Saskatoon real estate: Week in review (November 12-16 2007)
Yet another week of Saskatoon real estate activity is behind us, and while the numbers look more or less similar to those that we’ve seen in recent weeks, there is at least one notable change which is worth pointing out. The “average overbid” column has finally lost almost all of its relevance. While there were still eight Saskatoon houses or condos which were reported as having sold above the asking price, the average amount at which they sold over list dropped to its lowest level this year at just $1,213. The total amount that these eight properties were over was only $9,700. Compare that to the first week in August when buyers paid a total of $1,244,138 more than asking price, or even to the week of October 15-19, which recorded the previous low number at $57,200. Things are definitely different.
On the other side of the market, where most properties sold for less than list price, successful sellers discounted their homes by a total of $540,200 and the “average underbid” was more than $10,000 for the third week in a row. Approximately 10% of the fifty properties which sold below list price accepted discounts of $20,000 or more, with a few approaching the $40,000 mark.
Even still, the average asking price and the average selling price of the Saskatoon homes which did trade bounced back in a serious way from last week, once again reaching their highest levels for 2007. It’s clear that buyers have many more options to choose from but they’re still willing to pay a premium price for a good property in a good location.
Buyers and sellers should both take great care to examine recent sales to ensure that they’re thinking is in the right ballpark. Obviously, buyers want to proceed with caution when there are homes on the market that are priced too high by $40,000, or more. Sellers would be wise to ensure that they avoid such drastic pricing errors. Properties which are grossly overpriced fail to attract much interest and often sell for less than they would have, had then been properly priced in the first place.
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
28 comments so far. We'd love to hear your thoughts.
May 26th, 2009 at 1:18 PM
I spoke with a coworker while visiting in Calgary and his sentiment was the same. Neither him or I could put our fingers on just who is buying all this overpriced real estate.
It has turned into one of the most overlooked and pompous cash grabs this country could imagine.
We will pay dearly for it. All of us.
May 26th, 2009 at 1:20 PM
My fear is when the Average price in area 4 hits 200 000. If you take Area 4 out of the equation, add the average selling price of the areas 1,2,3, and 5, divide by 4, and the average price of a home is 299.5. If area four gets up there then there may be no options for first time buyers or low income housing.
Question for the group: There is no question that housing affordability has eroded in the last year. How do other cities get by? There are at least 16 cities across the country larger and probably with a larger average sale price. How do people enter into a market or rent in those communities?
May 26th, 2009 at 1:21 PM
In an email, Glen pointed out that I neglected to include the number of active listings in this week’s post. Thanks Glen!
We closed the week with 625 residential listings appearing as “active” on the MLS.
May 26th, 2009 at 1:21 PM
I think that the average sale price would be a more usable if it was converted into average per sqft price. True, there are other things like: features location view etc. that factor into individual list price, but sqft is probably the large variable.
May 26th, 2009 at 1:22 PM
Hi Steve,
Thanks for the comment. That’s a good idea but unfortunately the system I’m using to crunch numbers provides no real practical means to arrive at that number. As it is, I have to calculate the averages manually and it takes a fair bit of time to get this deep. Having said that, I can obtain a price per square foot average when I do monthly stats and I may take a look at trying that.
Going back to the beginning of the “week in review,” my intention in using the averages was to show the typical differences between list prices and sale prices on a weekly basis, and not so much to track values. The weekly averages can swing pretty dramatically and shouldn’t be relied on to track values over the short term. We do however, see some pretty instructive trends from one week to the next when we look at the difference between those two numbers.
May 26th, 2009 at 1:23 PM
Jedi
Other cities like Edmonton, Calgary, Vancouver?
Several things, higher wages, lower taxes (on some places this can be $200.00/month), better transport so you don’t have to rely on a vehicle, multi-familly dwellings(higher immigrant populations), renting out basement suites or rooms, ect
Couple examples – 2200sf house, brand new, Abbostford $425,000. 900sf house burnaby $400,000. (older). Downtown Van, it would be a million for a sfh. But, the incomes are higher down there. Two freinds of mine rent down there – one couple a nice large basement suite (2 bedrooms) $750 includes utilities. Another a full house in a really nice area of burnaby for $1500, not including util. A freind just bought a condo downtown Vancouver 600sf brand new for 250,000.
So, I always chose to live elsewhere, that was more affordable
I think one of Johnny’s quotes said it best – a boom is a boom because people think its a boom and create a buying frenzy.
May 26th, 2009 at 1:24 PM
Here’s a scary article that reveals some of the aftermath of the mortgage crisis in the US:
Click here
I can’t imagine what alphabet soup would look like if our economy ever took a nose dive. I’ve heard of people stealing construction materials off of job sites before, but smashing pipes out of established homes with a sledge hammer? I guess stuff like that is like gold to addicts if it gets them closer to their next high.
May 26th, 2009 at 1:25 PM
Cindy said:
“A freind just bought a condo downtown Vancouver 600sf brand new for 250,000.”
I find that hard to believe….
May 26th, 2009 at 1:26 PM
Batman,
That is some scary stuff alright. Makes me wonder what happened to the 800 families who lived there.
May 26th, 2009 at 1:30 PM
My response to Jedi’s question is that Calgary and Vancouver are totally unafordable and that new homeowners generally can’t own. I heard Calgary has the highest percent of working homeless in Canada – people who have a job but can’t afford a home and are living out of their car or some such.
If you just take the difference in interest between a $275,000 house in Saskatoon and the $425,000 in Abbostford example – you’re looking at $9,000/year in extra interest (at 6%) alone – thats $750/mo.
I’m not saying Saskatoon is cheap – if you want cheap go to Montreal or Winnipeg (or rural Saskatchewan) but Vancouver and Calgary are the last places I’d look at for affordability.
May 26th, 2009 at 1:31 PM
The freind bought this summer. That’s the price I was told.
Lots of people have argued that you can’t compare this city to the others. I tend to agree with that. I have only questioned the reason that prices are so high here, with less than a year’s time to create.
If I had a crystal ball and knew all the answers, I would post them, but I have no clue what is really going to happen in the future. Maybe I would buy right now, maybe I wouldnt. Stated before that we have only based our decisions on our circumstances. My personal feeling is that the prices right now are overvalued, and we could afford a better place in a different city because we would earn 20% more than what we earn in Saskatoon.
Other people have said the same thing. We may have a lot to loose by that decision – really nothing at all, because we are paying rent regardless, or that money goes to real estate fees and interest.
Ect ect
Right now, our money is safely earning some interest. We can afford for prices to go up 10% next year to wait and see what happens.
May 26th, 2009 at 1:33 PM
Cindy,
It is difficult to see the “value” given where we were just one year ago. I think it’s the massive change that makes it harder to take than anything. It’s pretty hard to deny when major economists are pointing specifically to our market and saying, “overvalued.” I can’t imagine that we’ll experience double digit gains next year. We have been well above what’s normal for two years now. While these same economists are not predicting declines, they make a good case that corrections will occur through slower than normal growth.
May 26th, 2009 at 1:34 PM
Thanks for the props Cindy.. I do recall revealing that “pearl of wisdom”
May 26th, 2009 at 1:35 PM
One of my friends is a Realtor for Realty Executives and he said that he expects the average home price to be sitting around the 350,000 mark by next fall.
The good thing is, for those not chained to Saskatoon there are a lot of good deals elsewhere such as down in the United States. Over at another Calgary blog a user posted a couple links to properties for sale in desirable areas such as California and Florida. For the cost of a 2 bedroom condo in Saskatoon, you could own a 3-4 bedroom house with attached garage in one of these locations. If you do a search through the listings on the Point 2 page, you will find a number of great looking places like the one below for around the 225,000 to 230,000 mark.
http://homes.point2.com/US/Florida/Hillsborough-County/Tampa/Charleston-Corners/1047435-Real-Estate.aspx
I used to be a really Pro-Saskatchewan sort of guy, but this boom has really soured my opinion of the province. I know of several of my friends who work in the fields in which their employers are directly benefiting from the boom, and despite rising rental costs and skyrocketing housing prices, their employers are reluctant to give them any sort of wage increase to help ease these burdens. Two of them just quit their job to look elsewhere for employment, and the one firm ending up bring in a an employee from out of country to fill their position. I don’t want to sound too much like Alex, but I feel those benefiting from this so called boom are a select few. I kind of get riled up when I hear individuals like John Gormley tell people to get off there ass if they want to benefit from Saskatchewan’s hot new economy, as it just isn’t that simple. While I am fairly lucky in that work has very busy for myself this past year, I was quite disappointed at the response I received when I likewise sent out notice to my clients of small rate increase put in place to help offset higher cost of living expenses. This was the first rate increase for me since 1998, and I was quite let down to hear that clients who I have had a great working relationship with over the years tell me that they would be forced to use out of province services if I went ahead with my marginal rate increase. I guess I am just a bit disappointed with the greedy side of Saskatchewan that seems to be rearing its ugly head. Those who were fortunate to own their home before the boom took place are now using their new found equity to buy up other properties and thus price out those first time homeowners, and those employers benefiting from the economic effects of the boom seem reluctant to share their good fortune with those working for them. Call me naive, but I always thought that people from Saskatchewan were better than that. Lately, however, it has become more and more clears that we are no different than those in Alberta, and will gladly step on and knock down anyone that gets in the way of their own personal pursuit of the almighty dollar. To me, I find that quite saddening.
But hey, there is always Florida.
May 26th, 2009 at 1:37 PM
Jason,
I don’t see what’s so negative about sounding like me. All I’m doing is pointing the finger much more quickly and with less concern for upsetting the insensitive.
When a problem comes around, if you want to fix things, you don’t wait until the political landscape has changed. You recognize the problem before everyone has profited and the damage is done. So do I sound extreme? Only if you’re one of those go-with-the-flow types who can’t stomach confrontation. Only if you’re someone who is optimistic to a fault.
Calling me any shade of extreme is just patent fear, showing just how little thought people put into a situation as serious as this.
It is ugly and sad. Be like me, speak out about it and get outraged. I thought we were all better than this, but over the past few years, Canadians have proven they want nothing more than to live up to their insecurity towards the US.
The private sector is taking over, and the innocuous claim to the freedom of investment will slowly nibble at our rights, opportunities and freedoms until we are left as nothing more than conduits for debt.
We will be the currency, on whose backs the money flows for the malignant corporations.
What does it take to wake people up to this very near if not mostly present reality?!
To show you just how unbiased I am, I personally would claim that my own age group is responsible for a lot of this. We are ignorant and unwilling to recognize the rights we enjoyed as children.
We are a greedy and petty lot, raised on nothing but capitalistic ideals.
May 26th, 2009 at 1:37 PM
Alex, you are likely a very kind, caring person, that really wants this society to improve on itself, I think you have your heart in the right place. However, you come off on this so angry, that it is frightening. When you utilize extreme language, it is hard to get the point because one is so taken aback.
Not to discourage you from posting, I think you have valid concerns. I think that the human race has a lot of good qualities, but so far, in this country, we are constantly being wagged by the tail of the dog so to speak. We are a heavily export dependent nation, which I think is a huge crux to our success as a leader. We have resources that no other country has, we have a lot of intelligence as a nation that goes underutilized. Our system is continously modelled after the States to our detriment. It benefits the few, but costs our society plenty. Yes, its sad, the only choice you have is to vote in this country. Political parties primarily buffered by the rich hoping to push their needs to priority.
But here you and I sit typing on a computer complaining, which maybe does nothing.
The human race – has succeeded on those qualities that make us greedy. Those that are the most benevolent of us usually don’t get into politics.
May 26th, 2009 at 1:39 PM
Cindy,
A shame really, as it is to be a train wreck in slow motion, just as it has been for the states. I think in a lot of ways the structure of society and business is one that has favored the businesses only slightly more than the individual.
It’s almost a kind of experiment where the two sides are set equal, but because of the rules of engagement, corporations always come out on top.
I wish better people could be encouraged into politics, but the very social nature of it all – as you said – lends itself to greed and corruption.
I just think that I knew a Canada that was capable of being better than that. Perhaps those memories are implanted, or perhaps we finally have lost all sense of good will towards each other. Well, not all of us. Just many.
Extreme words? What else can you use? Words that don’t work? You either say it or you don’t. A balanced statement that serves to say nothing in the end and meaning only what those who hear it want it to mean is not how I talk.
The bottom line is people need to be protected and the situation with housing proves it.
(Overheard more Calgary bashers this week…)
May 26th, 2009 at 1:41 PM
So how do we fix it? Should we set a limit on how much housing should be? Should we bring in mandatory price controls on all goods and services? Should we take away rental properties from landlords and distribute them to the proletariat? Maybe we should tell students what jobs they should work in? How should the system be fixed Alex?
Keep in mind we’re Saskatchewan, one province in the sea of North America. So if we suddenly go all lefty, prepare to see companies pull out and their investment with them. There’ll be plenty of housing for cheap, but not much money for people to heat them with.
May 26th, 2009 at 1:41 PM
Alex, I agree with Cindy… Your points are very valid and very relevant but you’re not exactly breaking new ground… degradation of classes and wealth distribution has been a progressive problem for a very long time. It’s difficult to educate the lower and middle classes on what they’ve got until it’s gone… and it’s going.
Where the upper class could control the wealth before with the mighty whip and no labor laws, they’re now doing with consumerism and a high availability of credit… this secures their position in market sinks, as they ride them out on the backs of the avg man’s heavy debt woes.
Todd, the only fix I can see is to tighten lending practices. I realize subprime lending isn’t as much of an issue here as south of the boarder but people are still getting 100% financing on poor credit with large debt… that’s a problem. If virtually anyone has access to credit without working for it (by that I mean saving, planning, budgeting, sacrificing for a downpayment on a loan) there will always be high demand. High demand drives up prices… just the way it is. Unfortunately people don’t see the consequence in it until it’s too late… see south of border for reference.
J.
May 26th, 2009 at 1:42 PM
Johny,
You’re right. Weak financing rules are presented to us as “friendly” to lower income families but often create bigger problems. Take the 40 year mortgage introduced this year for instance. Now people are stretched to the max over 40 years instead of 25.
Here’s something that was in an email I received yesterday from a Saskatoon mortgage broker.
o Qualify with no proof of income.
o Access your equity for investment purposes.
o Pull out equity from your home to invest or pay down debt.
o Want to pay down your mortgage? Let me show you how! (Okay, now I’m confused??)
o Get Free Groceries, up to 40% off at The Brick and a Mortgage!
Translation: We will lend any amount of money to absolutely anyone, for absolutely any reason. Why would you want “equity” when you can have cash to spend at the Brick?
May 26th, 2009 at 1:42 PM
Ha, the brick part is interesting.
It truly surprises me that we allow ourselves to stay on this path while in the same breath criticizing the U.S. for getting so far under water.
J.
May 26th, 2009 at 1:44 PM
Yes, it is a buy now pay later society that we live in. It’s my understanding that most of the mainstream lenders are retreating from these kinds of activities so perhaps some lessons are being learned. Sadly, there will always be someone willing to lend money at criminal rates of interest.
May 26th, 2009 at 1:44 PM
I’m one of those people lucky enough to stretched to the max for the next 35 years, and couldn’t be happier. For 10 years we rented our home in a perfect location, where the bus picked up our kids for school, I walked to work, and hubby had a loft studio to make his living. In January, we started looking for a home to buy. Then all hell was starting to break loose, and we realized that our low 200′s budget wasn’t going to buy us much of a house in a location that we could tolerate. So our mortage broker had me approved, just me on my wage, for an amount that allowed us to purchase our rented home. It wasn’t easy – I had student debt to pay off and it took all of our savings and a lot of scrimping for several months. At the time it seemed like an exhorbitant price. Looking at the list prices climbing to 300 and beyond for houses in our neighborhood that are smaller and have not been updated, we think we could probably sell it for 30% more than we paid. But that’s not why we bought our home.
So what do I get in exchange for being stretched to the max? No stress over horrific rent increases for the next 5 years, a mortgage which is only 100 dollars a month higher than my rent, home insurance to pay for the sewer-backed-up basement this past June (and which happened at least twice in the last 10 years that I can remember, yet was never fixed by the landlord), demolition of the disgusting non-comforming basement suite and bath that required vaccination shots before entering, the freedom to landscape around the house to prevent seepage into the basement (and make it look damn nice too), a home where my kids can live if and when they go to university (and they can walk to it), and the best part – 35 years to raise my kids and grandkids in the only home they’ll ever know.
May 26th, 2009 at 1:45 PM
Nomorerentingever,
I would have done it to and I congratulate you on becoming a homeowner. Too often, we view our homes strictly as an “investment.” Thank you for pointing out some of the more valuable benefits which come from owning your own place. Best wishes for a happy future for you, your kids, and your grandkids.
May 26th, 2009 at 1:46 PM
Nomorerentingever,
Congratulations. I’m glad you had the income to do what you did and you certainly struck gold in your situation! It certainly was brave as well given the price.
If I could use your story as an example, imagine doing the same with only one income. A much lower income. It just can’t be done anymore the way it used to because profit has everyone in a money lust.
Todd and Johny,
There is no easy fix and cutting lending practices won’t help. It will just cut more people out of the opportunity to have a home. Ideally there needs to be a way to provide the needed housing without it being a cash grab. Depending on how society values them, either lowering prices on older houses by building outwards, or the inverse by offering newer homes at lower prices.
The fact of the matter is, there aren’t enough homes.
Prevent investors from having first crack at houses. There will always be someone with more money out there – this is something we all understand. This point applied means you can want a house as much as your little heart desires. Unless you have favorable circumstances with the seller, highest bid wins and that’s never going to be you… All for what?
It’s disgusting that the idea of profit even enters this situation. Profitability alone can’t be the only thing that dictates decisions. Of course, our heavy right capitalist society seems to think that’s the only criteria for anything.
Heck, why have kids at this rate?! They cost you more than they’ll ever make you.
May 26th, 2009 at 1:47 PM
Well, to be honest Alex, 25% down was the only way people could buy a house before the 80′s (norm correct me on the decade if I’m wrong). Our generation is merely riding the wave of those days (low prices and low demand) as real estate inflation sky-rockets. So I think the past has proven that it does work and does motivate people to put their money towards sound investments and force them to prioritize their spending… now credit cards make it easy to do otherwise
J.
May 26th, 2009 at 1:47 PM
Seriously, just take it as it comes. I am a young guy fortunate enough to “predict” things coming and purchase in before the market boom. Everything will work out for you if you want it to. I have now moved on to my second property (from a condo to a house in a good area). Who knows, someday the market may all crash on my head and I will be back where I started… BUT I do know this fact! I believe if you truely want something quit complaining and make it happen. For real, I started from nothing, took loans to take a university education, paid them back asap and never looked back. Create your own destiny. Now you may think I’m quite the optimist but try being a little postive and forward thinking yourself and you would be suprised at the possibilities and even where you end up. BE CAREFUL WHAT YOU WISH FOR, it just may come true
Let me know your thoughts
May 26th, 2009 at 1:48 PM
Johny,
I’m not completely certain but I believe that the “First Time Buyer’s Program” which allows new entrants to buy with just 5% down was introduced in the late 80′s. Prior to that, it was 25% down for anybody.
Young man! This is just the kind of attitude that could get you somewhere.