Saskatoon real estate: Week in review (June 2-6 2008)
Any perceived “moderation” of residential listing activity in the Saskatoon real estate market was busted big as a total of 253 properties were offered up for sale on the local MLS system including 161 single-family homes and 82 condos. Total active listings spiked up to 1,259 residential units, from 1,154 at the close of last week. Today, there are 797 houses and 365 condominiums displaying the active status. An additional 66 homes are listed as conditionally sold.
Sales activity was on the weaker side with a total of 70 units reported sold, 67 of those in the house or condo categories. That would mark the second slowest sales week in the past three months, and the second largest week for new listings this year.
Remarkably, sale prices remained on the high side of the average for the year, at $323,256, just $7,000 below asking price on average. 9 of 67 sales showed sale prices, which exceeded list price by just over $13,000, while 50 buyers managed to negotiate a bit of a break, averaging $10,635.
The odds of a successful sale during any given week now sit at about 1 in 18, considering average weekly sales and new listings. Sellers need to be aware that buyers have a growing selection of properties to choose from. Don’t fall short on preparing your home for sale, and be sure that you do your research when it comes to setting a price. A fabulous online presentation of your property is a must as inventory has reached levels where buyers can’t realistically view everything that meets their needs. You can bet that many are being eliminated from the “to view in person” list because they look bad online. Everything counts today!
See a Google map displaying the boundaries of Saskatoon real estate “areas” here
Data collection and calculation for our statistical reports
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
Follow our daily updates on Twitter @SaskatoonHomes.
Norm Fisher
Royal LePage Saskatoon Real Estate
182 comments so far. We'd love to hear your thoughts.
May 8th, 2009 at 1:30 PM
So basically, listing are still way up, again, now 1,259 with 253 new properties and only 70 sold?!
Not sure how that maintains a high average sale price – less cheap condos purchased maybe? few big houses sold?, when week after week we see more properties listed than sold. Good to see that at $7,000 under list, buyers are still refusing to pay face value and are finding a bit of a bargain. Guess it will take a few more weeks of subsequent increases in inventory, with supply outstripping demand and anxious sellers before we see prices dip further.
Still, the $5,000 price reduction in May would suggest now in June with more inventory added each week, that prices will drop further. Especially in the face of a lot of similar listings, the sellers have to compete for the buyers’ interest.
May 8th, 2009 at 1:31 PM
Wait till the fall, not so far away, I already know of a few folk who are cancelling their listing so that after resting it for a couple of months it can be relisted as a new listing…with somekind of discount…nothing short of a sham. When people see the downward price trend from the sellers side, the downward pressure from the buyers side will only be stronger.
Norm, please keep us updated on listing cancelations as the information comes available.
May 8th, 2009 at 1:31 PM
Miska,
“nothing short of a sham” why?
we are entering a slower time of the year for house sales, if a seller can hold off to fall, I think they would be better off. Is it a sham to hold off til they can get the best price for their house? Many buyers are holding off hoping the market weakens and they can pick up a better deal.
Norm,
what is your opinion, if a seller can hold off to sell should they wait til the fall?
May 8th, 2009 at 1:31 PM
I think Miska was arguing that pulling a listing and listing later at a lower price is a way to disguise the fact that prices are falling.
I’m not sure it would work, though: surely people must be noticing the buildup of inventory by now, eh?
May 8th, 2009 at 1:32 PM
“Wait till the fall, not so far away, I already know of a few folk who are cancelling their listing so that after resting it for a couple of months it can be relisted as a new listing…with somekind of discount…nothing short of a sham”
Rest it for a few months – how about a few hours?? If you think this is bad you should see what they do all the time in Victoria (and BC in general). A listing is cancelled and the next day it is re-listed with a new MLS number so that it looks like a “new” listing to unsuspecting buyers and agents. If an agent or buyer doesn’t keep on top of what is for sale in their area of interest they can easily get fooled. Sometimes the price is reduced when the property is re-listed. I have seen this scam done several times on a given property before it finally sells.
The other problem with this scam is that it gives incorrect Days-on-Market and seling price to listing price ratios.
The Real Estate Boards in BC are well aware of this practice and agents provide it as an extra service to the sellers. Shame on them when they advertise ethical treatment of clients and professional conduct.
Norm, as an agent, I would be interested in hearing your point of view on this practice.
May 8th, 2009 at 1:32 PM
Norm,
I think that if a person is serious about selling their house, selling at realistic price for a reasonable profit and actually having the money would do you much more benifit than hoping to get top dollar and just dreaming about the money.
jrochest, you got the point. Buyer beware.
May 8th, 2009 at 1:33 PM
I’d say it’s a sham. Otherwise instead of relisting to show up as a “new” property, the seller would just reduce the price. But then people would see that the price was lower and the sellers position may seem weaker.
The problem with relisting, if inventory continues to climb and demand stays far below new listings, and even if prices only drop $5,000 a month, the seller stands to lose money by reselling in a weaker market in the fall, than by accepting selling at a moderate reduction now. Better to get out nearer the peak.
May 8th, 2009 at 1:33 PM
Miska,
The market was supposed to be hot this spring too, but sales didn’t really increase. People waiting until fall to get a better price may be in for a surprise. They might even lose more money than if they had listed their property now.
Norm,
Does the condo market seem to be slowing? I thought since it was the only way for most first time home buyers to get “in” that it would hold up longer than single family homes. What are you seeing happening?
May 8th, 2009 at 1:33 PM
i still don’t see how it’s a sham, i thought a seller could set whatever price they wanted, and that they can change the price whenever they want, and they can relist whenever they want, it’s just business. Please correct me if I am wrong if they are breaking rules?
It’s pretty transparent that some people want people to list now so the inventory increases, and they can perhaps leverage the volume to get a better deal on a house.
May 8th, 2009 at 1:34 PM
Carl, feel free to pull out the dictionary. Not sure if sham needs to be illegal. Just sneaky here. Listed, no bites, so re-listing a few days later, just to appear as a “new” property?
It’s like pre-google days where websites would hide a large number of words in background colour to increase hits from search engines. Not really criminal. Not really honest. Feel free to change my earlier comment to “sneaky” if re-listing a property, to pretend it’s new doesn’t fit “sham”. Either way, meant to hide fact that properties aren’t selling like hot cakes anymore. Will likely see more of this with increasing inventory.
Heather, I would have thought that condos would drop the soonest, as with all the conversions there is a lot of supply and way more supply on the way, and most of the people in Saskatoon who could afford to jumping onto the bandwagon out of fear, I’m not sure how many people out there really want a 30 year old condo with new counter tops… all in light of 70 sales to 253 new listings and highest overall property inventory in how long?
Norm, how long has it been since there were 1,259 available units for sale in Saskatoon? Just seems like a lot, compared to past.
May 8th, 2009 at 1:35 PM
Saskatoon will probably have the same experience with condos as that experienced in other cities in a real estate correction. Condos are the first to have sales slow, inventory increase and prices drop. The reason is an owners unit has no land value and this makes these properties the least desirable to a wide spectrum of buyers. Also as the buildings age they generally become less architecturally desirable and require more maintenance. Common ownership and monthly fees are also not attractive to many potential buyers, especially if they have other options.
Watch Victoria, Vancouver, Toronto and Calgary over the next few months. There is a real condo glut in these cities and there are a lot more units under construction. How does this affect Saskatoon? When it gets talked about on the national news and in the Star Phoenix folks will figure out that you are next. Saskatoon is one of the few “hot” markets in 2008 and it looks like things are cooling according to Norm’s stats.
May 8th, 2009 at 1:35 PM
Norm, this line sums it all up:
“The odds of a successful sale during any given week now sit at about 1 in 18, considering average weekly sales and new listings. Sellers need to be aware that buyers have a growing selection of properties to choose from”
18 weeks. Wow. And to get longer with more places.
And the price only dropped $5,000 in May? Bad news for any one who needs to relocate quickly – other than their house doubling in price I mean.
And Norm, within the last 3 years, I had a friend who bought an average 3 bedroom Sutherland condo for $80,000 and sold it 2 months ago (lucky for him while condo inventory was WAY lower than now) for $245,000!
Over triple, and most of that value increase was in the past 2 years.
May 8th, 2009 at 1:35 PM
Gave props to Norm for comment, Roger’s “When it gets talked about on the national news and in the Star Phoenix folks will figure out that you are next.” is bang on too. The average guy off the street still doesn’t get that with huge and steady increases in inventory, and yes Jim’s hated conversions, over supply should soon lead to a drop in price. Once a couple news paper articles or TV news stories talk about new listings and inventory out doing demand, prices and people’s willing ness to pay will drop, and buyers will question often biased realtors’ “This will double in the next few years” [even though it just doubled, and there are 10 other just like it for sale]
And aging units are definitely a concern. Friends over the past few years have seen condo fees increase substantially, $300 or higher downtown now not uncommon, as repairs and maintenance costs sky rocket, since they’re competing for skilled workers with new construction.
May 8th, 2009 at 1:36 PM
Saskatoon is unlike the other Canadian cities which have been experiencing large annual increases since 2001. Victoria, for example, had steady increases of 12-14% for many years in a row. This long period of time gave strong reinforcement to the idea that real estate always goes up, especially among the younger buyers. People are very reluctant to let go of this concept but prices are now dropping in Calgary and parts of Victoria.
Saskatoon and Regina, on the other hand were late bloomers and had a huge annual increase in one year. I remember the local press saying Saskatoon went up 50% in one year and thinking this can’t continue at this pace.!! Rapid price increases leads to euphoria in some but nervousness in others (i.e “too much of a good thing”). In my opinion, your market just hasn’t had enough time to build strong seller confidence and weak, eager buyers. As soon as Norm’s sales numbers and inventory reports gets around town, especially if reported on the local news, prices will drop as buyers move to the sidelines and sellers that need to sell lower their asking price.
May 8th, 2009 at 1:36 PM
Jim/Roger,
Those are good points, some of these older apartments people are trying to sell for 200K just blow my mind. I would think these should start coming down in price soon.
Doug,
Once the media finally acknowledges Saskatoon’s softening house market it will certainly cause a ripple effect. It makes you wonder if they’re still holding out hope for a turn of events, or just trying to ignore what’s happening?
May 8th, 2009 at 1:37 PM
Dan,
About a half dozen sales in the $500′s and one at $840K. This seems to be much more normal lately.
Carl,
“what is your opinion, if a seller can hold off to sell should they wait til the fall?”
Depends what they’re “waiting” for. Maybe there will be 2,000 listings then? Truthfully, it’s not that difficult to sell now unless you have your head in the clouds. Personally, if I were transferred tomorrow, I’m confident I’d have a sale in under 30 days.
Miska, Carl and jrochest,
The re-list strategy is not so much to hide something, or to trick someone into thinking it’s actually a “new listing. Agents do it because these properties are viewed daily by agents, in a special place of prominence. It also gets included in a bazillon email updates that work with the MLS system so the price “adjustment as a far better chance of being noticed. There are no MLS rules that prohibit it, but it would be good if they coud set up our MLS system to show cumulative days on the market. That doesn’t happen now, but I know it’s possible.
Jim,
“how long has it been since there were 1,259 available units for sale in Saskatoon?”
Some time before I arrived in 1993. I’ve never seen such a large inventory. The top that I’ve seen was 800-900, but I’ll say that it’s never felt like we had enough.
Doug,
“Bad news for any one who needs to relocate quickly – other than their house doubling in price I mean.”
Lol. It’s a matter of perspective, isn’t it. Average days on the market was only 17 last week. That tells me that some agents and sellers get it. Many don’t. A lot of the stuff that’s on the market will never sell. It’s just hanging around, cluttering the landscape. they’re almost not really for sale.
“Over triple, and most of that value increase was in the past 2 years.”
I’m not saying it’s not possible, but triple certainly isn’t the norm. I’ll also bet it wasn’t the same house when he sold it as it was when he bought it?
May 8th, 2009 at 1:38 PM
I’m still in awe at this place, such high prices, such high inventory, But I do have to agree with Norm on 1 thing there are a bunch of homes out there that are listed but really for sale because of a high price for an old out of date house. A lot of people watched as their neighbors made out like bandits last year, and still have not fiqured out that its now a new time. Since you all like to call this place a city, What is for sale @400K had better compare to what is available in other cities for the same price. One thing that makes prices high is lack of future development opportunities….Look around Saskatoon has LOTS of potential for expansion, and with some of the population estimates I’ve heard for over the next few years that expansion will happen quite rapidly… NOW if you were coming into a city would you want to move into the older areas of the city (Inner City) or would you rather live in brand new house. Well when there is no differance of price I would (and AM) looking for the value for $’s and a lot of older 80′s homes just don’t have the value included…lanoleum instead of tile. Laminate instead of Hardwood, or really old outdated shag carpets. I have seen some absolute crap listed for 400K, and the thing that gets me & I have gotten disgusted with is my agent wastes my time by getting me to go see it saying oh this house shows well….never mind the backing on too..the railyards…the busy roadway….the apartment complex….People in Saskatoon bought without the thought of LOCATION..LOCATION..LOCATION. I have a word for you people who have your homes listed in the undisireable locations such as those listed above (Oh and for those wondering all of the homes were on the “east-side”) What makes you think that a home where I nor anyone could not sit peacefully in the backyard is worth 2.5X what you paid for that house not even 2.5 years ago. The prices will continue to fall, and as prices fall people will snatch up the properties that get reduced such as the house in A1 that Norm had listed last week priced dropped 28k overnight and sold the same day as the price reduction.(probably in a bidding war) this will happen more and more as sellers realize they need to lower there price to allow the first time home buyer the chance to purchase their home. The first time home owner does not want a condo they want a yard and property value not a glorified apartment built in the 80′s
May 8th, 2009 at 1:38 PM
I also think that the US experience is having an effect on the way people are thinking about real estate: up until last year, the common assumption everywhere was that RE always increased, that prices never fell, and that if you extended yourself into near-bankruptcy to buy a house you’d recoup all your money in three years. Constant price increases were the norm, and there was no perceived risk.
The complete collapse of the market in the states has eroded people’s security about this: prices can and do fall, and it’s possible to wind up upside down.
I’m sure that even people who aren’t interested in RE will eventually notice the proliferation of ‘for sale’ signs and empty apartment buildings.
May 8th, 2009 at 1:38 PM
http://www.sreb.com/newListings.php3
Norm,
When you are counting the total new listings for the week, do you include an inventory dump like the 29 lots in Dundurn listed on Friday, since they are listed under “Saskatoon and Area?”
May 8th, 2009 at 1:39 PM
CA Student,
I am reporting on real estate activity within the boundaries of the City of Saskatoon only.
May 8th, 2009 at 1:41 PM
While it may be desirable to live in short commute distance in Vancouver or Calgary, MFToronto mentions all the available land around Saskatoon. I think this is key. You can build countless neighbourhoods like Stonebridge and be within 10 minutes of down town. Or you can buy a 50 year old house in Queen Elizabeth, be walking distance to Ex area (not a good thing) and only 8 minutes from down town!!
Current suburbs afford such short commute times anyway, other than City Park and Sask Cres or across street from U of S, most existing houses have little to no benefit over the potential new houses in the endless field 2 minutes away. If construction costs dip a bit, with less demand for new houses, and more labour, prices dropping on new houses, makes them a lot more appealing
May 8th, 2009 at 1:41 PM
Jim,
I don’t need a dictionary, perhaps a spell checker.
basically what Norm pointed out is what I was thinking. The seller wants to lower the price, and the agent wants to do there part in marketing the house, and bring attention to the reduced price. Simply lowering the price doesn’t draw attention. It’s not a sham or sneaky, just marketing.
May 8th, 2009 at 1:41 PM
Well, Saskatoon establishes its own limits, too: I choose my ‘hoods based on walking distance and transit, and walking distance *shrinks dramatically* in -40, as all here know.
Seriously: I consciously choose to live places that allow me to avoid the twice daily “plug in the car/dig out the car/warm up the car/scrape off the car/rock the car out of the frozen ruts/drive the car on solid ice” dance.
Just because it’s a short drive doesn’t mean that drive is pleasant or easy. I think there’s still a premium for property close to major employment, and/or on bus lines.
May 8th, 2009 at 1:44 PM
I’m in an interesting situation. I moved here from Kelowna January 1st. I looked at a few properties at the time which got snapped up almost immediately after. Then the bidding wars began. And then I gave up. I’ve also been patiently waiting for my place to sell in Kelowna and now it finally has. It seems to me that prices are on the decline. I went to an open house a little over a month ago and felt it was way overpriced at 289,900. Now that property is down to 227,000 and still hasn’t sold. There is also waaaay more on the market now then back in January. So the million dollar question is..do you think this decline will continue or is now a good time to buy? I’m renting and happy with the place I’m in, but would rather own my own house. Should I be patient and see what happens?
May 8th, 2009 at 1:46 PM
Sorry Dan for stealing your numbers/example, but they seem about right for commute times. And all the empty close fields has to be a bad omen for semi-suburb, 50 year old houses and 30 year old condo conversions.
May 8th, 2009 at 2:09 PM
Jim,
A lot of people prefer to live in established, mature neighbourhoods, close to services such as Broadway or 33rd (gasp), rather than being sandblasted for 15 years waiting for trees to grow in new suburbs.
Your preferences are not everyones, I know poeple who actually ike “skinny” houses on smaller lots with detached garages rather than front-loading non-lane houses.
May 8th, 2009 at 2:11 PM
Jim, in response to your comment “Should list your house at a reasonable price, and reduce/take a lower offer if it isn’t selling, in our slowed down market.”
As a buyer I’m curious, in a slow market, is there a norm percentage wise to offer under asking price. 5% under ask?
May 8th, 2009 at 2:17 PM
Cornwallis,
Most definitely,
I’d take an old home in Nutana -which I did- before a new one in Stonebridge. From what I hear, my old house would probably outlast a new Stonebridge build anyway.
May 8th, 2009 at 2:22 PM
I know my original comment was that Broadway or University walking distance is nice, but that if you’re just going to live in a middle of no where suburb, where you have to drive anyway (most people are NOT walking distance to Broadway) and most don’t want to be walking distance to 33rd (the far west part is nice, but no service and beside a field of new houses).
I think the key is, if your house doesn’t have some special niche location, or walking distance to school or work, you’re basically just selling an old house, with higher maintenance costs. Maybe Jim just likes new houses. I’d say touche on the convenience of an attached garage. A lot of old houses, and low end condos, don’t have any garage. Which definitely leads to scraping, before your drive your 8 minutes to downtown v. the whopping 10 a brand new house, potenitally walking distance to 33 rd for D. Corn, would have required.
May 8th, 2009 at 2:41 PM
Sean, since there seems to be so much overlap between similar houses or similar (okay identical) condos, I’d say take the lowest price of any of the bunch, and refuse to offer more than that for the others. If they are well priced, won’t be much of an over bid, if it’s a townhouse for 290,000 in my complex, when you know the two neighbours are 240,000 and 250,000, pick the one you like best, and offer 240,000. Just tell the 290,000 guy you like his, but for the $50,000 savings, you can pimp the cheaper ones out to be superior to his slightly nicer paint job and shinier fridge. Maybe you end up settling on 250,000 for the 290,000 instead of spending a week and $10,000 at Home Depot making the $240,000 look just as nice.
Offer the lowest of a bunch of places for the one you like the best. IF they don’t go for it, even $10,000 less for a less pretty unit is the equivalent of a month’s wages for most. Paint and polish it yourself for the difference. IF the more expensive one goes down, awesome, you saved yourself the weekend of painting.
May 8th, 2009 at 2:42 PM
Sean,
Summer is traditionally a slower season for real estate. This means inventory will continue to rise and more options will be available for buyers. I’d hang on for another month or two if I were you. We’ll probably see some increased activity in the fall, but I’m also not too worried about it since there will be a boatload of inventory remaining.
May 8th, 2009 at 2:42 PM
“Summer is traditionally a slower season for real estate.”
Not really, check out the last 4 years here: http://srar.ca/Srarstats.php3#Month
Slightly slower than the spring, but still the busier part of the year.
May 8th, 2009 at 2:43 PM
Spring/Early summer is considered “busy” season, so if inventory is building up now … just think how much more inventory, and less sales, once we reach the actual “slow” season.
Norm, how much did the average price fall last August?
Down in Regina for the day, CTV news actually did a relatively good story on increased supply (almost 1,100 in Regina) and decreased demand, apparently a $12,000 drop in average price in Regina. CTV used words like Cool Down, and seemed to anticipate Price Adjustments and Levelling Off. Not sure if Saskatoon TV did a similar story, granted only a $5,000 drop in Saskatoon for May, but with bigger inventory, 1,257 and WAY more new listings week after week than sales.
Seems buying now is not a good idea, might as well wait till the end of the summer and see what bigger inventory does to prices in the slow season.
And Sean, if you saw a house you were looking at go from $289,000 to $227,000, 5% under asking is too high a bid. I like Dan’s idea of refusing to offer more than the cheapest similar condo at least.
I’d go one further and under bid the cheapest price out there by 5% and offer that to the higher price. Tell them how much over the competition they are. Worst case scenario they say no. Than you can always under bid the reasonable priced one 5%.
I have NO idea why ANYONE would bid OVER asking. Especially with the huge available inventory.
Even if priced reasonably, you might as well offer a couple % less, just to see if you can pull it off. Maybe if one of a kind, offer list, so you don’t miss out.
Anyone see King of the Hill last night?
No one pays sticker on major purchases.
Why pay more than sticker?
May 8th, 2009 at 2:43 PM
I’d take a nice old house in most of Nutana too … if it had new wiring and plumbing at least. And a LOT of places have NO garage.
I’m just saying for 50 to 80 year old houses or 1980 condos that aren’t close to anything, you might as well drive a bit further and put your car in an attached garage. Aside from Jastek (some issues I’ve heard of from friends in new condos/refuse to fix anything a day past their responsibility, even if working on one unit over anyway), a newer house has better insulation/more efficient on heating/cooling, will last longer, and should be relatively maintenance free for a couple decades. To me, Stonebridge sucks, but new Briarwood/Lakewood etc… which seems to have a few dozen available condos at any time, and bus service, and fields for thousands more, means that a 1980 condo conversion in the middle of no where just shouldn’t be worth that much.
As well, the Briarwood/Lakewood condos shouldn’t be worth much, just for the massive volume for sale, many for a while, and the fact that the huge field beside them can duplicate everything about them, including commute, in a year of new construction.
Far West 33 rd is as far from the U of S as Lakewood.
West side bus service is worse than east side DART.
I maintain that the west half of the river scares me.
May 8th, 2009 at 2:43 PM
Jim said:
“I maintain that the west half of the river scares me.”
I don’t know whether your ignorance is more galling, or more pathetic.
I guess in the end you hurt only yourself- my family and I will have to console ourselves in our beautiful character home, in our vibrant neighbourhood, that costs tens of thousands less than it should because of yutzes like yourself.
May 8th, 2009 at 2:43 PM
Oh right Jim I forgot, there’s a “slowdown”. The last 2 months have seen the highest average price ever for Saskatoon, that is some “slowdown”. When we’ve seen 3 months of avg. prices falling, I’ll call that a slowdown. My prediction: we’ll hover around the high 200s for the rest of the year, 2008′s dollar volume will match last year’s on fewer sales.
May 8th, 2009 at 2:44 PM
It seems our Saskatchewan boom has caught the attention of the Economist magazine. How will this affect our relatively small market?
http://www.economist.com/displayStory.cfm?source=hptextfeature&story_id=11497012
Not just a breadbasket
Jun 5th 2008 | ALLAN, SASKATCHEWAN
From The Economist print edition
Saskatchewan becomes the new Alberta
THINK of Saskatchewan, and if you can place the western Canadian province on a map you might conjure up a vision of an endless prairie of wheat, so flat that the locals joke that “you can watch your dog running away from you for hours”. Now think again: Saskatchewan boasts the fastest economic growth rate of any Canadian province not just because of wheat but a rich mix of other farm crops as well as potash, uranium, oil and natural gas, all of which are enjoying record prices. PotashCorp, a fertiliser company based in Saskatoon, has become one of the biggest companies on the Toronto Stock Exchange by market capitalisation.
“We don’t use the word boom, because it is immediately followed by that other word,” says Brad Wall, the provincial premier, whose centre-right Saskatchewan Party ousted a left-wing government last November. Such caution stems from history. The province was settled before the first world war by European farmers, lured to the area by free land and the mendacious promise of an “agreeable” climate (winters can feature temperatures of minus 50 degrees Celsius, and summers 40 degrees). In 1931 Saskatchewan was the third most populous province in Canada, behind only Ontario and Quebec. Depression and drought then ushered in eight decades of decline.
More recently, Saskatchewan has been overshadowed by neighbouring Alberta, where oil and gas have created Canada’s richest province. Now, thanks to its export boom, Saskatchewan too has become a “have” province, which in Canadian parlance means that it no longer qualifies for federal handouts for certain social services. Canada’s economy contracted in the first three months of this year (mainly because of the impact of the American slowdown on Ontario’s industry). But Saskatchewan’s job market is so tight that officials are visiting Ontario this month to try to persuade laid-off carworkers to move west. Migrants and returning residents have nudged Saskatchewan’s population back over 1m—a far cry from predictions of 10m made a century ago, but seen as a milestone nonetheless.
Prosperity is not without its problems. The price of an average two-storey house in Saskatoon jumped 57% last year, while wage demands are astronomical too. The nurses’ union rejected a 35% increase over four years. Aboriginal groups, who make up 14% of the population, complain they are not getting an equal share. Farmers grumble about the high fuel and fertiliser prices that are helping to make the province rich. As always, they worry about sudden changes in the price of their crops, or bad weather. “This year I could earn C$300,000 ($296,000) or I could lose C$300,000,” says Lyle Funk, who has a large farm in the centre of the province.
Mr Wall wants to use the commodity windfall to build more infrastructure and fund more research and development. The government plans a clean-coal power station in the south-east of the province, for example. All very well but prosperity has dulled the interest in diversification, says Doug Elliott, who publishes an economic newsletter. “We’re still in the business of drilling holes in the ground and taking things out of it that are processed elsewhere,” he says.
Others are more optimistic. The bust, when it comes, may not be as deep or as long as previous farm slumps because biofuels now link grain and energy prices, says Richard Gray, an economist at the University of Saskatchewan. Canola (rapeseed), used in biodiesel, is an important local crop. Those runaway dogs might soon run into a few more people.
May 8th, 2009 at 2:44 PM
I think whoever is knoking Qe and exhibition areas have there head up there ass. I built my house on 60 sqf lot backing a beautiful park lots of nice people tons of room for huge garage, I dont like attached garages anyway think it kills the look of the home garage should be behind the house out of eyesight thats my opinion anyway. The only bad element was in the appartments near the river but most of them have be converted to condos greatest thing that ever happened for the area. The willows by the way is closer to the exhibition than qe any way like 4min. walk. People pay 160,000 to 200,000 for lots just to knock them down and build new big houses not cookie cutters like stonebridge or so close to your next door neighbor you feel like you have no privacy.
May 8th, 2009 at 2:44 PM
And also city council was throwing around the idea of moving the ex grounds by saskplace for a while that would be awesome close to the river right by 2 golf courses it would be a smart move.
May 8th, 2009 at 2:45 PM
Sean,
I would suggest holding off buying property until at least November.
May 8th, 2009 at 2:45 PM
What you are seeing is a pause or possibly a correction in a long term uptrend. The fundamentals are in place for a continuation. I see in the USA that Texas and Oklahoma are the few places where real estate prices are rising. A similar argument could be made with respect to Saskatchewan and Saskatoon. There will be no crash or major correction.
May 8th, 2009 at 2:45 PM
I see that Potash Corp. shares hit a new high today and Goldman Sachs is raising their one year price targets to $285/share. It is around $223/share. Saskatchewan is sitting on top of mines more valuable than gold!
May 8th, 2009 at 2:46 PM
The difference is Texas and Oklahoma didn’t see a doubling of real estate prices in the last two years!
As much as Saskatchewan has economic fundamentals, I remember that talk for the last few decades. House price wise, our supply far exceeds our demand right now and has for the last couple of months. Average sale prices may only be down a bit from their high, but probably down a bit more once sellers accept lower prices to sell homes, which they haven’t yet, and a bit more still, once buyers see the motivated sellers reducing prices.
I’ve seen a lot of home reduced $10,000, 15,000, 20,000 in the past few weeks and still notice a few high outliers that aren’t going to sell, with their twin condos going for tens of thousands left.
If 1,259 is the most available properties since 1993, and we’re adding 253 new listings a week, to only 70 sales. Maybe we should add thousands of new residents, but they’re not here yet, and until home sales are better than 70 a week, and available listings stop growing, it sure seems like a buyers’ market now. Just doesn’t seem all the buyers know about it yet. Except in Regina, where apparently a TV news station finally reported that available housing is also up (though not as high according to comment from Jim) and prices have also fallen.
Maybe when inventory in Saskatoon reaches 2,000 with 70 sales a week, the TV news will take note and comment on the weakening real estate market. And sellers just haven’t realized that they need to reduce prices in the face of huge competition from well over 1,000 competitors. Once they do, and for those who need to sell soon, reductions will pressure other listings, and a domino effect of reductions should occur.
May 8th, 2009 at 2:46 PM
All I’m saying is if I think a big supply of new houses will push down the price of houses in areas that aren’t popular. I’m sure Queen Elizabeth is very nice. Just an example of an often distant, yet still pricey area. I personally would enjoy an attached double garage for the 2 cars. You all would agree too, if we had this talk in January.
Then again, with the big supply now, it’s not just new houses, but the big supply of similar older houses directly competing with each other for fewer remaining buyers.
May 8th, 2009 at 2:46 PM
Jim,
After months of steady climbing, the average residential selling price bounced around through the summer.
May – $233,917
June – $252,443
July – $245,145
August – $253,240
September – $242,091
October – $255,613
May 8th, 2009 at 2:47 PM
I have slight feeling of panic from some posts, but I believe those numbers are not so critical. I think it’s just natural correction after years of substantial growth, that’s all. Things will calm down soon, we have to be optimists and avoid stress
Julie
May 8th, 2009 at 2:47 PM
I do think it’s kind of ridiculous that people around town still keep saying that the Saskatchewan relestate market has no where to go but up. Especially now with potash going up. Well that’s great that potash is expensive, but how does that help the people who work at sasktel or safeway get a home. Or even for that matter the people working in the potash mines. Until the average income is a lot more than 35 thousand a year in Saskatchewan we cannot sustain a housing market of this magnatude.
May 8th, 2009 at 2:48 PM
Jim,
Can you please elaborate more on what you meant by your comment on Jastek? I’m only asking because we were going to make an offer on a Jastek home but decided we are going to wait a bit to purchase. Is there a reason I should avoid this company? Thanks……
May 8th, 2009 at 2:50 PM
I have owend a Jastek built home for over 7 years and haven’t had any problems with their work.
May 8th, 2009 at 2:50 PM
Brandon, I totally agree with you. The province can have all the money in the world but exactly what does it do for the others not in those specific areas?! I mean if you only carry it a bit further, you get into the government rich, working poor countries. Government and big business just eat the places up and spit out the rest of the people. OR those people all start moving, which i suspect, will happen within a few years.
Heard a radio ad this morning saying ‘oh i’m scared of the rental market right now…’ then the narrator voice said ‘there isn’t a better time than NOW to get into your own house!’..push push push…
I don’t need a house personally, i’m happy with renting. My parents have a house that they own and it’s climbed from their $65G’s paid to around 379G’s…but if they aren’t going to do anything with it, they aren’t really any more ahead than me with no house. I mean if you never sell it, never leverege the money on it, it doesn’t really make a difference. The house may as well be worth $10million… So i have 1960′s cabinets…not a big deal to me.
People will start leaving in my opinion. The only way more people will start coming into teh province that can afford to be paid less are butlers and maids eventually.
May 8th, 2009 at 2:51 PM
I have sold several Jastek homes over the years and my clients have been pleased with them. No real return service issues that I’ve been made aware of.
I do know that there have probably been many buyers who purchased from various builders who were unhappy about the wait for service on their new homes over the past two years.
May 8th, 2009 at 2:51 PM
Amen Brandon! Just like people are saying that with the high crude oil prices the Saskatchewan economy is going to really take off. Great for the employees and share holders of the companies, but for the rest of us it just means less money in our pockets as it costs more to heat our homes, buy gasoline, and even put groceries on the table as the cost to transport goods goes up. These natural resources that everyone keep saying are the foundation for a booming economy in reality only benefit a select few. I guess what the province would like to see is for the general populous to abandon their old careers and all jump aboard the oil and potash train.
May 8th, 2009 at 2:52 PM
Jesse G.,
You may have to wait a bit to get into the market. I agree that housing has gone crazy and there will be a correction of housing prices but as well as wages. EVERY market corrects. You will get into a house, just have to be patient, I think you are.
I have been vocal on here about specuvestors in Stonebridge. They are not selling because people can not afford those overpriced homes. There will be bigger supply of homes come summer because people will be listing their spec home as well their own home, hoping to sell one of them. It happened in Calgary and Edmonton, it will happen here, if it has not already.
What I would do is take a list of the homes in Stonebridge and there will be a majority of them not sold in 6 months and specuvestors just wishing they did not buy that property. For something listed for 500k right now, I would offer 350k in the fall. Lowball them. If they think you are crazy and they will, Just tell them, I have about 200 offers like this. Someone eventually will bite and make a counter. The majority will become landlords. Bidding wars will have reversed. Sellers will be bidding for the buyers.
May 8th, 2009 at 3:04 PM
George,
I think you are completely right on it.
I am not in the market to buy a house anyways at least not in overinflated saskatchewan.
I’m definitely being patient.
Great plan though for the bidding low low low in the fall. I wonder how many houses and condo’s etc are vacant now…I subscribe to a apartment feed off kijiji and man oh man there are places (condo’s) popping up everywhere….a bachelor pad (under 400 sq ft) on 4th ave and 25th for $900 a month rent..good luck.
May 8th, 2009 at 3:04 PM
Jesse –
I think there’s bound to be a correction in the apartment supply, in a couple of years. The reason there’s a shortage is because so much rental stock has been converted to ‘condo’ status. So while there are one-bedroom basements going for 1,000 on Kijiji, there are buildings sitting empty while their units sit on the MLS at 220,000 plus.
These are not selling, because there are far too many of them now and there will soon be more with all those conversions in the pipeline, and because the prices put carrying costs at more than twice rent — even the higher rents this market has produced. I’m sure that the person who is trying to rent a 300 sf bachelor for 950 bought it for 125,000 (and I bet I know the building, an elderly thing with no balconies that’s had 20 units sitting on MLS at that price since January)and even at that silly rent they’re not going to cover all their costs.
I’m sure the developers hope that parents will buy their kid a condo when they can’t find a rental — but that means signing on for 2,000 a month or more with mortgage, taxes, fees and insurance. I think many more will suggest their kid live with roommates or transfer elsewhere.
Eventually, most will find their way back onto the rental market and then rents will drop again as the supply eases. And then it will be impossible to get enough rent to cover the costs on a 200,000 one bedroom, and impossible to sell it for anything like what you paid.
This kind of correction is in process in Calgary and Edmonton now: the under 125,000 end of the market is full of converted rentals being sold at less than purchase price, less than the tax assessment, or through foreclosure. And I think Calgary still has lots of in-migration, so it’s not a shortage of tenants.
May 8th, 2009 at 3:13 PM
jr,
you got the building exactly right LOL, and i completely agree. it’s now begun…the waiting game.
May 8th, 2009 at 3:19 PM
Ron,
The reason I see a correction in the market is based on mathematics and mass psychology. Let’s face it, when it comes to money, most people are quite emotional. You can see it on this blog.
When the value of property rises at such a steep rate, there comes a psychological tipping point where the masses say enough. Although I totally agree with you that Saskatchewan still has a lot of long term upside, I feel we’ve reached a short term tipping point. I’m thinking we’ll see 6 months of falling avg house prices (10-15%) then some stablization come the new year. I predict a somewhat flat 2009 (maybe 4-5% increase) followed by some 8-12% increases the following years. All this of course is subject to the global economy, local economy and government. In the case of Saskatchewan, the local economy and government look solid to me, it’s the world economy that has me a little on edge.
As far as the U.S. my wife is from Dallas Texas so I’ve spent a lot of time there. Of course being that I have an investment company I always check out real estate when I’m there. The avg house price in the Dallas/Fort Worth metroplex is less than $150,000. The reason why those places haven’t seen a major correction like a lot of coastal places is because it never had a huge run up in house price proceeding it. All that being said my father and mother in law just moved here in May because the economy even in Dallas sucks right now. My father in law is a successful architect and builder and with what’s happened down there he’s having an extremely hard time selling houses.
The part of Dallas my wife is from is a middle/upper middle class neighbourhood. We could buy a 3000 sq/ft newer home on a 75′ lot for under $250,000. I always find it funny when it comes to the liberal/socialization versus the free market/conservatism arguement. I seem to get blasted for my free market views from the left wingers but this is such a perfect example.
In the left wing areas such as New York, California and Seattle house prices skyrocketed. Both mom and dad have to work to afford it thus eroding away the family unit. Big government is created, kids no longer are taught by their parents as both have to work. Instead kids now see the state as their teachers and the state is doing quite a job of deliberately dumbing down the mass population. Now instead of a nation of educated, critical thinkers it’s turned in to who has the best car, coach purses, text messages and who’s Jessica Simpson gonna sleep with next. This is socialism at it’s best and Canada (in my opinion “unfortunately”) is a breeding ground for it.
In the southern states which are conservative, the above still takes place as it’s a Westernized world problem, however on a much lesser scale. The conservative values keep housing prices down and allow families to succeed in owning nice houses. The family unit is stronger as mom doesn’t need to work as much. Although there are still issues there I love the conservative values ( and I’m from Vancouver and used to be extremely liberal ).
May 8th, 2009 at 3:20 PM
Northstar –
Conservative or left-wing issues aside, the reason Texas hasn’t got the same price appreciation is that fewer people want to live in Dallas than in LA, SF or NYC.
I’m pretty sure that if you eliminated state-run education you’d gut the economy like a fish — since a literate, numerate and reasonably prosperous population is what allows companies to market Coach handbags, cell phones and gossip magazines.
May 8th, 2009 at 3:27 PM
callum,
Yes compared with May/June, July/Aug are slower, just as I was saying. People are vacationing and don’t want to bother with real estate. Of course summer is still busier compared to the dead of winter.
May 8th, 2009 at 3:27 PM
Jrochest,
Texas has 3 of the top 10 most poulated cities in the U.S. I personally wouldn’t say that fewer people want to live there.
May 8th, 2009 at 3:27 PM
Northstar said:
I’m pretty sure that if you eliminated state-run education you’d gut the economy like a fish — since a literate, numerate and reasonably prosperous population is what allows companies to market Coach handbags, cell phones and gossip magazine.
One of the leading economists in Canada agrees with you, as when he told the Saskatoon Chamber of Commerce the other day that Saskatchewan’s economic achilles heel is its under-education.
May 8th, 2009 at 3:27 PM
The Jastek home in question has issues with the wiring on exterior lights. A few months after moving in the light burned out … or so we thought, new bulb, nothing, nother new bulb nothing. The Jastek guy was putting up a building spitting distance/beside, so was asked to have a look at it. He said he couldn’t because it was a couple weeks past their responsibility, and that friend would have to go through new home warranty. Friends says, can’t you just take a look? You could just fix it when you do wiring on adjacent building, and it is only a few months old, Jastek guy says no.
Also, a few interior plugs now don’t work.
Other friends same problem.
Interior paint looks like it was done by a blind, drunken epileptic.
Jastek is not a pleasent company to have build a place near you. I had them build a town house complex behind me, started last June, finished this March, often started at 7 AM on Sunday (against bylaw) with loud power equipment/shovels/dump trucks etc. Wouldn’t be bad if a big project, done in a few weeks, but many times, two work men, one opertating something loud, working at excrutiatingly slow pace. Took months of 7 AM, homes sat open and exposed to elements for months before closed off. Garbage and dust flying at the neighbours for the entire 10 months.
As a buyer though, I’d be worried about town houses, where within a year, multiple wiring/sockets doesn’t work. Yes, when I stopped by to help I tried to flick breaker, no dice. I also think the single car garage, with “extra” parking spot in driveway behind garage (ie plan in advance who’s leaving everyday) and lack of parking in half full units is a deterrent.
This huge supply of low end newish, as well as huge supply of condos in general, which always seems to have a lot of units for sale, is why I would predict condos/town houses are in for some big correction.
Already, the Jastek places have went from many at $290,000 ish to $240,000.
May 8th, 2009 at 3:28 PM
Oil prices to plummet and investor likely to cash out of oil investments – ie not good for Sask/Alberta.
From Canada.com network/saw on thebench.ca, National Bank predicts oil could fall to $75 to $80 a barrel, just over half of current, in the face of potential higher US interest rates to combat the lower dollar. And that global demand is likely to fall below new supply growth and Asia’s growth being limited by decreased demand from a slumping American economy.
Oil being cut in half will likely be pretty detrimental to the Sask economy. $75 a barrel is nothing to laugh at, but far from the “boom” prices we’ve reached.
Full story in Montreal paper. Read before bashing me.
http://www.canada.com/montrealgazette/news/business/story.html?id=9fd55c6a-265e-4631-8c49-54197f316f2c
http://www.canada.com/edmontonjournal/news/business/story.html?id=2ef09ba6-f351-4f80-8067-ff13fce390c3
May 8th, 2009 at 3:28 PM
Yup, pretty tough to expand the economy when one half of the oil/potash picture is in question. I’ve also heard potential drop in potash prices, with increased supply/reserves. I think a big oil question mark makes a lot of homebuyers a little skittish and puts more pressure on sellers to sell.
May 8th, 2009 at 3:29 PM
Wow since it comes from Montreal paper I will have to believe it…..Lets take a minute and think about the world. Alot more countries are becoming industrialized expanding their need for oil and commodities. When half the world uses renewable energy resources the demand for oil will lessen thus the price will decrease. Fact of the matter is the world craves oil and they wont wanna build a windmill!
May 8th, 2009 at 3:29 PM
Also in the Edmonton Journal.
Armoth, you always seem beligerent when any one questions the Saskatchewan economy. Did you actually read the article? Worldwide economic slow down not so good for oil.
May 8th, 2009 at 3:29 PM
Seems the more often I post, the more frequent the other posters start to sound like me. Rationialation will return to the Saskatoon market,the laws of physics have always said what goes…MUST come down and a direct correlation can be made with how quickly things went up, to how far they will go down. What I know is going to suck for this local economy is how leveraged all these homeowners who bought into the whole senario are going to be. I’ve seen more new boats SUV’s motorhomes in peoples driveways in the last 2 1/2 weeks and where did this money come from ? oil? potash? probably not… I saw in the bank the other day they had a notice up said WOW look how much your house is worth now.. borrow money and only pay us back the interest as long as your house stays above what you owe us, How many people in the US fell into that trap only to lose everything they had. This upcoming fall in market values will have winners (buyers) and 2 losers …those that are selling there house because they bought a bigger one for a higher price countin on getting top dollar for there existin home….and the other family that instead of buying a bigger home decided to just borrow against there home and buy those toys that a hot real estate market allows them to buy. Not thinking that when the bank has to forclose on the house cause they can now NOT make ther new payments because the bank has said well when you borrowed the money your house was worth so much more but now…Sorry Mr.Smith I hope little Timmy isn’t to uncomfortable in that recently converted (apartment from condo) with his 3 other siblings because you thought it would be cool to have the latest toys on your still 40K / year job… that ok he’ll get use it and your wife will get use to working again as well, but thank you for those 2000K/mth payments on nothing
I’m glad to see people startin to see the insanity that has been this market for WAY too long.
May 8th, 2009 at 3:29 PM
Wow, you all would sure love this market to crash… even if you don’t own a home, do you honestly think you won’t be affected by the crash that you’re predicting? You’re predicting oil and potash will be the catalyst for a real estate crash? Lol, guys, those two commodities are probably among the most stable on the market.
I acknowledge that there will most likely be a small correction but those who have fantasies of last years prices will keep waiting for them. And Moving, how lucky we are to have your foresight that we’re finally “starting to see the insanity”. Oooh, what a wonderful crystal ball you have that shows the fact that people who over-extend themselves take on greater risk… wow! Just because someone has a new boat in their driveway doesn’t always mean they’ve pushed their family to the edge of debt-driven bankruptcy… could it be that they’re getting that raise that all you gloomers are screaming for? Salaries are on their way up and whether it supports your argument or not, statistics are showing prosperity. But I have a hunch that you really don’t have much concern for your list of losers… what your really after is a cheaper house, keep lick’n your lips pal because your “buyer’s market” feeding frenzy isn’t going to come.
May 8th, 2009 at 3:30 PM
Thanks to those who replied to my question….. greatly appreciated along with the blog you host Norm……
May 8th, 2009 at 3:30 PM
Yeah Chuck just like Tech stocks and the dot.coms, it’s never going to burst. LOL!!
Commodities are just the next thing that the effluent decided to put their money in to make another load of money. It’s trends as usual, as soon as things get to high the top 5% of the traders pull out their 40% ownership of the stock and then it starts to decrease leaving the late traders and the normal people left holding the bag again.
Also China and India, the worlds biggest consumers of natural recourses, have not increased the price of oil in their countries to avoid inflation. India’s oil producers are looking at trillion dollar loses this year due to high prices, so do you still really think that oil is going to stay at twice the price it was trading for last year? I think not.
Another interesting thing I’ve noticed is how oil prices always shadow the Nasdaq and homebuilders in the U.S and guess what those two areas of the United States economy have been doing over the last year, dropping, I’m sure oil will not be far behind, but live in your dream world all you want Chuck, and oh yeah housing prices are going to go up another 20% this year in Saskatoon to. LOL!!!
May 8th, 2009 at 3:30 PM
Dan,
I wonder how this fits in with the lack of exploration investment of big oil companies. I keep reading articles that oil companies are giving money back to investors, and buying their stocks back, and not putting their profits into exploration. Which has created a lack of surplus, For this reason, I find it hard to believe that oil prices will drop alot.
http://articles.moneycentral.msn.com/Investing/CompanyFocus/BigOilsBigProblem.aspx
May 8th, 2009 at 3:31 PM
Is it realistic to compare commodities to dotcom stocks? One is based on something that you can actually hold in your hand and attribute a value to… oh and ultimate demand will inevitably increase in correlation with population growth of the human race. The other is based on an idea that you can neither see nor feel. Yeah, I see the correlation
And if oil prices are expected to return to $75-$85 a barrel, it’s a good thing that the provincial budget was based around $80/barrel oil revenues.
But I guess neither of the two will get you a cheaper house in sask so what else you got as a reason for crash?
May 8th, 2009 at 3:31 PM
hey Chuck when I have i ever said that is there is a crash coming? I don’t think I have. I have only stated that house prices have gotten out of hand in Saskatoon and it’s unfortunate for the city because the young people are not going to stay for university or post university, there is just to much opportunity elsewhere. University enrollment is down as far as I know and is only going to get worse with current state of rent and house costs in the city. If you think that it is so beneficial for housing to be this expensive, state the benefits for me. The only benefits were to speculators who swooped in and swooped out, or at least are trying to swoop out.
CHUCK PLEASE GIVE ME A LIST OF THE BENEFITS OF THESE HIGH RENTS AND HIGH HOME PRICES
May 8th, 2009 at 3:31 PM
I wish that the housing prices would have been like this when i was taking post secondary…I could go to ontario to one of the best animation schools in the country and probably north america, and pay less for tuition, books, studies, AND if it was now? housing.
Young people will see this. And i will laugh when the same ‘why aren’t we retaining young people…i mean we have beer and the riders…’ argument comes up.
May 8th, 2009 at 3:32 PM
Also what makes you think I need a cheaper house? I can live where ever I want in the country, my company pays for me to fly home where ever I live. I’m now planning on buying in Alberta, like anyone else that is starting out their adult life with any sense of reason. Saskatchewan will never pay me what I get paid here, so I might as well buy a house in Edmonton instead of Saskatoon weighing the benefits of each. Also Edmonton has the Oilers, what does Saskatoon have? the Blades? LOL!! Small market just like the city, yet the city is trying to be big market and now getting people to pay big market prices for real estate. Don’t get me wrong I grew up Saskatoon, I love the city and it’s people, but I just don’t think it’s realistic to pay what people are currently asking for real estate.
May 8th, 2009 at 3:32 PM
Where did I say people are benefiting from high rents and high home prices. All I’m saying is that there’s a reason why demand remains pretty strong! The simple fact that you’re all on a real estate board complaining about real estate prices is evidence that there remains significant interest in the market and demand to buy a house. There’s got to be a reason for it? Wesco, why are you here?
I agree that rents are too high but that’s a result of a real estate boom. Like a correction in home purchases, rent prices will go through a correction as well… probably this summer considering a very large chunk of renters are students and landlords will learn that fact the hard way when they vacate for the summer.
May 8th, 2009 at 3:32 PM
“Chuck” “reason why demand remains pretty strong”
Weren’t there only 70 sales last week to 253 new listings? Aren’t there 1,259 properties available for sale? Hundreds of condo conversion units coming? Only 3 of 60 Stonebridge properties sold in May.
Demand is pretty weak. Supply is strong/plentiful. Just waiting for prices to reflect that.
May 8th, 2009 at 3:33 PM
Jim,
keep in mind that the 253 new listing include relistings. There was 105 new listings. That said I agree supply is pretty strong, but houses are still selling, I don’t think that everyone that bought a house last week over paid. What are your thoughts?
May 8th, 2009 at 3:33 PM
Hey Chuck I’m here because I am interested in the Saskatoon market, it is where I would like to live.
Why are you here? The way you’re pumping this market it seems to me you already have a house, or are you a speculator?
May 8th, 2009 at 3:33 PM
Lol, Wesco, I’m not pumping anything. It just seems to me that the majority of the people on here complaining about the market are those who’d like to buy but can’t afford the house they could last year so they slam the “so-called boom”… Which I find ironic because you all seem to want to live in saskatoon and love it.
If I were a speculator in this market, I’d have to be a pretty big moron to still think I can make a buck given the inventory situation. Just don’t hold your breath for the basement bargains you’re all waiting for, it’s not going to happen.
I’m here because I just stumbled across the site last week and think it’s comical for the reasons mentioned above. Wesco, if you bought a house last month, would you still be on here slamming the boom?
May 8th, 2009 at 3:33 PM
The 253 “new” listings do include relistings, but those are properties re-listed to highlight price reductions because they weren’t getting a lot of attention, so still indicate weak sales market. I’m not sure if I’d say 1,259 available listings right now (the most available property Norm has ever seen), 1,100 ish last week, just under 1,000 last month from only 300 early in the year suggests houses are still selling. Inventory is really high, and growing each day. New inventory is building up. New condo conversions are on their way. And I think prices are on the way down. While year over year we’re still up, month over month, real estate, sales, jobs and economic stuff all seem down. Granted, just a bit.
And I think the Edmonton Journal/Montreal article about oil prices potentially going down a lot high lights at least one thing. The predictions aren’t universally positive. Some people out there, including National Bank, have a pretty compelling argument for why oil might drop. The “boom” stuff just gets front page, while the “bust” stuff is relagated to page B4. Sure, oil should be expensive, but people were using gas a couple years ago when it was only $30 a barrel, with out a US slow down. And while the government may have budgeted for lower $80 a barrel, new promises, and real estate expectations were based on a lot of “potential” type arguments.
Are houses still selling? If inventory is increasing this dramatically, and people are re-listing to show off their house/reduction?
May 8th, 2009 at 3:34 PM
LOL!! buddy, if I wanted to buy I would buy, it’s that simple. My girlfriend goes to university in the city and that is the main reason why I would buy in the city. But considering it’s for the short term and we’re probably going to move elsewhere when she’s done, I’m not dumb enough to lose money over buying a place right now and selling it in a a couple years
May 8th, 2009 at 3:34 PM
Chuck –
Define “basement bargains”, because what you mean by that
While none of us think that houses will be available for 1.99 for three, lots of people here think that prices (selling, not asking) will drop 15-20%. I’m an optimist
and think they’ll come down much lower, to where they were in 2006, before the really crazy speculation started. Or, put it another way, I think the market will lose all of the artificial inflation that it gained from people who bought with the expectation that the gains will continue.
May 8th, 2009 at 3:34 PM
Oh, and apropos of nothing whatsoever — except Norm’s “lousy pictures” slideshow — take a look at the interior photos in this listing for a bungalow in Nutana.
Nondescript little bungalow but the interior is nice, especially in the living room: pretty furniture, nicely decorated with carefully chosen accessories and an attractive, co-ordinating colour scheme.
This bonus is NOT accentuated by the BIG GULP cup on the coffee table, the polar fleece dropped over the dining room set in the foreground (we get two shots of that!) or by the UNMADE BED in the bedroom with a pair of jeans over the chair in the foreground (what was the realtor doing?). Best is the kitchen shot, which features dirty pots in the sink, coffee cups on the counter and two pairs of shoes on the floor.
Note to inexperienced realtors: clean up the mess before you take the picture. Especially when it looks like you made it yourself.
May 8th, 2009 at 3:35 PM
I wonder where Wesco figures he and his girlfriend are going to settle down? He doesn’t really seem to know, one minute it’s Edmonton, the next it’s Saskatoon, the next it’s Fort McMurray! Come on make up your mind!
I wish you would quit bashing anyone who already owns a home here. We love this city and we hope that prices don’t drop like a rock like you do! Why don’t you go buy your house in Edmonton and get off this blog if you don’t like Saskatoon.
For all you who want to wait to buy a house, I hope you don’t have to go hunting for a place to rent. I know someone who has been searching for the last two months only to come up empty handed. There are only about 30 ads for places to rent at astronomical prices, even in shady areas on the west side. The rents are as high or even higher than places on the east side. Usually the places are rented within the first day as landlords have the upper hand and pick the best suitable tenants. Most require year leases.
No Wesco, I’m not a SPECULATOR, I don’t own any houses in Riversdale, I’m just a normal homeowner that can’t understand why you put this city down so much. I hope that the rest of the readers of this blog give you an earful too!
I only came upon this blog by accident and I can’t understand your negativity. I think that Saskatoon is a great city and I plan on staying here a long time.
I hope that house prices stay where they are or increase at a normal rate each year. I spent lots of money to fix up my house so that I could enjoy it, not speculate, but that almost sounds like what you’d like to do. You want the prices to go down, so you can buy a house, then hope the price goes up when your gf gets done school so you can make a profit. Speculator!
I only talk positive about this city and province because I was born and raised here. I lived in Vancouver, Calgary, Edmonton, but I came back because I love the north, the pines, the lakes, the people.
I think it was only about time that Saskatchewan house prices went up. We have so much going for this province, ie oil, gas, uranium, food crops, potash, diamonds, people! The house prices here are not that expensive if you really sat down and gave it some thought.
May 8th, 2009 at 3:35 PM
jrochest,
I’ve seen far worse.
The other day I saw a picture of a kitchen with a handgun sitting on the counter.
When obviously necessary, I discuss prep for photos with my clients. A lot of “stuff” typically gets shuffled around while I shoot, but hey, I’m not doing the dishes. You point out some fairly easy fixes and it is amazing to me how some of this stuff gets by an agent while photographing.
May 8th, 2009 at 3:35 PM
Thanks William for the vote for sanity.
Sometimes I just think everyone hates everything – online that is… I’m sure most of the people who drive me crazy online are probably perfectly reasonable people to talk to in real life.
May 8th, 2009 at 3:36 PM
I love Saskatoon and I hate what’s happened to the housing market, especially how it has shut out so many first time home buyers. It’s usually people who own their home, or make more than the average household income that truly believe these prices are justified.
A city’s real estate market doesn’t define it or give it character. That’s like saying if someone’s a smoker it makes them a bad person because smoking is bad. It’s not the city that’s bad, it’s the housing market.
Well I think it’s time for Saskatoon to kick it’s habit of overly-inflated housing prices! Right now it’s on the patch – the “nic fits” are starting to subside. :’)
May 8th, 2009 at 3:36 PM
Norm, just wondering man, where was the house with the handgun just sitting on the counter? Was it the West Side? Definitely in Saskatoon right, a rural area would be a shot gun for sure.
May 8th, 2009 at 3:36 PM
Dan,
It was on a real estate blog from Connecticut. It was likely pulled off of a U.S. MLS somewhere.
http://reagentinct.com/2008/05/31/bad-mls-photo-of-the-day-392/
May 8th, 2009 at 3:37 PM
William,
I work in Fort McMurray and will be working here for at least ten years I’m just looking for the place to live and settle down. I love Saskatoon very much, the people are great, I have tons of friends and family there and I also love the northern lakes, it’s beautiful country up there. I commemorate you for taking pride in your house and taking pride in the city. I love the University in the city, that specific institution has brought more opportunity to me than any could have in all the country.
I don’t “want” prices to go down I think that may hurt alot of people who have bought in lately. The only thing that I despise is the fact that people came into saskatoon bought alot property and are trying to make alot of money off of the residents of the city. Don’t you want the young bright people to stay in Saskatchewan? What if you had a kid who was just out of University, wouldn’t you want them to be able to own a home in the city without having to live in a condo conversion and still live mortgage poor? It’s fine for people who have already had real estate, however any young people trying to buy a place will have a tough time unless they go elsewhere.
The province finally had some positive migration numbers and then bang lets double housing prices. I have fiends that were going to move back home from Alberta but now it’s not worth it. They would be taking a substantial cut in pay and would not gain anything out of selling their home in Alberta and moving back to the city, so they’ve decided to stay………
Blast me all you want for my comments, that’s just the way I feel and that’s my opinion.
May 8th, 2009 at 3:37 PM
Wesco,
I feel for you. I’m in the same situation. I live in Toronto, because my husband and I came out here to ge career experience.
Both our families are in Saskatoon – and we had always planned to move back. Our plan was to move back last year or this year, but those plans took a drastic change. We thought we could make the money, get a few years experience, sell our house here in Toronto and still live comfortably in Saskatoon, as my husband would still keep his job in Toronto – remotely. I would take a pay cut, as marketing type jobs don’t pay that much in Saskatoon (this is reflective of not having that many commercial industries in Saskatoon).
I think the scary part is the volatility of the Saskatoon RE – if it had increased in prices and showed a constant pricing/demand, that would be okay. But this would be reflected by the economics, not speculative economics.
We have now made the decision to stay here in Toronto, until we see that sanity and reason returns to Saskatoon. I don’t think most people here are bashing Saskatoon. I think they just want a fair shot to be able to own a home in a city they love, and be near their family. But that’s hard when you know you are paying too much – and your salary hasn’t gone up. Those who already own a home, or have more than enough money to own a home are less likely to understand why some people here are frustrated.
Kudos to you for not getting suckered into this craziness.
May 8th, 2009 at 3:37 PM
I’ve never understood this “you don’t Love Saskatoon!” response to criticisms of this stupid bubble.
Prices that are out of wack with the fundamentals (what people earn, what the GDP of the area can generate) are a recipe for disaster, not a benefit. There’s no easier way to lose everything that you’ve worked for than to feed too much of your money into your house: all it takes is one lost job or one interest rate hike to put a family’s home in jeopardy.
A correction will hurt the people who bought last year , or took out loans based on their house’s current value; but only those people will be harmed if the prices correct quickly. Many more will be hurt if it becomes ‘the norm’ to pay 50% of your pre-tax income to buy a house.
And yes, the rental situation is awful now, but not for long. I think the reason for the shortage is the conversion of a significant portion of rental units to condos: the idea behind this is that the person who buys the condo will rent it out to cover the costs, plus 10% or so for their own profit. The problem is that the prices are too high to allow rents to cover the costs, let alone build in a profit, and being a landlord is a second job, not an investment.
So I think these units will come back onto the rental market, and they’ll have to charge market rents.
And, of course, if it’s impossible to find a place to rent at a reasonable price, tenants will leave Saskatoon, and there won’t be so much demand for places: the rental market is fluid, and people have no obligation to keep on paying stupid rents. Students will transfer to other institutions or double up with roommates for the duration of their degrees, young workers will get jobs in Calgary or Toronto or Vancouver, people thinking about relocating here will think again.
This isn’t good for the city’s economy or culture, but there ya go: you want expensive housing, there are consequences.
May 8th, 2009 at 3:38 PM
Ex Saskatoon,
You stated it completely accurately i believe for the majority that see the inflated market here as insanity for housing.
jr,
the ‘you dont’ love saskatoon’ argument is done on many scales when you don’t have the popular opinion..it’s also been used in such instances at ‘you hate the planet’ if you aren’t convinced completely by the ‘junk science’ of another popular opinion but that’s a completely unrelated topic to RE.
May 8th, 2009 at 3:38 PM
With due respect, I think that the “you hate Saskatoon” talk most likely results from the long litany of reasons which are often given as to why Saskatoon isn’t worth it. Someone looking in from the outside could easily get the impression that people think Saskatoon is the *** of the earth. It’s certainly not consistent with “I really love this place.”
May 8th, 2009 at 3:39 PM
I think anyone with a heart feels bad for any first time home buyer.prices will drop,people will go on a buying frenzy.it will ebb and flow like any market.
Where the issues come in are guys like MovingFromToronto bringing his arrogance and ignorance into the disscusion with statements like
greedy Saskatoon home owners,(sorry Norm it still drives me!)or hacking homeowners who took equity out so they could enjoy life.(how dare they!!)or even better telling people hes coming to buy ther houses for alot less than they think(i told my wife if anyone makes a offer on our house from Toronto im gonna add 20k).
Other people say they love the city and the people.then the next sentence they re trying to come up with some scenario or find some reason ,however obscure(seems to change week to week)on how saskatchewans economy is going to crumble and everyone s gonna go bankrupt.
Why don t all you guys wait til fall buy a house for a little (maybe alot) cheaper and then you can start focusing on the positive aspects of living in saskatchewan.
May 8th, 2009 at 3:39 PM
Would a drop in prices be a bad thing? Who would this affect? If homes were bought for what they are suppose to be bought for; investment. Investment for your family for the long run, you will be ok. But if you bought to investment for money and flip within a year, you are in trouble.
Our boom has only been the last 18 months or so. Houses up to this point were relatively cheap. I think there are lot of families with no mortgage or very little mortgage in this city.
There has been about 8,000 sales since Jan 07. Probably half of those are people moving up. The rest are first time buyers and speculators. I believe there were very few investors who bought for the long run last year.
So if there is a drop in prices do the people who moved up get hurt? No. Do first time buyers? Yes and no. I believe prices will drop a bit but in a few years it will climb again. Do speculators who bought to flip within a year get hurt. Yes.
Where prices are headed, who knows. I see a bit of a drop. Supply and demand and our economy will be the signs to look at. Even though we are over 1,000 listings, we will need to be at over 3,000 listings for any significant drop in price even if our economy is very strong. Have we overbuilt in Saskatoon in the last 18 months? Only time will tell.
May 8th, 2009 at 3:39 PM
C White,
I agree with you, but if they end up getting a good deal in the fall I am sure they will talk about how smart they were to wait, and how market savey they are. I am guessing they still bash sk for something
May 8th, 2009 at 3:40 PM
As a new Saskatoonian, here are my 2 cents.
I moved here for a slight pay raise over what I was making in Kelowna. I was under the impression that housing was far cheaper here than there and thought it would be worth it to leave the mountains and lakes for a better quality of life. I moved into my basement suite on Dec 31st. It was about -50 with wind chill. Yikes! Then I saw what the housing market was doing and had some very serious doubts about my decision. So far I like Saskatoon, and am very impressed with the amount of well established trees and how green it has turned this Spring. The people are far friendlier and things like gas/auto insurance are a little cheaper. Now that the market is finally turning I’m no longer second guessing my decision to move here quite as much. But I do definately understand what people are saying about the city. As far as culture, size, scenery, entertainment.. Saskatoon falls far short of say a Vancouver.
My incentive for moving here and I suspect for many others is a improved quality of life. If that gets taken away by an overinflated housing market, there’s very little draw for people to move here. And I’m not slamming the city, just sharing my opinion and being realistic. So Ifor me if prices down I’ll buy and live here. If they go up, I’ll probably move somewhere that offers more.
May 8th, 2009 at 3:40 PM
“Even though we are over 1,000 listings, we will need to be at over 3,000 listings for any significant drop in price”
Why 3,000? 1,259 is a lot of houses, especially with only 70 sales last week and given we’re still a small city of 208,000 ish (Warman/Martensville etc. add to population, but also make inventory way bigger than 1,200). As is. We’re seeing reductions. We’re seeing houses that haven’t sold for a few months. We’re seeing buyers weary and waiting for prices to fall. I think supply is already at the level to drop prices. And as Sean pointed out, with prices up, Saskatoon loses a lot of its draw. Jobs pay less or the same as most of Canada (way less than Alberta) still and Saskatoon is kind of a tough sell when we’re more expensive to live than similar places elsewhere. I think part of the reason a supply of 1200 plus and rising (which is up) is a lot, is because demand is falling.
May 8th, 2009 at 3:40 PM
Hey Norm,
I notice houses that I drive by are marked as sold, but they still appear on the mls website. Is there any rules regarding timely update of the mls website when a listing sells?
May 8th, 2009 at 3:40 PM
Carl,
The rules state that an MLS sale must be reported to the local MLS within 2 business days of the removal of conditions, though I don’t think there are any real big penalties for going over that. The local board provides data updates to mls.ca which can sometimes take up to 48 hours to process.
May 8th, 2009 at 3:41 PM
Jim,
1,250 is not really that much for our size. We are at about 3 months of inventory right now or close to it. Nothing to panic about if you are a seller. Unless you are holding 2 or more properties. This is a buyers market and their will be reductions.
The reason I say 3,000 listings, is because I have been looking at Alberta’s RE the last year. Both Calgary and Edmonton have experienced negative growth from last year. Calgary SFH this time last year was 500k, right now it is 480k. They have about 15,000 listings in the metro area. About 2500 sales a month. About 6 months inventory. If we get into the 5-6 months inventory we will experience the same negative growth for next year. (we seem to always be a year behind)
As for some properties being on the market a long time, they will NEVER sell. It is just the nature of the beast. My prediction is that alot of the condo conversions will not sell and investors (speculators) will rent them for a loss. Crappy old properties and the rundown area property areas will not sell very much as well.
And my favorite, Specubridge, will not sell much either because of the high prices. Very few people can afford 400k plus even with equity. Alot of speculators will be caught with their pants down here.
I expect a jump in listings this summer attributed to the fact that speculators will list their own residence and their spec home, hoping to get rid of one of them.
May 8th, 2009 at 3:41 PM
I think you’re correct in that they may rent condo’s at a loss…but remember…there is no law that protects renters from an increase when they get into a place in the amount they can raise the rent. If i was a greedy speculator that bought and flipped and had to rent at a loss, i’d lower my price to say $400 a month for a 1 bedroom, then 3 months from then raise it to $1000 and 3 months from there raise it to $1200 and so on…
It will definitely prove to be interesting once all of the ‘painted’ apartments hit the market.
May 8th, 2009 at 3:41 PM
Jim, your numbers are pretty much bang-on. Last I checked in Calgary (not including immediate surrounding area) there were close to 11,000 MLS listings for a population of just shy of 1.1M people. Compare that with our 1,250 listings for 250k people (guestimate). That’s 1 home for sale for every 100 people in Calgary where the market has been in *decline* for the past year — compared with 1 home for every 200 people in Saskatoon (which has still seen a fair amount of demand, even over the past 2 months).
I drove through ‘Specubridge’ (nice, I’ll have to remember that…) the other day and you could throw a quarter in any direction and skip it off at least 2 for sale signs. And Lakewood SC wasn’t much better. Tons of higher-end houses in Briarwood. Problem with all three areas is that there are only a small number of unique listings in a desirable location.
There are several general points I’d like to add:
1. Probably in excess of 300-400 of the listings in Saskatoon are not desirable for one reason or another (age, condition, excessive price, bad location, etc.) and they are not going to sell regardless. Desirable locations with short travel/walking distances and close access to essential services will hold their value regardless of minor market fluctuations.
2. Martensville, Warman, etc. are outside the scope of the market in Saskatoon and entirely in their own predicament with oil soaring to (and probably soon past) $139/barrel. How much more is that (slightly) lower-priced house now costing these commuters monthly in fuel costs?
3. Mortgage rates just went up today by close to 1% on fixed rates. Adjustments to 40-year variable terms won’t be far behind. On an average $250k mortgage a 1% interest rate increase just dropped your affordability by $35k. This isn’t going to push prices down; it’s going to drive buyers down into more affordable markets. By Fall we’ll be seeing active interest rate hikes from the Bank of Canada so this is only the start of new mortgage rate increases.
4. Finally, a *lot* of the homes listed in some of the older areas in the city (such as Area 1 and 2) have been there for 10+ years. They were purchased for a lot less at that time and in all probability a lot of owners probably own the title free and clear, which means they’re in absolutely no rush to panic and drop their prices. I figure there’s at least 200 that fall into this category (perhaps more).
So when you take all of this into consideration you’re really only talking about 600 listings, and then it’s questionable about how many of them are speculative sales. That’s really a 1.5-2 month supply of homes, at best.
Norm, here’s a question for you: Are there any numbers (from the city, etc.) on the current number of condo conversions (underway) as well as new condos, townhouses, single family homes, etc. in various stages of construction? It sure looks like (at a casual glance) that there are a *LOT* of new units still being built in Stonebridge and Willowgrove…!
May 8th, 2009 at 3:42 PM
Jesse G.,
I don’t think rents will go like that. I see renters trashing the place before that scenario happening. There will be a lot of speculators trying to sell but they won’t get close to what they want and they will be forced to take in renters. And they will rent for a loss. There has been hardly any properties sold in the last year that you can cash flow. A 150k condo at 6% over 25 years runs you about $1300 a month including condo fees and taxes. This is a one bedroom. Rents for about $700.
May 8th, 2009 at 3:42 PM
Drake said:
“So when you take all of this into consideration you’re really only talking about 600 listings, and then it’s questionable about how many of them are speculative sales. That’s really a 1.5-2 month supply of homes, at best.”
No, Drake: I don’t think it works like that. There are more than 1200 listings on the MLS. You can’t deduct half because they’re not moving or they’re not competitively priced or they’re not in a prime area. They are still there, and they’re part of the reason that the market is slowing — that is, the market is slowing because buyers are looking at the neighborhoods and properties they can afford and deciding not to bother because “*meh*, there’s no big rush, look at all the stuff on the market!”
Even if people are listing at ‘wishing prices’ they’d still not be listing if they didn’t mean to sell. Putting a house on the market isn’t a small thing.
It will take us 3,000 listings to have the “Oh my g*d she’s gonna blow!” level of listings in Calgary and Edmonton, both of which have 15,000 listings, five times the usual amount. But 1200+ is nothing to sneeze at: we still have more than Norm’s seen in his years in the business, and in another 400 listings, we’ll have a 6 month supply.
Oh, and Sean said exactly what I feel: Saskatoon has its charms, but high prices make them VERY hard to see if you’ve come from someplace larger (which I have).
May 8th, 2009 at 3:42 PM
Hey George –
I don’t think renters will have to or want to ‘trash’ the place: I think the re-introduction of these conversion properties into the market will make more units available. If that’s the case, any landlord fool enough to bait-and-switch will simply find himself with a condo that’s empty every second month: if I got a rent increase when I’d just finished moving, I’d leave as quickly as I could find another place.
As much of a pain as moving is, tenants are mobile.
But you’re perfectly right about the cash flow issue with the condo conversions. I just think that if you return them to the market then you go back to 5% vacancy rates, and landlords who play games will lose their tenants.
May 8th, 2009 at 3:43 PM
I think a lot of investors buying condos will put them up for rent, being that rent is higher these days. Win-Win really. Will ease the rental shortage with re-done condo conversions and allow owners to rent out if they can’t sell a condo right now, with all the other competition for sale, they can make a pretty penny and maybe less condos are for sale in a year’s time.
And I think Norm (or some one)pointed out earlier we’re at an 18 week supply, or 4.5 months right now. Well as of the end of last week. By now, I’m sure we’re nearing a 19 week or more supply. Supply is increasing slowly (about 100 more listings total each week) but steadily for over the past month.
And I enjoy “Stonebust” over “Specubridge”
May 8th, 2009 at 3:44 PM
Jump in banks’ fixed mortgages bad omen for housing.
Drake “On an average $250k mortgage a 1% interest rate increase just dropped your affordability by $35k. This isn’t going to push prices down; it’s going to drive buyers down into more affordable markets”
Actually, I had seen increases of about 0.5% but yes, will decrease buying power. Further making expensive markets, like Saskatoon, unaffordable. I think this will affect house prices across the board. And if it does drive them into more affordable markets, that means Winnipeg, rural/regional Saskatchewan, Red Deer, settle for Lloyd (higher wages, lower housing) etc. Not Saskatoon with Edmonton level prices.
George “Both Calgary and Edmonton have experienced negative growth from last year. Calgary SFH this time last year was 500k, right now it is 480k. They have about 15,000 listings in the metro area. About 2500 sales a month.” At 70 sales a week, about 280 a month, Calgary has 10 X our sales activity to go along with 10 X our listings.
Ie. We have an oversupply at 1,259 listings, evidenced by how new listings continually beat sales, over inventory grows each week, and we’re seeing re-listings and reductions.
May 8th, 2009 at 3:45 PM
117 comments already?! It’s like now that supply is way up and demand is down, the bulls/sellers are sweating and trying to balance out the bears. Or just a lot of sellers are PO’d their house won’t sell and just need to vent about fundamentals.
How do they respond when oil does drop?
http://www.canada.com/montrealgazette/news/business/story.html?id=9fd55c6a-265e-4631-8c49-54197f316f2c
I think it just takes one or two of these stories being the top story on supper time news on a slow news day, and already worried buyers get worried-er and sellers decide to reduce a bit more. Next thing you know, confidence is shot and “boom” talk is gone.
I heard it best on I think the CBC website.
Saskatchewan is a 3 legged stool.
Oil, Potash and Farming
Take out 1 leg and we’re basically shaky no matter what the other 2 do, take out 2 and we’re useless.
(yeah other stuff but not much)
We may have oil drop a lot (okay not broke, but half what it is now), what happens if we get an early frost? Got down to +3 my place last night. Or bugs? Or droubt? Potash is awesome, but can’t pretend we’re a diversified big league city.
Not just Montreal story, Canada wide, but Edmonton one was briefer/trunkated
May 8th, 2009 at 3:45 PM
If Saskatchewan is a 3 legged stool, what is Alberta? Yikes!!!
May 8th, 2009 at 3:45 PM
Drake,
According to this CMHC report this is what’s currently under construction in Saskatoon.
Single-family – 1,135
Semi-detached – 84
Row – 295
Apartment – 595
No good info on condo conversions but we know that around 2,000 units have been approved for conversion since 1/07.
May 8th, 2009 at 3:46 PM
Not sure why people tie commodities to housing, as a means of justifying real estate prices. It’s just a smokescreen, as far as I’m concerned.
The price of commodities didn’t persuade us to move to Saskatoon. We liked the place and the people, plain and simple. The fact that there were more people looking for houses than selling drove the price up through the roof (and has kept us out of the market). Now that it’s turning the other way, and more people are selling than there are people looking, you have to market your place properly. It’s really that simple. If you don’t lower the price of your house to a reasonable amount when selling, you will be stuck with it, as word has gotten out about how expensive it is here, and people aren’t moving here anymore.
Unless you get a steal of a deal, this is still a bad time to buy until things straighten out. You just have to look at all the $250K+ “so called” condos on MLS to realize that it’s still messed up.
Not trying to fear-monger, but unless you really do your homework, you could be “upside down” for a really long time (regardless if you are a buyer or a seller).
May 8th, 2009 at 3:46 PM
Go Jim go, the same comments every week, I think there is people in stonebridge other then speculators trying to sell properties, I am sure they appreciate your comments, no not really.
Wow, what bleak talk, we have a few months were supply is greater then demand, and now the fear mongers are off to the races with every possible reason to back up why the market will fall, and why the sky will fall. Not only are we talking down the housing market, we are taking pot shots at our commodities. Wow, wow. The same week potash corp is in the media about be a huge earner, people on this blog cut it down. Wow.
What’s worse is the talk of how these very same people want to buy into the market after they verbally kick the *** out of it for many months. Markets go up and down, take a look around, and take your hand off the panic button.
The most ignorant comments are those that actually post active listings, and then take a pot shot at the listing. Not only are you trying to effect the market, you are trying to effect the outcome of a listing. There outta be a law. I am sure nobody would appreciate listing a house, and then having someone post the listing on this blog, and then cut down the listing for one reason or another.
With all the negative comments I wonder why anybody would want to live here. Where is perfect place to live. Let see just about every place we discuss is too big, too expensive, too….. where is the perfect place to be? Let’s face it, somebody will always find a reason to complain about anything. The same reason why some people never find the perfect job.
Dan,
Atleast we have three legs, I can remember times when we didn’t have a stool where prices for grain, potash crap.
May 8th, 2009 at 3:46 PM
Jim,
I think that 70 sales a month is a bit low, I was using an average of 400 per month. But it is possible with the high prices that maybe 70-80 is all that will be cranked each week.
I was talking to a buddy who is in the business of building homes last night. Of course he was bullish about the market and I was bearish. We both brought up points the other did not hear before
He did tell me, it is not getting cheaper to build a home. Land, materials and wages are going up by a lot. Oil is having a huge effect as well. And if you have good workers you have to pay them well so they don’t jump ship. Getting a house built for less than 200/ft is a thing of the past. Anybody building this cheap is not paying well for their workers he said.
I then brought up the Stonebridge thing on why they are not selling if our market is booming. I said the prices are too high there. He said that is what they have to sell at. (He agreed with the speculation there)Well, either people need to get paid more or there is no demand for these new homes.
For what it is worth a 1200 ft bungalow priced out for materials, no labor or basement or land is at about 60k.
May 8th, 2009 at 3:47 PM
Jim,
“Calgary SFH this time last year was 500k, right now it is 480k.”
That’s not much of a change in light of the fact that inventory in Calgary has been through the roof for a year. Something is going on there that is keeping that average high. I hear that entry level housing has been impacted more.
George,
“He said that is what they have to sell at.”
What a seller has to sell at part of the market value equation.
Carl,
You raise some good points, especially about picking on specific listings. I don’t think we’ll leave those up in the future.
May 8th, 2009 at 3:47 PM
According to Norm’s stats, the average sales per month is close to 400: 380-400 for 2004, 2005, and 2006, all of which had sales of between 4600 and 4900. 2007 was higher, of course.
Carl, there’s nothing bleak about the talk: the market is correcting, and it needs to. Overly high housing prices benefit nobody: all it takes is a glance south to the States or west to Alberta to see what happens when people overextend themselves to buy. When prices double in a year, something gives.
And pointing out that the realtor took pictures of an unmade bed and dirty kitchen isn’t taking a pot shot at the house, it’s taking a pot shot at the person who was silly enough to put the pictures up!
May 8th, 2009 at 3:47 PM
Carl,
don’t bash Jim. I am the guy who has been attacking Stonebridge. I call it Specubridge, he calls it Stonebust, so maybe he deserves some. I agree there are probably some people who have to move because of circumstances. Collateral damage.
Any listing that does not even have appliances in the pictures was never entended to be lived in. It was bought for speculation plain and simple. This has driven the price up, keeping out first time buyers, which EVERY market needs to progress. Do I feel sorry for those people when they can’t sell? Should I? Hah.
What’s wrong with posting a listing and taking shots at the person listing it? If the seller is too lazy to clean up, too bad. If it is overpriced, too bad. In a bad area, too bad. If it is a neighbor who won’t let me have my firepit, I’m finally getting back at him, too bad. We live in a time called the INFORMATION AGE. Take the good with the bad. But I do agree it could get out of hand, Norm would probably step in then.
As for people bashing the market, wouldn’t you if your dream was to own a house but then you are priced out. Most of the people here love this city for one reason or another. Afforadable housing is what we had over other places, not any more.
May 8th, 2009 at 3:48 PM
First, I don’t think I’ve ever picked on one listing, but come on, it is funny when people just try to sell junk. And Stone____(insert reason for only 3 sales in a month on 60 units)? 60 units and climbing. Only 3 sales. Who wants to live next to 57 and growing empty places? Demand is obviously far less than supply in this case.
Maybe I should re-post, given that I have been accused of saying 70 sales a month, you can confirm above its a week. And I just quoted other comments on here, notice the “”‘s. I think the idea is that if Calgary still has 10 times the sales, it should have 10 times the listings. Which it does. And its prices are slowly, but steadily dropping, hence 20,000 isn’t a lot but still down and no sign of reversing its slow decline . So at 1/10 sales and 1/10 listings, maybe Saskatoon will slowly but steadily drop prices too.
And let’s not forget that with wages much higher, and still growing by a greater percentage year over year (ie widening the gap) Alberta should have more expensive homes.
“George “Both Calgary and Edmonton have experienced negative growth from last year. Calgary SFH this time last year was 500k, right now it is 480k. They have about 15,000 listings in the metro area. About 2500 sales a month.” At 70 sales a week, about 280 a month, Calgary has 10 X our sales activity to go along with 10 X our listings.
Ie. We have an oversupply at 1,259 listings, evidenced by how new listings continually beat sales, over inventory grows each week, and we’re seeing re-listings and reductions.”
and “Oil is having a huge effect as well.” (quote!)
If so, http://www.canada.com/edmontonjournal/news/business/story.html?id=2ef09ba6-f351-4f80-8067-ff13fce390c3
May 8th, 2009 at 3:48 PM
Norm said “That’s not much of a change in light of the fact that inventory in Calgary has been through the roof for a year”
If they have 10 times our inventory, but are selling 10 times as many units per month, I’d say our inventory is equally through the roof. We just got there last month.
May 8th, 2009 at 3:48 PM
Norm,
“What a seller has to sell at part of the market value equation”
That is true, but I am thinking too many of these new homes with hardwoods, tile, granite are just priced out of the rage of potential buyers.
If a seller has to sell at 500k but a buyer can only afford 400k, there is no market for that house and hence that house should not have been built. There was no actual true demand for that house in the first place. We are beginning to see that in the new areas.
Buyers are not jumping into the market like last year because of the high prices. Simply unaffordable. I believe most people buying in Stonebridge will be house poor. Let’s take a look at a 500k house.
A driveway, sidewalk, landscaping deck and fence will set you back about 25-30k. Finishing the basement and furnishing the house, another 35-50k. Then you gotta live.
I think there is only a small pool of buyers in this price range. What makes speculators think that buyers would not buy a new home in 07 for 400k but they will buy a new home from them in 08 for 500k?
If I was trying to sell my place in a new area, I would leave the price the same, but I would look at finishing the outside at least. You gotta set yourself apart for that very small pool of buyers. If I was buying brand new and was spending 500k (a half million dollars), I wouldn’t want to be spending any more to finish the house. I would like to think I spend enough on the house that I wouldn’t have to do anything to it for at least 10-15 years.
May 8th, 2009 at 3:49 PM
My last comment until some one, Carl, bashes me.
Norm says, currently under construction in Saskatoon:
Single-family – 1,135
Semi-detached – 84
Row – 295
Apartment – 595
Wow! On top of the 1,259 units on sale right now. Who honestly doesn’t think supply >> demand?
Add those to the 1259 = 3,368 !
I forget who said 3,000 was oversupply but just wait.
3,368 places for sale/move in, not even taking into account investors sitting on empty condos and waiting for the inventory to come down, apparently will be waiting a while.
May 8th, 2009 at 3:49 PM
So a couple things:
1 – Mortgage rates are up. With all the sparring on here, didn’t notice this in a quick glance. Yeah the article is from Toronto, but these are the same Canadian banks, so mortgage rates are up for everyone. Will decrease affordability.
2 – Most analysts had expected a 0.25% drop in the bank rate, after our economy contracted in the first quarter by 0.2%.
A recession is two back-to-back quarters of negative growth
http://www.torontosun.com/Money/2008/06/13/5864621-sun.html
Basically what we’ve all been saying. No crash. But vulnerable if stretched out. Slow down. Does sound like a slow down. Prices have to drop because borrowing is now more costly. And, if the states gets into a full blown recession “dire consequences” for Canada.
Funny, saskhouses.com still hasn’t covered mortgage rates going up. You’d think kind of important to know if buying a home. I posted on there yesterday, but they seem to take a day to reject my comments.
May 8th, 2009 at 3:49 PM
Jim,
those units are all under various dates of completion. Until they are all done sales will eat into that inventory, it won’t reach 3,000, this year at least. I would expect about 400 sales per month for the rest of the year. Between 2500-3000 sales. So I think we will see a higher number in inventory compared to now at the end of the year but I don’t think 3,000. But the speculators are the wild card for sure.
May 8th, 2009 at 3:50 PM
George:
“As for people bashing the market, wouldn’t you if your dream was to own a house but then you are priced out. Most of the people here love this city for one reason or another. Afforadable housing is what we had over other places, not any more.”
This about sums everything up for me. It’s hard not to wish for everything to come crashing down when you’re on the outside looking in.
May 8th, 2009 at 3:50 PM
#1: Calgary prices are crashing down! Let’s see, $500k down to $480k, that’s a 4% decrease! Big Crash!
#2: On the news and in the Star Phoenix the other day: House builders in Saskatchewan are paying their employees more than they are paying in high and mighty Alberta! Wow, we make less money than them?
Nurses vote against equal wages with Alberta! We make less than the people there!
#3: Potash Corp surpasses all other companies in Canada as the number one capitalized company in Canada! I guess they are going down soon!
#4: Cameco CEO Gerry Grandey says that his company will need at least 3000 new employees in the next few years to expand production of uranium.
#5: BNN television channel 69 on Shaw Cable had a program on tuesday night Called “Power Play: Nuclear Comeback”. On this program they called Saskatchewan the “Saudia Arabia of Uranium”. We have the most uranium in the world, 43% of world supply. They were saying that right now there are over 400 new nuclear plants about to built across the world within the next 10 years, that means completed, as it takes about 8-10 years to build one. If I was a smart parent or young adult, I’d be sending my kids to school to be nuclear engineers, there’s a world wide shortage right now and will be for years to come, and these guys make big money, Homer Simpson.
#6: The Bakken oil play is estimated to be over 5 Billion barrels, some estimates are quite higher, 175-500 billion barrels of light sweet crude, just like Saudi Arabia. Saudi Arabia only has an estimated 400 billion barrels. The only reason they couldn’t get to it before was a lack of technology, now they have horizontal drilling. It’s not that expensive to get at and doesn’t require huge amounts of heat or water to get it out. Most people with big paying jobs in Alberta live in Calgary and Edmonton, but the oil fields are further away than the Bakken is to Regina and Saskatoon. Most people I know that work in the oil field, even in Alberta, live in Saskatoon and commute. Then they have enough money to afford these big nice houses.
Come on people, the sky isn’t going to fall if we all claim it’s going to, read the story of “Chicken Little”
Saskatoon house prices may have fallen slightly in the last month or two (2-5%), but for this trend to continue indefinitely or dramatically (30-60%), I don’t think so! I’d say this might be your only chance to get a bargain, don’t wait til it starts to go up 5-10% by next year!
May 8th, 2009 at 3:50 PM
Saskatoon prices have NOT fallen over the last 2 months. In fact, we’ve had the highest average price ever: http://srar.ca/Srarstats.php3
The bad news guys are starting to affect what we think of the market. Please, let’s just stick to the facts.
Oh and William, don’t you know you’re not allowed to be positive on here
May 8th, 2009 at 3:50 PM
William,
I don’t think anyone is saying that the future doesn’t look bright for Saskatchewan but in the mean time it is getting difficult for some us.
Sure wages for some industries are going up quickly but that isn’t the case for everyone.
I think that before things really start taking off, we are going to see some correction in the market. The housing market has exploded but I’m not seeing a lot of fireworks anywhere else at the moment.
May 8th, 2009 at 3:51 PM
William,
answer me this question;
Why has our housing market which has hit record inventory and growing seem to have hit a snag even though our economy is red hot?
May 8th, 2009 at 3:51 PM
George,
If I may ask you a question; why not?
Real estate is highly speculative for both investors and home buyers. People often decide whether or not they’ll participate based on what they believe is going to happen.
We have simply hit the limits of affordability.
May 8th, 2009 at 3:51 PM
Thanks Callum for the correction, you and Carl seem to be the only other positive people on this blog. I thought I read something on Saskhouses.com that said our house prices had dropped but only slightly, I can’t remember the right number but I thought it was less than 1% in April. According to SRAR from $306 to $301.5 that’s $4,500/306,000= 1.4% drop.
I would say that the high number of houses on the market is a result of fear that’s been projected across Canada due to National (Toronto & Montreal) news agencies saying that Canada is going in the crapper, yet they always forget (ignore = ignorant) to say anything about red-hot Saskatchewan. I know that middle Canada (Ont & Que) are in the crapper. All they have there is manufacturing, mostly big, expensive, gas guzzling cars and trucks. Now that oil and gas is so expensive, nobody is buying them anymore, therefore all their jobs are gone, and that makes their whole economy go down. They sell most of these vehicles to people in the U.S. and now that they are in a major recession, possibly depression coming, nobody there is buying these vehicles either. Do you know of any car manufacturers here? no. We have potash, which is in short supply across the world, and will be for at least 10 years. We have oil, which as a record high price. We have all types of agricultural products that are also at all time highs. The price of uranium hit an all time high of $138/pound last year and is still around $90. Just 5 years ago it was less than $8/lb. They predict that the price will steadily increase over the next 20 years because demand will outstrip supply over this period because there aren’t too many places in the world that have this product. The only thing that could make things better here, is if they actually open up that diamond mine by Prince Albert. From what I’ve heard, might only be rumour, they have 25% of what they have in South Africa. Should need alot of people to work there at high rates of pay. If that does come about, the north will boom too, house prices in Prince Albert have gone up about 50% from last year and they shut down the pulp mill, where 750 people lost alot of high paying jobs. I know 2 people personally that worked there and now they commute to Fort McMurray, but still live in PA.
What happens if Oilsands Quest actually begins production up in northern Sask, there’s going to be alot of jobs there too.
There’s just too many reasons to be here in Saskatchewan, too much potential, too many beautiful lakes and wilderness, I’m not going anywhere, I’m going to buy another house or two. It might be in Saskatoon, or Prince Albert, but I’m betting that both these places keep going up in house prices.
The inventory won’t stay high forever, people are going to finally realize that the scare mongering is meant for Ontario and Quebec, not here. I wouldn’t be surprised to see alot of these auto workers start making their way here. They will have alot of equity from their homes there as the prices of house out there have been twice or three times our prices for many years.
May 8th, 2009 at 3:52 PM
Will, you think fear from media?
How about local TV that does nothing but try to fit the word “boom” into a half hour news cast as many times as possible?
They completely ignored GDP data that had Saskatchewan growing at about half of the predicted rate in 2007, although had previously covered the predictions ad nauseum.
Most people are just frustrated that while prices doubled, our wages still were out done by Alberta in growth, and still trail most of the country, AFTER the big increase.
And now we have a prediction from National Bank that says oil will go way down, kind of bad for Saskatchewan’s economy if oil prices are cut in half. And of course, doesn’t make CTV news. Surprise?
May 8th, 2009 at 3:52 PM
Exactly Norm, people can not afford those new homes at those prices.
William,
As for the economy I believe the long term scenario for our economy is even better than Alberta. I have mentioned this before. I know about all the prospects we have. I see our economy being very strong the next 10-15 years. With that being said, the housing market is tied to the economy by only so much. There are many more factors that determine the housing market than just the economy.
We will see a decrease here guaranteed, the next few years. If you bought for the long run, nothing to worry about, but if you bought a condo or a higher end home to flip you are in trouble. These properties will be the hardest to unload. For condo’s the reason is simple,there are tonnes of supply coming on to the market and since they are overpriced most of these will be reverted back to the rental market. Unless they can cash flow when rented out not many be sold for the price they want now.
Would you buy a rental property and put $400 a month into it to make ends meet? I wouldn’t.
As for the higher end homes, some will sell but most won’t. And I have given my reasons before why they won’t.
High house prices are not good for the economy. Why?
Half of our economy is consumer spending. Since affordability is crappy right now, people who stretch themselves out will be house poor and this will have a ripple effect on our economy.
I think I am being realistic, not negative, and you know what, I own my home so I am not a bitter renter.
May 8th, 2009 at 3:52 PM
Here to prove it,
Saskatchewan land sales leave Alberta in the dust
http://www.canada.com/edmontonjournal/news/business/story.html?id=7310a3db-3513-40df-9c4e-2e59a5c9cbef
We do have tonnes of potential here
May 8th, 2009 at 3:53 PM
Doug,
You are also pretty good at spinning the news.
You paint a bleak picture in spite of the fact that Saskatchewan has been leading the country for job growth, income growth, nominal gdp growth and retail spending for the past couple of years. Hundreds of millions of dollars are pouring into this province from all over the world. Every key economic indicator is showing positive results and every economist that works in Canada is feeling pretty good about Saskatchewan’s prospects. It’s almost ridiculous to suggest that Saskatchewan isn’t thriving. I understand that nothing lasts forever, and yes, commodity prices could come down, but things are clicking right now and the people of Saskatchewan are seeing real benefits with more to come. Remember, everything doesn’t fall into place overnight. All of the growth we’re experiencing has yet to pay off.
May 8th, 2009 at 3:53 PM
Anybody expecting $70 dollar oil is in for a big surprise.
Go here:
http://www.theoildrum.com and do some reading.
As for the rest of the “doom and gloom” stuff, come on guys, get over it. There is a LOT of stuff being developed here in Saskatchewan that is going to start impacting the economy in very big ways in the coming years.
Land Sales for the Tar Sands in the north actually start in August, with development expected to proceed in 2009 and 2010, that will create literally thousands of jobs once it gets going. The article in the paper today barely summs up what the players are planning on doing up there.
There are plans for up to 3 new Potash Mines being developed in the next few years. 1 east of Saskatoon, 1 south of Regina and another to the far south of the province.
A Division of Shell is said to be moving 400-500 jobs to Regina after an office building (that starts soon) gets off the ground. Other corporations are considering the same thing.
The Sask Government is sitting on about a 3.5 billion surplus this year that they have yet to announce and everything that Wall and Co are planning to do is aimed at attracting business into the province.
The economic indicators have said that Sask is leading the nation now in Job Growth, Rising Wages, Factory output, etc, etc and that should continue well into 2010.
A LOT of people are expected to immigrate into Saskatchewan this summer. Some analysts are predicting in-migration of 5-10k people in the SUMMER alone.
Rentals are at historical lows, probably because so many people cant afford the stupid prices that homes have reached, but it also suggests that once prices come down a tad, that these same people will dump their rentals and buy.
Is Saskatchewan going to bust anytime soon?
No.
Is Sask going to go bust even if oil drops to $80 a barrel? Hardly. Supply constraints are written all over the wall, the Oil Companies see this and they know that long term, oil is going up, period.
Are home prices going to correct? Of course. You cant have 50% increases year over year, thats insane.
However, anybody execting home prices to drop to 2006 levels (ie- 50% price correction) is equally insane.
We all want a house, I understand that, but the simple fact is that as far as housing is concerned, things are not going to get much better for years to come. Things will no doubt correct a bit this year, but the other factors will keep things larely level and slowly rising for a very long time to come.
As for the US housing market down turn, keep in mind that that market was vastly different than here, and that large areas of the US are actually still booming.
May 8th, 2009 at 3:53 PM
Norm:
Oh come on Norm, the billions they are investing into Saskatchewan is all propoganda!!!!
Who in their right mind would spend money in Sask in this credit starved 2008 world economy?!?! They couldn’t have a plan could they? I mean, businesses like to waste money. All those Alberta, BC and Ontario license plates we see here now are for tourists. Right?
May 8th, 2009 at 3:54 PM
MIthan,
That’s the first time I’ve ever seen someone provide a link to TheOilDrum and then follow it up with an “that’s enough doom and gloom” comment.
Nice to see that link there for those who think oil prices are just due to Big Oil, OPEC, or speculators – although imo speculators are playing a part in the latest runup.
May 8th, 2009 at 3:54 PM
I was going to post a warning about the OilDrum being a very doom and gloom based “end of the world” forum lol but it served the purpose.
Oil isn’t going to $70 a barrel.
More propoganda, from TODAYS Leader Post, so its up to date:
Oil plays drive up prices
http://www.canada.com/reginaleaderpost/news/business_agriculture/story.html?id=920b9182-e6af-4eb7-8cd6-17e3559295cc
Sask. still the ‘it’ province
http://www.canada.com/reginaleaderpost/news/business_agriculture/story.html?id=be415522-8bbc-4772-9d63-800b4232395b
Sask. exports surge
http://www.canada.com/reginaleaderpost/news/business_agriculture/story.html?id=f52f237a-2721-438e-9f36-378066db2828
Oh, here is one for you guys:
Housing Prices Cooling:
http://www.financialpost.com/story.html?id=586074
They talk about Calgary and Edmonton’s HUGE CRASH of 2%.
May 8th, 2009 at 3:54 PM
You guys can post all you want about our booming economy until you are blue in the face,the fact of the matter is the economy is only one factor in determining house prices. I am bullish about our economy going into the future, but that does not mean housing is going to continue climbing into the stratosphere like it has.
These are the factors that determine a housing market ( there are others) in no particular order.
Interest rates, affordability, supply and demand, local economy (wages), consumer confidence, speculation.
Interest rates have inched upward, affordability is the worst its been for years, supply is creeping up while demand seems to be softening. The economy is doing very well. I’m not sure where consumer confidence is but there is a bit of speculation, how much, who knows.
These, of course are all tied together. The biggest sign to watch is inventory. If it goes up, prices will come down, if it goes down, prices will go up.
May 8th, 2009 at 3:55 PM
Actually, the new investment funnelling into Saskatchewan is a big part of the reason why Alberta real estate prices are stagnating or falling. There has been a shift in investment dollars from Alberta into Saskatchewan and Alberta is losing out. In fact, Alberta is really yesterday’s news and is getting rather stale and an investment story.
It seems every week there is an announcement of a new project in Saskatchewan or an oil discovery or something like that. The fact that Saskatchewan’s resource land sales are at an all time high and Alberta’s are at an all time low speaks volumes. I do maintain that much of Saskatchewan’s oil and gas is easier to get at than the Alberta finds. In fact, Alberta’s easy, conventional oil and gas has already long passed peak production and is in decline. Saskatchewan’s conventional oil and gas is just getting going and has a long increase ahead of it.The Bakken is the equivalent of a new Alaskan Slope or North Sea find. This is more of an explanation than tax rates. Both Alberta and Saskatchewan have plenty of the unconventional tar sands but this process is not as easy as it was thought and many of those projects are behind schedule. Even at $80 oil, the Bakken is very profitable. Saskatchewan’s conventional oil is one of the energy stories of the year up there with the Brazilian finds.
As such, expect capital and labour to migrate to Saskatchewan in increasingly heavy volumes. It will be only a matter of time before wages go up, hiring increases. Corporate offices will follow the crews on the ground.
Real estate prices are not going down in Saskatchewan. Rather, I expect continued, steady rises albeit at a lesser pace than the last two years. My predictions are from today’s date on an average of 7-8% rise per year for Saskatoon for the next five years. Regina will clock in a little higher at a 9-10% average per year for the next five years.
May 8th, 2009 at 3:55 PM
George,
To be clear, I wasn’t talking about housing prices. I was talking about the economy and the desire that some seem to have to pretend that it’s not so good. I am in touch with the reality to the extent that I can acknowledge housing is too expensive, and I understand the principle of supply and demand. I just refuse to deny all of the good things that are going on here.
May 8th, 2009 at 3:56 PM
Norm,
I know that, sometimes with my posts I am not as clear as I should be. Our economy is doing very well but like I have mentioned before the economy is just one factor in the housing market. You know that. I believe this is the place to be, and I wouldn’t want to be anywhere else.
May 8th, 2009 at 3:56 PM
Ron,
Just curious why you feel that Regina will see larger increases.
George,
Thanks.
May 8th, 2009 at 3:56 PM
Interesting Globe and Mail link:
Home listings flood market
LORI MCLEOD
Globe and Mail Update
June 13, 2008 at 4:05 PM EDT
http://www.reportonbusiness.com/servlet/story/RTGAM.20080613.wmls0613/BNStory/Business/home
Some excerpts:
Other data included in the report (all figures compare May, 2008 with May, 2007):
– Markets with the largest increases in listings: Regina (+58 per cent), Saskatoon (+44 per cent), Greater Vancouver (+20 per cent), Victoria (+20 per cent), Sudbury, Ont. (+16 per cent), Ottawa (+16 per cent).
– Markets with the largest drops in listings: Edmonton (-9 per cent), Windsor-Essex (-6 per cent), Newfoundland and Labrador (-6 per cent).
– Markets with the largest decreases in sales: Saskatoon (-37 per cent), Edmonton (-35 per cent), Calgary (-33 per cent), Greater Vancouver (-31 per cent), Regina (-28 per cent).
– Markets with increases in sales (2 of 20): Newfoundland and Labrador (+5.5 per cent), Ottawa (+2.5 per cent).
– Markets with the largest increases in unit price: Regina (+45 per cent), Saskatoon (+29 per cent), Saint John (+22 per cent), Newfoundland and Labrador (+21 per cent).
– Markets with decreases in unit price (3 of 20): Windsor-Essex (-6 per cent), Edmonton (-5 per cent), Calgary (-2 per cent) .
May 8th, 2009 at 3:57 PM
Darn it! No mention of a category that we surely would have taken the prize in; Largest increase in active listings. Saskatoon!! Up 380%.
I’m surprised that Windsor faired so well. I thought it was nearly impossible to give a house away there. And why such small decreases in Calgary and Edmonton? Weren’t these cities 10,000 deep in listings by this time last year?
Thanks Crikey! Interesting article.
May 8th, 2009 at 3:57 PM
No problem, Norm.
If I need a RE agent in the near future (well, perhaps not so near), you’re the man.
May 8th, 2009 at 3:57 PM
Total MLS for Calgary was 7000 last year at this time. Now it is over 15,000. Take into account this includes places like Chestermere and Airdraire.
http://www.creb.com
I read an article a while back that there were hundreds of houses for sale under $1000 in Detroit. I’m sure that Windsor is not that far off from that kind of fate having the same economy. I wouldn’t expect those people having much equity to buy a house in Saskatoon or anyplace west.
May 8th, 2009 at 3:57 PM
Buying a house you can’t afford based on a job you might get in an industry that’s planning on locating here someday soon is not a smart move.
No matter how many wonderful economic rainbows there are on the horizon — and they may be, at that — prices will fall because they’re out of line with what people can afford. The same thing is happening in Alberta, which still has a nice strong economy. Their market is correcting because their housing prices went up by the same ratio ours did in 2005-06 and they’re going through the same correction we’re heading into.
In general housing markets are pretty stable, unless you get people buying extra properties to flip or rent and then getting stuck with them, or people putting so much money into their mortgages that they can’t deal with other expenses, or just don’t have any wiggle room in case of disaster.
Doom and Gloom? No, dollars and cents. Price things beyond the means of your market = lose your shirt.
May 8th, 2009 at 3:58 PM
“Actually the link Callum posted shows a drop in prices in May, ie NOT the highest price ever.”
Ok, you got me – they fell 5 grand from April to May. Perfectly normal activity as you will see from the SRAR link I posted. What I should have said: For the last 2 months Stoon’s average price has been above 300k for the first time ever. I want to be as accurate as possible, nothing annoys me more than people who pull numbers out their a…. the air. I like predictions too: We’ll hover in the high 200k (280k +) average price area for the rest of the year. If I’m wrong I’ll come here next year and eat virtual crow.
May 8th, 2009 at 3:58 PM
Okay Callum — so what you’re REALLY saying is that you expect a 20,000 drop in average price over the next 6 months.
That’s not a very positive statement, eh?
May 8th, 2009 at 3:58 PM
ROFL I love it how the bears are being called “negative” when the accusers have some of the angriest posts on here.
Very good article Crikey, I came on here to post it, but was WAY behind you! ;’)
I can’t believe Regina’s inventory has increased more than ours! There goes the theory on how Regina will see higher gains than Saskatoon this year.
I also hear around 40 people so far have dropped out of the Willowgrove lot draw because they couldn’t manage to sell their house for a fortune. Very sad.
May 8th, 2009 at 3:58 PM
Heather,
Where did you hear that “40 people so far have dropped out of the Willowgrove lot draw”?
May 8th, 2009 at 3:59 PM
Heather,
I imagine there were people who thought they could get around the “sell the house in a year and not pay the $50,000.” They couldn’t and dropped their lot. I bet if the city had implemented this 2 years ago, there would have been quite a bit less speculators buying in the new areas. These areas would have still sold but our average price would probably be lower.
Hmmm, take speculators out of the market and now it seems affordable and then there is no talk of a correction here.
Maybe the city should charge a certain percentage to anybody who bought a lot in the new areas within the last 4 years and is flipping the house. If they make let say 100k on the sale charge 15%, that is fair and give it to affordable housing. It does 3 things, keeps more speculators out, keeps prices down and helps out affordable housing. Win, win situation
It it would never fly, but maybe for the future it is something to look at.
May 8th, 2009 at 3:59 PM
Ok, lets change the topic.
Lets say that prices will decline (probably likely due to increases supply).
Callum, predicts $280k, which represents a “correction” of 13% from June 2-6′s “average” sales of $323k.
My prediction is a max of $250k. That would be a 20% “correction” from the $320k average sale prices you have seen over the last 4-5. That degree of a drop would probably take 12-18 months to accomplish. Prices don’t drop over night, thats just a fact but even then, 20% over a year or so would be pretty big.
What do you guys “predict”
May 8th, 2009 at 3:59 PM
George,
“Total MLS for Calgary was 7000 last year at this time. Now it is over 15,000.”
Gotcha, but I still think the price change is pretty small given the inventory.
Heather,
Regina has 826 active residential listings today.
May 8th, 2009 at 4:00 PM
Norm Fisher said:
George,
“Total MLS for Calgary was 7000 last year at this time. Now it is over 15,000.”
Gotcha, but I still think the price change is pretty small given the inventory.
You’re right Norm, the price change is minimal. The kicker is that sales have dropped in Calgary by 34% from last year at this time. It’s the waiting game in Alberta right now…and somethings gotta give sooner or later.
May 8th, 2009 at 4:00 PM
Mithan,
Sounds like fun. Let’s keep in mind though that last week’s average is not a reliable starting point. The average price is not $323K in Saskatoon. It was last week, but it was $295K two weeks before that and I can promise you that prices did not rise $30K over two weeks. These weekly numbers are based on fewer unit sales and very much subject to skewing by a few large, or small sales.
I think that Callum is probably pretty close with his number of $280K. I suspect that we’ll probably be in that range and it will happen by year end.
In February, the average was around $264K and unit sales were still showing increases over the previous year. We saw our first decline in March when the average approached $290K, and sales have steadily dropped as prices pushed towards, and over $300K. I think the affordabilty tipping point is somewhere between those first two averages. Assuming that wages continue to grow with their current momentum and interest rates don’t see a spike, $275-280K is probably a number which will be sustainable by the end of the year.
May 8th, 2009 at 4:01 PM
“$275-280K is probably a number which will be sustainable by the end of the year”
That is where I think we are headed. Inventory will be the sign to watch for. High inventory won’t drastically drop our price. But higher inventory will keep the price from climbing like we have seen.
I think looking at Alberta does give us a idea what will happen here. Even though they have a huge inventory the yoy price decline is minimal. I expect the same kind of thing here.
A decline for a few years, then we will see where inventory stands. If it is low and the economy is red hot, interest rates low we will begin to climb. But right now affordability at these prices needs to improve.
I believe the only people really affected by a decline the next couple of years are the speculators, is that such a bad thing? I don’t think so.
May 8th, 2009 at 4:01 PM
I agree alaso 280,000+ is where i see prices heading too. Which I think is still good not to low that people who bought this year for 300,000 t00 320,00 and stay in there house for a couple years wont lose equity.
May 8th, 2009 at 4:01 PM
More people will be moving to Saskatchewan in the future…
http://www.reportonbusiness.com/servlet/story/RTGAM.20080613.wpotash0613/BNStory/energy/home?cid=al_gam_mostview
Potash: The new gold rush
CAMERON FRENCH
Reuters
June 14, 2008 at 1:00 PM EDT
TORONTO — Long dominated by a small group of local players, Canada’s potash industry has become red hot, as soaring prices have begun drawing both top mining companies and small exploration firms to the vast resources buried deep under the western prairies.
Used as a key ingredient in fertilizer, demand for potash has soared along with grain prices, driving up shares of world No. 1 producer Potash Corp. nearly threefold over the past year.
It has also pushed explorers’ stocks higher, prompted a staking rush and raised expectations of takeovers.
With potash being sold for well over $700 (U.S.) a tonne recently – about triple last year’s price – several small companies are getting into the game, while top global miner BHP Billiton has also thrown its hat in the ring.
In May, BHP launched a $284 million (Canadian) bid for explorer Anglo Potash Ltd. to gain full control of an exploration joint venture between the two companies.
Speaking at a mining conference in Toronto last week, Graham Kerr, BHP’s head of special projects, said the mining giant planned to pursue “multiple projects over the course of the next few years.”
Analyst Ray Goldie of Salman Partners said he could see other big players coming in to snap up smaller leaseholders.
“BHP’s shown it wants to play, and I think you could see other companies like Vale and Anglo (American) wanting to move into the area,” Mr. Goldie said.
“One way of doing that would be by taking over smaller companies.”
For explorers, finding potash is not the hard part, as the western province of Saskatchewan has an almost unending supply. The trouble is the high cost of digging the deep mines, with long lead times needed to procure scarce equipment and find skilled workers.
With prices stagnant until recently, it has been about 40 years since a new mine has been built in Saskatchewan.
Now the market is waiting to see who will build the next greenfield mine, which would likely cost somewhere above $2.5-billion and take well into the next decade to build, with an expected annual production of 2 million tonnes.
The increased investor interest has pushed Potash Corp.’s market capitalization to around $70-billion, making it one of the largest companies on the Toronto Stock Exchange.
Shares of junior players, some yet to even identify resources, have also gone through the roof.
Potash North Resource Corp.’s stock has risen a remarkable 16-fold since last Tuesday, when the company changed its name from Timer Explorations and announced it had been granted a potash permit covering 91,000 acres.
The TSX Venture Exchange-listed property-holder now boasts a market capitalization of more than $100-million and has backing from well-known mining entrepreneurs Robert Friedland and Lukas Lundin.
Raytec Metals Corp. shares are up 85 per cent since releasing a potash resource calculation earlier this week, while Western Potash has climbed 48 per cent since it announced last week it would begin a drilling program on its Manitoba property.
The Saskatchewan government says there are 130 current potash mineral claims or leases in the province, more than half of which were entered this year.
“There weren’t a lot of exploration permits, if any, a couple of years ago,” said Roy Schneider, a resource official for the province, which holds the vast majority of the country’s potash reserves.
“Now we’ve got 130 sitting there that are already processed plus more than that in the system.”
He said potash sales in the province in 2007 were $3.1-billion, up 38 per cent from the previous year, largely due to increased demand from countries such as China and India.
“When you are the province that’s known as the Saudi Arabia of potash, that’s good news.”
May 8th, 2009 at 4:01 PM
Ya, its pretty crazy. Wait for them to start announcing all the Tar Sands projects at the end of the year on top of that…
Still it does go back to an important point…
Much of this stuff is still years out, and while it WILL be developed and WILL bring tens of thousands of people into the province between 2010-2020, it still doesn’t really justify the price increases we saw the last 2 years before any of this stuff has really gotten off of the ground.
The cool thing is that all of these projects are being undertaken and analysed at profit levels of a couple of years ago. The reason for that is because most people in the know, know that comodity prices are inflated right now and will probably burst at some point in 2009. Still, a return to “sanity” for Potash, Oil, etc will still be much higher than in years past and demand will simply keep growing long term.
May 8th, 2009 at 4:02 PM
Norm, my thought on Regina is that it is quite close to the Bakken oil reserves (which is developing as wI type) and so would be a natural place for a large oil industry servicing centre. The Bakken oil is a find as big as the North Sea and is the cheapest new oil play in the world today. It was interesting that the Globe and Mail today went on describing the frontier oil projects in the Arctic, Brazil and the tar sands as super expensive but forgot to talk about the Bakken which has a much better return on investment. I can see Regina having the economic boom that places like Fort McMurray have seen. Saskatoon will be fine as well. Oil companies that are into the Bakken will have a much better return than ones that do not.
May 8th, 2009 at 4:02 PM
Saskatoon gets media attention. Click above to read article:
Yesterday in the Globe & Mail:
“A fresh flood of homes on the market sent resale listings to their second consecutive record level in May, while sales activity and price gains both cooled.
“Rising food, fuel and home prices are denting consumer confidence. Increasingly cautious home buyers may keep listings on the market longer before being sold, which increases the importance of realistic pricing,” Gregory Klump, chief economist at CREA, said in a statement.
The most dramatic surges in new listings occurred in Saskatoon and Regina, a marked reversal from earlier in the year when they were the country’s tightest markets in terms of supply.
New resale listings rose by 58 per cent in Regina and 44 per cent in Saskatoon year-over-year in May. During the same month, year-over-year sales fell in those markets by 28 per cent and 37 per cent respectively.
May 8th, 2009 at 4:02 PM
Saudi Arabia of potash eh? I’m sure everyone in Saudi Arabia is just rollin in dough too, even the ones not in oil…
May 8th, 2009 at 4:03 PM
Does anybody here read the local newspaper? In today’s issue there’s one article entitled, “Saskatchewan to Lead Provinces”. An economist from RBC says that due to high commodity prices, Sask will lead the country in GDP growth for the next couple of years, at a rate triple the rest of the country.
It also states that there is a labour shortage here and they expect immigration from other parts of Canada and across the globe.
Retail sales have risen dramitically above national levels due to heightened migration, and recent population surges.
In another article, it says that Sask house prices are not expected to fall, even though there are a record number of listings, due to large numbers of people set to move here within the next couple of years, and record high prices for uranium, potash, wheat and oil. It also says that due to increased world demand for these products, they don’t expect the prices of these commodities to fall any time soon.
I wonder why people refer to articles printed by the eastern media, The Globe and Mail or the National Post, they often ignore Saskatchewan completely. I guess we’re too small of fish.
If I was thinking of buying a house in the next year, I would be doing it within the next couple of months before all these other people start moving here, this could be a great time to do it, with the high inventory and the slight decrease in prices (remember it’s only dropped 1.4% in the last month, look at the SRAR numbers, it happened a couple of times last year too, and then look at this year, up 20 or 30%, although I don’t think it will go up that much again but I suspect another 5-10%. 10% on a $350,000 house would make it $385,000 by next spring, do you want to take that chance?)
I don’t really feel sorry for first time buyers not being able to buy a $400,000 house, they shouldn’t be owning one anyways, maybe when they are in their 40′s after they’ve built up 20 years of equity like the rest of us have had to do. I think they should have to buy that $180,000 condo or that house on the west side, or a small house on the east side, that’s where I had to start. I didn’t have rich parents or a high paying job back then. I had to be a renter until I was 26, sorry that we can’t all have everything now, I guess that’s the problem with todays’ culture, we all expect to have that brand new car just out of high school or that big fancy new house at the tender young age of 25, but the way I see it, life just isn’t that easy or that way. I’ve never had a brand new car my whole life and I’m 44. I couldn’t afford one until I was at least 25, and in my mind, I think it’s a rip off to buy something that depreciates 40-50% in the first year of ownership, it’s like throwing money away.
If I was a first time homebuyer, and I just missed the boat only a year and half ago, when prices were almost half of what they are today, I wouldn’t be waiting for prices to come down, because I just don’t think that’s going to happen. I would be counting my nickels, talking to my parents, siblings or relatives that might be able to help me buy that first house or condo for $180,000-$250,000, you know the fixer upper on the east side, maybe in the exhibition area or holliston, or Queen Elizabeth or Avalon, or for the more braver, some of the parts of the west side where house prices are still pretty cheap, like Riversdale. From what I’ve heard the plans for that area in the next 5 years are incredible. It could become one of the most popular areas, being that it is so close to the river, downtown, parks. I remember 6 years ago a friend of mine had a pilot buddy who owned a big old house near downtown Calgary in Mount Royal, it was kind of like a Riversdale area then, he was only asking $275,000. Right now that same house is worth more than a million. They did the same thing that they are doing right now in Riversdale, rejuvenation. No, I don’t own anything there right now, no, I’m not a speculator, I’m just trying to help people put things into perspective.
May 8th, 2009 at 4:03 PM
Norm I have a question for you from worn out and worthless Alberta.
What the heck does the statement “all serious offers considered”imply?
I think it has a lot of implications so I’ll throw it open to anyone who cares to give their views on it.
I’ve heard it means offers where the money is firmly in place (ie: not conditional on seeling another house) or that it means an offer (pick a percentage) that’s within a certain percentage of asking.
As the place I’m refering to has been on the market a while and gone through several price reductions and the owners have bought out of province I’m curious as to an “offer strategy” might be.
By the way and with no malice intended I have recently run into unassociated people that have moved back here (Alberta)from Sask.
They each had their own reasons for moving back but the one common peeve seemed to be that the Sask. provincial taxes gagged them.
Yes I know; a few anecdotal experiences don’t suggest a pattern. But I think once the money starts rolling in, the Sask. government will be looking for ways to become more attractive in that area (what government wouldn’t?).
So while we’re counting the chickens; that’s more good news… right?.
May 8th, 2009 at 4:03 PM
Ken,
Lol!
“All serious offers considered,” implies to me that they’ve probably had no offers, serious or otherwise, and they’d really like to get one, but not enough to actually reduce the price to a reasonable level which would encourage people to make serious and reasonable offers. These little catch phrases, and others like “motivated seller,” almost always say the exact opposite to me.
Sounds like you’ve been given an awful lot of information about the seller’s motivation. If I were you, I’d start in great deal territory and work my way up from there. They’ll probably make a counter but you might be pleasantly surprised where they come back.
Make sure you carefully review recent sales. If several price reductions haven’t worked they were certainly grossly overpriced to begin with. While there are lots of listings out there right now, selling a home at market value is still “like falling off a log.” If they’re having that much trouble, something is definitely wrong.
Good luck.
I have also met several people who are headed for home after a move back to Saskatchewan. I close on a listing shortly for some folks who arrived last fall and are already back where they came from.
Hope you’re right about government actions to address the high taxes we pay here. Sounds like the treasury is bursting at the seams.
May 8th, 2009 at 4:04 PM
I guess Heather is not around, has anybody heard anything about 40 lots from the lot draw being returned
May 8th, 2009 at 4:05 PM
Carl,
I’ve heard nothing of this but the city’s Willowgrove lot map seems to indicate that about 50 lost are currently for sale.
May 8th, 2009 at 4:05 PM
Just so I can sound like a broken record too, I do NOT think now is a good time to buy, and people should wait. Those who do will be rewarded with a lower mortgage. $20,000-$30,000 will make a difference, not to mention interest saved. It doesn’t matter what Saskatchewan will lead the country in, blah blah blah… the real estate boom has already happened. As long as there is oversupply prices won’t continue to rise. It’s worth waiting until the fall for sure.
Regarding the lot draw, come June 17 the first 80 people will have picked their lots. Some of these people have dropped out from the lot selection process leaving more lots available for people further down the line. The city will begin calling the next group soon. There were only 83 lots up for grabs for individuals, the rest went to builders.
May 8th, 2009 at 4:05 PM
Norm; Thank for the tips. I’m not trying to be a sleezebLL bout it but maybe I can get a place I like for what I can afford. And maybe they would get enough to move on and stop worrying about why no one likes their place.
You hit it on the head: one ot the difficulties of setting a price after a run up is the desparity between true value and what the “market” may perceive. I believe you said earlier that true market value is what someone is willing to buy at from someone who is willing to sell.(This place has come down $10,00.) Truly I only see the recent run up as the instigator for the overvalued price it started at.
Optimist:
People are emotional when it comes to money. You ne to make decisisions when you buy sell or hold and some times there is a tendeney to believe in your own research past the point of validity. evrything anges. History is full of ” crazies”tat perservered in a belief and were eventually proven right or wrong.
And please the use of the word “retarded is disrepectful and poorly used.
May 8th, 2009 at 4:06 PM
Good luck for all you people that are going to wait until prices fall with the sky. If you keep thinking like this, you might not be able to afford to live here anymore! Rents seem to keep on rising, I’ve seen 2 bedroom basement suites in Mount Royal for rent for $1500/month!
Bye, Bye!
May 8th, 2009 at 4:06 PM
Ken,
There’s nothing sleazy about looking after your own interests in a real estate transaction.
William,
Of course you didn’t find it offensive. He was stroking you while he said that the rest of the readers here are uninformed.
I’ve just took a short stroll up this thread and there are a bunch of positive comments about the future of Saskatchewan. There are numerous links to local news articles, at least one to the Financial Post, one to theoildrum.com, a few from economist.com and a few to reportonbusiness.com.
So William, if you haven’t seen “anyone” post anything positive, you’re not really following the discussion.
Sorry to see you go but, bye bye.
May 8th, 2009 at 4:07 PM
Just to correct:
The place in question has come down $100,000 not $10.00 or whatever I wrote. Thanks Norm for the encouragement.
Aplogize for spelling and grammar in last post. Father’s day company was here and I was distracted.
To all Dads: Have a great day. Remember… we had SOMETHING to do with it all.
May 8th, 2009 at 4:07 PM
jrochest said
“Okay Callum — so what you’re REALLY saying is that you expect a 20,000 drop in average price over the next 6 months.
That’s not a very positive statement, eh?”
Just realistic, I’m not selling or buying or refinancing in Saskatoon right now, merely an interested observer…
I think it would be fabulous if Stoon ended the year at 280k or so. I’m a little worried about interest rates at the moment, much more so than rising inventory.
That quick rise in the rates last week after the BOC no-move was a sign of something…
May 8th, 2009 at 4:07 PM
callum,
What do you think is going to happen with interest rates? It is pretty strange what went on.
May 8th, 2009 at 4:08 PM
Callum and JR w.r.t. discussion on “expect a 20,000 drop in average price over the next 6 months”
Just looking at condos AND houses now, and virtually every real estate agent has offered $10,000 to $20,000 off list (and occassionally free furniture, once $29,000 discount) without me even seriously trying to negotiate price. Far from making me think it’s a bargain, it scares me, as if they are offering $20,000 off right off the bat, must mean they’re afraid they won’t be able to sell any where near list. Then you wonder why list is so high, if they can shave $20,000 off a mediocre condo and likely offer to do it to everyone?
Is this the “door in face” technique?(Making outrageous prices look better by first listing at an even more outrageous price?)
I do not want to buy in a market where I have NO IDEA what the ACTUAL price is, and where it seems sellers are trying to offload properties, but keeping prices artificially up, in hopes some one gullible enough will come along.
May 8th, 2009 at 4:08 PM
Interest rates are on their way up, lock in time in my opinion.
May 8th, 2009 at 4:08 PM
To start, I just want to say that I love all the different opinions on here and find them very useful. Even the bickering is entertaining…so keep it up!
I just moved here at the beginning of 2008 so I’m pretty unfamiliar with the market. So I’d like to go a bit off the topic of the future of the market. Before I can form my own predictions/opinions on that, I need to know more about the past and present. I have a few questions that I’m hoping some of you can answer. Any feedback you may have would be greatly appreciated.
1) How much has the market REALLY boomed in the last couple years? The way I’m reading it…did things double since 2006? Were the homes I see listed now for 400k, 200k in back? For 300k, just 150?
2) What is this rejuvination of Riversdale I keep hearing about? Is it a myth or is the city really going to try and spruce up that area. And if so…how? And to what parts?
3) All these homes I see built in 1912. Is there any chance of them lasting through a 25 year mortgage and still be standing afterwards?
May 8th, 2009 at 4:08 PM
If the Bank Of Canada drops 25-50Bp by Spring, Prime may follow suite. However that does not mean that a fixed interest rate will drop to the same amount. I was explained to me the Banks cost to attract capital has increased substantially and there is much less available given the environment we are in. Supply and demand theory would suggest it is more expensive.
I don’t understand this exactly maybe others here do, I was told it follows these two areas;
1) BA Swap Yield curve (which is similar to Gov’t of Canada Bond Yields). 2) Plus a Liquidity Premiums charged by the holders of the Capital (open market system).
My gut feeling is rates will slowly increase near the end of 2009 or early 2010. Then continue to increase until hitting double digits by 2015-20? Very long amortizations, plus those finding things difficult to budget monthly now may be in shock going forward unless they make enough head way by that time…Just my guess.
http://www.journalofcommerce.com/article/id32371
http://www.dailyfx.com/page/central_bank_interest_rate.html