Saskatoon real estate: Week in review (June 1-5 2009)
Saskatoon real estate agents reported ninety-four firm sales of houses and condos this week, a decline of nineteen properties compared to the last week of May, but still sharply higher than the same week last year when just sixty-seven Saskatoon homes were reported sold. Sales were up on a year-over-year basis for the fourth consecutive week.
New listings of Saskatoon houses and condos took a steep jump over last week as many of the properties that expired at the end of May were re-listed for another go at a market. One hundred and sixty-two homes were offered for sale, up from one hundred and twenty-seven last week, but again falling far short of the numbers we were seeing last year when a whopping two hundred and forty-three homes were listed on the Saskatoon MLS system. This week was the eleventh consecutive week in which new listings were down over the previous year.
Weaker sales and stronger listing activity didn’t prevent total active listings from falling again. They slid from 1,502 units last week to finish down twenty-four, and closed the week at 1,478. Last year at this time, there were a total of 1,259 active listings. As of today there are eight hundred and ninety-nine single-family detached houses and four hundred eighty-seven condominiums showing an active status on our MLS.
Click the image for a larger version of the graph.
Sixty-seven Saskatoon home sellers adjusted their asking price this week. Another twenty-six canceled a listing and re-introduced it as “new,” most with a new lower price.
Following several weeks of gains, Saskatoon home prices finally took some marginal declines. The weekly average fell nearly five thousand dollars from the previous week to $284,404 while the median selling price fell two thousand dollars to $275,000. The six-week average fell just about $500 to $280,621 sticking near record levels for the year but well under the $302,601 number recorded at this time in 2008. The four-week median slid two thousand dollars to $268,000 after sitting sticky at $270K for four consecutive weeks. The four-week median was down $15,000 compared to the same week last year.
Click the image for a larger version of the graph.
Saskatoon real estate prices for houses and condos - week of June 1-5 2009
Average underbids inched up this week to $12,147 from $11,411 the week before. That represents an average discount of four percent, up .2% from last week. Area one sellers gave up an additional half percentage point on average. Eleven sales at the $400 plus level brought some higher dollar underbids which are definitely reflected in this week’s chart. The percentage of sellers accepting an offer which was more than $25K off of their asking price nearly doubled from the previous week, and so did activity in the $15,001-$20,000 category.
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 @Norm_Fisher.
Norm Fisher
Royal LePage Saskatoon Real Estate
67 comments so far. We'd love to hear your thoughts.
June 7th, 2009 at 11:17 AM
A 185K (800 ft.) house will cost me around $1200 (over 20 years at 5.5% with 10K down). Plus taxes, plus grounds and building maintenance, plus utilities.
My character apartment (which i love) cost me $645 a month, plus electricity – everything else is included (and worry free).
It makes absolutely no sense for me to buy a house. Happy shopping folks!
June 7th, 2009 at 12:14 PM
guy_in_regina,
Sounds like you’ve got it made!
$645 a month isn’t going too far for most people in the rental market, at least in Saskatoon.
June 7th, 2009 at 7:43 PM
In Saskatoon, you could get a “character” apartment for that much… if by “character” you mean a run-down, bug-infested bachelor suite.
And sure, it’s maintenance-free… if you have a good landlord who responds to your repair requests. If something breaks on a Friday evening, will you have to wait until Monday morning to get it fixed? To me it’s worth it to own my place and have the freedom to fix things when *I* want them fixed.
June 8th, 2009 at 8:26 AM
“many of the properties that expired at the end of May were re-listed for another go at a market”
Is there any way of knowing the, “true” number of new listings (new listings – re-lists)?
Thanks Norm!
June 8th, 2009 at 8:44 AM
DS,
The “new listings” number that I quote in the weekly review should be pretty close. On Friday, I pull a list of all of the canceled listings for the week and run an active listings search on each address. If a property that has been canceled shows up as “active,” we subtract one from the total new listings for the week. It’s not perfect, but if a property is canceled and re-listed during the same week I will catch it. Unfortunately, there isn’t an easy way to do the same thing with expired listings.
June 8th, 2009 at 8:53 AM
guy_in_regina, I know a guy who bragged about how it did not make sense for him to own a home because he would be looking at 1200/month payments vs the 800/month he was paying at the time to rent. Shortly after (once the Saskaboom was in full force), his landlord cashed in and sold this rental to a buyer who chose to live there, rather than rent it out….so the guy I know had to find a new place to live. He ended up renting a townhouse in a less desirable area of town for over 1200 a month.
Even if it does cost a little more each month, it is really worth it to buy in the long run. It comes down to so much more than what you pay per month, and in 20 years it really adds up.
June 8th, 2009 at 10:46 AM
whats up with the new blog format…yuk!
June 8th, 2009 at 12:54 PM
Thanks Norm,
I’m shopping right now. Is there a public spot online that highlights new listings as they come in?
June 8th, 2009 at 1:15 PM
DS,
SRAR has a recent listings page on their website which I believe is updated daily, but it’s kind of a catch all and has all property types from everywhere across the province. Lots of weeding to get to what might ideally interest you.
http://www.srar.ca/newListings.php3
You might consider trying our listings tool under the Saskatoon Homes tab, on the navigation bar, just below the header. This tool syncs with the MLS, at least a couple of times daily. When you execute a search you have some “sort by” options, one of which is “newest to oldest.” The latest listings are wearing a “new listing” tag. It’s not perfect but it’s pretty user friendly and you can see far more detail then you’ll get at realtor.ca. You don’t even need to register. However, if you do choose to register, you can save a search that meets your parameters (you just need to set it up once as opposed to starting from scratch on each new visit) and you can choose whether or not to receive email updates. You can also save favorites to a special spot for easy review. Takes a bit of the pain out of the whole process. Registration is only required to use the save, notify, and favorite features and we don’t follow up with registrations unless people ask us to.
My apologies to anyone who has had difficulty accessing the site. We changed our domain name servers to point to teamfisher.com as opposed to teamfisher.com/blog/blahblahblah on Friday night and we’ve had nothing but trouble ever since. The site has been visible on the Rogers network since early Saturday. Shaw and SaskTel have been in and out since Saturday. Hopefully, this “propagation” process completes soon. We’re in email hell as well.
June 8th, 2009 at 6:31 PM
Norm, like the new format – one can tell you’ve put a lot of thought into it. For future reference (or the next time you embark on a DNS adventure), you can post a suggestion to users to flush their DNS cache if they experience any viewing problems (under MacOSX it’s “lookupd -flushcache” or “dscacheutil -flushcache”; Windows is more technical, but one can Google “windows vista flush dns cache” and modify as need be for their specific OS).
June 8th, 2009 at 6:37 PM
LOL Your neighbours don’t have a dog do they, Norm?
June 8th, 2009 at 6:51 PM
Hey Norm,
As of today there is 1484 active listings on the MLS, do you know how many new homes are for sale that are not on the MLS.
June 8th, 2009 at 7:20 PM
Jason,
I don’t think this was a local caching issue. I certainly cleared my cache for testing. Strange thing is I hopped on through Rogers with hours and never failed to connect over the three days when using my magical rocket stick. Couldn’t connect all day through Shaw on Saturday, then in the evening I was on, then back off on Sunday. Same issues with SaskTel. Nothing until Sunday, and then fine until Monday morning. I knew it could take some time but I was surprised to go from can’t find, to found, and then back to can’t find again.
Rick,
“LOL Your neighbours don’t have a dog do they, Norm?”
Two of my neighbours have dogs that yap constantly (well, I think one of them just yaps when there are people around, but of course, I can’t be sure). The humans carry on like they’re completely oblivious to it. I don’t get it Rick. I’ve never had trouble keeping the peace with a neighbour but for goodness sakes, I’m ready to flip my lid.
“As of today there is 1484 active listings on the MLS, do you know how many new homes are for sale that are not on the MLS.”
I haven’t got the foggiest idea but if I had a new house for sale it would definitely be on the MLS.
June 8th, 2009 at 7:55 PM
Hey Norm,
I wonder if your oblivious dog owner neighbours follow you on Twitter, if they do I’m sure they’ll get the hint.
On the serious side, most often home ownership focuses around the financial side of the equation and touches less on the lifestyle considerations. It’s not uncommon to have an unbearable neighbour, new flock of morning screaming crows, major new reno developement across the street etc. etc. If a person rents they can leave and find a more suitable living enviroment in 30 days gauranteed, if a person owns maybe they can leave just as quickly but in most cases probably not. By no means am I promoting renting over home ownership, in fact probably would in most cases reccommend ownership, but both lifestyles have their pro’s and their con’s, guess nothin is 100%
June 8th, 2009 at 8:28 PM
Norm, try OpenDNS (http://www.opendns.com); I think you’ll like it. I found your “dog tales”… strangely familiar. We endured a similar situation for close to a decade, then the dog finally calmed down – only to be supplemented with a louder, younger version. Then it was two dogs, non-stop. Two words: animal control. Yeah, a person hates to go down this path, but it’s better than the alternatives (ever wonder why there are no problems with dogs on acreages…?) They’ll issue several warnings at first, followed by a $50 fine that increases to $100 then $200. PER offense. Oh, and if their dogs aren’t registered, that’s a $200 fine. PER dog. It adds up, trust me.
We have obedience training for dogs; consider this the same for belligerent neighbors.
June 8th, 2009 at 9:52 PM
Yeah, it was petty of me to brag. Sorry guys. Thanks for letting a dog have his day, Norm.
I would love to own – and will. But it’s nice to be in a comfortable holding pattern for now. I was somewhat distressed there for a while about housing (as I was graduating house prices were skyrocketing). Plus I was getting hosed by BWalk. We were really lucky to scoop this place (by word of mouth through a friend). I’m way happier here than I was at BWalk, which was far more expensive and not as nice (IMO).
Pungo, when you say “the freedom to fix things when *I* want them fixed” do you really mean “the freedom to shop around for a reasonably priced contractor who has time for my job and wait for him to do it”? There are plenty of good reasons to own; but I’m not sure ease of maintenance is one of them!
Jeff,
Warning headed. But I’m not overly worried about condo conversion – more so about the swine flu. Seriously though, I think (hope) the heat is off conversions a bit.
I could have a $1,200 mortgage payment for, say, a decent little house. But, throw on taxes, utilities, maintenance and repairs, and you’re up to $1,500, easy. We pay $645 plus power; so say $725 per month (on a bad month). So, $1,500 – $725 = $775 that we save a month on housing. Owning is great in the long run, but that $725 is sure nice now! We’re using it to pay down student debt and build up savings.
So, nobody probably cares about my rantings; but, renting for a while can be alright.
Thanks all, and best of luc.,
June 8th, 2009 at 10:49 PM
guy_in_regina,
You would hit $1500 “easy,” so you’re at least $850 a month ahead. Great opportunity to “pay down student debt and build up savings.” Sounds like the “rantings” of a wise dude.
Jason,
Thanks. I’ll check out that site.
June 9th, 2009 at 12:24 AM
I had lunch with Debbie S today and mentioned to her that you hadn’t posted the stats on Saturday like usual. Now I know why. LoL
June 9th, 2009 at 10:47 AM
Hi Carrie,
Nice to hear from you! I hope that you are well.
There have been many weeks that I’ve had to do the post on Sunday, instead of Saturday, but I haven’t been any later than that since I started the weekly review. I was a little stressed that the weekend might pass without me even being able to access the back end of the site.
Things seem to be reasonably stable today. Working on SaskTel and Shaw. Yay!
June 9th, 2009 at 3:38 PM
Wow, it’s looking pretty spiffy here.
It looks like (bond yields and) fixed rates are up again… 0.60% increase in the last week and a half or so. Interesting.
June 9th, 2009 at 4:19 PM
Crikey,
“It looks like (bond yields and) fixed rates are up again”
and fixed mortgage rates are also up at the big five today. Not quite as much but going up.
Already some talk that the Bank of Canada may not be able to keep their promise not to raise rates.
June 9th, 2009 at 5:54 PM
“Wow, it’s looking pretty spiffy here.”
Agreed. I like the new look.
June 9th, 2009 at 7:10 PM
Crikey, hmmm… well, even I’m a bit taken aback at how quickly rates have increased over the past 9 days (I always anticipated a slow gradual process over months – not days or weeks). I think we’re going to see an influx of people rushing to get pre-approved, re-financed or convert from a variable to fixed rate – especially if the rate increases continuing trickling in over the Summer. I expect this will soon impact both prices and sales before long.
Norm, is captcha dead?
June 9th, 2009 at 7:33 PM
Jason,
“Norm, is captcha dead?”
Only until I can find a web person who needs some work. I’ve emailed three in the last two days and have yet to get a response.
If anyone knows of someone with some Word Press Thesis experience who is looking for work I have about a eight basic CSS wishes and could use some help with a couple of plugins.
June 9th, 2009 at 8:03 PM
Norm, does this help?
http://recaptcha.net/plugins/wordpress/
June 9th, 2009 at 8:10 PM
Thanks Jason,
There are dozens of captcha plug ins available and they’re easy enough to find. Pretty easy to install as well but I’m a bit concerned about installing something that screws everything up.
Are you familiar with this plug-in yourself? If you can vouch for it, I’ll go ahead and give it a go.
June 9th, 2009 at 8:21 PM
Cool new format Norm!
June 9th, 2009 at 8:57 PM
New website is cool. Did not like it on the weekend
June 9th, 2009 at 9:06 PM
Thank you both.
No, I was not liking it on the weekend either but we finally got through a day with no down time. I think the DNS gods are with me.
The Word Press product makes many things possible that couldn’t be done on Community Server. Once I get standing on my own again I’ll do a bit of a run down on the why.
Glad you both found me again.
June 9th, 2009 at 9:12 PM
“I think we’re going to see an influx of people rushing to get pre-approved, re-financed or convert from a variable to fixed rate – especially if the rate increases continuing trickling in over the Summer”
That could be true, Jason. I did read somewhere that in the US the 60bps bounce in mortgage rates has triggered a near-60% drop in mortgage refinancings there. I’m not at all sure about new mortgages. Regardless, I’m not sure we can correlate the actions of borrowers on either side of the border very well, for many reasons.
You might find this link interesting: Relentless rise of Treasury yields could choke nascent recovery
Your guess is as good as mine about whether or not rising rates might spook people or motivate them. Perhaps both in turns. BTW, I kinda liked Captcha too… it was occasionally both highly entertaining and freakishly telepathic.
June 9th, 2009 at 9:35 PM
Just to let you all know, I’m in a 3rd floor one room apartment in Stoon, rent will go up from $608 to $668 (doesn’t include power which is on average $30 per month) in August. Except for the occasional ant, there aren’t any bugs. I love the diversity of people in my building, young and old, people from all over the world. It’s a safe neighbour hood (lived here now three years): I usually walk to the store to get groceries and I’ve never had any problems, even late at night.
I’m thinking of buying a house here in Stoonthough. I’d like to have a back yard again (6 years houseless now). High house prices and the specter of rising interest rates has me worried that I might not be able to buy a house yet on a single income. What do you think Norm? Is it a good time to jump in?
June 9th, 2009 at 9:49 PM
Crikey,
Your link seems to be to a subscriber area of the FT. I love that you can use html in comments.
Captcha is an important tool, though I have to say that the spam filter Jay Thompson installed for me is cleaning up the spam quite nicely.
stoon_eng,
Your situation proves that there are still some decent landlords out there. Nice to hear that you’re getting a decent place for a fair price. I see the odd ant around my place too.
“Is it a good time to jump in?”
This is a tough call but it does seem that many of the more bearish individuals are at least willing to think about real estate again. Like George has said, it’s probably about the best time to buy in the past couple of years. Prices have come down a fair bit, but I have to say that some of it still makes me shake my head. I have seen some sales come through though that I thought were realistic, and the low interest rates available today certainly help. I wish I could say with more confidence what might happen. I’m more optimistic than I’ve been in awhile but still somewhat concerned that we’re kidding ourselves with all the talk of economic recovery. I hope that’s not so.
June 9th, 2009 at 10:25 PM
Oops, sorry about the FT article. Let’s try that again, shall we?
http://tinyurl.com/ma86e6
June 10th, 2009 at 7:48 AM
Norm is correct, some of us bears (well at least one) is thinking it may be the time to buy, so I’m going to buy within the next couple months. With the price of oil on the rise, inflation is going to be rising too, therefore I don’t know if real estate has that much room to shrink anymore. I’m personally going to find the right place and try to lowball the person quite abit,
June 10th, 2009 at 7:51 AM
Sorry, about providing my real name, I got tricked but the new site!! LOL!!
June 10th, 2009 at 7:53 AM
Wesco,
Real names are allowed but I’ve changed that for you anyway.
June 10th, 2009 at 8:00 AM
Thanks Norm, and by the way Lyndon is a great help!! Thanks Again. Cheers
June 10th, 2009 at 9:51 AM
TD raises mortgage rates again: http://www.thestar.com/Business/article/648138
That’s 60 basis points up in the last two weeks. This is what I said would come a few weeks ago, and it is driven by pressures in the treasury bond market. It will not get better; analysis of long-term buying patterns shows that foreign interest in US bonds with yields of 10 years has fallen off a cliff; the only thing that anyone is buying is bonds with a yield of 2 years or less.
The only way to counter the pattern of ‘moving to short term yields’ is to raise the rates on the long-term bonds to make them more attractive. Yes, that will drive up inflation, but if you have to have money, there is no other option. The US govt (and now the Canadian govt) are in massive defecit spending territory, and they need someone with money to lend it to them, and the only way the countries with money (China, Saudi Arabia, et al) are willing to do that is if the spenthrift governments are willing to make it worth their while.
Of course, the other way out is to reduce spending (cuts of $50billion + for Canada, or over two trillion for the USA) so that you don’t need to borrow… and while I see that as inevitably coming — neither people nor countries can live beyond their means forever — I don’t see it happening in the next two years, which IS when I see interest rates rising back to ‘historic norm’ levels (~8% for 5 year), and possibly even above.
What does this mean for RE? Well, two weeks ago, if I had $1500 to spend on mortgage payments (leaving aside taxes, upkeep, et al) then at the 5.25% rate I could afford to borrow $251k. Today, with TD’s rates at 5.85%, that same carrying cost gets me only $237k in mortgage. Effectively, my house-purchasing power has just decreased by 5% in two weeks… so what do you think that’s going to do to housing prices nationwide?
Speaking of house prices, CBC this morning was reporting that Regina was flat MOM, and had 3rd best YOY price increases in Canada (behind St. Johns and Quebec City). Saskatoon was down .4% MOM, and 11+% YOY, making it second worst in the country ahead of only Edmonton. Yes, I know we’re on the backside of the peak, so of COURSE we’re going to be down YOY … but this bear’s opinion is that we’re going to continue to see ‘down YOY’ for the next year or two at least.
June 10th, 2009 at 1:16 PM
Norm, I tried to find you one that had minimal installation commands and could primarily be completed through the WordPress admin interface. Plugins are typically designed to enhance the existing software without requiring an update, etc., so they usually either work or they don’t; it’s extremely rare that it would seriously screw anything up, as you can usually uninstall them to revert back to any original settings. More on that particular plugin here (there are some theme options that might look good with your new website as well).
http://www.blaenkdenum.com/wp-recaptcha/
June 10th, 2009 at 1:47 PM
Crikey, apparently the majority of cash deals in the US are under $100k, so I’m not sure what the impact of higher rates will be on new mortgages in the US, either (I can’t imagine it’ll help); I agree that it’s very hard to make any direct comparison between the two countries, but I do think that we’ll see some percentage of whatever impact we see in the US.
Norm, under the premise of being “more bearish” (I may fall into the “grizzly” category, not sure), I am contemplating the idea of real estate, but only in the sense that I feel that the right conditions might now be materializing to finally produce a substantial drop in housing prices. I still think the best time to find the best deals (not necessarily the best selction) is when everyone else isn’t, ie: late Fall or Winter.
Wesco, interest rates and inflation are mutually exclusive. Higher interest rates typically accompany inflation in an attempt to prevent excess inflation/hyperinflation, but this is not always the case (as we’re seeing now); big ticket items such as houses and vehicles are still depreciating and higher interest rates are only going to accelerate this (as Bookrat has illustrated). Myself personally, with the recent housing “mini” boom having once again lead to offers at or over list, I think sellers are going to initially resist any “low-ball” attempts.
Bookrat, excellent points. I don’t see how they’re going to be able to avoid even higher interest rates without substantially reducing deficit spending and hiking taxes, and I think this is going to lead to continued deflation in housing prices. The past week has started to make me feel really bearish again…
June 10th, 2009 at 3:17 PM
Jason, I’m not looking at interest rates for the cause of the inflation, I’m looking at the price of oil. When oil gets higher, which it will very soon, everything gets more expensive. Especially in terms of home building; transportation costs go, fabrication costs go and usually labor is more costly, because lets face it, the higher the oil price the greater the boom in Alberta and Saskatchewan
June 10th, 2009 at 6:51 PM
Wesco, they’re going to finally run out of tanker storage space in a month, and then the current over-production gets dumped on the open market. Short-term, I see prices stabilizing or possibly even declining. Long-term, though, I agree oil prices are going to go up (there’s simply not enough exploration and development going on to sustain current levels of oil production).
June 10th, 2009 at 8:23 PM
I think that macro-economic indicators will definitely be way ahead of anything thats happening locally, but I just can’t help not taking my eye off the number of listings on the Local MLS. As long as we stay in the 1500 listing range I just don’t see how there can be upward pressure on prices. I think people who are financing would be better off with a lower priced purchase and higher interest costs as apposed to a higher priced purchase and lower interest financing, this way if they qualify at a higher rate they know they have a better chance of keeping their heads above water for the long term. A low purchase price is locked in forever, where as their is no gaurantee that interest rates will be low for the entire length of your mortgage.
June 10th, 2009 at 8:49 PM
Wesco,
Thank you.
Jason,
Thanks very much. I really appreciate it. I have installed several plug ins so I’m confident that I could follow the install instructions.
I actually did a Captcha plug-in a couple of weeks ago that added an entry box, but no submit button. Comments couldn’t be entered at all. After some time I figured out how to remove it, but I scared myself a bit because we’ve put a helluva lot of time moving content. Jay Thompson has shared some stories about plugins gone wild so it’s possible that something could go wrong, and it’s clear to me that you can’t just call up a wordpress guy for help. I did get a response from a “Thesis expert” today. I’ve got a to-do list for him including some forms which I’ll want to include the captcha on, so I’ll wait until those are done and I have someone who can rescue me if something goes wrong. Thanks again.
Rick,
$200,000 @ 3.85% over 25 years = $1035.84 per month
$162,000 @ 6% 0ver 25 years = $1035.48 per month
Prices would have to drop more than 20% to trump a rate increase of 2.15%. Wouldn’t it make more sense to do this while rates are low and just make sure that you buy within a range where you can afford the higher rate when you renew in five years? Help me out here please.
June 10th, 2009 at 8:59 PM
Today BMO, CIBC, RBC, Scotiabank, National & Laurentian all followed TD and raised their mortgage rates. The 5 Yr. posted rate is now 5.85%. The recent Canadian mortgage rate increases now total .6% in less than 10 days.
Lets take a look at TD’s “special rate” for a five year fixed mortgage. It is now 4.55% vs. 3.89% two weeks ago. Here is what that means to a buyer that has $1300 for a monthly mortgage payment. All calculations are based on a 35 yr. amortization.
@ 3.89% the max. mortgage is 300K
@ 4.55% the max. mortgage is 274K
This is a considerable reduction in mortgage amount and consequently maximum home purchase price. So what will home buyers do? Maybe they will go for a 4 year fixed at 4.09% or variable at 2.85%
@ 4.09% the max. mortgage is 291K
@ 2.85% the max. mortgage is 346K
Things will get interesting once the current pre-approval letters expire. Will today’s variable holders get nervous and switch to a fixed rate? Will there be a big push by the RE industry and media suggesting that variable mortgages are the way to go?
June 10th, 2009 at 9:17 PM
Rick,
(I still contend that we are in a time of deflation.) Rates would usually stay low during deflation but all time highs in debt and debt spending are changing the game. Now, will we have the mother of all ARM’s come to reset 2012 2013 or 2014?
I don’t think the low rates have had a upward pressure on prices; the low rates have slowed the decline possibly even stopped the decline. But the bond market has been going crazy lately pushing up mortgage rates on fears of possible future inflation and the certainty of more debt. I may have to eat crow again.
June 10th, 2009 at 9:25 PM
Roger,
“Maybe they will go for a 4 year fixed at 4.09% or variable at 2.85%”
Maybe they’ll go with a broker and get a five-year rate at 3.85%?
“.6% in less than 10 days.”
Things can change rather quickly can’t they? I just could not do the variable thing right now. Roger, where do you think rates are going over the next 12 months?
George,
“I don’t think the low rates have had a upward pressure on prices”
I agree that hasn’t happened here but I gotta think there’s some upward pressure elsewhere.
This from a Vancouver friend in early May.
FYI in Vancouver’s east side and parts of the west we are back to multiple offers. Worst I heard was 25 offers on a 1.5 million home. On the East side I did an evaluation and during the processing time 3 properties went 100k over and my eval wasn’t worth squat….
Latest listing for me posted Friday to MLS has generated 103 calls to date and 30 emails.
Question? What the hell is happening? I thought we were headed for a depression. Tough to make sense of it.
My buddy had opens last Sunday and Saturday and had 83 and 90 sets through. It’s a dump.
It’s actually heartbreaking to see this kind of foolishness return. Like him, I just don’t get it.
June 10th, 2009 at 10:25 PM
I’m no expert but it seems to me that interest rates are not the cause of inflation, merely a reflection of investors perceptions. When you are worried about inflation, you need to get a higher return for it to make sense to hold bonds. Hence you sell your government bonds (especially the long-term bonds) and put the money into oil or some other investment that will hold up better under inflationary conditions.
I actually wonder if there will be inflation though. I have this theory rattling around my head that the current economic situation is a bit of a trap. On the one hand you have the natural effects of deflation as all this foolish debt binging implodes and net credit (basically money) decreases. This is counterbalanced by the government which is trying to inflate with deficits and government bond purchases. However, they are now in a situation where any recovery immediately sparks inflation as a result of their actions, which again is what we are seeing today. Like I said, they want inflation just not so quickly and at this preliminary stage of the recovery. So either you accept a timid recovery with high inflation and ultimately higher interest rates on government debt or you reign in spending and watch the economy fall flat on it’s face. I still vote that the US chooses the inflation path but I am seeing more and more opposition to this from the Republicans (in the US) and investors. Choices, choices.
BTW, as bad as the mortgage rates are in Canada, they have risen even higher in the US. 25 year fixed up about 1 percent from it’s lows. Canada always seems to follow the States on these things so export more fixed rate increases in the future.
June 10th, 2009 at 10:50 PM
Norm,
Worst he heard was”25 offers on a 1.5 million home”?. Could this just be propaganda started by someone to relive the glory years of 06-08. I am not blaming your friend, it sounds like it came from someone else. 173 people going through one property could suggest smashing sales records from 07. I don’t think they are doing that. http://vancouvercondo.info/
Bidding wars again? Some people have such short memories. Only 35 countries in the developed world participated in the world wide housing bubble in which every country had some sort of bidding wars that took place just a few years ago. Millions are now licking their chops after the implosion. But hey, RE only goes up. Maybe these people in the bidding wars believe RE has hit close to bottom. Just for reference, they have been calling bottom in the States for over 40 months. I’ll make a bet and say they will eventually call it right.
June 11th, 2009 at 12:55 AM
“Prices would have to drop more than 20% to trump a rate increase of 2.15%. Wouldn’t it make more sense to do this while rates are low and just make sure that you buy within a range where you can afford the higher rate when you renew in five years? Help me out here please.”
Norm,
I’m getting your reasoning. I guess the fear is that most people are close to maxing themselves out at these low rates, which as we’ve seen in the States, could conceivably harm even prudent mortgage-holders at some point in the future. If you’re giving yourself a good cushion for future (ie. you’re not at all stretched with current rates, you can ride out probable short-term fluctuations in the market, and you’ve actually run different interest rate scenarios at refinancing to see if they’re financially tolerable), yeah, you have a great point. Right now the market is in a place where I’m starting to find very reasonable homes for a price that I would consider good even in a longer historical context, considering our income. I’m not saying that this makes sense for everyone right now, but seems to for us.
Here’s our situation. Granted, I don’t think we’re typical, but I could be wrong about that:
-We’re lucky enough to have well-paying jobs (that I think are relatively stable), such that homes we’ve been looking at are well under 2.5 times our annual household income. To tell the truth, I’m really encouraged by this. I wasn’t sure I’d ever see this again a couple of years ago. Yes, prices were much lower pre-2006, but we weren’t in a spot to comfortably buy then and our incomes are quite a bit higher than they were then too.
-Thanks to your continuing and wonderful help we were able to work with a broker that quoted us a (frankly, crazily) low rate recently. Our projected monthly payments are within a very near margin of what we’re currently paying in rent.
Now, I happen to think that downward pressure on prices outweighs upward. How much might they go down and for how long? I honestly have no idea. Right now inventory is high, prices are appreciably lower than they were last year at our price range, and the cost of financing is ridiculously low. So, what to do? If we let the quoted rate expire, some months from now the cost of financing may be quite a bit higher. Do we wait until the rate lock expires and hope prices drop enough to equalize the payment at some point int he future?
I also agree that if we do buy, interest rates will in all likelihood be higher when it comes time to refinance. Now, we’ve run the numbers, and interest rates would have to triple the rate we’re quoted before the monthly payment would really start to hurt, assuming our incomes stay the same. Are rates this high possible? Absolutely. Likely? Who knows.
Thoughtful feedback, fellow bloggers?
June 11th, 2009 at 6:28 AM
George,
Like you say, that comment is heresay but I don’t doubt his own claim of “On the East side I did an evaluation and during the processing time 3 properties went 100k over.”
Vancouver W. – Tanking or Ticking?
June 11th, 2009 at 6:38 AM
Crikey,
“I guess the fear is that most people are close to maxing themselves out at these low rates”
I’m completely with you there, and as crazy as it sounds, I think an interest rate which is somewhere close to historical norms would be better, sooner, rather than later.
“Thoughtful feedback, fellow bloggers?”
Making sense to me, if one wants to be in their own home in the next few year. Again, the I think the key right now is to buy well below what you can actually qualify for at today’s rates. Hitting a 40% Total debt service ratio on a 2.85% variable rate mortgage probably isn’t the best strategy.
June 11th, 2009 at 7:29 AM
George, I’m with you on the propaganda thing. “There will never be a better time to buy” seems to be the marketing strategy of choice once again.
End Badly http://www.greaterfool.ca/2009/06/10/end-badly/
(the picture that accompanies this article is absolutely hilarious…!)
Crikey, in terms of financing, I think it’s going to be a catch-22 over the next few years in striking the optimum balance between finding the best price at the lowest rate. That being said, if it were me, I’d focus on location first, since these kind of properties hold their values better and always command a premium (even in a down market). Something to also consider: in a tough real estate market (one with excess inventory or where high interest rates exclude many buyers), there may be deals to be found in seller-financed options (where owners may have equity but no means to either convert it to cash or an income stream).
CMHC report says Saskatoon rents up more than $100 in past year http://www.thestarphoenix.com/CMHC+report+says+Saskatoon+rents+more+than+past+year/1682017/story.html
Norm, now that we can utilize html, is a “preview” option (prior to submitting) available?
June 11th, 2009 at 7:40 AM
Jason,
Seems pretty much anything is available for wordpress. When my prospective web guy delivers his quote I’ll ask him about adding a preview. It’s a good idea. Thanks.
“CMHC report says Saskatoon rents up more than $100 in past year”
I just don’t believe this. All of the rent stories we’re hearing from actual renters indicate that pressure is off of rents and that they’re coming down, but it’s not unusual for CMHC to report the opposite of what’s really going on.
June 11th, 2009 at 7:53 AM
Norm,
Yes perhaps your idea does make sense. Fundamentaly something seems to be not quite right. Home purchase focus seems to be all about interest rates with the purchase price being a far secondary consideration. I doubt anybody really wants to carry a mortgage for the full 25 year term, rather does anybody consider if they can pay off there house in 10 to 12 years by making lump sum payments here and there when they can. I have heard of re-fi, in the past I was famaliar with 3 months penalty for paying off a mortgage early, but I think I have heard of thousands of dollars for early re-fi, there seems to be a whole lot of shuffeling around to make home ownership work, it all seems to point to the fact that houses are very expensive or overpriced or unaffordable, like a pair of shoes it’s nice to have a little wiggle room, but for a lot of buyers the ducks will have to all stay lined up for a long time to successfully facilitate there ongoing lifestyle. Probably the best route would be for buyers to purchase well below their means which would create somewhat of a permanent safety net, however whith human nature what it is, that’s not going to happen.
June 11th, 2009 at 8:23 AM
Hey Norm,
Rents are going up on average, could be. Some property’s that were sky high are coming down a bit, on the other hand places like the Milroy are at $1,100 for a 2 bedroom which is up, a 2 bedroom Styleright property on Siverwood and Lenore was $875 as of June 1 it’s $975. Looks like there may be a lot more 1 bds then 2, suggesting that there is a lot more people doubling up. I would say the average price for a 1 bedroom is $ 650- $700 and about $ 800 for a 2 bedroom. One thing for sure is that as rents rise people begin to make other living arrangements.
June 11th, 2009 at 9:05 AM
Norm, the timing and source do come into question… I think landlords are really starting to push the boundaries of what’s affordable, and we could see more rental inventory in the next few years as boomers look for alternatives to sale that provide them with a steady monthly income.
Rick, that’s a very astute observation; kind of scary to think that purchase price is secondary and that little if any consideration is given to the possibility (and likelihood) of higher interest rates. I’m not sure gambling on inflation and wage increases to offset this is a sound plan.
June 11th, 2009 at 9:16 AM
Norm, this would seem to reinforce the view that rents aren’t going up – or at least that vacancies have substantially increased. This company may be struggling due to their desire to only attract short-term tenants.
McNab Park owners looking for tenants
http://www.thestarphoenix.com/Business/McNab+Park+owners+looking+tenants/1684025/story.html
June 11th, 2009 at 10:07 AM
Rick,
“Probably the best route would be for buyers to purchase well below their means which would create somewhat of a permanent safety net, however whith human nature what it is, that’s not going to happen.”
Probably won’t be the common approach, and yes, the consequences could be fairly serious.
“Rents are going up on average”
Maybe. I wonder if the rental market isn’t like the resale market as it’s going through a correction. You can find lots of stuff that’s overpriced and some selection of sstuff that’s in the process of getting to the right range. I know you could easily get $1500 in the second avenue lofts last year. Now they’re going for $1275-1300. Someone told me that those three storey walk-ups on Stlllwater have come down $50. Maybe this is one of those “year-over-year things where the actual yea-over-year number isn’t representative of what’s been happening lately?
Jason and Rick,
I don’t think that prices are secondary at all, but whenever you have a product that is most typically financed, interest rates are certainly going to be as important as the price and I know we can count on both of you to make the same arguments as rates continue to rise.
Jason,
“I’m not sure gambling on inflation and wage increases to offset this is a sound plan.”
I would say that everything is a gamble nowadays. Things aren’t exactly unfolding as one might expect.
“This company may be struggling due to their desire to only attract short-term tenants.”
Lol. These guys made their intentions known long ago and all of those buildings are listed for sale on a “to be moved” basis. I cannot understand how they could possibly be confused as to why people aren’t lining up to rent them. Forgive me for being blunt, but that’s simply stoooopid! Not you Jason, them.
June 11th, 2009 at 11:51 AM
Looks like the McNab Park folks may have made the same mistake as the folks over at the Milroy, and the Prudential listed apartments on St. Cecelia, you know the ones, on the river bank. Those short term rentals of 2,3, or 4 months he refers to may turn into 2,3, or 4 years.
Well if people begin rushing in to buy I would say interest rates trump purchase price, for the simple reason absolutly everybody who lives in Saskatoon knows prices are falling and “ahem” are going to continue to do so untill they start rising.
Well we all know the lighthouse project downtown is toast, and the other super mega developement, the hotel on the riverbank seems suspiciously a little quite. Maybe it’s because when it was in the feasability stage it was all we heard about, sure has toned down a bit. If I’m not mistaken there supposed to break ground this month, maybe they already have.
You’re right Norm the Bay aka 2nd Ave lofts may have come down, as I mentioned some sky high prices have. From my daily observation I would say that as of June ’09 prices are down $100 on average across the board since last summer, of course there are still quite a few holdouts.
June 11th, 2009 at 12:31 PM
Norm, the photo of the boarded up unit did it for me! Sold!
I do hear what you’re saying about everything being a gamble, although for many first-time homebuyers the only real gamble is whether they’ll get financed later. I’m not sure the bigger gamble isn’t the one we’re all taking as taxpayers with the Canadian government backing all of these mortgages. I’m not saying we shouldn’t have government-backed mortgages – but for terms of up to 25 years (and no more).
Btw, what’s happening with the River Landing project?
June 11th, 2009 at 12:58 PM
Jason,
Too funny! Lol. Humans are strange, strange animals.
Buyers don’t have to qualify for a renewal on a CMHC insured mortgage, but I’m completely with you in your concern as to whether these buyers will actually be able to pay. Seems to me that buyers are actually being “qualified” on the posted rates (some fixed term), and not the “special” rates that are being offered. Anyone know if that’s so?
River Landing – I got an invite to the groundbreaking, sent in my RSVP, and within a couple of days was asked not to come. They said something about “dignitaries” not being able to make it but no rescheduling yet. My fingers are still crossed.
June 11th, 2009 at 3:07 PM
Norm, that we are… I was more referring to the trend to buy now while one qualifies as opposed to waiting for prices to drop and risk not qualifying due to higher interest rates, term reductions, additional financing requirements, etc. I’m with Rick that for a lot of first-time homebuyers, price is really the secondary consideration; because if you don’t qualify everything else is academic. Here’s hoping the River Landing still goes ahead.
June 11th, 2009 at 3:54 PM
Jason,
I don’t think buyers have to worry about being priced out forever for a long time. But the “buy now and take advantage of the low rates before they go up” spiel is working quite well right now. But for some people, it does make sense to get in because buying is not just a financial matter. I don’t want to get into the issue of renting vs buying. They both have pros and cons. But if people are buying because they can afford it, their jobs are stable, and rent is almost comparable, then yeah, jump in. Wesco has a great idea in looking at certain properties that have been on the market a long time and offering a low offer. What is the worst that can happen? Higher priced homes in new areas have proven to be the ones that have lost the most value dollar wise in many cities after the peak. I am sure it is no different here. Something at 450k, offer 410k? maybe less. There are a couple at that price here I think.
I think young couples should factor in future higher interest rates, having a family and the possibility they may not be able to tap into their home for equity if they bought with little down. They should have some sort of saving each month for the unexpected. Every buyer should plugging in numbers with many different scenarios down the road when it comes to buying a home. It is the biggest investment most will ever make.
I am one also hoping for River Landing but wondering about its future
June 11th, 2009 at 4:23 PM
Seems to me that buyers are actually being “qualified” on the posted rates (some fixed term), and not the “special” rates that are being offered. Anyone know if that’s so?
Yes, that was the case with us and our recent mortgage approval through a bank. Don’t know if it’s an industry standard though, or how the brokers work it.
Regarding the recent twitter post:
Overheard on the public comments of an MLS listing, “OPEN HOUSE – SATURDAY, APRIL 4TH, 2-4.” Man, I admire her ability to plan ahead.
Funny stuff, but where is it that people can post/read public comments on individual MLS listings?
Thanks
June 11th, 2009 at 4:35 PM
George, I’d agree that this wouldn’t be a concern for the average buyer. The buyers I’m referring to are the ones being pre-approved at the absolute lowest possible interest rate at the maximum financial requirements allowed. Those seem like a recipe for disaster with any of the scenarios you outlined (which I all agree with).
I’m not disagreeing with Wesco’s idea — I just don’t think the mentality that we’re still in a “buyer’s market” has set-in with many sellers. As long as one doesn’t have one’s heart set on any particular house, I don’t think there’s any downside (outside of rejection). But I do think that one might find more success in a few short months (when sales and prices have potentially declined further).
June 11th, 2009 at 6:16 PM
Jason,
Speaking with a broker this afternoon I’m told that buyers may select any rate plan available but that they are qualified using the lender’s three-year posted rate. So, for instance, Scotiabank might offer me options as low as 2.75% but they would calculate my maximum TDSR using their three-year fixed rate of 4.65%.
Kermit,
Sorry for the confusion. A “public comment,” in this context, would be the remarks made by an agent on an MLS listing that migrate to various websites where they can be read by the public. The largest box of text on realtor.ca listings would be an example. An MLS listing also usually contains Realtor comments, which remain somewhat private and only accessible in the back end of our system and public comments that go to the front end (realtor.ca). I was probably speaking realtorese there.
The idea of comments from the public on listings is an interesting one, but I expect you won’t see it for some time. Point2 ventured into this territory at one time. Agents flipped their lids (apparently some sellers did as well) and threatened to remove their listings from the site. The idea died a quick death.
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