Saskatoon real estate: Week in review (October 22-26 2007)
The Saskatoon real estate market continued to move at a pace which was remarkably similar to the previous week. A total of 61 houses and condos were reported sold and prices were pretty much spot on with what we’ve been seeing most recently. New residential listings fell slightly from 122 to 112 units but active listings still managed to move ahead slightly to 689 properties, up from 675 last week.
The percentage of homes selling below list price increased again to 77%, but above list sales also managed to see a bit of an increase to 15%. More and more sellers are pricing their properties at, or above market value providing buyers with a bit of negotiating room in most instances.
The condo market has certainly slowed. Today, there are 139 condos available on Saskatoon’s east side. Only 12 condo sales were reported last week. Anyone seeking a townhouse style condo in Saskatoon’s east end will be pleased to find a number of good options, and probably some motivated sellers. There are quite a few new, never lived in homes ranging in price from the low 240’s to the mid 260’s. The demand for good single family homes priced around or below the average still seems to be quite high. Most of what comes available will find a buyer pretty quickly if it’s realistically priced and showing well.
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Norm Fisher
Royal LePage Saskatoon Real Estate
38 comments so far. We'd love to hear your thoughts.
May 27th, 2009 at 10:12 AM
Not much,
to say here. Seems pretty average to whats been seen the past few weeks. I’m thinkng we’ll bounce around between $250k and $260k for a while.
May 27th, 2009 at 10:13 AM
Have been reading your blog for a while. This is certainly one of the best real estate blogs I’ve ever seen. A lot of information, great discussions …
You mentioned that condo market has been slowing own, well, not really reflected in the price tag. A quick browsing on mls shows some low-rise condos are listed over half a million, WOW, there are two from that “Landing” Sask. Cresent building, one is 529,000, the other is 569,900; looks like just a wood-framed building, are you kidding me? We don’t even have that expensive condos in Calgary and Edmonton, I mean wood-framed ones
May 27th, 2009 at 10:13 AM
Gostephen,
Are you saying that Saskatoon is overvalued?
I was in Saskatoon earlier this week. After having lived there for most of this year it was a nice reminder of why I left.
Poor quality and lots of low expectations.
May 27th, 2009 at 10:13 AM
Northstar,
It’s likely to come in above 260 for October.
Gostephen,
The price of upper end condos is particularly gross. I have to wonder where the money is coming from. I think these units were a major target of speculators. They gobbled up everything which was “pre-construction” at the start of all this.
I think we will see some movement in prices with the big imbalance between listings and sales. I already notice some. There’s a bunch of townhomes being completed on Slimmon in Lakewood. These properties were easily fetching into the high 250′s back in June/July. There is a handful of them available now priced around 245. I showed one of them today and there were 15 other agents who had been through over the last couple of weeks. No takers. I’ll guess that we some come available under 240 very soon. It’s not huge, but close to -10% in just a few months.
May 27th, 2009 at 10:15 AM
Norm,
How will avg sales come in over $260k? All your weekly stats have been in the 250′s
May 27th, 2009 at 10:15 AM
Great question..uh..
The numbers I post for the “week in review” are based on sales which were reported as having firmed up during that particular week. In other words, the contract date of the homes “reported sold” last week, may have actually been from the week before but were not reported during that week because they were conditional.
Monthly stats will always be based on the actual contract date, and my program will only count sales marked as sold between October 1 and October 31. In order for these to be accurate, I need to post them a little later in November (after the 10th) to ensure that most of the sales conducted during October have been reported.
While we’re on the topic, there is another subtle difference in the numbers that I track versus those reported by our MLS. They will generally lump everything together in the residential category so their average sale price will include semi-detached properties, mobiles, vacant lots, etc. I do my best to report on houses and condos.
So far, there are 174 condos and houses which actually sold during October at an average price of $264,014.
May 27th, 2009 at 10:16 AM
Just thought,
I’d throw this out there as it was previously used as a reference. It’s a stat on job growth that was brought up to support a downward trend theory. As you can see, a complete turn around to the upside
http://creastats.crea.ca/sask/employment_trend.htm
That’s now over the past 8 quarters roughly:
31,000 jobs in
7,000 jobs out
net 24,000 new jobs in Saskatchewan
Norm,
Thanks for the clarification. $264k will look great on my chart for a continuation to the upside.
May 27th, 2009 at 10:17 AM
Alex,
To me, overvalued is an understatement for some of the condos out there, prices tagged to them are mind-boggling, how could they ask that much!!! how did they come up with those prices and expect there are buyers.
Norm,
I think market is now putting the squeeze on those speculators. I am seeing a lot of the same going on in Edmonton and Calgary. But with prices going up that much this year, it’s just a matter of how much profit speculators could get. For people who want to buy and live here, they are paying the price, sigh…
May 27th, 2009 at 10:17 AM
Northstar,
Enjoy it while you can. I suspect this is probably the peak, at least for the next several months. It’s based entirely on gut but I bet we don’t see another “mid-260′s” before spring of ’08. There’s an awful lot of inventory hanging around out there right now.
gostephen,
Agreed. Competition from investors shouldn’t be too much of a problem over the coming months. If anything, I think some of them will be quite willing to take a little less to get out while there’s still some market. Migrating home buyers also seem to be less of a factor. Their current homes (Calgary and Edmonton) are proving to be a tough sell right now.
May 27th, 2009 at 10:22 AM
Norm,
I agree that inventories are signifigantly more that what we saw in April. However if we’re sitting at less then 700 coming in to the “historically” worst 2 months for real estate, I don’t see a lot more people putting their houses on the market until next spring. It wouldn’t make sense unless you had to sell ( divorce, illness, loss of job etc ).
May I further point out this comment by you back in August.
“For 14 years, inventories have fluctuated in the 600-800 range. Even at that, buyers and agents complain of no selection and prices manage to creep up, much more marginally of course. With the increased demand I’m thinking that we need to see somewhere between 800 and 1,000 to really balance things out.”
May 27th, 2009 at 10:22 AM
Northstar,
Wouldn’t you agree that we have seen a shift away from “increased demand?”
May 27th, 2009 at 10:23 AM
Norm,
I definately agree with that statement.
May 27th, 2009 at 10:25 AM
Obviously one of the reasons some of these homes are selling below asking is because the asking price has significantly gone up. When I bought my house earlier this year I paid $20,000 more than the asking price. The homes on my Crescent going up for sale now are being listed at the price I paid for mine and they are nothing like my house (not updated at all). So, really, to me the price they are getting might say “below” list price, but they are still getting way more than they would have 6 months ago. The new higher asking prices are just cutting out the large volume of overbids by projecting a more on target starting price.
May 27th, 2009 at 10:25 AM
catsmeow,
I can’t disagree with that at all. What I’m saying is that I think the upward pressure has ceratinly come off of prices due to an increase in supply and a decrease in demand.
Thanks for the comment.
May 27th, 2009 at 10:26 AM
Hey guys,
Looks like a lot of stability is coming to the market. I still think we have good demand relative to other years – just based on the overbids. Overbiding of 15% is weak relative to the boom but I think its strong relative to other centers and Saskatoon historically.
As for average price, I’m thinking RBC just might end predicting this correctly. I’m thinkin that a lot of inventory is from speculators who aren’t going to sell for anything less than they paid. When I bought a couple months ago I forecast price stability with modest gains from here on in. I still think this is the most likely scenario.
May 27th, 2009 at 10:27 AM
I would see speculative investors more willing to drop their prices. They have to weigh the cost of holding an investment vs the cost to reduce the sale price. Everything month that property doesn’t sell, is another month’s mortgage/taxes/condo fees tacked on to their cost… offsetting their margin. I actually think the amount of speculative holders and sellers is the largest and most dangerous variable. Typically, when an investment begins to eat into an investor’s margin, the investor will reduce holdings. Stubbornness does not a smart investor make.
Investor reaction to the market is what I’m watching closest to understand when this market will be corrected. Like SomethingDoesn’tAddUp said, in order to sustain this market, we NEED a boom.
Be careful guys, Norm’s stats aren’t as encouraging as you’re suggesting. Inventory continues to rise, and sales are slow. It’s not safe to have so many investors for sellers.
J.
May 27th, 2009 at 10:28 AM
Johny,
I agree about the significance of slowing sales and rising inventories. Thats why I suggest price stability and modest growth. I guess it really comes down to your expectations on housing afordability – you think a correction is comming to bring prices down where I think a correction just took place to bring them in line with the Canadian norm.
On investor psychology, I think we all know investors who are stubborn and who wait to see the market align with their expectations during purchase. It normally takes months to sell a property so someone who’s used to investing in real estate isn’t going to be afraid if their property isn’t selling right away.
On the subject of investors, I’d just like to comment that I also see them playing a significant role in this market. I believe there are still some out there that are buying – of course they expect a return on investment which means higher list prices. Median prices continue to climb (slowly) which reinforces this assumption. Average underbids aren’t changing that much so if list prices continue to climb I think we’ll see average sales prices go with them.
May 27th, 2009 at 10:29 AM
Johny and Doug,
The losses incurred through monthly carrying costs may be manageable for some of these people, assuming that they just have one or two units to subsidize. If you have a dozen, it gets old (and painful) pretty quickly. These people are most often leveraged full tilt and they’re not going to have a few thousand dollars to chuck away each month. Also remember that there are those that bought 8 months ago, and those that bought last month. One is in a position to feed on the other by taking a loss and still coming out all right.
I still believe that the resale single family home market is not at that great a risk. A lot of the investor cash is tied up in condos and new construction. The resale “house” market can probably withstand some correction in condos, and new homes are scarce enough that they should continue to hold their value, unless there is a sudden flood of completions that end up on the market. It does seem that we are seeing a bit of an increase in “new” inventory as winter approaches.
May 27th, 2009 at 10:29 AM
Have we identified a correction yet? I don’t really see a correction in prices, I see a big drop in demand and significant increase in inventory levels. Seems to me to be a recipe for a correction that’s yet to be seen in avg prices.
J.
May 27th, 2009 at 10:31 AM
Hey Norm,
Thanks for your comments on investors – it would be nice to know the ratio of new to old in the market.
When it comes to the house/condo issue I’m looking at the median price of a house being $286K while the median price for a condo is $230K. That’s a 20% discount which doesn’t seem totally out of whack. I looked at the discount for a few Canadian cities and ours is not unusual.
Correction: I mentioned about a week or so ago that median prices for condos had decreased to $206K but I made a mistake. They’re definately $230k today.
May 27th, 2009 at 10:31 AM
Johny,
Thanks. Frankly, the “averages” aren’t very reliable on a week to week basis with the reduced number of transactions. Even from month to month they can be significantly skewed by a small handful of transactions at the upper end of the market. Look at SRAR’s numbers for the last few months.
June: $252,443
July: 245,151
August: $253,240
September: $242,091
October: not yet available but my guess is $255,000-$260,000.
If my guess is close, I don’t think one can fairly say, “prices have risen 7% in October.” I made the same argument when the average dropped between August and September. I think that these numbers are more likely indicating some stability, or even a bit of shifting around from one category to the next (ie: condos inching down, houses inching up).
Doug,
The medians are probably much more useful, assuming that sellers can get some traction at those asking prices.
My comments on condos are based more on the disproportionate increase that we saw in condos as compared to single family homes. I just think they rose too much, too quickly. Consider the rent to price ratio as well, which matters much more with this type of property. The fact that you can rent one for almost half the cost of owning one raises some value issues.
There’s a big whack of apartment inventory priced between $155K and $195K (46 units – east). Very few of them are selling (only 8 in October). I think we can all agree that active listings in this category are going nowhere but up. I can’t see them escaping untouched.
As for a “correction,” consider this. A number of these units were sold in July and August for between $251,000 and $261,900. Today, choose from 2 brand new ones for $242,000. The MLS shows an additional 8 units, which are owned by “investors” priced between $245,500 and $264,900. What do you think the “fair market value” for one of these homes is today? I’ll agree that it’s not significant, but it looks like a bit of a correction to me. These subtle changes are most obvious where you’re able to compare properties like these which are almost identical.
I still think single family homes could see some marginal increases while condos see some marginal decreases. Again, I don’t see any real signs of the bottom falling out.
May 27th, 2009 at 10:32 AM
All the more reason why I think these high level statistics have been doing more harm than help.
When government and others look to gauge how bad the problem is – these numbers are what they rely on. If the numbers do not show them a problem with one glance, they assume everything is tickety boo.
Although let’s not kid ourselves. Saskatchewan and Federal government don’t give a hoot about what’s happening to the middle class.
May 27th, 2009 at 10:35 AM
Norm,
Well considering I’m one of those new home owners I hope you’re right!
Also, I ran accross some statistics a few weeks back that lead me to believe construction costs were coming down. I was reminded of this based on your post – anyone heard anything about materials or labor prices coming down?
May 27th, 2009 at 10:36 AM
Oh also, on mean versus median averages I should note that I’ve run accross material that indicates median averages are the industry norm for understanding real estate because they get rid of the extreme sales. If I take today’s housing median of $286k and the condo median of $230k and do a weighted average based on the number of properties listed, I get an average of $269k. Tracking this figure is probably the ideal way to evaluate market direction.
May 27th, 2009 at 10:37 AM
Food for thought, I found a good link on housing prices in the states.
http://biz.yahoo.com/ap/071030/home_price_index.html
‘Notably, eight of the 20 metropolitan areas in the Case-Shiller index showed their lowest annual returns ever recorded in August. The report showed drops in Cleveland of 4.1 percent; Las Vegas, 7.6 percent; Miami, 7.8 percent; Minneapolis, 4 percent; Phoenix, 8 percent; San Diego, 8.3 percent; Tampa, Fla., 10.1 percent; and Washington, D.C., 7.2 percent.’
Not good news but then again a fairly mild drop in comparison to the prior runup in pricdes.
May 27th, 2009 at 11:05 AM
So just to clarify Norm, you feel we’ve already seen a correction?
May 27th, 2009 at 11:14 AM
Doug,
Saskatoon is moving to a new MLS system on January 1. I’m hoping that there may be some easier ways to get at the “medians.” I agree that it’s probably more useful. Averages are something that everyone seems to understand but they are less reliable over the short term.
Anonymous. Thanks!
Johny,
“seen a correction” might imply that it’s over.
I think that we are seeing some corrections in some segments of the market, particularly condos. There is some pressure on prices and I think that I see sellers starting to respond. Yesterday, I mentioned a handful of townhomes that were priced from $242,000 to $264,900. Today, there is a new listing in the same project for $239,900. Oddly, there doesn’t seem to be a lot of movement in those smaller wood frame three-storey walk ups, but with very slow sales and lots of inventory they are bound to be affected soon.
May 27th, 2009 at 11:15 AM
Preach it, Norm!
I’m in a rental apartment a stone’s throw from 8th and Broadway. There are four units for sale in elderly 3 story walk-ups within a half-block of my current place, and another on 10th between Landsdowne and Dufferin, all for between 173,000 and 200,000 — only two of them show up on MLS, since three are on Saskhouses.ca. The buildings and units are, to be kind, shabby. There’s also a Meridian conversion going on at 1009 9th Street East, which will supposedly come online next summer, and there’s a one-bed in the tower at 5 corners for 229,000. Of all these, the only one I’d even consider is the tower — it’s a concrete building, purpose built, and it’s much better quality than the rest. But still, for the same price I can buy a Haltain bungalow, and for 20 grand more, a Nutana one and half story, which would be ideal…
Yes, the apartment conversions are two-bedrooms, but they’re in worse shape with less space than my two-bedroom rental, they’d cost me twice as much to carry and I’d lose money when I came to sell. So yes, they HAVE to come down to make any sense.
Maybe my rent will triple? Well, if my rent goes to Toronto levels in a town this size, I’m just not going to stay, wonderful job or no wonderful job.
May 27th, 2009 at 11:16 AM
I tried to explain the problems with how bad the 3 floor apartments are as condos. Most everyone seemed to think they were such a wonderful thing.
Why am I always stuck thinking too far ahead for anyone to listen to me?
May 27th, 2009 at 11:16 AM
jrochest,
Did I hear an “Amen!?”
You hang in there with your “wonderful job” because I can almost guarantee you that your rent won’t triple. I could be wrong, but I suspect there will be an excess supply available next year. If they can’t sell them, they’ll be renting them and there will likely be some competition to attract tenants. A lot of what came out of the rental stock will come back improved.
Alex,
That’s it! You’re just about a year ahead of the curve. Hey, they’re not all crap cans! Some of these condos have actually been done with some pride. For instance, I like all of the projects which “Meridian” has done. They seem to have good vision and I believe that they care about their work. They would pretty much be perfect if they hired me to sell their stuff, but that’s enough ass-kissing for one night.
That said, some sellers have become a little lazy. I showed some townhouses last weekend. Two of three which I showed had no natural gas service, in spite of the fact that it has already reached minus 10. My client said, “he’s cheap” and bought the one which was warm even though it was practically identical to the two that weren’t. Thinking about it afterwards, I probably had a bias towards the unit which was actually heated by October 28. The seller was realistic and reasonable to deal with. It’s amazing what you can learn from a thermometer.
May 27th, 2009 at 11:17 AM
Looking forward to month end stats
May 27th, 2009 at 11:17 AM
On the correction issue Johny, my impression is that rising inventories are more a function of increased supply than reduced demand. In August of this year we saw 66% more listings than we saw in August of last year (compared to a 13% increase in sales). In September we saw 42% more listings and its looking like October is going to see over 30% more than last year.
To me demand is going back to historic levels and its supply that is causing changes in inventory – I don’t see this as a sustainable trend. Personally I predict inventories to start droping in by late November, early December. In the mean time, I see corrections in the types of units on the market like Norm – as far as average prices, I could see them coming down but I’m leaning towards them staying the same.
May 27th, 2009 at 11:19 AM
Doug,
You could be right about inventories. My math might be off as a month ago I thought $28 divided by 2 was $16. However I think there has only been 35 listed properties so far this week. If that trend holds up we could see less than 90 properties listed this week (Lowest in a long time). Don’t hold me to those numbers. Maybe Norm can verify.
That being said, it not unusual for less listings at this time of year.
May 27th, 2009 at 11:19 AM
Northstar,
I’ve been waiting a month for new listings to drop off! I heard a bunch of new houses were completed in the fall and that a lot of folks are selling their old houses to move into the new ones. Its probably the last dregs of the short-term investors moving out of the market as well.
May 27th, 2009 at 11:21 AM
Read: “Statistical Data” !
May 27th, 2009 at 11:22 AM
I am a home owner that will be looking to sell between spring 2009, and spring 2011. I own a 2 story split on Delaronde Rd. I want to move into a townhouse. My question is with respect to relative prices, between that of a home and townhouse; can I expect relative prices to fluctuate in unison?
Or are we going to see the prices of townhouses drop compared to that of housing?
thanks,
Michelle
May 27th, 2009 at 11:22 AM
Michelle,
I have never felt more unceratainty about the future of our market. Looking ahead to 2009-2011 is a much larger jump than I’m prepared to make.
I’ve said before that think condos and houses are two close in value and I believe that in the coming months we’ll see that work itself out. Assuming I’m correct, there are a number of ways in which that could happen. We could see condos drop some while houses increase some. We could see condos remain falt while house prices increase.
May 27th, 2009 at 11:23 AM
Norm,
Thanks for the quick response. It looks like my plan to sit tight for 1.5 years or so would best benefit me.
Michelle