop retiring any time soon, however Saskatoon’s economy may be up and down based on commodities. In other North American (USA) regions I think there is more up then down side potential over the next ten years . Further I think Penticton is a safer long term opportunity. Finally, I have to be honest, I’m getting tired of Saskatchewan winters.
July 28th, 2009 at 1:20 AM
Thanks for sharing your stories! I’ll post mine a bit later. Completely unrelated… I know listings are down, but ‘for sale’ signs seem to have sprung up all over the place in Stonebridge, where there were only a handful previously (now close to 50). Anyone else seeing similar trends in their neighborhoods? (Briarwood, Erindale, Arbor Creek, Willowgrove, Hampton Village, etc.) And rental listings for houses seem to have absolutely exploded all over the city (I left my search on page 6 of Kijiji still in the $1,500+ price range…). I’d believe the population is up in Saskatoon, but I’m not I’d place much faith in the city’s 5,000 year-over-year gain estimate.
July 28th, 2009 at 12:07 PM
Case-Shiller home price index rose for the first time since the bubble burst in May 2006 and 14 of the 20 cities in the bigger composite eked out an increase. I don’t believe this data is seasonally adjusted, which may make quite a difference. Prices still down 16.8% YOY.
http://tinyurl.com/kwa3lv
July 28th, 2009 at 4:47 PM
Does anyone here know the GDP growth and income per household in Saskatchewan since 2005? In normal situation (or say, before 2006), what is the average house appreciation rate?
My husband and I can afford a decent home at today’s price, but I’m still afraid of the likelihood of losing my one year income over a house within a year if I buy it right now. I do need a quantitative guideline to tell me what a reasonable house prilce looks like. I’m absolutely new to the realestate market and may have asked naive questions…
July 28th, 2009 at 5:32 PM
Alisha,
Here is some info on median incomes, 2002-2006. I don’t think you can get anything more recent for annuals. Average weekly earnings (Sask) went up 5.4 % in 2007. Average weekly earnings also grew 4.4% in 2008.
A five-year history of house prices is here, or here with some graphs.
July 28th, 2009 at 6:03 PM
Norm, Sask’s 4.5% wage increase still trails Alberta’s 4.7% increase, more importantly, end result is $120 more per week in Alberta.
I actually see the 5,000 new people in Saskatoon as a bad thing for a few reasons:
1 – Listings are still @ 1,290 in Saskatoon, despite near record growth/after that much growth
2 – This level of growth is not sustainable
3 – Potash/Uranium are still on the way down, as the rest of Canada emerges from recession, it appears we are just starting
4 – All this inventory, yet more expensive than Ottawa, London, or Hamilton
Still having 1,290 places for sale after all that growth really points to how much over supply there is in Saskatoon. If it isn’t shrinking much during record growth, how about next year? When interest rates go Up from record lows, when Ontarians move back for cheaper housing? When Potash Corp lays off another 1,000 workers, in time for re-financing.
I have to admit, I am amazed that Saskatoon grew that much.
But largely because there are still almost 1,300 places for sale, many vacant
July 28th, 2009 at 6:08 PM
Nick,
I wasn’t suggesting that Saskatchewan is the world’s greatest. Just answering Alisha’s question as best I could.
July 28th, 2009 at 8:51 PM
Nick, you bring up some really interesting points. I’ll go one further: if we saw a negative drop of 5,000 people, what impact would there be to the housing market here? In other news, the Government is already backing away from the BoC’s prediction about the economy.
Flaherty: Too soon to declare recession defeated
http://www.financialpost.com/news-sectors/story.html?id=1837674
“I think we have to be careful, we have to continue to implement the [government's] economic action plan. We have to continue with the stimulus to the economy to avoid the danger of some slowness re-occurring.”
July 29th, 2009 at 8:33 AM
Bank of Canada may have to break rate promise.
July 29th, 2009 at 9:46 AM
asking for stories on home selling/building here is mine.
Originally built in 2004 before the boom. Geat looking house but builder obviously cut corners, had a roof leak, a few other minor issues. We had planned on living in the house for a long time but since we already had issues with a four year old house so we ixed everything up and said lets sell and build with a trusted contractor who I would be directing (aka. watching like a hawk).
We sold first (May long 2008) at the absolute peak. We originally built for $154k (2004) and sold for $437K. We rented a nice townhouse for 10 months while our house was being built. Very happy we did what we did. My recommendation would be to sell first then you know exactly what money you have and can plan accordingly.
July 29th, 2009 at 10:36 AM
EI recipients jump from ’08
Provincial claims increase 71 per cent from May of last year
http://www.thestarphoenix.com/business/recipients+jump+from/1839614/story.html
“In fact, all provinces recorded an increase in EI beneficiaries year-over-year in May, with Saskatchewan’s 70.9 per cent increase significantly lower than Alberta’s 236.3 per cent, British Columbia’s 115.2 per cent and Ontario’s 100.5 per cent.”
July 29th, 2009 at 10:45 AM
Further to Jason’s comment, from the StatsCan Release.
“In Saskatchewan, the number of regular beneficiaries more than doubled to 1,900 in Saskatoon. There were also large percentage increases in the number of beneficiaries over the same period in Swift Current and Moose Jaw. In Regina, 1,200 people received regular benefits in May 2009, up 600 from 12 months earlier.”
Also notable, though I’ve not been able to find it in the StatsCan release, the media is reporting that some 15,000 more people are employed in the province compared to the same month last year.
July 29th, 2009 at 1:02 PM
Norm, I believe this is the StatsCan data you were looking for:
http://www.statcan.gc.ca/subjects-sujets/labour-travail/lfs-epa/t090710a4-eng.htm
And not to pick apart the numbers the media released (which I haven’t seen), but it was 14,800 jobs of which 8,000 were part-time. So we gained 6,800 full-time jobs and lost 5,790 full-time jobs. I’m not sure I’m that terribly excited over those numbers (considering that’s province-wide); part-time jobs tend to be service-based, and not necessarily the type that allow people to afford things like houses. Ontario and BC’s numbers are just *scary*.
July 29th, 2009 at 3:07 PM
Norm, thank you very much for all the info you provided. It does help. Your blog is a great place for first time home buyers like me.
Cambo, you are absolutely one of the luckest in the city. May I ask how much you paid for the house you currently own? Is it an upgrade or simply a better built one?
July 29th, 2009 at 5:42 PM
If interest rates do increase, it will knock off a lot of lower income earners who can no longer afford to buy that condo or cheap west side house. As well, bad news for those who have to re-finance.
Interest rates have no where to go but up, more evidence house prices in Saskatoon have peaked, and are eventually going to bottom out.
July 29th, 2009 at 9:19 PM
Looks like sales are on a real tear, does it have to do with rock bottom interest rates. Sure would be interesting to see a graph detailing recent interest rate history and sales in the Saskatoon market, I wonder if they move in lockstep. When the government took out the heavy artilary (interest rate reduction) did they consider that short term gain may cause long term pain, they probably considered it but were bound and determined to stimulate at any cost. If in the future rates increased drastically and sales sagged leading to lower home prices, would people walk away from there mortgages if they could’nt afford the payments. Having your mortgage underwater is one thing but not being able to afford your payments is another. Do people first empty their savings, then there RRSP’s to service a underwater mortgage. Many things seem to be upside down, the bulls (the usual suspects) Mayor Atchison, Premier Wall, John Gormely, Paul Martin all seem to think that growth is all that matters and their going to keep preaching it until the fat lady sings. If I’m not mistaken they think that it leads to a higher standard of living for one and for all, however if you look at people during their daily lives you might see a similarity to gerbals on a wheel. dogs chasing their tails, or a pack of rats in a maze. I’ve talked to several differant people in very differant occupations and all have said that there jobs have slowed significantly from last year, the people who are buying obviously have jobs for now, but since this momentum is government stimulted do you think it could backfire like so many other short sighted government initiatives, anything to keep their phoney baloney jobs and future pensions, may have really saved the hides of some speculators though.
July 29th, 2009 at 10:12 PM
Rick, yes, I suspect there’s definitely a correlation between sales and interest rates/amortization periods. I once asked the question, ie: where is the long-term planning and thinking, and one of the responses I received was very telling: ‘everyone wants to enjoy the party for as long as they can, while it lasts’. I think that speaks volumes, don’t you?
The TSX is down the past few days, the Government is backing away from anything official or unofficial concerning a recovery, the BoC may be forced to raise interest rates within three months (forget next year!), unemployment is up all over the country (and at some of the highest levels in decades), oil and potash are both down (and continuing to fall) and the CDN dollar is once again approaching par with the US dollar.
And we’re going to have a banner month of housing sales in July. At what point does it go from owning your own home to the banking/CHMC owning you?
July 30th, 2009 at 9:12 AM
Us bears have been forcasting a decline SK’s economy for awhile. Now the Conference Board of Canada is saying it too.
“After a stellar performance in 2008, Saskatchewan’s economy is forecast
to decline by 2.7 per cent in 2009 – a significant downward revision from
growth of 0.2 per cent in the Spring 2009 outlook. The major reasons for the
decline are a massive reduction in potash extraction levels, combined with
drought-like conditions in certain parts of the province. Despite the downturn
in the primary sector, most other sectors are performing well and are
continuing to add to payroll – Saskatchewan’s unemployment rate is still the
lowest among all the provinces. Next year, a rebound in the primary sector is
expected to support real GDP growth of 3.5 per cent, the strongest performance
of any province.”
http://www.cnw.ca/en/releases/archive/July2009/30/c9746.html
July 30th, 2009 at 10:35 AM
So the GDP growth of 3.5% in Saskatchewan in 2010 is based on a recovery in the primary sector, which comprises oil, potash, natural gas and agriculture. If anything, prices for these commodities will likely be lower next year – or at best, on-par with current levels. It’s possible agriculture could improve next year, but being weather dependent, I’m not sure that it’s possible to forecast a good season this far in-advance. Let’s not forget a high CDN dollar, and how that’s going to impact revenues and exports.
July 30th, 2009 at 11:07 AM
Jason,
That high Canadian dollar may force the BOC to take some action with interest rates sooner than they might have expected. I can’t see the dollar staying high if commodities weaken, however.
On a lighter note, apparently Tim Geithner is having a bit of difficulty selling his own house. A classic “Daily Show” takedown ensues:
http://tinyurl.com/mh7f7h
Those bathroom tiles are something!
July 30th, 2009 at 12:46 PM
Crikey, yes – at the rate the dollar is climbing, it wouldn’t surprise me if they review this sooner than their next quarterly meeting. August could be a busy month for refinancing… Hard to say with commodities; it’s definitely a factor, but the continued US economic woes are also having an effect on their currency (which tends to then also effect ours).
“Isn’t it like hiring a personal trainer who is morbidly obese…?” (haha, this was hilarious, thanks for the link!)
July 30th, 2009 at 2:49 PM
“That high Canadian dollar may force the BOC to take some action with interest rates sooner than they might have expected”
As I understand it, higher central bank rates actually put upward pressure on the Canadian dollar. Higher rates lure international investors looking to park their money. The reason the central bank might raise rates earlier is because the economy may recover much faster than they anticipated and they’ll be doing it simply to curtail inflation risks. Them raising the central rate sooner rather than later is a good thing, done because things are better than anticipated.
Also, Jason, funny guy. TSX down? Oil Down? What are you looking at, two day trends now? Oil is up like 40 percent so far this year or some such this year, how can you say it is down (and dropping) except in the shortest of time frames. It rallied 5 percent today. Stock markets in the States today touched levels not seen since October and November. TSX also near it’s peak. “unemployment is up all over the country (and at some of the highest levels in decades)” What, since the last real recession you mean. Official unemployment touched 12-14 percent in 83 and 91, or around that, and we are nowhere near that. Oh, and unemployment in Sask. is hovering near its lowest levels in decades.
Also, potash can’t go down from the past six months when nobody bought anything. You say, ‘if anything, prices for these commodities will be lower next year?” You think the world is going to hold off buying fertilizer next spring like they did this year when they couldn’t get financing? Prices may not peak again, but sales will rebound strongly, especially as crop yields drop this year. And if oil can hold these levels given the slack demand and inventory overhang, is it really going to drop in price as economies truly start to grow again? Potash is going to hurt Sask this year in lost revenue, for sure, but it is going to be huge going forward. Demand for that commodity has been rising on a steady line for decades, except for the odd single year pause or pullback, and this year is one of those. Potash re-itereated a few weeks ago its plans to carry out their expansions over the next few years. I know you’ll believe it when you see it, but they are looking at the five and ten year plan, not a 6-12 month correction.
Also Bank of Nova Scotia still predicts growth for Sask. this year. They could be wrong though. But they also forecast strong growth next year, as most analysts do.
July 30th, 2009 at 6:28 PM
http://www.cbc.ca/money/story/2009/07/30/conference-board-gdp-provincial.html
Sounds like Manitoba is to lead the way economy wise in 2009.
With Saskatchewan worse than the Canadian average.
And from the Conference Board of Canada, which has a history of being OVERLY OPTIMISTIC regarding Saskatchewan’s economic growth!
Not really surprising when you consider potash and agriculture are 2 pillars of the Saskatchewan economy. Oil is up a bit this year, but that may actually help Alberta more than us. CTV pointed out that while the provincial economy may contract 2.7%, Saskatoon would be hit the hardest. Makes sense, Saskatoon is the potash hub.
Go Regina with our oil companies!
Oh, and Manitoba has lower unemployment and cheaper housing too!
July 30th, 2009 at 6:52 PM
Bank of Nova Scotia predicts Saskatchewan to lead Canada for growth:
“Saskatchewan is expected to post positive growth of 0.6 per cent this
year – the only Canadian province to do so – and 3.0 per cent in 2010,
supported by strength in the resource sector and a relatively strong
domestic economy.”
http://finance.yahoo.com/news/Regional-Prospects-Turning-Up-cnw-970584984.html?x=0&.v=1
July 30th, 2009 at 7:02 PM
I’m sure the Bank of Nova Scotia must have been very excited by the huge drop in potash prices from last year or the drought.
July 30th, 2009 at 7:05 PM
Jason,
“If anything, prices for these commodities will likely be lower next year”
…
” Let’s not forget a high CDN dollar, and how that’s going to impact revenues and exports.”
Do you realize that these 2 items are likely not compatible? The Canadian dollar is up because resource prices are up. This winter when commodity prices crumbled so did the Canadian dollar. If we have lower commodity prices, chances are we will have a weaker canadian dolalr which will help to offset the price decline.
Also, oil is still 50% off it’s peak so come on, how can you can say best case is prices stay level? Crop prices are down by 30-50%. Similar situation for all commodities. Also realize that even if prices stay level, for the most part companies are making money. The profits flow into the economy, capital investments are made, hiring occurs and GDP continues to grow. You don’t need price increases for GDP to grow, although it certainly helps.
It is ironic that while claiming to be the champion of truth and financial prudence you continually remind me of the the face of wall street, spitting out lies, half-truths and whatever twisted argument you can string together to sell your point.
July 30th, 2009 at 7:08 PM
Nick,
Well they were one of the few Canaidan banks to avoid heavy sub-prime exposure but what do they know? I’m going to put my money with you Nick.
Also note that the forecast was released this morning. So potash and agricultural information would have already been reflected.
July 30th, 2009 at 7:35 PM
“Higher rates lure international investors looking to park their money.”
Very true, Mark- I was attempting to point out only that a rapid rise of the CAD is something the BOC was discussing they may want to avoid, as it would hurt exports. Quantitative easing, were it to occur, would make the currency less attractive to speculators by increasing the supply of dollars. Lower CAD, easier to export. As you rightly point out, higher CAD, good for money-parkers.
http://tinyurl.com/nywerk
Bank of Canada Governor Mark Carney has a problem: Many investors are having a hard time believing that he would actually tailor monetary policy to slow the loonie’s ascent.
“Mr. Carney went out of his way early last month to signal displeasure with the dollar’s record surge in May, an unusually aggressive stand for a central banker who prefers to remain silent about the decisions of private investors.
In the Bank of Canada’s last policy statement, and then in public appearances that followed, Mr. Carney warned that the “unprecedentedly rapid rise” of the dollar risked snuffing out early signs of an economic recovery.”
July 30th, 2009 at 7:48 PM
Strange how the bulls only seem to make an appearance when it coincides with any stock market or commodity rally…
……….
Mark, one could argue that the gains with commodities and stock markets also demonstrate that both are due for another correction (and probably sooner as opposed to later). Unemployment numbers have been increasing in recent months, so we’ll see what the future holds (I’m not implying that the numbers are as high as the 80′s and 90′s, but they’re not exactly headed in the right direction, either). And no, I don’t think that the financial situation for many countries will have sufficiently changed to push the demand (and prices) for potash higher.
Peter, commodities are not the only thing influencing our dollar; the US dollar has and will continue to drop in value against all currencies (based on their economy and unprecedented borrowing). I’m not sure if farmers would agree you that ‘for the most part they’re making money’ (farms are businesses, after all). And I said ‘best case’, as in, using current commodity levels as a base and then estimating revenue higher from there isn’t very financially prudent (as you put it). I’d rather be a realistic and err on the side of caution than a blind optimist who is only willing to see what he wants to believe.
July 30th, 2009 at 8:35 PM
Strange that the Conference Board is getting so much respect around here all of the sudden.
Nick,
“Sounds like Manitoba is to lead the way economy wise in 2009.
Ahhh, my good man Nick. 2009 is nearly over and will soon be a part of history. Here’s what the Conference Board is predicting for the future.
“After a stellar performance in 2008, Saskatchewan’s economy is forecast to decline by 2.7 per cent in 2009—a significant downward revision from growth of 0.2 per cent in the Spring 2009 outlook. The major reasons for the decline are a massive reduction in potash extraction levels, combined with drought-like conditions in certain parts of the province. Despite the downturn in the primary sector, most other sectors are performing well and are continuing to add to payroll—Saskatchewan’s unemployment rate is still the lowest among all the provinces. Next year, a rebound in the primary sector is expected to support real GDP growth of 3.5 per cent, the strongest performance of any province.”
By the time you find a job, pack all your stuff and move to Manitoba, Saskatchewan will be the place to be again.
Funny how these predictions change. In April, Conference Board was predicting big growth and Scotiabank was saying no growth for Saskatchewan. I believe that Bank of Montreal is saying no growth.
Peter,
Scotiabank was also paying enough attention to point out that Saskatoon homes had become overvalued before the end of 2007.
July 30th, 2009 at 9:48 PM
If anyone is harboring any illusions as to how the US economy is faring…
States Look for Economic Relief Selling Govt. Buildings
http://abcnews.go.com/print?id=8204778
“The initial sale of the properties could bring the state between $350 million and more than $700 million in new revenue, said Paul Senseman, a spokesman for Arizona Gov. Jan Brewer. The catch? ATRA’s McCarthy says that back-of-the-envelope calculations show that the state could end up paying between $60 million and $70 million a year on the leases. Over a 20-year lease, that would add up to as much $1.4 billion.”
July 31st, 2009 at 12:47 AM
You know, I go through newspapers, blogs, news programs….on and on and to be honest, it’s all the same crap. Even reading the posts above….Almost every single one has a reference to what the conference board said…or what some bank predicts, etc. Why are so many people hanging on the words of what some overpaid bureaucrat is predicting who didn’t get it right last year when the house of cards came tumbling down?
Those of you who lap up everything you hear and read in the media, keep drinking the kool-aid because you don’t get it. You don’t get that what the media is telling you is to support their own agenda. For those of you who are seasoned businesspeople with a number of years experience under their belts, you do realize that it’s going to get worse before it gets better….and why is that? It’s because the core fundamentals of business management and finance have not been returned to. Talk to some independent business owners and ask them how things are. If they are honest, they will tell you its getting tough. I’m in manufacturing and look after a large number of retailers across the prairies. I hear it every day….and not just in my industry. You think Visions electronics is advertising lower margins because they feel like giving us a break?
July 31st, 2009 at 1:11 AM
Westcan, it’s definitely going to get worse before it gets better – especially if people keep overextending and leveraging themselves to the hilt. And you’re absolutely bang-on with your comment about needing to return to the core fundamentals of business management and finance before we see any kind of real, sustained improvement in the economy.
Looks like July was another banner month for housing sales. Norm, what’s the record for unit sales in (any) August, and what did we do last August?
July 31st, 2009 at 2:32 AM
“Strange how the bulls only seem to make an appearance when it coincides with any stock market or commodity rally…”
you mean the last four months?
yah, i’ve timed my comments to correspond with the last four months.
i tend to time them with bullheadishness. ironic isn’t it.
July 31st, 2009 at 7:06 AM
Jason,
The August record appears to be 397 from 2007. Last August was way, way off, the weakest in more than a decade at 224. The five-year August average is 317.
July 31st, 2009 at 9:08 AM
Thanks Norm. So we’re up almost 100% over last year and 50% over the five-year average… I wonder what August and September hold (are we seeing a lot of activity by first time homeowners in lieu of anticipated rate increases in the coming year, or is it all over the spectrum?)
Economy contracted more than expected in May
http://www.financialpost.com/news-sectors/story.html?id=1848764
“OTTAWA — Canada’s economy contracted in May at its fastest pace in three months as the recession continued to hammer the manufacturing sector and weaken demand for exports. Statistics Canada said Friday that gross domestic product declined by a worse than expected 0.5% during the month. That followed a revised 0.2% drop in April, and extended the economic declines to 10 straight months. Most economists had expected GDP to shrink 0.3% in May.”
July 31st, 2009 at 9:42 AM
Jason,
To be clear, you asked about August and those are the numbers I provided. The numbers are surprisingly impressive but nowhere near “100% over last year and 50% over the five-year average.”
These are the same numbers for July. The July record appears to be 422 from 2007. Last July was down from 2007, but still near average at 342. The five-year July average is 347. Month to date sales for July are at 413.
July 31st, 2009 at 10:02 AM
Norm, sorry, I was thinking July for some reason… (so we’re on-par with July from 2007 and up about 20% or so from July 2008). Well, if we’re now tracking 2007 for (some) periods, we may see close to 400 this August (anything under 300 would be below average).
July 31st, 2009 at 2:58 PM
First of all, great blog Norm. Thanks for the opportunity to comment…
Samson, you say “a cheap west side house”. You may want to take another look at West side house prices. There’s nothing cheap about them unless you consider a $400,000 in Meadowgreen as cheap! Average in Massey Place seems to be about $250,000… A house just went up in Hudson Bay Park for $361,000. Just doesn’t seem to cheap to me, unless your comparing to Cities like Vancouver and Toronto…
July 31st, 2009 at 7:50 PM
“I’d rather be a realistic and err on the side of caution than a blind optimist who is only willing to see what he wants to believe.”
If you want to be a realist and err on the side of caution, why wouldn’t you say prices could go up but it seems more likely that they will go down given x,y,z or something to that effect. When you say simply prices will go down that’s not realistic or erring for caution, that’s just pure stubborness. Given that in the past prices have spiked it is entirely possible that they will spike again. Note I didn’t say they WILL spike again. You need to consider the full range of options though. Don’t forget there is danger to missing out on an upward swing in the markets as well. If you park all your money in bonds, if you avoid buying a house and the stock or housing market takes off, wouldn’t you say you have lost in that scenario? I would say you need to take into account the FULL RANGE of possibilites which do include higher prices.
“the US dollar has and will continue to drop in value against all currencies”
The US dollar may continue to decline but not against all currencies. There are other countries with high debt loads, eastern europe, the UK, japan come to mind. I still believe the US dollars strength relative to canadian dollar is related to the price of oil. I follow it pretty closely and invariably when oil is up, the canadian dollar is up, oil down, down goes the loonie. I would also point out that if things do go as far south as you predict Canada will be in a heap of trouble and that will put downward pressure on our dollar. The US problems are already well known and priced in, a financial crisis in Canada is not reflected in the dollar.
August 1st, 2009 at 12:00 AM
Peter, yes, commodity prices could go up or down. Realistically, though, we’re still over-producing and under-consuming (this would be the x and y). If world economies kick into high gear once again or we start seeing reductions in production, this could all change. Eventually commodity prices are going to spike again. Probably not all at once, and not all to the same degree. (z) would be the ‘mystery’ factor, ie: H1N1, scientific breakthrough, etc.
Trust me, I am considering the full range of options – but I’m also weighing risk vs. reward (this includes things like the market and housing). With respect to housing, I think it’s more likely that prices will continue to decrease than increase, and I’m betting that my cost to rent another year will be less than what I’ll save by waiting.
My only point about the US dollar is that right now, their economy is faring worse than ours. And if that continues to be the case, we can expect to see a high Canadian dollar. You’re absolutely correct that if the sh*t hits the fan here, all bets are off, though.
August 1st, 2009 at 6:32 AM
Bullish remarks on Manitoba should at least recognize the provinical debt level is triple that of Saskatchewan, they are the largest recipients of equalization this side of Quebec (higher than Quebec per capita), and the tax rates are significantly higher than SK, particularly at the upper end.