Saskatoon real estate: Week in review (July 27-31 2009)
Home sales showed no signs of slowing down this week as Saskatoon real estate agents reported one hundred and two single-family detached house and condominium sales to the MLS system, bringing about the third strongest sales week of 2009, and the fourth consecutive week of rising sales. The number of homes sold increased just four units from the previous week, and showed gains of twenty-two when compared to the same week last year.
The pace of new listings entering the market continued to slow as one might expect at this time of year sliding eleven units from last week to ninety-one, and down sharply from the same week in 2008 when one hundred and thirty-nine Saskatoon homes were offered for sale.
Click the image for a larger version of the graph.
Active residential real estate listings took another slide this week as unit sales exceeded new listings for the first time in 2009. An additional fifty-one properties expired without a sale, most as the calendar turned to the month of August. This is fairly typical of month end, and throughout the year we’ve seen many of those month-end expired listings come back on the market during the first week of the following month, although that didn’t happen last month.
Total active residential listings are down eighteen percent from the same week in 2008 when they reached 1500 properties. Today there are 741 single-family detached houses and 393 condominiums showing an active status. During the last week of July 2008 there were 976 single-family homes and 418 condos for sale, so clearly, the inventory of houses has seen the greatest downward trend falling twenty-four percent in recent months, while the condo inventory has slid just six percent.
The average selling price of a Saskatoon home bounced back this week reaching $290,542, more than seventeen thousand dollars higher than last week. The six-week average edged higher on a week-over-week basis to $287,927, falling short of last year’s number by just eighty-five hundred dollars and reaching its highest point since the first week of November 2008. The four-week median climbed to $275,960, a gain of six thousand dollars over the week before, but remained down by twelve thousand dollars from the same week last year. The year-over-year declines are actually starting to look quite slight when compared with the much larger gaps we were seeing over the past few months.
Meanwhile, fifty-eight sellers adjusted the asking price that they’d initially put on their home, and an additional fifteen properties were canceled and re-listed on the Saskatoon MLS system, most at a new price.
Click the image for a larger version of the graph.
The average underbid on properties that sold below the asking price grew again reaching $13,550, up from $12,014 last week. This represents an average discount of 4.5% from the list price, approximately.3% higher than last week. Larger average discounts were driven higher by a few extremely large cuts to the asking price, while a slightly larger number of sellers actually found a buyer willing to pay a price within ten thousand dollars of the asking price.
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
31 comments so far. We'd love to hear your thoughts.
August 1st, 2009 at 12:06 PM
Norm, “A housing boom during a recession? Hmmm?” (from your Twitter) Yes, it still somewhat defies belief. I don’t think anyone (bears or bulls) would have anticipated that the market would be as strong as it has been, and in any event – certainly not breaking sales records from 2007 (which was a banner year). The only thing that looks certain at this point is that we’ll have a lot of condos still for sale going into next year. Onwards August!
August 1st, 2009 at 2:20 PM
Hi Norm,
It seems to me that when the speculators and developers transferred rental units to condos in 2007 the condo market was flooded in Saskatoon (and is now gradually being re-absorbed) and pressure placed on the rental market. I do not get the sense that the rental market is soft at the moment, but what do you think? Also, what do you think about the future balance between supply and demand in the condo market? I would be interested in your thoughts or those of other bloggers.
August 1st, 2009 at 10:38 PM
I don’t see why people are still so surprised that Saskatoon is doing well, despite the economy of CANADA being in a recession. There are still regions in the United States where housing prices are doing well despite it’s recession. Saskatoon/Regina as a region, too, are a particular hot spot. Even in times when there isn’t a recession, the housing market some regions can drop – but this isn’t seen as odd. So why is the reverse so unfathomable?
August 2nd, 2009 at 2:01 AM
Jon,
Late last year, there were 300 counties in the States that there not really affected. Now there are less than 100. Could you explain why you think Saskatoon is doing well? ..I mean other than real estate.
Saskatchewan as a whole had been flat forever regarding real estate until a couple of years ago when resource commodities went through the roof. Our economy for the most part is resource commodity based. Grains have dropped, oil has dropped, natural gas has dropped, potash has dropped, etc…Yet real estate remains strong. Has it remained strong because the resource based economy? No, it’s because banks have returned to 0 down financing with the lowest interest rates in generations..combined with natural greed to be a homeowner and short sighted planning.
It’s been said what goes up must come down. When it comes to finance and interest rates, the reverse also applies. Someone will have to pay for these deficits and it won’t be done with these bottom basement rates. It’s already started. Try buying a boat or RV, motorcycle..whatever and you’ll find rates in the 6% range. National lenders are at 7-9%. Of course, you could use a HELOC to buy those things and save on the interest rate and pay for that purchase for another 20 years.
August 2nd, 2009 at 10:21 AM
Hi westcanguy,
Yes Saskatoon has been flat, but I think this has worked in its advantage because it has allowed for massive price increases in real estate in the last couple years. You have people migrating to Saskatoon, selling their much higher value houses and getting great purchasing power when coming here. And yes Saskatoon does rely on primary resources. Consequently, as commodity prices have fallen so have the house prices. But, they’re on their way up again, and potash, uranium, and oil are all projected to come out strong by the end of the year and into 2010. This will be especially true as the USA comes around in future months. Then there are also the jobs available here that aren’t available in towns reliant on 1 or 2 manufacturing industries (ie those in Ontario) – someone has to get the resources out of the ground and as extraction increases so will the number of jobs required, which will spur all sorts of growth. Brad Wall’s government, I think, and as much as I hate to say it, has been doing a pretty damn good job at promoting Saskatchewan to developers too.
So I think there’s a lot going on for Saskatoon right now, as well as Regina, and I think that there will be another housing “boom” immediately prior to June 2010 as the Bank of Canada raises its interest rates, with people seeking to get in quickly before having to pay higher rates.
What will happen after that? Well, I think no one can really say, since I wouldn’t have predicted the economic collapse that happened, nor could I have predicted that the Sask housing market would have stayed so strong thus far.
August 2nd, 2009 at 12:36 PM
“Saskatchewan as a whole had been flat forever regarding real estate”
As Jon alluded to, this is exactly why prices in Saskatoon were able to increase so much. They were undervalued before. This is not the first time we have had a real estate boom either, I have heard stories of people buying houses in the 70′s and selling 6 or 7 years later for 3 to 4 times what they bought. In this context our boom doesn’t look so big, the average would need to go up over 500k for a comparable increase. There was a slight downtick in the 80′s, I think about 10 to 15% but don’t quote me and then prices stalled out for years. However, they never, ever even approached where they were in the 70′s when the boom started. I think the same will be the case this time as well. Barring complete economic collapse the $160k average house price is history.
August 2nd, 2009 at 1:09 PM
Condo and rental supply,
A 20% price adjustment has certainly helped renew some interest in condos, but as mentioned above, the condo inventory has not shrunk much in a the past year, at least compared to single-family homes. There are literally hundreds of converted units around town that haven’t gone on the market because of weakened conditions. For the most part, this causes the largest problems for small entry level apartments.
Jon,
My “surprise” has little to do with Saskatoon, and more to do with housing markets across Canada, many of which are arguably stronger than ours (unit sales and price growth). It’s the juxtaposition of multiple bids and buyers paying well over list in some of Canada’s most expensive housing markets, and in the midst of one of our worst recessions that strikes me as strange.
August 2nd, 2009 at 1:13 PM
Westcanguy,
“Could you explain why you think Saskatoon is doing well?”
Isn’t our population up significantly over the past few years, and our unemployment rate among the lowest? Aren’t our incomes growing well above the national average for the past few years?
August 2nd, 2009 at 5:18 PM
“The more hold-outs who capitulate to the trend, the closer it is to a reversal. Already we are seeing some notable bears sounding uncharacteristically optimistic. They may not yet be accepting the recovery mantra, but they are seeing the rally lasting for a long time.
The more bears switch sides, the more bearish the message, as it is evidence that the herd is moving towards an extreme. When received wisdom, in this case as to recovery, is almost unanimous, then the trend will have gone about as far as it can, and the stage will be set for a sharp reversal. I think we are already seeing many clues that we are getting late in the trend. — TAE
August 2nd, 2009 at 8:12 PM
Isn’t our population up significantly over the past few years, and our unemployment rate among the lowest? Aren’t our incomes growing well above the national average for the past few years?
Norm,
While I agree that population has grown, I don’t think that one can discount the fact that EI claims have gone up 70% in the last year(4th highest in the country, 3rd if you discount Nunavut.)…and yes, incomes have gone up, in particular with skilled work but hardly enough to compensate the sizable increases in real estate pricing. All I’m trying to say is that what is happening outside the province is affecting what is happening inside the province…with the exception of real estate. Higher unemployment and lower commodity prices that the province depends on cannot sustain higher real estate unless we get out of this economic recession in a few months…that we’re all hoping for but not realistic. Something’s gotta give.
August 2nd, 2009 at 11:47 PM
hitlers bubble
August 3rd, 2009 at 9:44 AM
Westcanguy,
I don’t disagree with your point, but I would say that Saskatchewan is in better shape than most (doing well is certainly relative). While it’s certainly strange to see unit sales reaching numbers above what we saw in 2007 I think we can be thankful that we aren’t seeing the same kind of goofiness that other markets are experiencing with multiple bids, and overbids. Those facts may be an indication that prices here are as high as the “fundamentals” will allow for the time being.
I am also with you on this idea that the worst is behind us economically. At the very least we have to acknowledge that the progress is pretty fragile.
August 3rd, 2009 at 11:27 AM
Norm, do you know what was the highest weekly or monthly average house price that was reached last year (excluding condos and lots), and what’s the highest similar price that we’ve reached this year? Thanks.
August 3rd, 2009 at 12:05 PM
Jason,
The average price of a single-family home peaked last June at $339,548. For 2009, the highest average was recorded in July at $315,768. That said, last year prices were moving down substantially in July (and through the balance of the year), while this year they have moved up.
August 3rd, 2009 at 5:50 PM
The rental market isn’t coming down in price either, a friend of mine with a 2 bedroom apartment near 8th St. is getting a $300 per month rent increase in a few months. That’s insane. We need some controls on that kind of thing.
August 3rd, 2009 at 6:29 PM
Interesting article/survey. Without offering any insight, it would seem that the purchase of a home is more of an emotional than financial decision. What happens if houses don’t appreciate over the long-term, but instead remain flat? (or depreciate further?)
First-time buyers seek ‘well-being’
http://www.househunting.ca/buying-homes/story.html?id=0220bea2-a17c-4530-8582-0e3e4f50a1c7
“- Ninety per cent felt more financially secure owning rather than renting. The national average was 88.
- About 86 per cent believed that even though home ownership may mean more work and effort, they’d still rather buy. Nationally, it was 85 per cent.
- Eighty-four per cent of Calgarians and other Canadians agreed with the statement: Owning a home provides a greater sense of emotional well-being and security.
- About 87 per cent of Calgarians, along with 84 per cent of all Canadians, felt the value of owning a home goes beyond the financial value.
- Fully 85 per cent of Calgarians surveyed consider the house or condo they own as being more of a home than a rental house or apartment. Across Canada, 80 per cent agreed.
- In terms of personal fulfilment, 84 per cent of respondents from Calgary said they had a greater sense of fulfilment with home ownership. It was 80 per cent nationally.
People have a vested interest in their homes and are willing to overlook the impact of the temporary economic downturn… In the longer term, they know their property will appreciate in value, as did their parents’ homes.”
August 4th, 2009 at 12:36 AM
I think my parent’s houses only appreciated cause CHMC was created, 25% down got reduced to 20% down, 20% to 10%, 10% changed to 5%, and then 5% got down to 0%. Each of these changes in policy has gotten more buyers into the market thus causing an artificial increase in price.
Too keep this scheme going, 0% mortgaged house owners need buyers to be paid to buy a house now. How else can this sham stay fueled?
Canadian gov’t is already going down the path of paying people with the FTNB tax credit! http://www.cmhc-schl.gc.ca/en/co/buho/buho_008.cfm.
August 4th, 2009 at 8:40 AM
http://www.teamfisher.com/images/teamblog/recovery.jpg
August 4th, 2009 at 8:47 AM
Pungo,
Your friend ought to look around. A colleague of mine who does property management says the rental market has weakened and they have had to lower some rents to keep units occupied. I wonder if your friend’s landlord is attempting to force tenants out. “I wanna be a condo conversion” perhaps?
August 4th, 2009 at 9:26 AM
Steven,
it was one of the ways the credit bubble was fueled. One just has to think were house prices would be if people needed 10% down for the first house and 25% for a second without using home equity. Probably under 200k.
As for the FTNB tax credit; this is another step the government is taking to get at the underground economy. The underground economy( drugs, money laundering, working under the table, etc) accounts for 10-15 of GDP, but the government has no hand on it. But they will one day.
August 4th, 2009 at 9:33 AM
I have to think that the author of the SRAR reports is happy. The July report will likely be one of the easiest ones he/she has had to write in a while.
August 4th, 2009 at 10:17 AM
Unless there hasn’t been any previous rent increases (doubtful), $300 does seem a tad on the high side. Rent controls are an inherently bad idea (see: Winnipeg), but I do agree that we need some sort of cap or moratorium on ‘condo conversions’ when the vacancy drops below a certain point (say 3-5%). Very short-sighted on the part of the city.
August 4th, 2009 at 12:29 PM
George, or traditional 25-year amortization periods… I was curious about your FTHB comment and how it relates to the ‘underground economy’; with this tax credit, how do you see the government taking a step towards it?
In other news, spending fell 0.1% in the US in June, personal incomes declined 1.3% and real disposable income tumbled 1.8% (the largest decline in a year). Savings slipped from 6.2% in May to 4.6% and US personal bankruptcies soared 34% in July (the highest since Oct ’05).
August 4th, 2009 at 2:11 PM
Our EI rates have risen 70% over the last year however Saskatchewan still has the lowest (EI) beneficiaries on a per capita basis; 1.7 per cent. National average is 3%.
Between June 2008 & June 2009 Saskatchewan employed 14,500 more people. employment is up… Saskatchewan has the Countries lowest umemployment rate; 4.6%.
Oil, gas, grains, etc are all down from their peaks in 2008. They are also ALL way ABOVE historical norms. Oil is currently high then the 2007 prices which was 3 times the 2000 price… Potash has historically (pre 2007) been under $100 per ton. It is current above $400 per ton.
Yep, Saskatchewan is screwed. LOL. How about a little perspective.
August 4th, 2009 at 2:34 PM
PS for those that don’t think this was predictable look back to previous comments.
Like: http://www.teamfisher.com/saskatoon-real-estate-week-in-review-january-19-23-2009/#comments
Almost everything I predicted back then has occurred. re: May peak of 1800-1900 houses on the Market (with Saskhouses) dropping to 1000 or under by year end. If anything I was slightly pessimistic.
I’ll go back to lurking and return at year end…
August 4th, 2009 at 3:17 PM
Ryan, apart from being ‘screwed’ (we’ll see where things lead in the next few years), we created 6,800 new full-time jobs and saw 8,240 more people become unemployed. This was then offset by 8,000 new part-time jobs. So 6,560 new part-time jobs net (not 14,500 or 15,000).
August 5th, 2009 at 9:35 AM
Jason,
underground economy is worth 100 to 250 billion in Canada. Total GDP for the nation is about 1.4 trillion. The FTHB works two ways, it keeps the consumers spending money and as well these consumers want receipts so the workers need to be legit. But not everybody will want receipts and some people will only work for cash. But I know it will get tougher for these people. This underground economy is by far the biggest resource the government can tap into for revenue that really has not been explored much to date. But they will; how? anybodies guess.
August 5th, 2009 at 10:40 AM
Jason the problem is that I actually know the statistics; I don’t pull them out of the air.
Here are the raw numbers:
http://www.aeel.gov.sk.ca/labour-force-statistical-report-June-2009
In June 2009 there are 5600 MORE full time jobs and 8900 MORE part time Jobs then June 2008. The number of unemployed raised 3500 over the period as well, but that means the we had more people looking for jobs. It does NOT mean we have less jobs… BTW Saskatchewan and New Brusnwick are the only two provinces with positive job growth.
August 5th, 2009 at 10:51 AM
PS we are also up ~5000 jobs from May 2009.
August 5th, 2009 at 11:34 AM
Thanks for the tip Norm, I will pass that on. The owners are “renovating” quite a few apartments, so this may indeed be an attempt to get people to move out so they can go condo with less fuss.
August 5th, 2009 at 2:38 PM
I was predicting very modest year over year gains in 2009 if you look back to my posts early this year. (January I think)
I predicted a dip at the start of 2009 followed by a rally at the end of 2009. Looks like we might see that rally bring us back to very modest 1-5% year over year gains.