Retiring..moving to BC.

This was months ago.

Are you thinking of the surplus thing? this weekend

The surplus thing was you just looked at the wrong number, no biggy, apology not even needed but appreciated and accepted.

I’m bothered by intense media coverage of Conference Board interpretations, while ignoring Statistics Canada’s earlier disappointing actual GDP numbers, when they had given so much press to the overly optomistic forecasts. I wouldn’t make fun of media outlets either if one reporter had given the wrong number, to retract it later. But they keep ignoring or down playing negative reports of actual results, but going in depth to cover already disproven predictions. I can’t stand people who won’t admit when they’re wrong. I am willing to say “my bad” when I mess up, and I will if prices Aren’t down by at least 10% in Saskatoon from now to January 2009.

“(before adulteration by whomever)”

Thank you for handling my apology so graciously.

wages, wage growth, taxes, no provincial debt, GDP growth (before adulteration by whomever) etc…

Hardly, I’m merely being realistic. And my above comments were directed at the Canadian real estate market as a whole. As you can see from Norm’s numbers Saskatoon is still doing fine. I’m worried about the major markets of TO and Vancouver where buyer sentiment has obviously turned.

Anyway, I’m a real estate cash flow investor. With my rental properties I don’t care too much about their month-to-month price. I look for properties where the renter can cover my mortgage and fees/taxes. A drop in prices is a good thing for me. I will probably be in your neighbourhood sometime soon buying up discounts.

I’m more concerned about interest rates and the overall health of the economy where I’m investing. Sask. is still a great place for my money, as for interest rates well, they may have nowhere to go but up.

In regards to BQI I do know who they were before they were Oilsands Quest and to be honest I wish I bought there stock while it was 35 cents like some people did. The fact of the matter remains their land which is in Saskatchewan called Axe Lake discovery has a low estimate of 1.2 billion barrels of oil by an independent firm. Now tell me why should I not buy their stock which I have already made thousands on and will make more please tell me why. Indirectly the money from such corporations will affect Saskatchewan in a positive way with tax cuts and surplus vastly superior to precious Alberta. Causing more jobs, more money, and more migration for everyone already living in Saskatchewan.

p.s.

Shouldve bought BQI stock before they were BQI you wouldve had enough money to buy 4-5 houses.

That does make some sense. While the average selling price is going to come in higher for June, the actual cost per square foot has dropped from $276 in May to $271 in June. The largest drop is in condos which went from $262 to $253.

Though it may be what a Real Estate friend told me two weeks ago. He said that sellers are pricing homes better, but the buyers still have the mindset that they are going to pay big bucks, so instead of buying “cheaper” they are just spending the same money buying a better home, while skipping the riff raff, which is not coming down in price enough yet to offer enough of a deal to be worth buying yet.

He figured that would go on through July and August and then when the good stuff is sold, prices will finally start coming down as sellers expecting to get top dollar for their crap, are forced to start lowering prices to get rid of it.

Does that make sense?

Another way to say it is:

If you are mentally prepared to pay $250k on a home, you will probably still pay the $250k and buy a BETTER home that has just been price reduced as opposed to paying $200k on a crappier home.

Interesting logic. Who knows.

I’m equally perplexed. Here’s what I have for June as of today.

Total residential – 321 units at $310,386

Houses – 212 units at $339,548

Condos – 87 units at $248,681

House and condo – 299 units at $313,109

Median price in June (house and condo) $299,900

Median price in May – $278,500

Median price in April – $285,000

Unless I am mistaken reading your “averages”, the averages for Home and Condo sales based on your blog have been:

April $306k

May $305k

June 1 to 20 $313k (though I know you left a note that some expensive sales have lifted the average)

Seems pretty flat to me, with a “possible” increase in June over April and May and thats with a lot of homes on the market.

It boggles my mind.

Oops. My apologies.

http://www.cbc.ca/canada/saskatchewan/story/2008/06/27/public-accounts.html

While Sask revenues were $2 billion higher than projected, there was also increased spending, and apparently other stuff, that ended up in the government announcing a $641 million surplus. Eyeballing it, it looks like Alberta’s surplus is about 7 1/2 times greater than that.

Plus that whole thing were Alberta wages grew by more so are actually opening up even more distance on Sask wages …

Gotta agree with Jim, Alberta’s surplus is still A LOT bigger than our, they have no debt, and their already really high wages are increasing by more than our middle of the pack (4th out of 10 provinces) wages, so they STILL have the hotter economy in terms of results and what they mean to actual residents.

I think it was you that mentioned Alberta’s surplus was 4.6 billion. I don’t need to crack out my calculator to understand that 4.6 is not “8 times” 2. Given that Alberta has a pop of 3.5 million, compared to just over 1 million in Saskatchewan, I’ll stand by my comment that our surplus was far greater than Alberta’s on a per capita basis.

By your logic, there should be about 33 million Canadians living in Alberta, but of course, there isn’t. People have various reasons for living or moving where they move.

Doug,

I agree. The idea of a three year correction is far less palatable. I say, “bring it on, and get ‘er done.”

I disagree, I think once a lot of these conversions are put back on the rental market because they aren’t sold, or as they are sold for well below list price, a lot of cheaper student/young working adult housing is going to come on line. A big increase in cheaper places to purchase, which then may be rented out, or places that are rented out when they can’t be sold, should drive rental rates lower in Saskatoon.

I think you took my point about the “speed” of a correction the wrong way, but to clarify what I mean about the 10-20% over 2-3 year thing…

Lets say that in 10 years we look back and see that from July 1 of 2008 to July 1 of 2011 that there was a 25% correction in the marketplace before things leveled off and then remained the same or started going up again with inflation and the normal course of events.

In 10 years if you plotted the “average home prices” on a graph, I think it will be a curve that happens over a 2 or 3 year period from peak to trough. That “correction” wont have happened in a 6 or 9 month period, unless some catastrophy happens in the next 6 months that basically makes people refuse to buy homes.

I make that comment because it seems to me that some people here have this idea that the market will correct 10-20% by January of 2009. I can understand seeing a 5-10% correction THIS YEAR, but expecting to see the higher end of that is TOTALLY unrealistic, especially with 250-400 homes still being sold per month.

As I said, I can see a 5-10% reduction in the next 6 months, but I think the “worst case” correction, would be something that will take a few years to take place.

As you said, Calgary has corrected 10% over ~1 year. It is possible that Calgary could correct an additional 10-20% over the coming years, but the key here is “years”.

Even the US has taken 2 years to see its “15% average price correction” and what most people do not understand is that the average is dragged down by Florida, Nevada and California having lost almost 30-40% of their home market. The REAL average for the rest of the United States without those 4 states is much less than 15% actually, but it looks a lot worse.

My point is that I think that Saskatchewan will correct, and while it COULD be deep, it will take a period of 2 or 3 years to reach the deepest part of that correction.

Its just something that bugs me about this forum where some people think it will see a huge correction happen in a few months. Even Nevada and California didn’t see that and they were more run up than us.

They are widening the income gap.

Their economy is still much better right now than Saskatchewan’s.

I think this is important, because now with house prices nearly equal (actually a bit more in Saskatoon than a lot of moderate sized Alberta communities) the allure of Saskatoon as an affordable place to live is gone. It is cheaper to live pretty much any where but Calgary, and each year moving to Alberta will actually see more of a wage improvement than the year before. I still don’t see any reason for new grads other than family to stay in Saskatoon, when you make more, pay less tax, and get equivalent or even cheaper housing in Alberta. Half of my friends from college moved to Alberta already, so I’d know almost as many people in Edmonton, Calgary, even a few in Red Deer, as I do in Saskatoon… it’s just a matter of being at a point in your career/education where you can make the move up to Alberta.

“Office tower” would be a bit of a stretch.

It’s 50,000 square feet over 4 levels.

http://www.realestateappraisals.com/News/NoPr0408.pdf

I guess I sometimes forget that we’re talking real estate. i don’t put these things forward as a justification for house prices and I’ve had as much to say as anyone about prices in Saskatoon. Discussion often goes into basic “economy” stuff and there are many here who still think Saskatchewan is a losing province.

Maple Leaf canned it’s “kill” operation in Saskatoon and opened a “distribution” centre. I believe the city now owns their former spot on 11th Street. That will be demolished to make way for the Circle Drive extension.

You make good points about the comparisons between Saskatoon and Calgary and I think you’re pretty much right about what we can expect. I said last week, “I can sell your house in a few days for a price that would have had you doing backflips in April.”

“Poor people always get screwed ”

We have never been in more agreement, lol. With George Carlin’s passing this month, there’s a clip of one of his bits about “the big club” making the rounds on the internet. Very funny stuff, and same conclusion – poor people get screwed.

Your logic all makes sense, I’ll just tell you what’s been going on in Calgary (my interpretation of it anyways). It seems like Saskatoon always lags Calgary, just like Calgary lagged the States.

- Home prices shot way up, some of it justified, some of it not. People were moving in droves so rental rates started to climb as well (increased demand, constant supply).

- There was the whole condo conversion craze too and landlords selling their rental properties (increased demand, decreasing supply).

- Eventually though builders caught up and then surpassed demand (check out the scary numbers on condo starts right now in Calgary). This is being coupled with a bunch of mini Donald Trumps who are looking to sell their spec properties. This is being coupled with people cashing out and heading for greener pastures.

- Calgary has had unheard of levels of supply for going on a year now in the resale market. Sellers are increasingly facing two choices. Cut their price and sell the house. Or rent it out and wait for the market to “recover”. End result is that there are a lot of properties being taken off of mls and rented out (the Herald even had an article on this a while back, talking about what to do with the 3,000 condos that are for sale).

- This is coupled with a lot of people, particularly lower income earners (who would more likely rent than buy) moving away from Calgary after finding out that the streets aren’t paved with gold after all. If you’re going to make lousy money and pay too much for everything; you may as well do it somewhere that isn’t an hour commute to your job.

- Net result now is that supply is skyrocketing while demand is flat to falling. This is being reflected in rent prices (from what I’ve seen on rental sites anyways, compared to when I moved here).

So not necessarily how it has to play out (as I said, your logic makes sense), just an example of how it can play out.

The only quibble I have with what you said is that things sometimes move quicker than you think. Sales in Calgary have been pretty constant this year, part of which I would attribute to people who are long term bullish on housing buying on what they think are the lows. It may not take 2 or 3 years for people to snap up what they perceive to be “deals”.

Also, Calgary prices are down almost 10% from last year and I think consumer confidence is still pretty high. Housing prices are a part of consumer confidence, but not all of it. A possible explanation is that prices here went up so fast that people didn’t even get a chance to get used to the peak they hit – and therefore it doesn’t seem weird to them that prices have fallen? If you have gotten used to your house being “worth” $400,000 – and last year you could have got $500,000 – but now it’s back down to $400,000 – do you really notice?

Are you moving out of the city or wanting to upgrade? Just curious.

Thanks for the info, very helpful.

I’ve always said that I believe Saskatchewan’s economy to have way more potential than Alberta’s (so we have no disagreement there). I know about the population growth (I was pretty impressed by that one), and the budget surplus, and the land sales records. Personally, nothing makes me smile more than having the #$@*-hole province I live in now get knocked down a peg or two off its high horse by my home of Saskatchewan.

That’s particularly great news if Saskatoon is getting a new downtown office tower (I may actually stop ranting about the head office jobs bit).

That being said, this is a real estate blog, and I just don’t see support or justification for the housing activity that has been going on in Saskatchewan for the last couple of years. I think Alberta prices are out of whack (even with the nearly 10% correction from last year that has happened), but it’s a heck of a lot easier to afford the crazy prices in Calgary than it is to afford the crazy prices in Saskatoon. That’s just been my experience anyways.

P.S. I thought Maple Leaf Meat Ditribution left town? Am I confused?

On Rent not going down:

I realize it is supply and demand, but I still feel that my point on rent not going down is correct, at least for the next 4-6 years. I think that rent is going to go UP another 25% in the next 2 years, putting average 1 bedroom rental units in Saskatoon and Regina squarely into the $800-900 a month range.

My reasoning is this:

If the housing market does go down 10-25% over the next 3 years (Despite some people here expecting a crash over night, it wont happen), rent will further increase as people stay on the side lines waiting for prices to go down more, causing more rental demand.

Plus, we ARE going to have a lot more people moving to Sask over the short term, and they will no doubt opt to rent in many cases where possible, even if they are renting homes.

Plus2, if homes drop 10-20% over the next 2 or 3 years in Saskatchewan, it also means that consumer confidence went down the toilet and it becomes a self fulfilling prophecy where people dont buy in, even with a slight correction and remain on the sidelines (rental market), stoking rental demand.

That leads to all sorts of other problems as well, such all the people who can not afford homes now, also not being able to find a job period. Heather asking for a crash so poor people can get a house may not be the best wisdom either. Poor people always get screwed

After 2 or 3 years people would obviously take advantage of the reduced home prices and start buying again, if the economy is ok and people have money.

However, it would then take rental demand destruction another 2 or 3 years to happen, at the end of which inflation will have caught up to prices and the rents wont come down regardless.

See what I mean? Long term, ya they could go down, but I highly doubt that happens in the next 5-6 years and if the economy does take a turn for the worst, the rental market actually gets better or that is how I see it.

As for the rest of your comments:

I pretty much agree. We are being told so much about Saskatchewan right now that I am having a very hard time determining what is real and what is bullshit.

So it really comes back to my original question:

How much of our economic boom is real, based on industry and long term jobs? I wish somebody new. We all know what happened in the US in 2005 as everybody though that they were in the midst of a perpetual boom that would last forever. Ya, they really got a “boom” alright.

Sigh. Why cant people be content with slow, measured and secure growth? Why do we have greedy fucks that screw everybody over?

60-90 homes are selling weekly. 321 residential properties traded in June. There is “action” out there.

Given the high level of inventory that exists, you’re facing some tough odds but if you have no showings it’s probably a sign that you’re not competitive compared to other options available. Buyers will look at what they perceive to be the better values first. Chances are, they’re making a buy before they get to your place.

“Total value for non-residential permits for the City of Saskatoon increased by an impressive 81% compared to 2006, while the surrounding areas experienced a staggering 1000% increase. Year-over-year, the region experienced an increase of nearly $260 million in non-residential construction investment.”

New Facilities

Maple Leaf Meat Distribution

IRD Manufacturing Plant

ACE Manufacturing

Dymark Industries

Doepker Industries

Q.A. Structures

SJ Irvine Foods

Wanuskewin Museum

Expansions

NORAC Systems

JNE Welding

Croatia Industries

CNH Global

PotashCorp-Patience Lake

Cargill Canola Plant

Bayer Crop Science Greenhouses

Livestock Barns

CLS Synchrtron

Gems Lab

VIDO Intervac

College of Law

End quote.

Looking ahead, we have the completion of Circle Drive running above $200 million, the River Landing project which will easily exceed $200 million. Can’t recall who’s doing it but there will be a new office building constructed in downtown Saskatoon over the next couple of years.

As you point out, migration numbers continue to look fairly impressive.

Saskatchewan continues to post impressive job growth and income growth stats. Now rank #4 amongst all provinces for incomes.

$2 billion dollar budget surplus for Saskatchewan, which waxes Alberta by the way, on a per capita basis.

Year-to-date, land sales for oil and gas at $605 million. Previous record was $250 million which accounts for all of 2007.

Things don’t look all that bad for Saskatchewan’s economic future from where I’m sitting.

No traffic. If the market was active we had something to gauge our price but the market seems to have stopped. (market correction?) It’s like buyers and sellers are staring each other down – who will blink first?