Saskatoon real estate: Week in review (November 17-21 2008)
New listing activity in the Saskatoon real estate market increased for the first time in six weeks as 82 residential properties made their way to the multiple listing service, up six from the previous week. A total 78 single-family homes and condominiums were added to the database, an increase of just two units from the week before. Fewer than half (28) of the 61 property listings that were cancelled or withdrawn over the course of the week made a second appearance as a new listing. By week’s end, total active residential listings slipped from 1,567 to 1,537 units and reached its lowest level since the last week of July. The current active listing inventory includes 932 single-family homes and 510 condominiums.
Unit sales of houses and condos bounced back to reach 55, the highest number recorded since the week of September 22-26. Interestingly, sales in area 2 actually matched new listings for the week, while sales in area 5 nearly doubled up on new listings offered for sale. I don’t want to overstate the significance of what could be a one-week blip, but this is the first week that we’ve seen that happen since January of this year. There’s no denying that there is a near seven month supply of Saskatoon homes for sale but it is starting to look like our surplus inventory is slowly chipping away. In spite of weaker demand the large gap between new listings and units sales has narrowed significantly over the past few months. Listing number in March, April and May of next year will paint a clearer picture of where we are headed for 2009.
Click the image for a larger version of the graph.
Following a week that saw the average selling price of a Saskatoon home spike, this past week produced numbers which are more typical of what we’ve come to expect over the past couple of months. The weekly average fell hard to just $275,436, and the six-week average sale price resumed its slow but steady decline reaching its lowest level since the week of September 1-5 to settle at $283,313. The four-week median selling price, while slightly lower than last week at $270,000, managed to maintain a near straight line on our graph for the eleventh week in a row.
Click the image for a larger version of the graph.
Saskatoon home sellers not only benefited from a higher number of sales this past week, but they also struck deals which were closer to their asking price as the average underbid declined to $12,623 from a whopping $17,214 the week before. The percentage of homes that sold within $10,000 of the list price swung back to settle just above the 50% mark, up from just 42% the previous week. The percentage of sales showing discounts above $20,000 decreased significantly from 22% last week, to 10% this week. Price adjustments were made to 80 active listings over the course of the week.
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
108 comments so far. We'd love to hear your thoughts.
April 26th, 2009 at 9:52 AM
Harper ponders ‘unprecedented fiscal stimulus’
http://tinyurl.com/6z46be
LIMA, Peru — Prime Minister Stephen Harper says Canada faces the prospect of a “technical recession” and Ottawa might need to take unprecedented actions to stimulate the faltering economy.
“The most recent private sector forecasts suggest the strong possibility of a technical recession the end of this year, the beginning of next,” Mr. Harper said Sunday at the close of the Asia-Pacific Economic Co-operation summit in Peru.
“Yes, I am surprised at this. I’m also further surprised, more importantly, by deflationary pressure that we’re seeing around the world. This is a worrying development, one of the reasons why it may well be necessary to take unprecedented fiscal stimulus.”
Wow. He’s surprised. Is anyone else surprised?
Sept 15, 2008: “My own belief is if we were going to have some kind of big crash or recession, we probably would have had it by now.” – Stephen Harper
Who is advising this man, exactly??
April 26th, 2009 at 9:53 AM
What do people on this board think about the cost return of kitchen renovations? In my case, I am dealing with 30+ year old cabinets in so-so shape. I was planning to replace them with stock cabinets, probably from home depot. I am going to attempt to use contemporary style and colors as I expect to sell the place in the next few years. With the cabinets / countertops /backsplash I am looking at 5-6 k if I DIY. Given the current slow market conditions am I likely to get my renovation money back if I was to sell my house after renovating the kitchen?
April 26th, 2009 at 9:53 AM
ounds like the ominous financial situation involves Saskatchewan now, makes sense if Alberta’s cutting it’s surplus predictions by 75%
And to add to Crikey’s post, it’s a beautiful thing that the expert the Conservative hired blamed the looming federal deficit(s) on Conservative policy, not the economic down turn. Shouldn’t come as a surprise, we heard about it during the election. Harper’s not surprised, he called the election to get voted in before the fall out, he just was caught by surprise how early the commodity led stock crash started.
April 26th, 2009 at 9:53 AM
The first post reminded me of Harper’s sweet stock tips to Peter Mansbridge back on October 7, 2008 before the election. http://www.youtube.com/watch?v=kTgfjpZkAPQ
If you would have invested $10,000 into the TSX the morning after this broadcast aired (only a month and a half ago), you’d have have already lost about $1433.
http://finance.yahoo.com/q/hp?s=^GSPTSE
April 26th, 2009 at 9:54 AM
Matt,
if you are going to reno anything, and get most of your money backyour best bet is the kitchen. Your place will have a better chance to sell if it has newer cabinets than something 30-40 years old. We will have a buyers market for at least a few years and you will have to stand out from amongst your competitors.
Norm,
55 sales this week! I am surprised, that is higher than I thought we would see. Last month media across the country were reporting sales crashes. This month it is even worse. Anybody check Calgary lately? Ouch! 500 sales up to Nov 22 this month Last Nov they had 1103 SFH sales and that was slow.
http://www.findcalgary.ca/listings?pathway=127&pageId=19
April 26th, 2009 at 9:54 AM
Matthew, Harper dropped out of economics at the University of Toronto, do we really expect him to be competent with our money??
We clearly voted Conservative for health care and social reasons
http://www.cmaj.ca/cgi/rapidpdf/cmaj.081477v1
http://www.cmaj.ca/cgi/rapidpdf/cmaj.081459v1
http://scandalpedia.ca/Scandals/Lukiwski_en.html
(Actually real estate related, as Lukiwski makes it harder to get people from metropolitan/tolerant cities to move to Saskatchewan)
April 26th, 2009 at 9:54 AM
Matt:
I don’t think you can go wrong with a kitchen reno in terms of added value to your home. New cabinets, flooring and countertops will always stand out. I just finished a reno and here are a few tips:
I looked at the cabinets at Home Depot but I went with cabinets from Eurorite from J&H (Cyprus chocolate pear shaker style). Much nicer colors and styles and priced right. They were there to help me every step of the way too. Very easy to assemble and install. Check out http://www.eurorite.com. Consider ceramic tile as a flooring option. Much nicer than vinyl. By spending your money wisely (not cheaping out) you will see the investment back when you go to sell.
April 26th, 2009 at 9:54 AM
This is more of a historical question, but I suppose it has merit considering the large numbers of houses being built recently..
Does anyone know who the major house building companies were in Saskatoon during the housing boom in the seventies? More specifically, those who were working in Meadowgreen in 1976. My husband is replacing the aluminum wiring in our house with copper (odd, since it became code again in ’76 to use copper… we must be the last house in Saskatoon to be wired with aluminum), and he would like to place a flaming bag of dog poop on the doorstep of whoever built our house.
The more we look at how our house is put together, the more we are sure that the contractors hired monkeys as labour. It maybe that they were under time pressure, and drywall hides a multitude of sins…but I wont forgive them for it. *end rant*
So…given the time and labour pressures that companies are under today, what horrors are hidden under the drywall of the 2007 and 2008 model houses? I know I’d be right P’d off if I paid all that money for a house and it was built stupidly.
April 26th, 2009 at 9:55 AM
Matt,
Can you get away with just replacing drawers and door fronts? Or, better yet, having them professionally refinished (or pick up a spray gun and air compressor for a couple hundred to DIY)? That would probably be your best bet for return on investment if it’s feasible.
If you need to replace, I also looked at Home Depot and J&H, with J&H by far having the best value and selection in the mid-range cabinets. Their mid-range line is by Superior, which is local (yay!). My mid-range, laquer finish, full-height cabinets with light valence, Blu motion glides, and lots of drawers came in at about $190/linear foot, taxes and delivery included. Bonus: I don’t have to assemble them! Home Depot, at full price, was $443/linear foot for exactly the same kitchen in a cherry finish, although if you find out about a sale before it gets advertised, you can get in during the 15% off kitchen event… still not worth it in my opinion, though. Cherry/maple was about 30-50% more expensive than laquer in Superior’s line, depending on how dark you wanted to go, (and the Depot’s version was so flat it looked fake), so say the cherry kitchen would come in at about $250-285/linear foot through J&H. I didn’t look very much at the entry-level kitchens, but my impression was that J&H beat the Depot hands-down on those, too.
You don’t want to throw away your money by over-doing it, but make sure that your cabinets are the right quality for your neighbourhood, or your potential buyers might be thinking kitchen reno anyways (I think there are some guidlines on the Internet about what you should be spending on each part of the kitchen reno based on a percentage of your home’s value if you’re not sure). I’d also recommend picking up Blumotion drawer glides and cabinet closes; they add a feeling of luxury for not much added cost. Let us know how it goes!
April 26th, 2009 at 9:55 AM
Bringing forward Norm’s comments from last week:
“I will go out on a limb here though and guess that we’ll end the month ahead of the 2004 number. In fairness, the five year average is 227 units. If we get anywhere near 200 it’s a performance that is well short of ‘abysmal.’”
55 sales this week is good. Unless we get at least 53 next week, though, you’re going to miss your prediction… I guess we’ll see.
As for ‘abysmal’ … I stand by my choice of adjective. Even *if* we match 2004′s numbers, that still produces a 40% YOY drop in sales for November, and ~ 18% off the 2004-2007 average numbers for the month. Those are pretty big numbers, and they can’t be handwaved away; if you (RE publicists, not you specifically Norm) want to tout the big numbers on the way up, then you (see above) need to accept the big numbers on the way down too.
And I *know* I have asked this before, but somehow I remain confused. Next week Friday will be the last business day of the month, so we’ll see the numbers for the month then. Or will we? When Dec 1st comes, do you (Norm) break out the sales from Sat/Sun and add them to the monthly total? Are they even reported for those days specifically by whoever collects them, or are they aggregated into Monday’s stats?
If the weekend days get added in too, then I agree we have a better chance of making your target; if not, then I’m sticking with *my* sub-2004-level prediction. Heck, I’ll stick with it anyway just so you can gloat if you’re right.
April 26th, 2009 at 9:55 AM
Bookrat,
Did I say that?
Don’t forget that the monthly numbers you’ve thrown forward are for the entire residential category. This is what SRAR reports on each month. We’re at 145 units right now, so provided the next five days produce 42 reported sales we’ll have matched the 2004 numbers. SRAR’s numbers will be released sometime after month end but it will only include sales that are reported as firm by the close of business on Friday, November 28. Whether it’s me reporting on weekly numbers or SRAR reporting on monthly numbers, they are always based on firm sales which are reported during the period we’re discussing. If a deal firms up on Monday, the system recognizes it as sale on Monday regardless of when the contract was written. It’s not a sale until all conditions are removed.
“Even *if* we match 2004′s numbers, that still produces a 40% YOY drop in sales for November, and ~ 18% off the 2004-2007 average numbers for the month.”
I agree, but I think when you look back over the past five years it’s pretty clear that November 2007 (and almost any other month during that year) is the anomaly. We used words like “insane” and “crazy” and “I can’t believe it” on the way up. It’s hardly catastrophic that we won’t match them again any time soon. I’m willing to “accept” whatever numbers the month produces, but even if we are 18% off of the five year average I’ll say, “Hey, we’re pretty lucky in comparison to a lot of markets.” It’s not great, but it could be far worse.
April 26th, 2009 at 9:56 AM
I just had to pass this along:
http://tinyurl.com/56reu9
Offer may not be valid in Canada… please read the fine print.
April 26th, 2009 at 9:56 AM
Crikey,
That’s priceless, but why would they give them away when Americans are so willing to pay top-dollar for them?
Laura,
You can go down to city hall (Planning Dept.) and find out who built the home. They might charge you 7 or 8 bucks for the info but they’ll have a complete history on its construction.
Matthew and Nick,
Don’t worry guys. Obama is going to fix everything. He is “the one.”
Matt,
I’m with the others. A kitchen reno is a good idea. If your cabinets are 30-40 years old, you’d be paying for most of the value of a reno on resale. May as well do it now and enjoy the new kitchen while you’re living there.
April 26th, 2009 at 9:56 AM
Matt – speaking as someone who is currently considering buying – kitchens are a BIG deal – when a buyer is looking at what needs to be done in a home – the kitchen is a big ticket item. Yet – it can be done very economically. Good luck!
April 26th, 2009 at 9:57 AM
Former Royal Bank head economist is a Liberal MP, McCallum, think that would come in handy right about now?
April 26th, 2009 at 9:57 AM
Well thanks to everyone who gave me some feedback on the kitchen reno’s. I had never even considered J&H as I thought they would just be too expensive but I will definitely check them out. Does anyone have any experiences with Ikea kitchens?
April 26th, 2009 at 9:57 AM
Matt,
We’ve purchased a lot of stuff at J&H and always found them to be quite competitive. On top of that, they’re local, and pretty good folks.
I can’t say that I have direct experience with IKEA kitchens but I do have a client who has owned two. They liked them but had some issues with deliveries. On the second kitchen they had to send stuff back a few times. IKEA eventually came through but it took a long time to end up with a finished kitchen.
April 26th, 2009 at 9:57 AM
“why would they give them away when Americans are so willing to pay top-dollar for them?
”
LOL. I’m not sure “willing” is the appropriate adjective to use there.
http://tinyurl.com/6cpzuw
“Nov. 24 (Bloomberg) — The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.”
It’s getting harder to get gob-smacked, but his sure does it for me. Perhaps the US pledge of allegiance should be to the banking system now…
April 26th, 2009 at 9:58 AM
Dutch Home Sellers Cut Prices in Market That Would ‘Never Fall’
http://www.bloomberg.com/apps/news?pid=20601109&sid=aOrLBJ1TNreY&refer=exclusive
Inge Fransen last month cut the asking price for her house in the Netherlands by 11 percent, as one of the final holdouts in Europe’s housing boom capitulates.
The boom has left the Dutch saddled with the highest level of mortgage debt in the euro region just as the economy slides into a recession. As recently as the second quarter, the Netherlands was the only euro-area country among 11 surveyed by the Global Property Guide with rising property prices.
Irish real-estate prices have fallen 15 percent from their peak in 2007. In Spain, the collapse of the housing boom will leave about 930,000 new homes unsold by the end of this year, according to valuation company Tasaciones Inmobiliarias SA.
Worldwide housing bubble meets worldwide credit crisis.
April 26th, 2009 at 9:59 AM
Why they do it
http://www.greaterfool.ca/2008/11/24/why-they-do-it/#comments
the builder’s offering the same homes for up to $70,000 less than last year. And still business is slow, I hear. Who would ever have thought selling expensive new houses to people without money would work out badly? Oh well.
I wonder how many have had their down payment wiped out?
April 26th, 2009 at 9:59 AM
George,
You said this last week:
“I am seriously looking at Gold.”
So am I. I’d like to discuss what you’re doing, i.e. paper vs. physical, impact of paying in USD, where/how to buy, etc. Could you email me at ********* if you don’t mind? No rush.
Any information from anyone else in the know would also be appreciated.
April 26th, 2009 at 9:59 AM
Crikey,
My knowledge on gold is limited, but I know this
The Bank of Nova Scotia will sell you gold at the going price, with a bit of spread between buying and selling price as their transaction fee.
If you store it with them, they’ll charge you storage fees periodically.
If you take it home, when you sell it, they’ll charge fees to weigh it again, and to check it to be sure that you haven’t added some other stuff to make it less valuable as an alloy (called “assay” fees).
I would go with physical gold because I believe that paper is backed by the assets of the bank. If a Canadian bank were to fail, I am not sure what would happen. And I would want the gold in my hands. Personally, I do not trust any Canadian banks.
I am also looking at some gold mining stocks. Some were trading at 7,8 bucks a share are now down to under a dollar. I believe they will come down some more, though.
I do believe the Canadian dollar will improve compared to the US dollar, but when and how much, who knows.
If you have time here is great website on gold and other metals
http://www.kitco.com/
April 26th, 2009 at 10:00 AM
Thanks, George.
I’m finding that the over-spot charge for physical gold is quite usurious lately, but it might be worth it. I’m with you with physical gold over paper. I’ll be sure to check out the link you mentioned.
Sorry about the way OT posts, Norm. If they get to be too much, please say so.
April 26th, 2009 at 10:00 AM
Case Shiller US
http://watch.bnn.ca/clip115732#clip115732
The influential Case Shiller Home Prize Index has shown record declines for the past few months. Is there any good news this time around?
April 26th, 2009 at 10:00 AM
Chart of housing bubble cities
http://3.bp.blogspot.com/_pMscxxELHEg/SSwHSLRkm_I/AAAAAAAAD2c/tQrLeBDIxoM/s1600-h/CScitiesSept08.jpg
Average price for a house in the US, 189,000.
April 26th, 2009 at 10:00 AM
George and Crickey,
Regarding Gold: I agree with your sentiment George that you should not hold gold or silver certificates, there is simply no way to prove that the amount gold or silver you hold(certificates)is actually there for you to take physical possession of.
I have had success ordering both Silver and Gold through Gatewest Coins out of Winnipeg. They have a website and are easy to order from.
Something that should be taken into account would be that there is a massive disconnect between the comex(paper market) and the physical market. An ounce of silver will cost you about 6 dollars over spot if you can find any to buy. Currently 8+ weeks for delivery at Gatewest Coins. That is around 50% over the paper market. Gold is about 6% over the paper market. Historically the ratio is 3% over spot.
Precious metal stocks are also interesting. They act like a derivative to the gold price, because they are leveraged to the gold price. So be careful.
Gold is almost at all time highs in terms of Canadian dollars. In this case fulfilling its role as a store of wealth.
The last thing I would suggest in terms of Gold or Silver physical or stocks. Never ever use margin. The swings can be brutal.
DYODD NIA,
Nix
April 26th, 2009 at 10:01 AM
Crikey,
No problem. Peoples got to talk.
I removed your email address from that comment. Thought it might be prudent, since you’re talking about lugging a bunch of gold home.
Nix,
See George’s bubble chart.
http://3.bp.blogspot.com/_pMscxxELHEg/SSwHSLRkm_I/AAAAAAAAD2c/tQrLeBDIxoM/s1600-h/CScitiesSept08.jpg
Would you rather own a home in Phoenix or Dallas?
We may not be an “island fortress” but we are the envy of almost everyone else in North America.
April 26th, 2009 at 10:01 AM
Norm,
Thank you for your thoughtfulness. “Physical possession” wouldn’t equal “home” for me, but thank you anyway. You’re a gem.
BTW, I don’t keep gems at home, either.
April 26th, 2009 at 10:01 AM
Norm,
the scary thing about the chart is that Phoenix had the “catch up effect” in 2002-2006. And they had huge runups in price over a short time. Bidding wars etc.
Saskatoon went on the ” we are undervalued” train in 2006 on. Doubling of prices in two years, bidding wars etc. We will see a decline closer to Phoenix than Dallas.
Dallas learned from their housing bust in the 80′s. Their gains in the last few years were barely above inflation. That is why their decline is so low.
April 26th, 2009 at 10:02 AM
George,
I suppose I brought some confusion by pointing to the Case Schiller graph. I wasn’t thinking of house prices so much as the economy in general. I think the graph effectively illustrates that things are different everywhere. Rome may be burning, but at this point, all economic indicators are still pointing towards growth for Saskatchewan. Of course, that may change. Nobody knows to what extent we’ll be affected by economic happenings around the globe, and there’s no doubt that we will be, but there seems to be some consensus that Saskatchewan is in as good a position as anywhere else to weather the storm. We are fortunate to be living here during this challenging time and I don’t find it the least bit “sad” that Saskatchewan people are optimistic about the future.
“We will see a decline closer to Phoenix than Dallas.”
With all due respect, if my foresight was as sharp as yours I probably would have sold my investments when the TSX was at 15,000 and my house in May or June.
Are you just going to sit back and watch it happen or are you bailing out of that toxic College Park bungalow?
April 26th, 2009 at 10:02 AM
George, the main difference between Phoenix and Saskatoon and Regina is that Pheonix is filled with speculative homes with nobody to buy them. Hundreds and hundreds. I think Regina and Saskatoon don’t have this problem on anywhere near the same scale. I talked to my father in law in Phoenix the other day and he said houses in his central Tempe neighbourhood hardly seem affected by the massive price declines. He said most of the price declines are the reflection of distressed sales in overbuilt areas skewinng those averages. Foreclosures are making up 40 percent of the sales in places like Phoenix. I don’t see that happening around here anytime soon. Do you? Then again, we’re pretty much 15 percent off the peak here anyway right? So what would a 30 percent decline be – down to 240,000? Well, I suppose that could happen. That’s what we are in Regina. But no more than that I would think. Massive distressed selling going on in those cities. Don’t see the same scale of thing being possible here.
By hundreds and hundreds, i mean thousands and thousands. I think Phoenix inventory is close to 50,000. It was 5000 at one point a few years ago. And 16 months of inventory at one point earlier this year. If a high percentage of sales these days are purchases from the bank, there are extreme underbids being accepted. I wonder what percentage of the total inventory down there is foreclosures, or spec homes. I’m guessing close to half of it. In Regina or Saskatoon, what percentages would we be looking at today? I’d be surprised if more than 5 percent of our listings in Regina were spec homes. Maybe Saskatoon is different, but likely not by much. And foreclosures are probably lower than that.
April 26th, 2009 at 10:02 AM
George and Crikey, I still think you two should each compose a well written letter to the editor for the Star Phoenix, they published mine, and you are both far more informed than I was – I’m just too busy to keep up on latest housing/real estate issues these days.
Anyone else notice that the TSX is now Lower than the Dow? That is Canada’s stock market is slumping worse than the American market. Largely because of weakness in commodities and resource stocks…
Either the USA is doing A okay, or Western Canada is in a lot worse shape than we all thought.
April 26th, 2009 at 10:03 AM
Mark “George, the main difference between Phoenix and Saskatoon and Regina is that Pheonix is filled with speculative homes with nobody to buy them. Hundreds and hundreds”
That’s funny. You realize that when there were over 600 vacant homes in Saskatoon and listings went from 300 to 1,800 (when our population was apparently growing) that we did (probably still do) have hundreds and hundreds of country bumpkins who invested at the peak, on speculation, often on houses that they couldn’t really afford in the first place – oh well, as long as their jobs are safe and there’s no market down turn or drop in oil prices….
Saskatoon has a lot of speculation homes, and condo conversions where the entire building is based on speculation, that’s a lot of inventory that often isn’t even listed, with hundreds of additional sellers wanting to ride out the down turn, before unloading hundreds more speculation properties onto Saskatoon
April 26th, 2009 at 10:03 AM
And one of the few things I may have scouped the group on, though as I admitted, I haven’t kept up.
Rumour has it that Cameco is no longer building their new office tower in down town Saskatoon, due to credit problems, and a lack of confidence in their own company, but Saskatoon down town as a legitimate business center as well.
Just another big project that was pumped up, but whose cancellation is swept under the rug to make way for the next pipe dream…
Doesn’t bode well for Saskatoon investment or commercial wise, and bodes poorly for business investment climate Canada wide as well
April 26th, 2009 at 10:03 AM
Nick,
Correct me if I’m wrong here but I don’t think Cameco had a downtown project to cancel. At one time they expressed interest in building an office downtown, but chose to build on their current site long before the downturn. That project is either underway, or perhaps even complete at this point.
Mark,
I have to agree with Nick on the speculation thing, but I expect we’d disagree on the scale of the problem. In Saskatoon, over 2000 apartments were approved for condo conversion last year. I understand that similar things were happening in Regina. That’s a problem that could take a few years to work itself out.
Phoenix is pushing 55,000 listings with a population of around 1.6 million. We have 1550 (2,500 if you want to look 50-70 km in every direction) listings with a population of 210,000. Tell me if I’m looking at this incorrectly, but I don’t see how Saskatoon is anywhere near the same condition as Phoenix.
As for foreclosures, I think we can expect to see those numbers to grow over time if the current economic climate continues. The U.S. has a serious headstart on us and was already in the dumps while Canadians were buying real estate at a frenzied pace. There are definitely some Saskatoon homeowners with negative equity, but again, only about .3% of Canadians are in arrears at this point. Currently there are no foreclosure properties listed in Saskatoon.
April 26th, 2009 at 10:04 AM
Nick, read my second comment – i said thousands and thousands. Maybe it’s tens of thousands of spec properties actually. Anyway, as Norm points out, very different scales. Also, as I mentioned, distressed sales skew the average quite a bit. Established neighbourhoods in Phoenix aren’t seeing those same 30 percent declines. Banks will take very low offers to get houses off their books. For an example, I offered less than 50 percent of asking price on a foreclosed property in Regina this month and the bank took it. That’s quite an underbid. Few homeowners would entertain that kind of distressed sale unless in very dire straits. Imagine if half the sales in a city were being handed over by a seller that motivated. That’s Phoenix right now.
Also, oil prices and income aren’t that much different than they were 18 months ago for the province. And things were great then. House prices made most of their gains before oil went sky high. Even at 50 dollars a barrel, given our low Canadian dollar right now, Sask. is still raking in royalties. And more wells are pumping now, especially in the Bakken. Less per barrel, more barrels. And people are still coming here, far more than they are leaving it seems. I had some properties up for rent last month and there was a steady stream of calls from people out of the province, on their way here.
Another curious thing I’d like to know about our inventory – how many people have two listings up? Can’t be that many can it, but in the last few weeks I’ve heard a few different stories about people who bought up just before the market stalled, and currently have both their old and new house on the market. If one sells, two listings will dissapear. Interesting. Could five or ten percent of our listings involve this kind of situation? Or have I just heard a few extreme cases? Norm, any clients you know in this kind of situation?
April 26th, 2009 at 10:04 AM
Nick, and others.
Also, before scoffing too much at Sask.’s economic promise in the near future we are about to embark on the largest infrastructure spending spree in our history. A lot more jobs right there. And that doesn’t include anything that’s about to come out of Ottawa right away. Apparantly Ottawa is on the verge of giving the okay to tens of billions of dollars in new infrastructure spending for projects that are ready to go now. From yesterday’s Globe:
“Mr. Flaherty said he met with leaders of Canadian municipalities along with Prime Minister Stephen Harper and Transport Minister John Baird and asked them bluntly to give Ottawa a list of construction projects “that are environmentally approved that can go now, that can put a shovel on the ground now.”
Some of those projects will likely be in Saskatchewan. And then there’s ongoing oil money. Sure, it’s at 50 bucks a barrel right now. And maybe it will be lower in the next six months. But then what? The IEA this week came out with its report predicting oil to average 100 dollars a barrel over the next seven years. Then higher after that. Huge for our province’s wealth.
http://money.cnn.com/2008/11/20/news/companies/okeefe_oil_stocks.fortune/index.htm?postversion=2008112107
Given everyone’s fear level right now, it is a good time to be buying a lot of things, even the right properties.
April 26th, 2009 at 10:05 AM
Mark,
“how many people have two listings up?”
Personally, I don’t have any clients that are in that situation right now. I do know of a few cases where one seller has two but I doubt it’s a number that would really impact the market in a big way. I do think that a good deal of the “vacant” properties that are currently available are not near ready for occupancy. A pretty good handful are just a “plan” at this point and the builder may later decide not to build it.
April 26th, 2009 at 10:05 AM
“And that doesn’t include anything that’s about to come out of Ottawa right away.”
Think that will affect Ontario and Quebec a bit more, and prevent immigration TO Saskatchewan??
Oil falling from $150 to <50 is a lot different than $50 and climbing (last year)
April 26th, 2009 at 10:05 AM
“Can’t be that many can it, but in the last few weeks I’ve heard a few different stories about people who bought up just before the market stalled, and currently have both their old and new house on the market. If one sells, two listings will dissapear.”
Sounds like people are desperate to sell anything
How about those who don’t have either property on the market? Hoping prices will go up again?
To me – that supports a very weak market, with compromises and free cars and no sales and sales below mortgages (one place that was just down the street when I lived there is now listed $10,000 below the amount owed on mortgage and $70,000 below initial asking
I think it’s delusional to think prices won’t keep going down for the next few years
April 26th, 2009 at 10:05 AM
Norm, a friend at Cameco said they were disappointed that Cameco had not proceeded with a down town tower, and internally, they were told it was because of:
credit issues
and
lack of confidence in a large scale downtown office tower
Mark, you did repost, but like all the boosters, you have “hundreds and hundreds” and “thousands and thousands” tough to back up a position when the actual numbers all show the Saskatoon housing market and provincial economy are in a down turn
April 26th, 2009 at 10:06 AM
obama’s presidency may be the bigger blow to oil
the previous high oil prices were with Bush
obama has a much stronger commitment to the environment and to reducing emissions and consumption
April 26th, 2009 at 10:06 AM
Nick,
“Mark, you did repost, but like all the boosters, you have “hundreds and hundreds” and “thousands and thousands” tough to back up a position when the actual numbers all show the Saskatoon housing market and provincial economy are in a down turn”
Sorry, don’t understand your point. I was comparing Phoenix market to a place like Saskatoon and explaining how they are very different environments. I, and Norm, backed it up with some numbers. Saskatoon would have to have 6500 listings to have a similar ratio, population to active listings. Very different. I did back that up. If you disagree, back your point up.
I’m not denying a housing downturn, or a weaker economy going ahead, only pointing out what many economists have been pointing out, Sask. is better positioned than most jurisdictions in North America to weather this out. And we’re about to spend 1.6 billion on infrastructure. I think most economists are still predicting decent growth for Saskatchewan. Not sure I’d take your word over theirs.
April 26th, 2009 at 10:06 AM
And Nick, where are these actual numbers you speak of that show the provincial economy is in a ‘downturn’? Or by downturn, do you mean pretty good growth?
April 26th, 2009 at 10:06 AM
I don’t think anyone could argue the federal economy is not in a “downturn”, although you certainly could argue that Saskatchewan’s economy is holding better than most. We need to keep in mind that commodity prices, which provided significant upward pressure earlier this year, continued to slump this November, and there certainly remains scope for these prices to slide further in the near term. Moreover, with the economy increasingly showing signs of weakness, downward price pressure on several other goods and services is likely. That being said, we’ve got a goodly amount of resources in this province, and demand is not going to fall to zero, barring Armageddon. One could even argue that this slowdown in demand and financing for exploration will only lead to higher oil prices, as we won’t immediately be in a position to service any uptick in demand. I think if anything is glaringly obvious, we need to be wary of economic “predictions”. Including mine, I dare say.
April 26th, 2009 at 10:07 AM
Dear friends,
Please forgive me for bringing you this terrible news. I have just heard that the Saskatchewan Potash Corporation has announced a 4 billion dollar expansion of their operation in Saskatchewan. Apparently, the project will create 5,800 jobs in Saskatchewan including 1,900 in Saskatoon.
April 26th, 2009 at 10:07 AM
Norm and Mark,
sorry it has taken so long to respond.
Looking at the bubble chart, Dallas has lost about 3% from the peak while Phoenix is at about 38%. Saskatoon has just started the downturn in housing and has lost at least 10% from the peak, maybe 15%. I personally do not think 30% is out of the question right now with slow sales, inventory still high, unaffordable homes and credit contracting.
That would put Saskatoon closer to Phoenix in losses.
The problem is that Saskatoon gained so much in prices in the such a short time. Rental prices are now more expensive than mortgage payments two years ago.
House prices can only increase in relation to wage gains unless there is an expansion of credit. At the beginning of every bubble price increases are justified by the fundamentals, but then things get out of control. Sure we don’t have the amount of speculation or subprime like Phoenix to get to the housing bubble we are in. Saskatoon had other vehicles to reach the peak. Bidding wars, easy cheap credit, panic, greed, fear of being priced out etc, as well as wage gains, consumer confidence, great economic activity led us to where we are now. When it is all said and done, affordability is the key to any market.
2007, 2008 will be known as the bubble years for Saskatoon RE.
Like I have said before we were not undervalued before, everybody else was overvalued and we were just late to the party. House prices were slowly widening the gap with respect to wages in 2006.
Escalating house prices bad for society Sept 2006
http://www.canada.com/saskatoonstarphoenix/columnists/story.html?id=1ee8e93f-866c-4876-b69e-d24bda20be15
“In Saskatoon, there’s smugness, too. House prices here are up an average of 34 per cent in the last five years. That’s three times the inflation rate
House prices are going up faster than salaries. More and more wage earners are thus squeezed out of the market. For them, escalating prices only drive further out of reach the dream of home ownership.”
So the government introduced 0 down, cash back and 40 year mortgages and took away at least 25% down for an investment property. We are kno seeing all around the world the damage innovative mortgages have caused.
This is a great province and I love Saskatoon and our economy is forecasted to do well. But I can’t help but notice what the housing bubble and the credit bubble have done in the world and I believe the same thing is here as well. For example, retail spending is in double digits yoy, but I know wages are not in double digits yoy so people are spending on credit. Just yesterday there was an article in the FP
“after internal bank figures showed Canadians were increasingly struggling to make payments on money they’ve borrowed.”
http://www.nationalpost.com/story.html?id=991378
I wrote a post a few weeks back that outlined why affordable house prices are good for everybody. Builders can keep building at good pace and not lay off hundreds like in Alberta and they can still make money, realtors can make sales, people from other provinces would move here and increase the tax base, more advertising for the media, home buyers are not house poor, parents do not have to dip into their savings to buy a condo for their kids and renters do not have to double up and be house poor.
For anybody who is interested, this is probably one of the best websites on the net that deals with finance and economics that tells it like it is
http://calculatedrisk.blogspot.com/
April 26th, 2009 at 10:08 AM
Norm,
sometimes I am a little bit on the doom and gloom side. So I don’t mind a punch to the face or kick in the groin once in awhile. It can’t do any harm
Thanks for the great blog.
April 26th, 2009 at 10:08 AM
George,
Lol. I didn’t mean to make you feel like you’ve been punched in the face.
I’m not arguing for higher house prices and I do understand the benefits of affordable real estate. I believe the current correction is healthy. I just think that comparing Saskatoon to the worst housing market in North America is probably a bit of a stretch.
Regarding my earlier comment about Potash Corporation. Turns out that it’s worse than I thought. The project is actually worth 4.8 billion and is projected to employ as many as 11,000 people at the peak of construction in 2,010 and create as many as 14,500 jobs over the life of the mines.
April 26th, 2009 at 10:09 AM
While people have been forced to endure the comparisons against wealthier markets, doing the opposite is just as bad – for sure. I never think to do that when speaking out against home speculation and inflation. It just isn’t an argument that proves anything.
Norm,
Regarding the jobs at the Potash corporation. I don’t think anyone would want to take the steam out of growth, but there are different types of growth and they have subtleties that glance off of most people.
Are these jobs well paying ones that are going to go towards helping the people who take them participate gainfully in a Saskatchewan economy? Is the growth driving debt amongst the people to keep up out of fear or a lack of alternatives? These may just end up being people who end up working there at a loss for the profit of the lucky few.
No doom or gloom, but there’s jobs and there’s good jobs. We’ve been having too much of the former these days to say that creating them is ever fully justified.
I’m going to be flying to Saskatoon next week. I was there a few weeks ago, but only briefly. It will be nice to be in the area for a longer stay and check out my old favorites. Ever since they closed the Winnipeg Freehouse and I moved back, I’ve been without those delicious (and overpriced) thin crust pizzas!
Which actually gives me a great tie-in to this discussion…I remember inquiring as to why prices at the Freehosue kept going up and up and – well, anyway: When I asked the boss on duty, she said “oh, because of the changing economy! It costs more to hire.”
(groan)
I said “I certainly hope that extra money you’re charging ‘for wages’ actually makes it to the employees then.”
April 26th, 2009 at 10:09 AM
Regarding types of jobs, a lot will be trades, as noted in the canada.com release. But there was this on the internet this afternoon too, talking about a lot of very high paying jobs eventually.
http://www.newstalk650.com/story/20081126/9059
And lenders lower mortgage rates today. Good news for real estate.
April 26th, 2009 at 10:09 AM
Norm, I thought your comments were bang on. Many people here will be disappointed by the PCS expansion news. I lurk here from time to time and it mystifies me how some people have so much time to spin bad news. Some people post mini-essays multiple times a day! It has become so bad here that I actually came here this time to see what kind of negative spin would be put on this announcement. That should be telling!
Alex, PCS jobs are all fairly high paying. Most miners are now making 6 figures. It is expected that most jobs will be around the $100,000 salary mark; see press releases.
April 26th, 2009 at 10:10 AM
A lot of the “reduction” in interest rates has failed to meet consumers, as prime – 0.75% is now prime plus something, so a lot of the government’s reduction is eaten up by banks
So I’m still considering renting in Saskatoon, versus moving elsewhere that’s cheaper, but have an okay job in Saskatoon so will probably stay until they are done training me before moving to interior BC or somewhere cheaper.
In the interim, what would be a reasonable rent for a 2 bedroom higher end condo? Downtown, Broadway or Sask Cres?
April 26th, 2009 at 10:10 AM
Renter,
Here’s hoping! I never say what I say out of a desire to perpetuate bad situations. But consuming every news item as good news is obviously foolish.
As a society we all need to stop being so easily convinced that everything is good news for everyone.
April 26th, 2009 at 10:10 AM
It’s not all bad news here – someone believes POT will rise…2.2 million dollars in one drop !
http://www.cnbc.com/id/27930755
Let’s re-visit in March and see if they were right.
MVA
ESLR up 16 % today . . . life is good !
April 26th, 2009 at 10:11 AM
Mark “Maybe it’s tens of thousands of spec properties actually”
Uh, I think your “numbers” are speculation
Touche Norm on clarifying,
And Mark, if you are buying Regina properties at 50% of list for bank foreclosures, and Saskatoon has a more bloated market
As for Potash Corp expansion, good, maybe Saskatoon can close the few thousand dollar gap on the Regina over Saskatoon annual family income advantage.
April 26th, 2009 at 10:11 AM
$1,200 to $1,600 max, beyond that, better be the ritz, for a downtown/broadway condo
right now I pay $1,200 for 2 bedroom, ug parking, downtown, nice building
April 26th, 2009 at 10:11 AM
Any statistics about where the buyers of Saskatoon realties are from?
It seems that Mark think the local demand was the key motivation of 2006-2007 housing booming. I never thought in that way. It was the money from AB, BC, and other places. I do know some from AB invested in Saskatoon and Regina. For them, oil price dropping means more than folks in Saskatoon.
April 26th, 2009 at 10:12 AM
Ryan,
Thanks. Many of the most negative people are caught up in a fairly difficult rental trap that has led to countless rent increases and even some eviction notices. They feel beaten down by this “growing economy” and I suspect they think that any kind of growth will hurt them further. I think that we’re most likely heading in to a period where they start to see some rewards from the growth. Conference Board recently predicted double digit “real income” growth for 2009. Interest rates will likely drop when credit markets loosen up. Mean time, house prices are dropping. Everything that’s going on is working to make housing more affordable.
Don,
Unfortunately, there are no statistics like that available. My sense is that there are still a good number of people moving to this area. I would say that a little better than half of the clients we’ve been working with over the past month are new to Saskatoon. We are also starting to see some activity from first-time buyers again. There’s a reasonably good selection of single-family homes priced between 200 and 270K. It’s first timers who are buying them. Believe it or not, I have had the odd call from “investors” in recent weeks (buy and hold types that are looking for positive cash flow). Up until recently all of the investor calls have been from prospective sellers.
Renter,
I think another renter pretty much nailed it. I spoke with someone last week who just got an increase to $1250 for a one bedroom in Marquis Tower (no parking included) and another who pays $1150 for a 2 bedroom in Carleton Tower that includes parking.
April 26th, 2009 at 10:12 AM
Norm,
I’ve been hearing on the CBC lately (there’s a federal announcement over budget today) that 2009 will see increases in unemployment. How do any of us here think that will figure in when talking about wages going up?
Less jobs, thus higher wages? Less employees, thus under staffing? The imbalance in where the effects of inflation apply themselves confounds me!
The trickle down approach is scary because it only seems to go so far before the promised improvements fizzle out.
I know you may not have implied it, but things like “a period where they start to see some rewards from the growth” are indeed what scare people because they convey the assumption (interpreted by a misinformed reader) that the rewards have already happened.
Once those impressions are out, it’s difficult to get people to see differently.
April 26th, 2009 at 10:12 AM
Alex,
Perhaps relief would have been a better choice of words than reward.
A significant portion of the income increases will result from $350 million in income tax cuts. Fuel is dropping like a stone. House prices have come down a fair bit. If only rents would follow.
Saskatchewan is still expected to grow through 2009. I hear that there’s still about 10,000 jobs available here.
April 26th, 2009 at 10:13 AM
Renter –
Right now, I pay 1,000 all inclusive for a 1,000 sq ft apartment just off Broadway — 6 rooms on the top two floors of an old character house, nicely renovated.
I’m lucky, because my landlords are remarkable — but I’ve got to say that I’d never pay 1600 for a two-bedroom — not in this town.
Sign a lease for a year: that freezes rent increases. If you are paying month to month they can (and will) raise the rent every 3 months. My old place went from 650 to 1200 in 8 months, mould and floods and unlocked front door and pot dealers in the suite downstairs and all. For all I know, it’s still going up.
It’s no longer insane, so unless you have a pet or kids you won’t have that much trouble finding a place, I’d think.
April 26th, 2009 at 10:13 AM
I have been following Saskatoon RE for 2 years. I agree the houses below 300K are coming to reasonable prices before the false boom compared to 2006-2007. In that category also, some people are still dreaming about the boom price…
However, I see there are lots of inventories in Willowgroove and Stonebridge in 350-600K range which are still sitting in that high range. In “Saskhouses” alone there are more than 50 houses in this category. Today itself I see 5 new entries in this category. Is this affordable to Saskatoon people or where these houses will end up???
April 26th, 2009 at 10:13 AM
everone just loves to trash talk saskatoon but i think were in a pretty good position. oilfield/tar sand construction is cutting back alot. the automotive industry is tanking. at least we have news about expansions and job creation with potash corp and i read about a canola plant being built and also the sask government are giving sasktel 90 million to upgrade infrastructure in saskatchewan.
where do you suppose all the laid off auto industry and tar sands construction trades people are going to go? i wouldn’t bet on the house prices crashing anytime soon. nation wide saskatchewan is looking pretty good.
sask housing market is settling down, and getting ready to take off again. buy now or be priced out. lol
April 26th, 2009 at 10:14 AM
Norm,
today, I am only posting good news for economic activity and jobs. Many places in Canada are in recession and some are possibly in the beginnings of a depression but we are living in a place that the government, cities and companies in this great province have the money, credit and confidence to expand and invest in the people and our future. These are troubling times and sometimes we should be thankful for where we live. Not only keeping our jobs, but creating jobs is a great feat.
Capital budget sets record at $242M
http://www.canada.com/saskatoonstarphoenix/news/story.html?id=cc3b857e-fb45-4612-a3bb-bd9af79f5175
Saskatchewan region ID’d as viable spot for nuclear plant
http://www.canada.com/saskatoonstarphoenix/story.html?id=f4a65249-0e19-4d03-80e9-35d5177bc223
PotashCorp projects to create new jobs
http://www.canada.com/saskatoonstarphoenix/news/business/story.html?id=ec7f2b74-c587-4ee5-a6b5-f45a316d04b1
Lenders lower mortgage rates
http://www.reportonbusiness.com/servlet/story/RTGAM.20081126.wmortgagestaff1126/BNStory/Business/home
BofC rate and mortgage rate
http://spreadsheets.google.com/pub?key=pqoAQ_B0GEgU0BSE6iS7UXQ&oid=2&output=image
April 26th, 2009 at 10:14 AM
“I think another renter pretty much nailed it. I spoke with someone last week who just got an increase to $1250 for a one bedroom in Marquis Tower (no parking included)…”
That’s bloody insane.
April 26th, 2009 at 10:15 AM
Thanks for the links, George. I was actually looking for more info on the PotashCorp announcement, but couldn’t find it yesterday.
“everone just loves to trash talk saskatoon but i think were in a pretty good position”
I can’t agree with the first part of that statement. There are very few people on this blog that openly slag this neck of woods. Anyone with two brain cells to rub together can see we’re better positioned to ride out this economic climate than most.
My husband (who also occasionally posts here) and I were just discussing how the “boom mentality” seems to be abating a bit. Last year, at the height of the housing frenzy, we met with a banker to discuss a mortgage pre-approval. We ended up qualifying for far more than we were prepared to pay, but that’s not really the point. When we balked at the fact that what we were looking at had “appreciated” nearly 80% in less than two years, the person actually said, “Don’t worry, this house will appreciate another 30% by this time next year, and you can always refinance!” with an idiotic grin on her face. Seriously! We didn’t drink the Kool-aid, but many people did. I feel bad for those people, as they may have already lost their equity, even with a sizeable down payment. Growth is good, but let’s please keep a level head.
April 26th, 2009 at 10:15 AM
It seems a lot of people believe that just because the economy is doing well that housing prices should skyrocket (which they have). I agree that Saskatoon’s economy seems to be doing well and that can have an influence on the real estate market but only if it translates to more jobs and higher salaries and most importantly …more people b/c at the end of the day it’s all about supply and demand isn’t it? Saskatoon’s real estate boom was principaly due to two factors ….the 40 year mortgages and speculators. Unlike Calgary, Edmonton, FtMcLeod etc… Saskatoon did not see a huge jump in its population and in fact by some accounts will see a drop in population. I know some of you will say …oh boy another doom and gloom post but honestly…for someone who has recently come here from out of province….it just doesn’t make sense.
April 26th, 2009 at 10:15 AM
“Lenders lower mortgage rates
http://www.reportonbusiness.com/servlet/story/RTGAM.20081126.wmortgagestaff1126/BNStory/Business/home
”
“Good” news??
Seems like a temporary fix to me,
doesn’t fix the fundamentals that a lot of people just can’t afford and shouldn’t buy in Saskatoon with their lowish incomes (5% a year raise does not justify a 50% house price increase in one year)
April 26th, 2009 at 10:16 AM
doubleJ “the automotive industry is tanking.”
Really?? Not here, sales are actually up.
Saskatchewan people are all decided to spend their life savings (okay line of credit!) to boost the economy beyond what their incomes can alone!
No big deal, unless of course they ever lose those jobs, or their debt gets too big, or their speculation condos they bought a year too late as amateur investors loses ANOTHER $30,000
April 26th, 2009 at 10:16 AM
Debt driven growth is nothing to be proud of, or put much faith in.
April 26th, 2009 at 10:16 AM
Alex,
I agree and I have been saying that on here for some time. But if it does get bad here (Saskatchewan) where we get into a recession or even worse, it would probably mean most of Canada is in a depression. Bailouts for everyone?
Not that I am suggesting people get into more debt and that they hope their debt is wiped clean.
Nick,
consumer confidence and credit are doing well here, until that changes, our economy will do well as well.
April 26th, 2009 at 10:17 AM
Sask. credit rating gets boost
http://www.canada.com/saskatoonstarphoenix/news/business/story.html?id=28d5d7e4-ed4b-49f6-bbe7-5c7b6a6b1998
Potash bucks decline in commodity price index
http://www.canada.com/saskatoonstarphoenix/news/business/story.html?id=ba39c060-d1d5-403d-b83a-ef1a481f59b7
April 26th, 2009 at 10:17 AM
You know, I’m one of those people who do think houses were undervalued here before the boom. They may be overvalued now, but how much, who knows, but there’s no doubt about it, housing was cheap here four or five years ago. In Regina, my wife and I bought our first house in 2002 for 110,000. It was a nice character house in a nice neighbourhood. We had an average family income of 70,000. We each made 35,000. Even we were shocked at how far that money would go when it came to our house. As were most people we talked to who lived in other cities. Our mortgage payments were 500 dollars a month. Since we could live on one pretty much one of our incomes at that point, with those costs, we actually entertained the idea of paying off our mortgage in 6 or 7 years. Friends of ours in Saskatoon at the same time were in the same boat, average household income, similar prices house, and planning to pay it off with one of their incomes. Of course instead we all used that extra disposable income to go on hot weather vacations and the like, but the point being, when we could buy a nice house back then for 1.5 times household income, prices were cheap. Nobody would pay an extra premium to be here. It wasn’t like there was a wealth of jobs. Well, now there is, so perhaps our house prices should be more in line with three times household income, like many other places. Once Saskatchewan became a place worth moving to, for a job say, our houses went from being extremely affordable, to eventually, unaffordable. Affordable, provided people want to be here, is 240,000 or so isn’t it. If people are willing to pay a premium to be here, it will probably stay higher. My poing being I don’t think the whole ‘we were playing catch up thing’ is completely fallacious. We had very affordable houses leaving many of us with extra income. It was one of the things we touted about this province. Now that there is a reason to b here other than it simply being ‘a cheap place to live’, tough to see it becoming extremely affordable again. Affordable sure, or close to it, but not much below that.
April 26th, 2009 at 10:17 AM
Re: Saskatoon, Phoenix
Not that I want to beat a dead horse, but Phoenix is not the biggest bubble in the States when it comes to housing.
http://3.bp.blogspot.com/_nSTO-vZpSgc/SS2hw8Rk2WI/AAAAAAAAD2k/4t6v-DUmaeo/s1600-h/CAR-%25decline-2008-10.png
April 26th, 2009 at 10:17 AM
George, insane numbers for some places in California. Wow.
April 26th, 2009 at 10:18 AM
This just in from Murray Wood.
http://www.newstalk980.com/blogs/murray-wood/believe-it-sask-is-the-place-to-be
More good news for Saskatchewan today, in a roundabout way.
‘Scotiabank predicts Oil Rebound’
http://www.reportonbusiness.com/servlet/story/RTGAM.20081128.wrcommodities28/BNStory/SpecialEvents2/home
April 26th, 2009 at 10:18 AM
Mark
“My point being I don’t think the whole ‘we were playing catch up thing’ is completely fallacious.”
I think the mentality of society has is that higher house prices equates wealth. In reality, higher house prices equals more debt. This housing increase has only put more debt for the people on the bottom of this real estate chain.
http://bp0.blogger.com/_5Unw8_SY09A/RnquWEGsayI/AAAAAAAAABU/S1XGE37RXJI/s1600-h/RealEstate_ValueChain.gif
Interest rates have relatively been about the same the last 5 years. So house price gains can only increase in relation to wage gains. Anything more than that we need an expansion of credit.
We are both in agreement that houses are too high and nobody knows where prices will end up. This province is in a great postion right now. Looking at this realistically; good times (economic boom) do not always last. All we have to do is look next door to Alberta. Oilsands, construction and their spinoffs (retail spending is down yoy)have really turned on a dime. But debt there is at an alltime high.
An affordable house price? I would say 2.5 times income with no debt. Maybe lower, I like to have a buffer in case of a downturn in economic activity or higher interest rates.
April 26th, 2009 at 10:19 AM
George,
“Interest rates have relatively been about the same the last 5 years. So house price gains can only increase in relation to wage gains. Anything more than that we need an expansion of credit.”
And there’s nothing automatically wrong with an expansion of credit, provided people can pay for it. House price gains can outstrip wage gains if people are willing to spend more of those wages on their housing, or the financing of it. We had a fair amount of disposable household income in this province pre-boom. We are now spending more of it on our houses. We’ve overshot, for sure, but we had room to begin with to move up the scale, the ratio of wages spent on housing.
April 26th, 2009 at 10:19 AM
George,
“Interest rates have relatively been about the same the last 5 years. So house price gains can only increase in relation to wage gains. Anything more than that we need an expansion of credit.”
And there’s nothing automatically wrong with an expansion of credit, provided people can pay for it. House price gains can outstrip wage gains if people are willing to spend more of those wages on their housing, or the financing of it. We had a fair amount of disposable household income in this province pre-boom. We are now spending more of it on our houses. We’ve overshot, for sure, but we had room to begin with to move up the scale, the ratio of wages spent on housing.
“And there’s nothing automatically wrong with an expansion of credit, provided people can pay for it”
Don’t forget that banks have to be willing to lend it, too. If it’s percieved as too risky for the economic environment, those wanting credit (even if they can “afford” it) are out of luck.
April 26th, 2009 at 10:19 AM
Mark,
“And there’s nothing automatically wrong with an expansion of credit, provided people can pay for it.”
I totally agree with this statement, From 98 or so till 06, there was a healthy expansion of credit with respect to wages. Since then, we jumped onto the credit bubble train. Now credit is contracting and there are many people in over their heads.
On to a new story about the Fed gov.
WTF is going on?
Jobs at standstill in September, new report says
http://www.globeinvestor.com/servlet/story/RTGAM.20081128.wjobs1128/GIStory/
Liberal, NDP coalition talks gain steam
http://www.theglobeandmail.com/servlet/story/RTGAM.20081128.wPOLcoalition1128/BNStory/politics/home
Monday is going to be interesting to say the least
April 26th, 2009 at 10:20 AM
Crikey,
Oh yah, I know it’s expensive now, and a further expansion of credit for housing is over. My point was related to pre-boom times. Housing was cheap in Saskatchewan, relatively speaking. We pointed to that as a selling feature for our province. Prices will correct, but will they correct to it being considered cheap again? Not with a strong economy. More affordable, yes, but not cheap. Mainly, my point being that we were playing a bit of catch-up. Part of the boom was that. Not all of it, but part of it.
April 26th, 2009 at 10:20 AM
Mark,
I know you are looking at possibly buying some properties in the near future. And I believe there will be some great deals in the not too distant future. Here a some tips to further your bargaining powers.
How to be a vulture
http://www.greaterfool.ca/2008/11/26/how-to-be-a-vulture/
April 26th, 2009 at 10:21 AM
George,
Better stay clear of buying Garth’s house. He knows all my tricks. But how did he get a photo of me?
April 26th, 2009 at 10:21 AM
everybody gets their 15 seconds of fame
April 26th, 2009 at 10:21 AM
8/28/2006-Peter Schiff Predicts The US Economic Collapse
http://www.youtube.com/watch?v=LfascZSTU4o&feature=related
Pretty accurate from 2 years ago. The other guy is eating his words now.
April 26th, 2009 at 10:22 AM
George,
“Not that I want to beat a dead horse, but Phoenix is not the biggest bubble in the States when it comes to housing.”
Ouch, and they still look like a load of cash. I saw a magazine of Phoenix listings the other day. There were some homes I’d love to live in for under $100K.
How to be a vulture: “I’m often asked by people who like to prey on others how to buy real estate in a falling market, like this one. The danger of doing so is that you buy before the bottom arrives, and take a capital gains hit. The advantage is you hold absolutely all the cards, and can strike a great deal while the victim-seller is writhing in pain and begging for mercy. That’s the fun part.”
This man has a strange idea of “fun.” I’m not saying that a buyer shouldn’t try these things, but watching someone who “is writhing in pain and begging for mercy” isn’t my idea of a good time.
I’ve seen several of these Peter Schiff snippets. It’s hilarious how they actually laugh in his face only to eat crow later. I tend to lean in his direction. America is probably insolvent. I suspect that they’ll find a way to milk another good run though before they finally drive themselves to bankruptcy.
A few thoughts on gold for you and Crikey. Picked this up behind the wall at GlobeInvestor. Thought you might find this excerpt interesting.
“The price of gold topped $1,000 (U.S.) an ounce earlier this year and then lapsed into a decline that took it to the $700 range. Recently, it has rebounded back above $800 as part of the same flight-to-safety theme that has driven down government bond and T-bill yields. Gold could have a bright future if the U.S. dollar were to fall from its current high level – bad times for the buck cause investors to seek the security of gold. Then again, gold could be shunned at a time when inflation, always a plus for gold, is no threat at all thanks to a global economic decline.
If this mixed outlook doesn’t make you wary of gold, then consider the returns investors have made in the medium term. The average precious metals fund actually lost 5.4 per cent on a compound average annual basis for the five years to Oct. 31. The average loss for the past three years was 6.5 per cent, and for the past two years it was almost 30 per cent.”
Something to think about.
Bookrat,
I concede.
November closes with just 181 units sold, down from 317 last year and well below the five year average of 227…and yes, even lower than the 187 units recorded in November, 2004.
That’s friggin “abysmal” man!
April 26th, 2009 at 10:23 AM
Another view on gold. Peter Schiff again.
http://tinyurl.com/5jgwfa
Variable rate mortgages fall to prime + .6%.
http://tinyurl.com/5zwg8o
April 26th, 2009 at 10:23 AM
Thanks Norm,
Phoenix has over 300 days of sunshine a year. Many are drawn by the year-round good weather with an average temperature in the low 80′s.
If I was closer to retirement, I would consider one of those newer houses going for 100 bucks sq ft including a pool backing a golf course. If only I knew how to swim and golf
Golf Course Homes in Phoenix-Mesa, AZ
http://www.newhomesource.com/golf-homes/state-Arizona/amenity-golf-homes/area-Phoenix-Mesa
I am fan of Peter Schiff and Ron Paul. Unfortunately, I think they know their stuff.
April 26th, 2009 at 10:23 AM
“Bookrat,
I concede.”
As if the visible acknowledgement weren’t enough of a testimony Norm’s character, I would like to let people know that he even sent me a personal email to ensure that I would not miss his comment.
I think that November was shortchanged a little by the way the business days fell on the calendar this year, but maybe it’ll help the December numbers? Either way, I will now go on record as predicting in December sales in the 120s… or lower (ouch). If I’m wrong, I will be as magnanimous in my miss as Norm was.
But for now, I think I’ll gloat a little. Gloat gloat gloat gloat… okay, I’m done.
April 26th, 2009 at 10:23 AM
“Mark said:
More good news for Saskatchewan today, in a roundabout way.
‘Scotiabank predicts Oil Rebound’
”
I also remember Scotia Bank was one of the first to come out and say Saskatoon housing was over valued!
Mark, think you could also provide a link to that study?
No Merril Lynch saying Saskatoon was 50% over valued (when most of us only think it is 20 to 30% over valued) by was kind of earth shattering end to one sided positive news, so of course it didn’t get any coverage, the media was busy going wild over estimates of GDP growth for 2007 that all overshot Saskatoon’s average economic growth.
April 26th, 2009 at 10:24 AM
Seriously? Murray Wood? News Talk Radio?
I think John Gormley is an impediment to recruitment of new residents to Saskatoon. Like Tom Lukiwski, Gormley (News Talk’s poster boy) gives us the intolerant red neck appearance.
Gormley, Wood et al. are beligerently against any realistic assessment of Saskatchewan’s actual mediocre performance at pretty much everything.
http://www.youtube.com/watch?v=TwumZ5I6vkM
One more loud mouthed booster on the red neck network says little about any objective evidence Saskatchewan is more desirable than still $16,000 a year higher paying Calgary!
April 26th, 2009 at 10:24 AM
Nick,
I’m sorry Saskatchwan sucks so much for you.
April 26th, 2009 at 10:24 AM
Bookrat, and Norm,
I personally think those are great numbers, given the kind of press the world has been through these past few months. If not for non-stop headlines of the economic collapse of the century, you probably would have had well over 200 sales. Some people balked. I really do think those numbers, in the face of what we’re going through, are pretty good. Call me crazy. Anyway, my bet is on a strong January and February and the TSX back over 10,000. I’m optimistic, for sure, very much so, but I believe back in September some on here predicted 10 months of inventory and a 240 average by years end too. That seems a little dire now.
April 26th, 2009 at 10:25 AM
‘America is probably insolvent.’
Norm, as far as I know, America has a fairly normal debt to GDP ratio in the world. I mean may other G20 countries have higher burdens given the size of their economies. George? Plus, all the money the US government is spending right now isn’t gone, so to speak. It’s not like dropping bombs. A lot of it is stock, and assets, that may pay back. George?
April 26th, 2009 at 10:25 AM
Bookrat,
Lol. I think that’s 1 each, isn’t it?
I guess that my own daily schedule brought too much optimism as I have been quite busy through November. Four firm sales on my own listings, one conditional, and two offers on one other which I’ll present this morning.
Nick,
Here’s a link to a post I did on the Scotiabank ‘overvalued” story.
http://tinyurl.com/5cwkek
“Gormley, Wood et al. are beligerently against any realistic assessment of Saskatchewan’s actual mediocre performance at pretty much everything.”
Don’t worry Nick. You are quite adept at representing the other end of the spectrum.
Mark,
Given the constant barrage of bad news that we’re hearing I have to agree that things could be much worse.
Royal Bank did something similar shortly afterwards.
http://tinyurl.com/5ub7vj
April 26th, 2009 at 10:25 AM
Does anyone on this board have any information on long-term rental prices in saskatoon? I am looking for some data going back at least 20 years, preferably longer. Failing that, is there any province wide or federal data on average rental prices.
April 26th, 2009 at 10:26 AM
Hey Matt,
I don’t do any work with rentals so I haven’t tracked the numbers. CMHC does do a “Rental Market Outlook” on an annual basis. Not sure if you can find archives on their website at http://www.cmhc.ca but you may be able to call them and get access to past reports. Only issue really is accuracy. I find their more recent reports really understate rental amounts.
April 26th, 2009 at 10:26 AM
I moved to Regina, housing is way cheaper, and jobs are way better – housing/work sucks in Saskatoon.
Still to be delusional and pretend Saskatoon, with family incomes $16,000 less than Calgary, similar rent prices, and a violent crime rate twice that of Calgary, is a decent place kind of sucks too.
April 26th, 2009 at 10:26 AM
And of course predictions from Scotia Bank to Merril Lynch that Saskatoon is 25 to 50% over valued are all way out to lunch. Why believe an objective 3rd party when we have CMHC and the mayor of Saskatoon saying we’re doing a good job?
http://www.reportonbusiness.com/servlet/story/RTGAM.20070913.whousing0913/BNStory/robNews/home
April 26th, 2009 at 10:26 AM
Seems to be lots of rental talk on here.
For what is available, Saskatoon is quite expensive rent wise. Was considering a move out there myself, but decided against it when on tour of some rental accomodations, was not enthused by circa 1980 orange apartments with street parking in minus thirty weather, all for what I pay for under ground 10 blocks from the U of A.
Saskatoon had appeal when I first looked a few years ago, but with rental rates beyond Edmonton, and the level of jobs below Alberta, it does become a tough sell. Not sure it “sucks” but the rental rates sure do!
The positive which I have taken away from my little trip to Saskatoon is that Edmonton is a pretty nice place to live, and the “high cost of living” argument for Edmonton just isn’t backed up, as it is quite competitive to “home”. Haven’t lived in Saskatoon for quite some time anyway, but now there really is little reason to move back.
April 26th, 2009 at 10:27 AM
Nick, I had a look at that article you posted and I don’t think it really backs up your point. The economist states that Saskatoon is overvalued by 21%. That isn’t really a substantial difference, considering some of the cities in the states were overvalued by closer to 100% before they crashed. The article also states that the economist doesn’t expect price decreases:
‘To be clear, Ms. Warren is not predicting a Canadian housing collapse, but rather a cooling in price gains. Nationally, she expects prices will rise 10 per cent this year, slow to the “high single digits” next year, and eventually fall back in line with the rate of inflation, which would put them between 2 and 2.5 per cent.’
April 26th, 2009 at 10:27 AM
181 sales, eh? The universe is unfolding as it should, after all.
Looks like my ski jump might be happening after all: do you still have that chart of yearly sales around here somewhere, Norm?
Personally, though, you seem to be doing nicely, which is good to see.
April 26th, 2009 at 10:28 AM
jrochest,
“do you still have that chart of yearly sales around here somewhere, Norm?”
Somewhere, but it’s getting easier to lose track of stuff around here. Tell you what though, I’ll update that one and post it with my monthly review which will be up before the end of next week.
“you seem to be doing nicely, which is good to see.”
Bless you! This market is treating me well as I am learning how it works. My listings are selling and I’m running low on inventory. Perhaps I’ll have nothing to do over Christmas.
April 26th, 2009 at 10:28 AM
Mark,
“as far as I know, America has a fairly normal debt to GDP ratio”
Really? I’m not sure about other G20 countries, but there’s a lot of good information on the web. Check this out:
http://tinyurl.com/5j2hqu
In particular, check the debt to GDP ratio against where it was around 1930 or so.
Today’s total U.S. credit relative to GDP has surpassed significantly the levels preceding the Great Depression, actually. Back then, the total amount of credit in the financial system almost reached an astonishing 250% of GDP. Using the same metric today, the debt level in the U.S. financial system surpassed 350% in 2008, and that’s not even counting the last few month’s worth of bailouts.
As of November 19, 2008, the total U.S. federal debt was $10.6 trillion, with about $37,316 per capita (that is, per U.S. resident). Of this amount, debt held by the public was roughly $6.3 trillion. Adding unfunded Medicaid, Social Security, Medicare, veterans’ pensions, and similar obligations, this figure rises to a total of $59.1 trillion, or $516,348 per household.
All the foreign held debt is a problem, too.
The US debt in the hands of foreign governments is 25% of the total, virtually double the 1988 figure of 13%. Lenders from Japan and China held 47% of the foreign-owned debt. This exposure to potential financial or political risk should foreign banks stop buying US Treasury securities or start selling them heavily was addressed in a recent report issued by the Bank of International Settlements which stated, “‘Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely, indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely.”
Actually, you might say most of the money was lent into existence. Check out “fractional reserve lending”.
This is a recent post from Peter Schiff:
Peter Schiff: The Truth About Bailouts
http://tinyurl.com/5ge4t3
By the way, just for fun, you might want to check out this tasty new cereal… I hear it’s big on Wall Street these days:
http://tinyurl.com/6egpnj
April 26th, 2009 at 10:29 AM
Poking around on Kijiji and idly looked at the apartment ads: there’s a guy who’s trying to rent a two-bed unit in the Meridian for 3 grand a month.
The kicker? He’s listing it as a furnished short-term occupancy, ie a hotel, for 100 bucks a night.
Last I checked, most condo boards have rules against this kind of thing: if you’ve shelled out 300K plus for a condo, the last thing you want is an unlicensed and unsupervised B & B operating on the other side of the wall.
Reason #347 not to buy a condo in Saskatoon…
April 26th, 2009 at 10:29 AM
Oh, and it’s not the chart of yearly sales, Norm — it’s the one of month-to-month sales from 05 to 08, the one that I was betting would look like a ski jump, back in July.
April 26th, 2009 at 10:29 AM
jrochest,
Yes, we are on the same page.