In a report titled, “Migration Drives Saskatchewan Housing Market and Economy,” RBC is predicting that Saskatchewan’s economy will grow by 4% in 2007, and 3.6% in 2008, outpacing the Canadian economy and all but two other provinces.

“After ten years of declining population, the province is enjoying its largest migration surge in 25 years,” said Craig Wright, vice-president and chief economist, RBC. “It has sparked a sudden housing boom that can be seen by increased construction activity, a massive pop in house prices particularly in Saskatoon, and a lift to consumer spending.”

The report also says, “caution is warranted regarding the sustainability of house prices” noting that it’s far too early to call this migration shift permanent.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

Housing affordability deteriorated across Canada during the first quarter of 2007, and most sharply in Saskatchewan according to RBC’s Housing Affordability survey which was released today. It probably comes as no surprise that Saskatoon wins the prize for the highest levels of change in the affordability measure when compared to the last quarter of 2006.

It is important to note that Saskatoon and Saskatchewan are still among the most affordable places in Canada to own a home. Only the Atlantic Provinces and Manitoba proved more affordable than Saskatchewan. Also, keep in mind that this report examines affordability based on data gathered to the end of March 2007. We can expect to see further erosion over the second quarter as prices of Saskatoon homes have continued to increase at a rather rapid pace.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

The CanadaWest Foundation just released a report titled, “Urban Quality of Life and Urban Growth” which is based on survey responses gathered through interviews with 3,500 respondents in seven Canadian cities.

It seems that the highest “quality of life rating” was found right here in Saskatoon where close to 90% of those surveyed rated the local life as “good” or “very good.”Personally, I didn’t see what I’d consider being remarkable differences from one city to the next in this particular category, but one does get the sense that Saskatchewan people are a little more optimistic about the future when compared to respondents from other cities surveyed. Almost 58% of Saskatoon residents expect that quality of life will improve even more over the next five years, a stark contrast when compared to Calgarians who don’t seem to hold much hope for future improvements.

The responses measured in this study include;

The current quality of life in the city;

The current quality of life in the city compared to five years ago;

Expectations for quality of life in the future;

The attractiveness of downtown;

Protect historic buildings;

Population growth;

Population size; and

Population diversity

My discovery of this report was a timely coincidence.

I had just been reading an article about Saskatoon on an Alberta bubble blog in which one commenter, Groucho, bashed the crap out of Saskatoon.

Following a visit to both Saskatoon and Regina Groucho says, “People jaywalk like crazy all around you…the homeless all have bicycles…Saskatoon and Regina both have a lot of poor people (all riding bikes, of course) A lot of drugs and alcohol problems. It looks like a ghost town in some places…every single house we drove by has an alarm. Apparently they have a lot of crime there…there really is no culture to speak of…I don't want to bash Saskatoon and Regina here, but cheaper housing does not always equal a better quality of living.”

Well, thank you for restraining yourself and not bashing us!

It’s rare that I hear such a critical and condescending review of Saskatoon from anyone who has actually been here. You have to wonder if this guy actually found Saskatoon. Fortunately, he seems to have found his way back home.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

“While the Bank of Canada elected to leave its key lending rate unchanged at 4.25%, it will likely be the last time the central bank does so for a little while. In acknowledging that both economic growth and inflation has exceeded its expectations, the Bank explicitly stated that “some increase in the target for the overnight rate may be required in the near term to bring inflation back to target.” This statement blows open the door to what we believe will be the first of two 25 basis point increases in the overnight rate starting at the Bank’s next Fixed Announcement Date (FAD) on July 10th.”

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

I read an article today written by commercial real estate/property management specialist, Don Sylvester of Saskatoon Real Estate Services which appeared in “The View,” the monthly newsletter of the Saskatoon and Region Association of REALTORS®. Don discusses the frenzy of buying activity in Saskatoon apartment buildings this year.

“The apartment sale for condo conversion frenzy is being fueled by out of province investors and first-time homebuyers wanting to enter the market place.  The frenzy is heightened now by offers of up to $116,000 per unit, representing a near tripling of prices this year alone.  Multiple offers above the listing price are the norm and the demand has spread to small-town Saskatchewan as well.”

Sound familiar?

He goes on to explain that when “resale prices of $180,000 to $220,000 for a renovated and converted two-bedroom unit are commonplace” it’s not difficult for investors to justify this kind of huge upfront investment and notes that developers can still “turn profits well in excess of 50% of their total investment.”

Last week, a number of converted units were sold between $215,000 and $222,000. I’ll suggest that we’re going to see a few more pushing the mid 230K mark within a week or two. Will buyers bite? Maybe, but these units are making less sense as an option with every price increase.

Don then goes to the fundamentals which are required to sustain any healthy real estate market like “affordability, new family creation, job, and income growth.” He makes the point that resale prices have moved much closer to units available in Calgary.

He’s right! I see a selection of two-bedroom condos in Calgary between $250,000 and $300,000, some of them built in the last ten years.

Don reminds us that Saskatchewan lost 200 jobs in April while seeing an increase of 200 in its labour force effectively pushing our unemployment rate to 4.1%. He points out that income growth in Calgary still outpaced Saskatoon by a full percentage point last year, never mind the fact that incomes were already 20% higher in Calgary before that.

“From a pure wages perspective, a working couple can afford to spend $60,000 to $80,000 more on housing in Calgary than they can in Saskatoon.  The question is how close are we to Calgary prices and how much will our wages increase?  The answer to that question suggests that apartment prices should stabilize here soon.”

It looks to me like Saskatoon condo prices are already encroaching on that $60,000-$80,000 price gap. Consider also that the average selling price of a Saskatoon condo was up 75% in May when compared with May of 2006. Consider that hundreds of rental apartments have been removed for the rental market over the last couple of quarters and that many of them will be starting to come on the market as resale condos. Consider that the average selling price of a single-family home increased just 39% for the same period outlined above and you see that the dollar difference to own a house as opposed to a condo has narrowed significantly over the last several months.

All of these factors suggest that the Bull Run which condos have enjoyed may soon come to a close. It’s doubtful that the current low inventory situation will allow prices to decline in the short term but I think we can expect to see prices begin to stabilize.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

I came across an interesting “Letter to the Editor” in yesterday’s Star Phoenix which I wanted to touch on. The letter was submitted by Maureen Shebelski, a Saskatoon resident and mother.

Maureen’s decrial of the current state of the Saskatoon real estate market is a testimonial to her social conscience and it’s obvious that her concerns are sincere at every level. She points to the challenges and consequences which are inevitable in a market that experiences such rapid and significant change. Rising property taxes and insurance rates, increasing levels of debt, and uncertainty about the future are all things that are on Maureen’s mind right now.

I share many of the concerns which she expressed. I am also a parent, and coincidentally I have one daughter and one son, both young adults, so I’ve spent lots of time considering how this “new Saskatoon” will affect them. I’m also keenly aware that there are many residents in this fine city who will face challenges that will dwarf those that my own kids might experience as a result of this “boom.”

Maureen also takes the opportunity to place a little blame for what’s going on, starting with Premier Lorne Calvert and wrapping up with the real estate industry. She says, “I also blame the real estate industry and its new method of taking bids on houses, instead of taking offers. When my father was in real estate, there were some ethics involved. I don’t see that now.”

This attempt to “blame the real estate industry” and suggest that there is something unethical about “the new method of taking bids” would be easy enough for most to agree with, particularly those who are facing the challenge of buying a home in this market. Ultimately, it demonstrates a lack of understanding as to the role of a “seller’s agent” in the real estate transaction.

Since it is “ethics” which are questioned here, let’s take a look at some of the ethical guidelines which may apply from the Canadian Real Estate Association’s Code of Ethics which all REALTORS® are sworn to uphold.

Article 3 – Primary Duty to Client – A REALTOR® shall protect and promote the interests of his or her client. This primary obligation does not relieve the REALTOR® of the responsibility of dealing fairly with all parties to a transaction (Also appears in provincial statutory legislation in the Saskatchewan Real Estate Commission Bylaws, section 702).

Article 12 – A REALTOR® shall render a skilled and conscientious service, in conformity with the standards of competence which are reasonably expected in the specific real estate disciplines in which the REALTOR® engages.

Article 18 – The business of a REALTOR® shall be conducted in strict accordance with all statutory and regulatory requirements.

Ethics and statutory regulation aside, we have volumes of agency law decisions that define an agent’s obligations to his or her client. Agency law provides a history of expectations that are considered reasonable and holds an agent accountable and liable for damages which result from a failure to act as a fiduciary to the person or persons who have hired them. In its simplest form, the agency relationship is founded on obedience, confidentiality, competence, disclosure, accountability, trust and loyalty.

Finally, the listing agreement used in Saskatchewan binds a seller’s agent to the following promises to his or her client;

• obey the seller’s instructions on the Exclusive Seller’s Brokerage Contract and all lawful instructions of the seller;
• represent the seller’s best interests;
• fully disclose known facts which might influence the seller’s decision;
• maintain the confidentiality of personal and financial information discussed with the seller even after the Exclusive Seller’s Brokerage Contract expires;
• safeguard the seller’s documents and money; and
• exercise reasonable care and diligence.

I expect that most people do understand that multiple offers on a property most likely places the seller in the best possible position to negotiate a favorable price and terms. Given that are bound by a Code of Ethics, statutory law, agency law and our promise in writing to act with complete loyalty to the seller, how is it that we are viewed as “unethical” for making as many prospective buyers as possible aware that a client’s home is for sale? I would suggest that failing to make every effort to deliver the best result for a client would be unethical and unlawful.

Discussions which I’ve had with Al Jacobsen, Registrar of the Saskatchewan Real Estate Commission and with Randy Katzman, a local real estate lawyer suggest that agents who fail to provide adequate exposure for a client’s property could be subject to both the prosecution and civil litigation with potential consequences including large fines, license suspension or cancellation, and damages which might result from that negligence. Personally, I’m not much into any of that.

Every time that a seller’s home is sold without a reasonable level of exposure to the market, a betrayal is committed. Every time an agent brings a seller’s property to the market and provides buyers with reasonable access, a promise is fulfilled. Seller’s benefit and so does the community of Saskatoon real estate buyers.

Please don’t call the Saskatoon real estate community unethical for doing right by its sellers. They pay us a hefty chunk of change for representation and they deserve to get exactly what they’ve paid for; obedience, confidentiality, competence, disclosure, accountability, trust, and loyalty. Acting as one’s agent is an honor and a privilege that should be taken seriously.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

I thought it would be interesting to compare the average selling price of Saskatoon homes during the month of May 2007 to those recorded in May 2006 in order to provide some perspective on Saskatoon's real estate price increases.

This first category compares units that would be classified as homes, both detached houses and condominiums. The selling price of Saskatoon homes shows an increase of 44% in May, over the previous May with the largest gains being shown in Area 2 and Area 5, up 64% and 65% respectively.

The average selling prices of Saskatoon houses jumped 37% in May to an all-time high of just over $240,089 from $174,797 for the same period last year. Again, Area 2 and Area 5 record the greatest gains at 62% and 61% respectively.

Saskatoon condos saw huge increases with the average selling price rising to $210,236 in May 2007 up a whopping 75% over the average in May 2006. Once again, Area 2 and Area 5 pull the prize for the largest increases at 81% and 94% respectively.

So why such a significant difference in the price gains when comparing condos to houses? Why do Areas 2 and 5 show greater gains when compared to the rest of the city? I think it all boils down to demand and there’s no question that Saskatoon condos have been a prime target for those wishing to build a bit of an investment real estate portfolio. Affordability is also a major factor for both investors and first-time buyers who may be scrambling to grab a little piece of Saskatoon for fear of being priced right out of the market. For those wanting to purchase an east-side home, Area 2 is more affordable than Area 1 and consequently, there are more buyers who can afford to live in Area 2, and fewer buyers who can reach the lofty average of $285,000 which Area 1 homes are fetching. For those who find Area 2 a bit of a stretch on the housing budget, Area 5 provides a solid alternative for a family home.

It seems unlikely to me that the disparity between house prices and condo prices can’t continue for the long term. I expect that we may begin to see condo price growth level out some while detached houses play catch up. In the coming months, we are likely to see the condo supply increase and some of the apartment buildings which have been purchased with “condo conversions” in mind will find their way back onto the market as single condominium units.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

The average selling price of a Saskatoon home increased close to $12,000 during the month of May to a record $233,013. The average was just shy of $221,000 for the month of April 2007. Here is an overview of sales activity including both condos and houses.

Saskatoon houses were scooped up as quickly as they were listed for sale with 383 units changing hands and an average selling price which is now pushing towards the quarter-million-dollar mark.

The average price of a condominium in Saskatoon exceeded $210,000.

Tomorrow we’ll take a look at how the average selling price of condos and houses has changed since May of 2006.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra