Saskatoon real estate: Week in review (May 19-23 2008)
New listing activity softened some this week as 179 single-family homes and condominiums were offered up for sale on the Saskatoon real estate market, finishing under 200 for the first time in five weeks. A similar softening occurred in the sales column with just 69 residential properties changing hands including 61 houses and condos, the lowest level of sales recorded for any week since January 14-18. With just 260 sales recorded for May, and just one week remaining in the month, it’s clear that unit sales will be off significantly from May, 2007 when they reached 500 units.
Total active listings reached a new high at 1,125 residential units. At present, there are 715 single-family homes (houses) and 315 condominiums available to Saskatoon home buyers.
Overbidding returned to the lower levels we’ve seen in recent weeks with just 9 properties (14.75%) recording sale prices above the asking price. A full 75% of home buyers were able to negotiate with their chosen seller to the tune of about $11,000 on average. This is the first week where the average underbid crept above $10,000 and the second largest average since we started recorded underbidding last August.
The gap between list price and selling price continued to widen. While the average selling price remained pretty strong at $295,238, nearly 20% higher than it was at this time last year, sellers are starting to get the message that the market has softened. So far in May, 241 price adjustments have been processed on the local multiple listing service.
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.
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Norm Fisher
Royal LePage Saskatoon Real Estate
30 comments so far. We'd love to hear your thoughts.
May 12th, 2009 at 9:24 AM
Whoohoo! Let the “softening” continue!
May 12th, 2009 at 9:24 AM
http://www.canada.com/vancouversun/news/business/story.html?id=15b7dec7-1936-4081-8ca9-029cb6238856
May 12th, 2009 at 9:24 AM
So Norm, let’s say on average throughout the summer we see (optimistically) 85 homes being sold each week… 85 X 4 weeks X 3 months = 1020 listings. That would be the # of residential properties needed for a 3 month supply in Saskatoon.
I recall you saying something about a buyer’s market having MORE inventory than a 3 month supply? Would you say we’re already IN, or nearing that buyer’s market? (passing right on by “balanced”)
May 12th, 2009 at 9:25 AM
JJ,
Quite the article! It’s Scotiabank VS Royal Bank of Canada… and RBC stands VICTORIOUS! Oh but did you catch that last sentence? “…similar fate to Alberta’s likely for both of these cities in a year’s time.” Oops, a tad on the safe side – that year is NOW baby!!!
May 12th, 2009 at 9:25 AM
So is it as bad in Canada? How is the market up there? Has it only just started to soften? The market?
May 12th, 2009 at 9:25 AM
I still think that about all we will see long term is an elimination of the price increase we saw in the first few months of 2008, which was totally based on the media running up the price on sellers minds anyways.
I think things wont drop to where they were last year, unless our economy goes *** up, which we would be stupid to hope for, though no doubt some here will.
May 12th, 2009 at 9:26 AM
Heather,
I said, in the comment string of last week’s review, “Inventory levels which offer about a three month supply are pretty balanced. Once we get beyond that, we’re probably in a buyer’s market.”
I think it would certainly be a stretch to call it a seller’s market as some are still doing. Seems to me that conditions are rapidly improving for buyers on a week to week basis. If we’re not in buyer’s market territory yet, there is some real momentum that is taking us that way in a hurry. Activity over the next thirty days will start to paint a clearer picture.
May 12th, 2009 at 9:27 AM
Norm, are you expecting SRAR to report the May numbers? (Not to mention March and April.)
May 12th, 2009 at 9:27 AM
flat fee MLS,
No it’s not that bad in Canada, not even close to the situation in the States. Things are definitely softening with real estate, but it’s been on a roll for the past 5 YEARS so this was bound to happen. (and pretty much NEEDED to happen)
May 12th, 2009 at 9:28 AM
“Markets in the West, which have risen the furthest above their underlying values, are the most at risk of an increase in defaults”
I wonder if after year-over-year May numbers come in down in sales, with substantially more listings each week than sales, we’ll actually start to hear more about the softening market in the media? Again, I never predicted a huge “crash” but a moderate price correction is in order. Good to see 75% of buyers are UNDERbidding asking prices.
Regina lost population between 1996 and 2006 with pretty minimal housing price increases, with many of those years being pretty good economically. To say our strong economy (which before has had little to no effect on housing) justifies crazy growth over 2 years is just not true. It would be nice to see our market drop a bit, say 10%, and for price increases to be based on something other than boosterism (I forget who introduced this word to the blog, but I enjoy it)
I love that Vancouver Sun article, saying we’re (Saskatoon and Regina) about to go from “Hot” to “Not”, didn’t notice it in the Star Phoenix, but I have been gone for a while. Thanks JJ. Good to see the media elsewhere is being honest about Sask’s overinflated prices.
“Eric Beauchesne, Canwest News Service
Published: Friday, May 23, 2008
OTTAWA — Canada’s long-running housing boom has ended, with the formerly bubbling markets of Calgary and Edmonton already having gone from hot to not, and with the current hot spots of Saskatoon and Regina to follow, a major Canadian bank says”
“Markets in the West, which have risen the furthest above their underlying values, are the most at risk of an increase in defaults as a result of recent mortgage innovations, the report’s author, RBC economist Amy Goldbloom, said in an interview.”
From JJ’s Vancouver Sun Article http://www.canada.com/vancouversun/news/business/story.html?id=15b7dec7-1936-4081-8ca9-029cb6238856
May 12th, 2009 at 9:28 AM
callum,
SRAR provided some stats to members for April. I used the year to date stats to extrapolate March’s. They’re posted at http://www.teamfisher.com/MLS__Stats/page_1723681.html
I expect that we’ll see a big decline in unit sales for May.
Jim,
It won’t be long before we start hearing this kind of news locally.
May 12th, 2009 at 9:28 AM
Does this mean that I, who bought a house last week, am basically SOL? Should I have asked for more off the selling price?
May 12th, 2009 at 9:29 AM
recent buyer,
That depends on your situation, was this your first house, or were you already a home owner? How long are you planning to stay in SK? Eventually the market will start gaining again, but it may not be for quite some time. (in my opinion)
May 12th, 2009 at 9:29 AM
Recent Buyer,
Your making a common mistake that all the bears here make.
This year has seen over valuation in the market, where people read media stories and toss an extra $100k on their home. An example is that a nice home that would have sold early last year for $250 is now priced for resale at $450k, when $325 to $350 is more inline with reality…
They wont get $450k for it but they will probably get $325-$350 for it worst case.
The bears here see this as evidence the market is collapsing, when nothing is further from the truth. All that is happening is that reality is kicking in and sellers are going to need to sell to what the market can actually afford.
The homes that will loose the most value are the ones that were the most inflated. For example, I have seen 800sq ft homes built in the 30′s and worth 80k 3 years ago, with “For Sale” signs asking $500k for them.
NOBODY in their right mind is going to pay $500k for those homes.
I’ve also seen homes that were bought last summer for $300k being flipped now with an asking price of $750k. Again, nobody is going to pay that, they are going to build instead.
Do you see my point?
People are “asking” much inflated prices for homes but they are not getting it anymore.
That “media inflation” will be wiped out, meaning the guy who bought the $300k home last year intending to flip it this year for $750 isn’t going to get $750, but he WILL get a lot more than last year, just not a stupid price for it.
Look, as long as you didn’t buy something that quadrupled in price in 2 years, your fine. If you bought something like a decent 1050sq ft bungalow that was valued around $150k 2-3 years ago for $250-300k, you are going to be fine.
Don’t be scared by a few bloggers here into thinking that the market is going to go down to 2006 levels where the average price of a house goes back to $125k or whatever it was. That isn’t going to happen.
On the other hand, don’t think any home you buy today is going to double in price tomorrow. It wont. Unless you bought an over inflated home, expect that your home value will stay relatively flat for years to come, or raise at inflationary levels as is the norm.
That wont be good for some people, but no doubt they will be pissing away a mortgage on rent and getting further behind.
As usual, you need to find the middle ground between the “market is going to crash and correct by 100% AHHHHHH” people and the “buy buy buy!” people.
What is going to happen is that the insane scenario I described above (asking half a million for a crap home that wasn’t even worth $100k 2 years ago) is done. Homes that people bought last year for $250k and expecting to sell it for $500k this year, is done.
Saskatchewan’s ability to support homes in the $500k range is very minimal. The ability to support homes in the $200-300k range is very strong.
I know couples in BC and Toronto that have combined incomes of $60k a year that own $300k homes and we can’t do it here?
Now, barring economic disaster, which usually affects poor people harder, things could go down more, but all the indicators are that Sask is positioned well for growth into the future due to world demand for things we produce. Ya, some people will tell you that Sask sucks, we have nothing here and bla bla bla. Yes, because resources are going to collapse when 2.5 billion people in India and China are dying to get their hands on what we have.
Also, keep in mind that people ARE moving into Saskatchewan and our economy IS going to keep going up for years to come. If you go to the city of Saskatoon and Regina, they will tell you there are literally hundreds of new projects that businesses will be building in these cities in the next few years that have not gotten started yet because, well, it takes time to come up with plans, find developers, etc. Regina sold all its industrial land last year and while some is purely for speculative reasons, do people here seriously think ALL OF IT IS? Come on.
There are also tonnes and tonnes of people waiting in the wings for things to come down so they can finally buy a home. Record Low Apartment Vacancies in Saskatchewan are clear indicators of this and If you look around at your own network of friends and family, how many are looking for prices to come down so they can buy a home? I bet quite a few.
Prices coming down will stoke a “mini-boom” in and of itself as renters get out of paying a mortgage worth of rent to people and buy a home, and that will keep demand in and of itself strong.
I’ve had 3 friends in the last 2 weeks that finally found good deasl on homes and bought into them. They all bought nice little bungalows in the $220-260k range that they can afford. They know that they could lose $15 or 30k over the next few years but don’t care because they know long term, those homes will remain steady, plus that they will be LIVING IN THE HOME.
The main thing is that our home prices should start reflecting the economy again, not what people buying them last year for $250 and hoping to sell this year for $500k, think they are worth.
So yes, there will be some corrections in the next year or two, but that is normal and will come off the “asking price”. When things finally level out, no doubt the average home spread in Saskatoon and Regina will be in the $200k-$350k, where it used to be in the $100k-$250k range. Just refuse to buy a crappy little shack over the $400k range and you should be fine.
May 12th, 2009 at 9:29 AM
“reality is kicking in and sellers are going to need to sell to what the market can actually afford”
Couldn’t agree more. But this is great news for buyers. As if prices are down to what people can actually afford, and what is justified, that is substantially lower than what prices have been in the past. This is a pretty major correction and a pretty good deal for buyers and means sellers should have gotten out months ago as RBC Economics is now echoing what we’ve been saying with price decreases in our “unjustified” market of Saskatoon.
http://www.rbc.com/economics/market/pdf/citytrend.pdf
May 12th, 2009 at 9:30 AM
its good to see people have their crystal balls out and firmly believe they can predict the future. I am sure the people scrambling in alberta listing their houses right now in extreme panic mode thought the same as Joe in his post above. prices are not level there. they are going down by the $1000′s weekly as sellers try to dump their properties as fast as possible. nobody wants to see saskatoon’s economy suffer, but the real estate bubble has popped in saskatoon whether anyone wants to admit it or not. I see more for sale signs up everyday and they are not moving. Just like the U.S. in that sense I think people here are waiting to see just how far the prices will go down, and listings go up, before they buy. the only ones that are in a panic right now are the specuvestors who are trying to unload their investments before they lose anymore money.
May 12th, 2009 at 9:30 AM
“prices returning to 2006 levels”
According to Norm’s stats, in January of 2006 the median price was 149,000. In December of 2006 the median price was 175,000.
Do I think the median price — sales, not asking — will end up being between 150,000 to 180,000? Yes. I might be wrong, but I suspect that prices will go back to where they were before the entry of a flood of speculators into the market.
Almost all of these very very clever speculators came from Calgary & Edmonton. Given that those markets are currently in a little trouble, I think paying the mortgage/doing the renos on the three Saskatoon flips that they bought in 06/07 is not going to be a speculators’ highest priority.
Hey, I could be wrong: I often am. But there’s small craft warning signals all over the place, and I think the weather’s due for a change.
And now I HAVE to get some work done.
May 12th, 2009 at 9:31 AM
Joe,
I haven’t seen many (if any) “bears” on here that think the market is going to go back to 2006 prices. Also, could you tell me who on here has indicated the market is “collapsing”? Thanks.
And for the record, I’m a renter and I don’t think I’m “pissing away” my money on rent when now Saskatoon is moving into a buyer’s market and could see some houses go down as much as $50,000 – that’s a LOT of rent my friend.
May 12th, 2009 at 9:31 AM
Heather, Joe:
Thanks for your comments. I’m mostly concerned because this is our first home, it’s a pretty big mortgage, and we may move in 5 to 7 years (depending on my job).
My family never made a dime on any of their houses, and we watched our relatives make 100-200K per house. Is this what’s going to happen to us?
I asked our realtor if we were spending too much, he said, “If you asked me 3 years ago if this house could sell for above 200 I would have said no. So I can’t tell you what’s going to happen in the future.”
Later he said he thought this was a fair price (just below 340K).
So, I know you guys are all happy about the prices going down, but this is our first home, our first mortgage. Are we basically financially screwed for the forseeable future?
May 12th, 2009 at 9:33 AM
Recent Buyer,
Did you purchase this property as an investment or do you intend to live in it for some time.
Again, if I was without home today, I would probably be looking to buy one. I’m not rushing the one that I have to the market either.
You’ll probably enjoy living in your home much more if you’re not concerned about its “value.” Now that you’ve bought, the value won’t matter that much until you’re ready to sell.
May 12th, 2009 at 9:34 AM
Recent Buyer,
If you think you’ll be spending at least another 5 years here I don’t think you have anything to worry about. I can’t say for sure if much equity will be gained in that time period, but I couldn’t see things getting SO bad that you would end up losing money by the time you’re ready to sell.
Enjoy your house, it will be the most rewarding purchase of your life! :’)
May 12th, 2009 at 9:34 AM
jrochest,
did i read your post wrong or did you just call for a 50% drop in the average house price.I m going to assume you were trying to light some fires and have a good laugh,but if your serious that could very well be the silliest thing I ve heard since I began reading Norm’s blog a year ago.
May 12th, 2009 at 9:35 AM
Yeah, 50% would be bad for everyone … it seems the numbers tossed around are a 10 to 15% decline, based on the current economy, but then again, a couple frosts for farmers, or potash prices declining with increased inventory, and who knows if it could drop more given that potential economy.
May 12th, 2009 at 9:35 AM
I don’t think you read the article correctly that was printed on May 23/08 in the Vancouver Sun:
Saskatchewan has since jumped into the housing market spotlight as its commodity-led economic expansion has attracted an influx of migrants and led to a major housing market boom, it said.
“Regina and Saskatoon continue to clock year-over-year price gains that are several multiples above the pace of their local wage growth,” it noted. “This lends evidence that current momentum is unsustainable, with a similar fate to Alberta’s likely for both of these cities in a year’s time.”
© The Vancouver Sun 2008
A few people are getting frightened about the Saskatchewan economy, but they probably aren’t aware of the all the positives about this province.
For too many years this province was ruled by the NDP party whose overbearing political ideologies kept this province from succeding. Socialistic programs don’t work, remember USSR, communist China?
Now that we have the Sask Party in power, we are in for some good times, probably the best ever. They want the province to get ahead, including each and every individual.
Just as I’ve heard from various individuals on this blog, we have all the resources that the world wants. Lets help get them to market, let’s invest in our province, it’s about time that we started to sell our resources before they aren’t going to be used anymore, ie. oil, gas, uranium.
I feel sorry for the people who have been left behind, but I still don’t think it’s too late for them. There are still houses that can be affordable, or condos, don’t wait, buy now. This may sound like someone who thinks speculatively, but I’ve even seen my own mother get left behind because of fear. She could have bought a 3 bedroom condo last year for $89,000. She was afraid she couldn’t make the payments, which were only $600/month. Now she can’t find anything to rent under $750 for the same living arrangement, a 2 bedroom apartment.
I don’t really think some people on this blog are in touch with reality. Prices are not going to drop 50%, that is the old NDP thinking, doom and gloom. They will either increase by 4-10% in the next year, depending on what you buy houses versus condos. On a $150,000 condo, you would make $6,000 increase at 4 measley percent or $15,000 if it goes up 10%! Just think, every mortgage payment would be paid back to you if you resold in only one year!
THINK POSITIVE, DON’T LET PEOPLE SCARE YOU OUT OF MAKING A GOOD INVESTMENT!
May 12th, 2009 at 9:35 AM
Hey William,
I must have read more in to it than she intended to convey. When I hear that Saskatoon and Regina will go the way of Calgary and Edmonton, I’m thinking some declines. That’s what I hear is happening in those markets.
I do agree though that we have a lot to look forward to in this province. I’m not even thinking about selling.
May 12th, 2009 at 9:36 AM
Will “Now that we have the Sask Party in power, we are in for some good times, probably the best ever. They want the province to get ahead, including each and every individual”
Wow. The “best ever”. Not sure who didn’t want the province to get ahead. Last conservative government didn’t do so well with all our resources.
“”Regina and Saskatoon continue to clock year-over-year price gains that are several multiples above the pace of their local wage growth,”"
That mean’s we’re over priced. And due for a small decline in prices. Edmonton and Calgary both have had declines, Edmonton in the infamous Royale LePage article had a well documented year-over-year decline. Saskatoon is predicted to follow in a decline. Who knows how much?
May 12th, 2009 at 9:36 AM
This is my first time posting here. I’ve seen some interesting comments.
I agree that prices in Saskatoon are about as high as they can get for now. However, remember that average prices in Saskatoon are only now nearing the average house price for Canada. So while it seems like prices are high, I would say that they are about where they should be relatively speaking. People in Saskatoon have generally been lucky to have such low house prices. You can’t be one of the steadiest economies in the country for over a decade and not expect an increase in housing prices.
In 2002, we bought a 2 bedroom condo in Vancouver(west side) and paid $220,000 at a time when that same style condo would have been about $90k-100k in Saskatoon. Now six years later, that condo in Saskatoon is going for about $215,000, that Vancouver condo is now near $500,000. So prices here when compared to the rest of western Canada are not out of line…..
While there may be a correction for all of the speculative buying that has gone on across western Canada, I think people in Saskatoon are going to have to get used to prices that have been normal for the majority of the country for some time….
May 12th, 2009 at 9:39 AM
Dana,
Good points, but also Saskatoon needs to see higher wages to meet these prices.
May 12th, 2009 at 9:40 AM
well its simple from here ,we all know the market is not going to crash,the boom we just went through brought us up to the nations values now.so from here on in unless bank rates shoot way up all the prices will do now is spike up,and spike down in small amounts,any buyers out there just need to look into the crystal ball and time it right.poeple who are out there “waiting to see if prices are going to go down” are playing a dangerous game,since by the looks of things the average sale prices is still creeping up.
May 12th, 2009 at 9:40 AM
I am a first time home buyer too.
With rents skyrocketing to over $1000.
we really felt the pressure to buy
and
were fortunate enough to buy into the market
this february at $147K for a townhouse.
I appreciate now that we are in line with the rest of the nation! (and worst case, we will break even
on our investment of 147K.)