Saskatoon real estate: Week in review (October 29–November 2, 2007)
The most notable change within the Saskatoon real estate market over the past week was the sharp drop in both new residential listings and total active listings. Only 85 properties were offered up for sale, the lowest number for any single week since the week of April 2-5. Unit sales surged forward enough to produce the highest sales to listing ratio since the week of May 21-25. These factors, combined with month end listing expiries pulled total active inventories of Saskatoon homes back to 665 units from last week’s high of 689 properties.
This week did produce the highest percentage of negotiable sellers this year with a full 83% of houses and condos going for less than the list price. Only 10% of reported sales managed a price which exceeded the asking price.
Remarkably, the average list price and the average selling price reached new highs once again at $273,961 and $265,538 respectively. These numbers were somewhat skewed by a single sale in the Nutana area which topped the million dollar mark, a new record for the Saskatoon MLS® system. A negotiated reduction of $171,000 off of the list price pushed the average underbid to its highest level yet at $11,353.
I continue to be amazed at the number of executive homes which are trading above the $700,000 mark. So far this year, we’ve seen 18 sales in this price category. Prior to 2007, only 5 homes had ever managed to top the $700K mark.
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
66 comments so far. We'd love to hear your thoughts.
May 27th, 2009 at 9:00 AM
Were did every body go?
Maybe all the negative spin doctors are out there franticly trying to get in the market before it does another surge.
There must be a few of you folks still out there to try and dampen the market so the rest of us can continue cherry picking a little longer. My buck says the spring harvest won’t be as profitable as last, but we don’t want to get to greedy, do we?
May 27th, 2009 at 9:00 AM
People went away because they were tired of being treated like suckers by people like you trying to convince them to buy so that your investments go up. “Cherry picking”? I highly doubt you’re doing any buying, in these conditions, if it’s to flip your purchase during another “profitable” spring.
Sorry to say it, but buyers can’t afford the prices now, don’t hold your breath for another surge.
May 27th, 2009 at 9:02 AM
I bought in December and January and sold most of what I had in June. I think we have arrived at what close to the bottom of the dip, but I hope it stays flat for the next couple of months so I can buy some more good ones before Christmas. I’d be very happy if it does that. I don’t pay much attention to what every else thinks. My money is mine to loose. You bet on what ever you like and so will I. What is said on this blog doesn’t really influence the market. We all roll the dice some win some loose. Go with your gut… Time will tell how it turns out.
May 27th, 2009 at 9:03 AM
Happy House Hunter,
Congrats on your investments here in Saskatoon. If your motives are to start arguments I think you’ll succeed with that first comment. I do agree with your assessment of the market though.
Jen,
Although 3x H’s comments were a touch arrogant, (and I understand your response), if people couldn’t afford a $250k avg house price, no one would live in Vancouver/Victoria/Calgary/Edmonton/Toronto etc etc.
May 27th, 2009 at 9:04 AM
Northstar,
One thing, you do realize that wages are dramatically different between the cities you’d listed and saskatoon?
May 27th, 2009 at 9:05 AM
Happy,
Thanks. Just curious why you sold in June. Seems like a lot of hoops to jump through just to buy again in November.
May 27th, 2009 at 9:06 AM
Hey Norm,
I had to sell, cash flow, I could see a number or other locations in the province that were starting to move. I figured, if i was lucky l could catch the jump in two spots concurrently with the same investment, longer possessions on the buy and short on the sell. It worked somewhat but the other locations did’t move real well until after i had close the offers in Saskatoon. But they did well all summer so i still did better than if i would have left it all in Saskatoon fot the summer. Just blind luck. Bought in P.A., N. Battleford and, one in Regina that closed last summer. Made some $ and it’s time to sell them again. I like Saskatoon and Winnipeg for next spring. Winnipeg has lots of new stuff, I have bought 6 new units in Winnipeg so far that close between fall 08 to early spring 09. I think Saskatoon is good for another go next spring and sell again next summer. Another double down thing. Hey it’s an entertaining game and makes a pile more than working.
Cheers
May 27th, 2009 at 9:08 AM
Jen,
Actually the wages aren’t dramatically different with the exception of Calgary. The wages in Victoria are 5% less than what they are here yet house prices are more than double on average. The average household income in Vancouver is only 10% more than it is here, yet the average house price is triple. Even when looking at Calgary, the avg household income is 25% more than here, but the avg house is nearly double.
In my opinion, the wage argument holds no weight. Taking Saskatoon’s average wage, the average house price would need to be $300k to be comprable to just Toronto. Try $500k+ to be comprable to Vancouver.
I can see the next argument coming (those places have more to offer). I’m only debating the point that Saskatoon wages don’t support more increase.
HHH,
How on earth did you buy in Saskatoon back in December and aren’t able to cash flow? The only property not cash flowing for me is one I bought in July. I agree with Norm here. Seems like a hard way to invest. Why not just pull your equity out in June with a re-finance and buy your next properties with that. Remember, having assets (not flipping) is what truly creates wealth long term. Moreover, be careful with new builds. The developer can always sell cheaper than you can. Other than that, congrats once again.
May 27th, 2009 at 9:09 AM
1 more thing (and it’s the most important)
“Hey Norm,
I had to sell, cash flow”
just some advice here, but I’d never want to be in a position where I “had to sell”.
May 27th, 2009 at 9:11 AM
Well, there’s also the income and sales tax… among other taxes that make Saskatchewan much less affordable than many cities, granted not those listed. Jobs, etc. This, however, will turn into a redundant argument until we see the next affordability study (which unfortunately does not factor in a lot of cost of living components between cities).
J.
May 27th, 2009 at 9:12 AM
Northstar
Maybe what I wrote was a bit confusing the I bought in to Saskatoon in December 06, the cash was needed during July and August for the other properties in P.A., N.Battleford and Regina. I don’t finance just trying to get a good return on capital.
May 27th, 2009 at 9:13 AM
North Star:
yes, there are not as much wage difference between saskatoon and other cities you’ve listed,20-30% top. However, those cities have another driven force in real estate market price other than wage-making average joe. there are over 300000 new skilled worker/ business immigrants to Canada every year with their foreign-made savings, among which 90% of them choose to land in Vancouver, Toronto, Montreal or Calgary. Most of them choose house purchasing as their first step to settle in this country, and yet the money toward those house purchases are not exactly generated by the wage made in these cities.
It is like an injection of several thousands foreign families with their foreign earned money in the real estate market every year to buy a house. and according to statistics canada, technically, their income in canada is $0.00.
if the purchase power is truly and solely generated by the wage making everage joe, you’d be suprised why with only 10% higher average income in Vancouver, they got ferrari dealerships and lamborghini dealerships every other block.while in saskatoon, people think you are loaded if you drive a brand new VW.
By the way, excuse my rough english.I am a new comer in Canada.After travelling across Canada for a year, I am truly surprised by the house price in Saskatoon.
I haven’t decided where I’d like to purchase my first home, but 6 of my friends with no T4 for any of their family members are signing million dollar mansion deal in Vancouver/Toronto this year alone. I guess that is also one of the factors you have to take into considerations other than wage when you compare the housing price difference between saskatoon and those big cities
In Saskatoon All I see if hard working young couple take out 30+ year mortage to have a roof over their head or benefitor from oil boom in alberta use their line of credits from their houses in alberta to flip the house in saskatoon and try to make a quick buck.
May 27th, 2009 at 9:14 AM
What is the driving force in Saskatoon other than average wage making joe??
new comers with their foreign made money?not really, all i see is 300 come every year with 200 of them are gone year after.
dramatic numbers of people move back to Sask from Alberta? yeah maybe,but with new constructions in Stonebridge,Blairmore, Rosewood ect, and big number of 2nd hand houses listing every year, there are easily thousands housing available to accomordate tens of thousands new people already.I don’t see any huge shortage between supply or demand that could cause the house prices keep rising dramatically.
Undervalued Sask housing market prior to 2007? Maybe, but when you take income level or market purchase power origin into considerations, Sask market has very few limited chance of rising like big cities.
just my 2 cents.
May 27th, 2009 at 9:23 AM
Vancouver and Victoria do not have incomes that are much higher than Saskatoon. In fact, I believe Victoria has a lower HH income than Saskatoon. Neither city has much manufacturing industry or an abundance of corporate head offices (there are very few in BC and fewer as the years go by). Why are prices so high in those cities? It certainly isn’t because of the number of highly paid jobs. True – there are wealthy immigrants and rich retirees who like to head for these cities but they are really a minority albeit minorities that make a big impression – hence the fact there are more than a few noticeable Ferraris out here. But for the vast majority of the population, they must struggle to afford the high cost of living and must content with sky high mortgages. A very average older house in a working class part of these cities can cost well in excess of $500,000. I don’t believe that rich immigrants or retired oil executives live in those houses. They are working people who are struggling with big mortgages. I should also note that rental rates are more than in Saskatoon but not that much more and certainly don’t justify the sky high real estate valuations in BC. For example, brand new cramped 500 square foot pre-sale condominiums located in a very crummy district called Whalley – a crime ridden, drug infested part of Surrey that would be equivalent to your Riversdale (except much, much farther from Downtown Vancouver) sell for $300,000! For that price, I could buy a roomy family home in a good part of Saskatoon. Saskatoon is not outrageous by comparison and frankly is very affordable for a working family.
May 27th, 2009 at 9:24 AM
Ron:
Affordable so far? Yes.
Keep rising?No.
I guess that summarises my point
May 27th, 2009 at 9:25 AM
I wouldn’t compare the purchasing environment in BC or Alberta against Saskatchewan.
Wages aside, there are too many other influences. On average, those who buy homes in Saskatchewan now cannot afford a home.
It’s seriously broken right now.
May 27th, 2009 at 9:27 AM
Foreign Investor,
I specifically stateded in my post that I wasn’t comparing any other factors but “avg income”. The reason for that was because so many say that wages don’t support the rise in housing here. My point is that wages alone don’t support living anywhere so people need to quit using it as an argument.
If people have other arguments for their reasons for unsustainability (like you presented), I’m more than willing to hear it. I’m just tierd of hearing about ” Avg income ” because it doesn’t matter.
May 27th, 2009 at 9:28 AM
Lets see, hmmm. Maybe if the likes of artificial inflation of the prices of Saskatoon homes from these investor types were gone, we would have a nice, stable rental and real estate environment that would lend itself more confidence in the market.
I would be more than happy to jump into purchasing my future home if that were the case. By the way, saw a few 350-400 priced SFH in Calgary that were quite nice last weekend. I think the toughest market is the 200-250 in Saskatoon. You don’t get much in that price range. I would not go to the 300 mark. Interesting report from the CGA’s a couple weeks ago.
I think to quote “Alarming” amount of debt in Canadians.
There are people coming here, it is booming. Why don’t you investors just buy stocks and stop messing with Saskatoon’s affordability. We would really like to stay here and have the economy stabilize. If another spring fling hits, we may just start looking elsewhere.
What is really ridiculous is the prices for places that need $100,000 worth of updating.
By the way, Victoria used to be famous as a “retirement” place. (ie – would not expect that average incomes would be higher than Saskatoon)Vancouver, has always had a lot of foreign investment, and steady growth in the appreciation of real estate. What happens in five -10 years here?
Absolutely, we have lots to loose if Saskatoon booms in the spring. But, maybe Saskatoon does, too.
May 27th, 2009 at 9:29 AM
Northstar,
Ask Florida and California how important affordability is now. They used to have the same argument as you do now.
Before I even went to University, I had a job that paid 60,000/year in Vancouver. I rented a place with a roomate and my cost of living was about $700.00 a month (10 years ago) including food, utilities, and rent. Even with 3% inflation, that would be a much more affordable situation than I have here.
May 27th, 2009 at 9:34 AM
Cindy,
What argument are you refering to? That avg income doesn’t have much bearing (by itself) to housing prices?
Do you know those 2 states you brought up have avg household incomes of $40,000 and $49,000 respectively. Yes household not individual. By your theory California’s housing on average should be $150,000 for it to be affordable and Florida’s housing needs to be $120,000. I believe that we’re also talking about owning a home, not renting with people in Vancouver, ( which by the way you can’t get anything there for $700 a month now, “bills included ) unless you want to live on Hastings or in Whalley and eat at the soup kitchen.
Look, I understand that it’s frustrating for some not being able to afford buying a house. We live in a capitalistic society and unless you want to live in “a crappy neighbourhood in a crappy house”, incomes alone don’t support housing anywhere. That’s why people are getting creative in their housing ways. I’m not justifying the system, ( I actually don’t like it that much ). However, it is what it is and in order for me to provide a good life for my wife, myself and soon to be children, I’ve taught myself to go with the flow (not fight the current). It all goes through ups and downs and California, Florida and a majority of the U.S. is going through a down. If you don’t like the “Up” that is taking place here, then wait for the down and buy. Simple as that.
I’m quite confident that one day capitalism will come crashing down as something better will take it’s place. When that happens (if in my lifetime), I will embrace it with open arms. Until then I’m stuck with what’s in place at this moment in time. I’m not going to complain about it as I once did when I had no money and bad credit. I’m going to embrace it and learn about it so that I don’t struggle financially all my life.
May 27th, 2009 at 9:34 AM
A – we hope to stay in Saskatoon.
B – just tried to offer some balanced opinions, based on lots of things that are currently putting pressure on the Canadian housing market.
C- We arent broke, and have excellent credit. We just arent willing to risk our entire financial picture at this time to “own”
D- Everytime anyone has anything other than pro-buying to say on this blog, they are criticised as “negative”.
E – Yes, we have a stake in this as well. We will likely look elsewhere in the future if the market pressure keeps going up. With all things considered on our ability to have a safe neighborhood to raise kids, a nice home to live in (that doesnt need $$$$$$ to fix up), I believe there are other opportunities to be had for the young professional.
Thats just where we stand on it. That’s as capatalistic as it gets
May 27th, 2009 at 9:36 AM
I see all these comments from people saying things aren’t affordable…I agree. The ones that say ‘go with the flow’ obviously have a little more cashflow than the rest that are struggling or see the tidal wave of being out on one’s butt in a few months when rental increases hit.
The issue isn’t nessessarily the ‘purchase pricing of homes’ but is IMHO more to do with the fact that there are other factors that eat up a person’s wages.
My dad said he was making $9600 (take home) a year in 1983. He got a mortgage for their house which cost $64000. With my current wage now sitting at about $27850 a year take home (42g’s before deductions), my ‘same ratio’ is somewhere in the $180000′s. The thing is, dad was making $800 a month take home and his payments were $500 and so the rest of the money was spent on bills, etc etc for 4 people… can ANYONE live on 300 a month? i spend that much on food for myself and i’m one person.
The ecomomy is so screwed…and the rising cost of living isn’t helping. I think the single biggest problem in the real estate market is everything switching to condo’s to make a buck for some outside investor or other greedy companies.
Does one HAVE to find someone to marry to share costs with to afford things now adays?
*shakes head at it all*
Jesse
May 27th, 2009 at 9:36 AM
Doug,
I like the consideration of factors other than avg income but one thing to consider is this year’s popularity of For Sale By Owner sites. I’d venture to say there are several hundred homes listed on saskhouses.com that would’ve typically been found on mls a year or two ago. That kind of skews the argument to reference previous inventory levels as a prediction as well. I also agree with Cindy… those who say be cautious and don’t fall prey to “buy now or your screwed” buzz words really get attacked by you guys and vilified so that you can continue to present a pro-buy argument. And it seems to be a common theme that the pro-buy argument is primarily typical of those holding multiple property investments… kind of skews your opinion no?
J.
May 27th, 2009 at 9:37 AM
Good comments Johny – if you’re right than we may indeed have above average inventories. As for vilifying anyone who’s anti-buy, I hope I don’t come accross this way. I’m pro-buy, obviously, I wouldn’t have bought a house recently if I wasn’t.
After following the market so long, I’m just interested in seeing if I’m right in my analysis and throwing comments out there for anyone who sees value in them. Buy – don’t buy – it makes no never mind to me… I just hope my comments help someone make a good decision.
May 27th, 2009 at 9:39 AM
Johny et all,
I also want to say that I empathize with everyone’s position on the expense of real estate. I generally haven’t gotten into this but my own feelings on the rising costs of real estate are that its going to cause social problems as poorer people can’t afford to pay for housing. A lot of people who do great things in our community for low wages are going to abandon the jobs they love for the jobs they need to do to get by… and lots of things I enjoy like good service at a coffee shop is going to go down the tubes. That’s not even getting into how this feeds into increased crime and just a general decrease in quality of life.
It actually saddens me… but there are a lot of things in the world that sadden me but all a guy can do is roll with the punches. If you try to force the world to fit your picture of the way it should be, then your going to have an uphill battle your whole life. If you accept the world for what it is, you can maybe mold it a little and make the best of what it has to offer. Work with life – not against it – its the basic strategy behind chinese chess.
May 27th, 2009 at 9:39 AM
Doug, it sounds like you and I are on the same page. Believe it or not, I’ve been a homeowner since well before the boom so trust me when I say, my words aren’t in efforts to get a cheaper house.
Ultimately, I am very concerned about the level of debt people are being forced to take on not just to buy a home but more importantly to afford the rent of a home. The dangerous acceptance that this kind of debt is “just the way things are now” will be all of our problems when we (as canadians not just saskatonians) move back into our own recession. I’m not being pessimistic, this is just the cyclical reality of any capitalist economy… conservative spending and tax cuts stimulate and heat us up, while liberal saving and taxing cools us off. If the conservatives carry on too long, we tip and go bust, if the liberals carry on too long, we lose our government to slow bloating and bureaucracy. One can’t exist without the other and capitalism can’t exist without both.
That said, we’ve never before come into a cooling period with this kind of debt/equity ratio. Life in debt has become so mainstream. It would seem today, as our neighbors to the south are proving, that the only way to turn around an economic recession is to stimulate spending by encouraging more borrowing… in other words, economic stimulation on the backs of perpetual and exponential debt tolerance.
I’ve always been proud of the stability and predictability of Saskatchewan. I realize that many will argue back the fact that we’ve been doing nothing but going down the drain for the past 2 decades (thanks in no small part to conservative fiscal irresponsibility). I see, in at least the past decade, excellent and managed growth in Science and Technology, while setting examples in social programs and distribution of wealth.
I can’t remember who said it on this forum but someone said something very prophetic, “We’ve boomed because everyone thinks we’re going to boom, now we HAVE to boom to sustain our boom”. That’s called inflation at the hands of speculative investment, which puts us at great risk when the next economic cooling period comes… perhaps greater than most of our sister provinces. That truly scares me.
Buyers,
Evaluate your financial position. Create as detailed a budget as possible and plan for at least 3-6% increase in interest rates over the next 10 years. Don’t assume that lenders have your financial stability in mind when approving your mortgage, lending conditions have never been looser and profitable.
If, within those parameters, you can buy the house that best fits you, buy. If not, be patient, don’t let promises of another frustrating spring price jump, affect your decision. ultimately, by over-reacting to those kinds of promises, you are fulfilling their prophecy… that’s the motivation behind convincing you.
Educated and cautious buyers make an economy stable, understandable, and even in some cases, predictable. Reactive, frenzied, and misinformed buyers make an economy unstable, unsafe, and inflated. Quick-buck flippers know this and use any forum available to sway buyer opinion and create an environment as described above.
J.
May 27th, 2009 at 9:40 AM
Johny, Doug,
Great posts!!
I need to address this though:
“I also agree with Cindy… those who say be cautious and don’t fall prey to “buy now or your screwed” buzz words really get attacked by you guys and vilified so that you can continue to present a pro-buy argument.”
I’ve had this discussion with you before and the remarks go both ways. To suggest that the cautious people are just victims of senseless attacks isn’t justified. Moreover in no way have I suggested to anyone to buy or you’re screwed!!! If I have, please copy and paste so I can see my mistake.
All I’ve stated is my opinion on which direction I feel the market is going due to my research, experience and gut feel. I feel some seem to have issues with my opinion because my thoughts project a market going higher (getting further and further out of reach). Because I’m an investor in this market and those are my thoughts, there is a lot of emotions projected at my comments from people who don’t want to see the market go up anymore.
If someone said “I think the market is going to go down” just because it was how they felt, I can’t debate that. It’s how they feel and I’m more than happy to hear and support that reasoning. If someone says the market is going down because of “x” and I don’t agree with that, I’m going to say I don’t agree with that. It’s not attacking, it’s debating my position on the fact whomever is presenting.
I’ve said it before so here we go again… I’m here to offer my thoughts and opinions, nothing more. My investments will hit my targets when they hit them. I’m not concerned when that happens. If the average price hits my target this spring, I will be quick to change my opinion on direction. In the end, I could be wrong either way.
For those who believe I’m posting for personal gain, that’s your opinion and I respect that.
May 27th, 2009 at 9:40 AM
Good post Northstar, Johnny *very valuable info* (this is exactly what we based our risk aversion to), and Doug – Well thought out, good comments!
Appreciated
May 27th, 2009 at 9:42 AM
I find it funny the people here that keep saying someone is posting to drive up the market or drive down the market for houses.
Guys, Norm’s blog might be a great resource and I love reading it, but it hardly has the reach or power to move the real estate market as a whole.
May 27th, 2009 at 9:43 AM
“When Alex says that the price of houses are too high, there are obviously 71 people who bought houses last week who disagree with him.”
I disagree with your matter of fact speculation. You are interpreting without regard to the potential situations. In a lot of cases, people are buying homes when they shouldn’t – and if not for the excepting greed of the banks – can’t!
You’re acting like your view has it all wrapped up, but quite frankly you work to suit your own goals with a statement like that.
Many Americans are living in homes worth a fraction of what they were initially worth, or are going bankrupt because they “disagree with him”.
Statistics mean NOTHING. Take it as another prediction of mine (as all the others have come true). Statistics work to distance us from the real problems at hand and encourage decisions that favor the rich.
May 27th, 2009 at 9:43 AM
Or the 71 people who bought homes last week might have been more speculators or “flippers” taking advantage of the current market slowdown. Unless you know whos buying these units, the number mean very little.
May 27th, 2009 at 9:44 AM
I don’t know about that,
It doesn’t matter who you are… Nobody buys real estate with the expectation of it going down. I agree that people who shouldn’t be buying homes are buying them. I also agree that banks are letting them do it. However I also think that 71 people last week are expecting prices to keep going up else they wouldn’t have bought. Either that or 71 people saw a great deal and got houses for below market value.
Doug, I see your point of view.
May 27th, 2009 at 9:45 AM
“Statistics mean NOTHING. Take it as another prediction of mine (as all the others have come true). Statistics work to distance us from the real problems at hand and encourage decisions that favor the rich.”
I won’t believe this statement until you provide me some statistical date to prove it!
May 27th, 2009 at 9:45 AM
Read: “statistical DATA” !!
May 27th, 2009 at 9:46 AM
Johny,
I’m curious about your comments about interest rates. With our dollar climbing out of control, I’d think that decreasing interest rates and making Canada a less attractive place for foreign investment would be the national agenda. You’re talking about more of a 10 year period though and I’m just interested in getting more about your opinion on where interest rates will go and why.
May 27th, 2009 at 9:46 AM
Also, I was kind of curious about the average price of real estate in the United States and in Canada. The U.S. tracks median sales price and average sales price and I found this for anyone who’s interested:
http://www.census.gov/const/uspricemon.pdf
Canada only seems to track average sales price and I found stats here:
http://www.crea.ca/public/news_stats/statistics.htm
It looks like the Saskatoon average sales price is below the national average for both the U.S and Canada.
May 27th, 2009 at 9:47 AM
hi doug
interest rate has to go up to control spending while the economy gets TOO hot for not enough reason(which we call inflation)
interest rate has to go down to stimulate economy by encouraging spending.
May 27th, 2009 at 9:49 AM
Foreign Investor,
Good briefing on intrest rates.
Doug,
Please clarify your last post. Cutting intrest rates would make Canada a more attractive place for foreign investment. Maybe I’m reading it wrong.
I think the wildcard though is the Canadian dollar. Exporters and others are getting hammered right now with how fast the dollar is accelerating. The best way to stop the dollar is to lower intrest rates.
I’d hate to be the one in charge of that decision!!! I’d probably just leave them where they are.
I was talking with my mortgage broker a few days ago. He said the general concensus among brokers right now is that rates will be cut .25 – .50% in the first and second quarter of 2008. We’ll see if that prediction comes true.
May 27th, 2009 at 9:50 AM
Yes, interest rates traditionally go up when an economy gets too hot… there’s a delicate balance and a fine line towards inflation. I agree the wild card is a currency but I’d say that the U.S. dollar is more the wildcard than the Canadian one.
Northstar, did your broker give you any justification for his prediction? I’m not sure I understand why interest rates would go down given the state of our economy… I guess unless the Bank of Canada considers the present state of the U.S. economy a good thing.
J.
May 27th, 2009 at 9:50 AM
Doug,
I don’t think decreasing interest rates will make Canada a less attractive place for foreign investment, I think the present state of the CAD dollar is doing a good enough job of that already (or maybe we’re arguing the same point)
J.
May 27th, 2009 at 9:52 AM
Johny,
Being that we’re 80% tied to the U.S. dollar I guess that’s pretty much the same argument. Lol!!! It does all seem confusing.
My broker didn’t give me any justification for that prediction. He just said that the concensus of the brokers he was talking to was that intrest rates would be cut in the first quarter of 2008.
I will E-mail him right now and ask him why he believes this. I will post the conclusion when I get a response.
May 27th, 2009 at 9:52 AM
Its kind of confusing. I do know that the Bank of Canada is involved in setting rates for t-bills, prime commercial rates, and whatnot. If interest rates go down, it means foreign investors get a poorer rate on money market instruments which offsets the demand for domestic currency to purchase these investments. Its probably a short term tool because as you say – this would have an opposite effect on spending (including equity investments) which is probably more important over the med to long term.
I’m sure its more complicated that this but I’m thinking it probably boils down to the resiliancy of our economy. If the economy does well then inflation picks up and interest rates go up. If the economy slows down (say the global economy slows or our exchange rate keeps rising) then inflation goes down and so does the interest rate.
If this is the case, I’d tend to think Canada’s economy will slow down and interest rates should come down over the short to medium term. I’m no expert though and would like to get challenged on this.
May 27th, 2009 at 9:53 AM
Johny and blog,
Here is what my broker said,
“The reason I believe that there is a “possiblity” rates may drop is due to the US’s weak economy. With this on the horizon, they have reduced their lending rate which will now put pressure on Canada to do the same. If David Dodge does believe that this will happen he may drop the Bank of Canada lending rate to ease pressure however this could heat up our inflation. If inflation then goes out of control and starts to rise, we may see him raise the rates again. So as you see he is in a very difficult position. As I mentioned before, I am not a professional at predicting rates, however I am just voicing what I have read and heard over the last several months. Please do not put a lot of weight on my personal opinion as the market could do exactly opposite of what I am suggesting. This information should be used as a “Food for Thought” only.”
Doug,
Your points sound intelligent enough for me. I’m sure not going to challange that as I’m far from an expert either. I do know that there are so many factors intertwined with each other when it comes to adjusting rates. If I did that job, I’d throw a dart at a board with +/- .5% and everything in between.
May 27th, 2009 at 9:53 AM
Great discussion everyone. I’ve been buried again over the last couple of weeks so I haven’t had much time to get involved in the conversation.
Just want you to know that I read every comment and I really do value the feedback and the opinions that you all share.
I have to agree with Todd that this blog isn’t going to have the “reach” to change the direction of the market, but I know that each of you have some influence on someone that is thinking of buying or selling. During any given month there are 10,000-12,000 people that do pass by this site. Almost every day, someone is telling me how much they enjoy the feedback they read here.
Regardless of whether you think that the market is going to go up, down, or stay the same we should remember that our point of view comes across in a more powerful way when there are others who disagree with us. These discussions, and the differences of opinion really get people thinking for themselves. That’s a great thing. I believe that each voice is being heard and considered. I am very thankful that you come by and share your thoughts.
May 27th, 2009 at 9:55 AM
I’m in Calgary this week and I’m talking with some people who have actually moved here from Saskatoon a few years ago.
Interesting stories. Even though they managed to sneak by with a purchase, they’re still hitting hard times. There came a point in the conversation where we both just threw our hands up. Neither of us can attribute the growth in either provinces SOLELY to increased lending lenience, wage increases or any other factors.
We should start inspecting these houses and seeing if the inhabitants are capable of printing legitimate money. It’s the only thing that makes sense – how can real people afford all this insanity?
(Both in Saskatchewan and in Alberta, heck, BC too!)
May 27th, 2009 at 9:55 AM
So we now have a new premier and governing party!! Anyone have any guesses on whether this is going to impact the housing market? Personally I think it is — heck, just listening to Brad Wall’s acceptance speach tonight, I’m getting excited about what’s going to happen in our province! It wouldn’t surprise me to see some Alberta money start trickling in here not just in real estate but for oil and other opportunities as well.
May 27th, 2009 at 9:57 AM
Norm, I also wanted to comment on your remarks. I was at a conference this winter where the key note speaker talked about the wisdom of crouds:
Essentially if you take 100 people and get them to estimate the number of jelly beans in a jar, the exact weight of a full grown cow, or the location of a lost submarine in the ocean… the most accurate estimate will be the average of the sum guesses. No one person can guess more accurately than the group (whether they’re an expert, amateur, or complete novice). Check out the book, “wisdom of crouds” for more info.
One of the keys is that each person has to contribute an independant view point (as opposed to group think)… another key point is to effectively bring these view points together and determine the midpoint. Essentially, this blog allows posters to contribute wisdom and for readers to tap into the wisdom of crouds. More posters means more wisdom and a potentially more accurate evaluation of where things will go.
May 27th, 2009 at 9:58 AM
Doug,
I also think this election is significant for this province, (Long term direction). I don’t imagine it’ll change much in the next year however I bet it you looked at housing prices 10 years from now, you’d see a difference in them depending on the party that’s leading the way.
As far as the rest that they’re promising, we’ll see what happens. I’m for sure hoping for that crack down on bat/knife weilding punks.
Norm,
Have you been buried in work because demand is starting to pick up?
May 27th, 2009 at 9:59 AM
I don’t know the exact impact the election of a new centre right government will have in Saskatchewan but in British Columbia, the replacement of the NDP with the BC Liberals (our equivalent of the Sask Party) was followed by an increase in real estate prices. It will be interesting to see.
May 27th, 2009 at 9:59 AM
Brad Wall is quite the speaker, isn’t he? I think it will be good for the province to have new leadership and a young and dynamic leader like Wall could accomplish a lot. With a solid majority, he and his party have at least got four good years to prove themselves.
I don’t think there’s much question that the Sask Party will be far more open to welcoming new business in our province.
I don’t see housing going through the roof because of this change though property tax reform isn’t going to hurt housing. A 20% reduction in property taxes has the net effect of a $10,000 price reduction on a home being taxed around $3,000 a year.
Northstar,
No. Most agents are saying it’s slow. I just happen to have a number of clients on the go.
May 27th, 2009 at 9:59 AM
“A 20% reduction in property taxes”
These are set by the city, no? Which tax are we talking about?
May 27th, 2009 at 10:00 AM
Things that seem to me to be at odds…
-The US lowering interest rates to stimulate economic growth – despite estimates that they have not yet seen the bottom of sub-prime mortgage crisis fall-out
The US economic slow-down impact on Canada’s economy – Especially with our high dollar.
And what the Bank of Canada will do with rates – we seem to have high inflation pressures in the west, slow in the east.
What I read earlier in the Accountants report on debt is a real concern re the real estate prices in British Columbia’s lower mainland. Because we have had so much growth in Saskatoon at such a rapid pace, I have been worried that we are potentially more at risk – but, now, with new changes on the horizon, I am not so sure about what will happen….Definetly interesting times.
May 27th, 2009 at 10:00 AM
Callum,
A large chunk of the revenue which is collected by the city is earmarked for education an expense which has been offloaded from the province to municipalities. The Sask Party has promised rebates from the province as a short term fix, and some effort to resolve the issue for the long term.
In reviewing my comment, I see that I have overestimated the value of the rebate as it would actually be a 20% rebate on the education portion of the tax, not the taxes which are collected for city revenues.
May 27th, 2009 at 10:00 AM
I think,
there are major differences between the U.S. economy and the Canadian economy. I understand that our economies are closely tied but I don’t think what’s happening down there will have as much of an effect up here as some may believe. It’s not like the U.S. economy has fallen off a cliff. That would be a different story.
the differences I’m speaking of are:
1) Canada isn’t 9 trillion dollars in debt and counting because of a war.
2) Canada has an almost endless supply of resources to offer the world. The U.S. has little more than I.O.U’s (printed currency) for all of their consumption.
That being said, I think it’s extremely important to diversify our exports. 80% to the U.S. is sooooo!!! dependant. I think that number needs to be under 50%.
Final thoughts,
Barring a U.S. collapse, I think Canada’s issues are more to do with a continued, rapid over inflation of our own market. As Cindy pointed out, inflation is fast in the West and Slow in the East. 70% of our population lives from Ontario East and politicians in Ottawa have had a history of ignoring what’s happening West of Ontario. From an investment stand point, lower interest rates are always ideal. From a personal stand point, I hope the East doesn’t ignore what’s happening out here so they can jump start their market.
I’m by no mean an expert of the effect of intrest rates but why can’t individual provinces have a bit of regulation on rates. For example if the fed rate is 6%, but there’s ridiculous inflation taking place in let’s say “Saskatoon”
… The province could set an adjustment for Saskatchewan of up to a certain amount. Like a half point or something. Just a thought.
May 27th, 2009 at 10:01 AM
Northstar,
Think of how many of our businesses (retail, etc) start with U.S. corporations. those US corporations are affected by the US economy, we follow… just an example.
J.
May 27th, 2009 at 10:03 AM
Johny,
I never said we wouldn’t be affected. The whole world is connected to the States. All I mean is it’s not doom and gloom.
May 27th, 2009 at 10:03 AM
As far as I can tell, the only difference between the Saskatchewan Party and the current Saskatchewan NDP party is that one favors the young and the other favors the old.
Aside from that, they’re both a flawed conservative lot with no eye or capacity for doing what Saskatchewan needs.
It’s sad to think that Saskatchewan used to be the origin of Canadian Social policies – and now? It is reduced to nothing more than a clone of Alberta. Such a sad day, but I think Saskatchewan wasn’t given much of a choice.
May 27th, 2009 at 10:04 AM
Hmm… all of this talk about the U.S. and Canadian economy made me wonder how each of us are doing as far as balance of trade. For anyone interested, here is the US balance of trade (ouch!):
http://research.stlouisfed.org/fred2/series/BOPGSTB?cid=125
And here is Canada (we be good!):
http://www.tradingeconomics.com/Economics/Balance-of-Trade.aspx?Symbol=CAD
May 27th, 2009 at 10:04 AM
I kind of got curious about Saskatchewan’s trade balance at this point. The most recent figures dividing Saskatchewan’s inter-provincial exports and imports by province are for 2003. In that year, Saskatchewan had an international trade surplus of over $4 billion but an interprovincial trade deficit of over $4 billion, leaving an overall trade deficit of $43 million.
The info was a pain to dig for but its in here:
http://canadianlabour.ca/updir/Subm_to_SK_LegisAssem-TILMA-rev_for_website.pdf
May 27th, 2009 at 10:05 AM
Alex, SK isnt that bad. Alberta went nuts when they boomed and were so money crazy they spent a lot of the royalties they were earning. SK has a much better policy where a lot of the money is re-invested for long term stability, if we loose the royalties. Alberta wasnt so smart, and I think Stelmach needed to increase royalties to provide a more safety for the financial plan if they loose some of the companies.
I hope that the policy doesnt change. We are lucky to have the resources that we do. Hopefully they arent flogged and squandered stupidly. I saw that Encana put interest into areas of the States, so I don’t quite know if it is worth it to them or not to come to SK?
SK and Canada, as a whole will do better to moderate the sale of Natural resources, we’ve been spoiled by the vastness so far. Try expanding your horizons, there are some pretty fantastic ideas out there on how to moderate the use of resource for maximum economic benefit with least cost to environment. (Norway, for example)
I think SK has done a fairly decent job, as of yet. We’ll see what happens, though. Don’t forget that socialization policies have a HUGE taxation cost – I dont think it is bad – its just different, and much harder for the young to advance their position in life. As I said, its just “different”. Certain areas of the EU make it mandatory for people to afford housing, healthcare. But, tax is really really high. Education is structured a lot differently as well. On the whole – I would much rather take our country – but, we need to smarten up our country. Why in the heck are we so export dependent, for example? Why do we export so much RAW natural resources – they are like gold! We are very narrow in our approach to business in this country. Still in our infancy, I think.
I hardly think we are Alberta, however, because money is the be all to end all in a capatalistic driven society, hard to say what will happen. Hopefully the growth of this province will be more moderate, stable, and provide long-term strategic success. We need to focus on the youth at this time – lots have left. If a lot of the growth here has been from retirees coming back, well, that will have an interesting effect on the health care system. I dont know if Calvert did enough to attract and retain youth here (ie we need taxpayers to pay for all these wonderful health care plans). Makes me laugh about his golfing campaign to attract people to sk.
May 27th, 2009 at 10:05 AM
Norm,
Are listings expiring right now? Noticed that listings are coming down slightly this week. Or, are things picking up again?
Thanks
May 27th, 2009 at 10:06 AM
Cindy,
Great post. It’s important to learn from the mistakes of other provinces.
The listings coming down might be because of the time of year. November – January are typically slow for new listings.
May 27th, 2009 at 10:06 AM
Northstar,
Actives are down to 652 this week from 665 last week, and 689 the week before. Over the past two weeks the number of sales have increased to more closely match the number of new listings. There have also been 33 expired listings month to date. These are climbing slowly each month. Current numbers are much higher than months like May where we see 707 new listings and only 14 expired listings. A total of 80 listings expired in October but that’s not very serious problem when you consider that there were 534 new listings that month. If only 15% of listings are expiring, 85% are selling and that is still well above what would be considered normal. In 2006, 74% of listings taken managed to sell and 26% failed to sell.
May 27th, 2009 at 10:07 AM
Alex,
Two days elected and you’ve already written them off? Can’t we at least get him sworn in before we decide that he’s bad for the province?
May 27th, 2009 at 10:07 AM
What’s happening in Saskatchewan is what happened and is still happening in Alberta.
The business community is expecting the public individual(s) to bear the brunt of inflation. It disgusts me. Wages barely go up – and if they do, it’s a timid advancement that barely nets any advantage. It’s like the environmental problem, except in this case, it’s money – and not enough of it. The first recourse of the entire arrogant snob community of decision-makers is to shift the responsibility of mitigation onto the masses.
Smells like a lucrative cop-out to me.
I was just in Calgary and I can assure you, the stories of businesses and people alike there are just the same as what’s going on in Saskatoon. The only difference is that the numbers are much higher. If you can sling burgers for 40k, why would you take a job that demands more and pays less – because the businesses are too cheap to recognize the situation there? Are they afraid they might be stuck overpaying once a theoretical bust comes along?
Face it, as the businesses grow, they prefer to keep the money going to the top rather than the people who make it work.
Before you libertarian whack jobs get going, remember – free markets do not necessarily imply freedom of choice today. Don’t mistake the “freedom” in these values as “capacity”.
With the laissez faire mentality running rampant, you can see the impact it is having. Industries are stagnating, they have defaulted to persuasive marketing strategies rather than improvement. Research and development has atrophied to the point where many companies have forgotten what they existed to do in the first place. Subcontracting, outsourcing, subscription-based product models are all the result of simplifying companies to nothing but a bunch of accountants.
As far as I’m concerned, anyone who complains or fears taxes suffers from sticker shock.
The Saskatchewan party will need to recognize that not everyone in Saskatchewan is money obsessed. Granted that’s shifting as things get more insane and the idiot youth of my generation continue to get control. But some of us just want to do something other than take the future of our lives and chart them like a business venture.
Sometimes planning your career around your interests and having a life outside of investment fanaticism is nice.
May 27th, 2009 at 10:09 AM
Ok Alex and others.As I have been saying all along.This whole “real estate boom” was a get rich quick ploy that only worked the first time around.After that little dumb people thought they could do what experienced professionals had did.It was and is a game.
Thats all it is!
D.T.