Excerpt from a Globe and Mail story on Garth Turner and his latest book, Greater Fool.

Garth Turner has some unsettling news for Canadians who've tied their financial future to their homes – every real estate bubble in history has burst, and there's no reason to think it will be different this time.

Mr. Turner's new book, Greater Fool, The Troubled Future of Real Estate, argues that Canadians have been buying homes at inflated prices by taking advantage of expensive mortgages that last 40 years and signing up for incentive plans that allow them to forego the traditional down payment. As a sub-prime-mortgage crisis unfolds in the United States, with more than 400,000 families losing their homes in the past year and a million more said to be on the brink, should they smugly assume they are insulated because of high commodity prices and a strengthening dollar?

“When the average family can no longer afford the average home, how can so many people be deluded into believing a boom will last forever?” he asks. “How could we put so much money into something we might never be able to sell, except to a greater fool?”

This article is a very interesting read. Check it out here.

Garth’s blog is also worth following.

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 Vidorra

Tenants of the Saskatoon Milroy Apartments received offers to purchase their units from the developer yesterday. Two of them kindly dropped me a note and I thought you might be interested in the details.

A tenant living on the 12^th floor writes, “We got a package in the mail last night with the price and upgrades they are doing. Ours is priced at $315,888.09 - we have 30 days to buy and if we buy before April 10 we save a whopping 2000. This includes a surface parking spot as well. Sounds a little (alright a lot) steep for this place. They are planning on "gutting" the suite - replacing plumbing fixtures, kitchen cabinets, flooring, windows and appliances and upgrading the electrical service to the building and each suite. Replacing the air chiller, moving to in-suite laundry and upgrading the elevator(s).”

I love the .09 cents thing.

According to another tenant residing of the 17^th floor, it will set you back considerably to move up five floors. He states that his unit is offered to him at $351,502.32.

Let’s assume that the gentleman on 17 is interested in purchasing this property and he coughs up a 10% down payment and mortgages the balance. At 5.1% over 25 years, and assuming condo fees of roughly $290 per month and taxes of $200 (a guess, but probably somewhere close), he’ll have monthly payments totaling $2,385.13. An annual income of $95,000 will be required to qualify. Thankfully, we have 40-year mortgages that allow him to qualify with just $82,000 in annual income. :)

Average annual income of a Saskatchewan resident - $38,636.

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 Vidorra

Tenants of Saskatoon’s Milroy Apartments learned Thursday of their lost court challenge aimed at stopping the condo conversion project at their building, which was approved by Saskatoon city council on January 14, 2008.

“The decision was that the court is not interfering with city council’s decision. The application to set aside the decision approving the condominium plan was denied,” said Andrew Mason, lawyer for the Milroy tenants. Mason presented his case before Court of Queen’s Bench Justice Mona Dovell on March 12 arguing that council did not correctly interpret or apply provisions in the provincial Condominium Property Act which gives municipalities discretionary wiggle room to deny applications based on low rental vacancy rates. The latest Rental Market Report released in December by Canada Mortgage and Housing Corporation pegged the vacancy rate in the area at just 1%, and at .6% across the city of Saskatoon.

The Milroy Apartment tenants will now have to decide if they are willing to bear additional costs, which would have to be incurred if they choose to appeal the court’s ruling.

The City of Saskatoon has agreed to undertake a review of its condominium conversion policies and city administrators have already brought a proposal of potential changes forward. The administration will present the court decision to the city’s executive committee on March 31, and according to city solicitor Theresa Dust, a policy debate will likely ensue at the committee’s April 14 meeting.

Read the story from today’s Star Phoenix here.

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.

Norm Fisher

Royal LePage Vidorra

Note: The graphics in this post were updated on March 5, 2009 to reflect the final sale numbers as reported by agents for February 2008. The graphics show the final figures while the commentary reflects the statistics as they had been reported as of the date of the original post.

The average selling price of a Saskatoon home (condos and single-family detached homes combined) for the month of February came in at $266,573, up from $252,763 in January and sharply higher than the average of $188,028 recorded in February of 2007. A strong and steady flow of new residential listings combined with strong demand led to an increase in unit sales to 339, up from 319 during the same month last year, and well above January’s number of 265.

Houses (single-family detached homes) continued to experience large prices gains with the overall average coming in at $310,533, up from $284,473 last month, and $194,360 a year ago.

The average sale price of a Saskatoon condo slipped for the third consecutive month to levels not seen since May of 2007. Lower averages can largely be attributed to a couple of conversion projects offering small units priced below $125,000. When we look to other projects which have a large number of recorded sales over several consecutive months we can see that condos are continuing to rise, though not nearly as sharply as houses. For instance, looking to the Pine Creek project in Lakewood, we can find sales ranging from $235-$245,000 in December, selling from $245-$260,000 through January, and as high as $270,000 in February. These numbers probably provide a more accurate picture of what’s happening in that market.

You may note that these monthly stats are different than those released by the Saskatoon Region Association of Realtors (SRAR) at the beginning of March. Just a quick reminder on why: SRAR reports on all residential property types, including semi-detached and duplexes while my “closer look” numbers focus specifically on houses and condos; units which we would consider homes as opposed to income properties. SRAR also bases their report on sales which firmed up during the stated period, where my numbers focus on contracts written during the period.

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.

Norm Fisher

Royal LePage Vidorra

Residential real estate sales softened nationally in February, edging down 6.4% from January, and 9.6% compared to February 2007 according to the Canadian Real Estate Association (CREA).

“Snowfall in Toronto made it tough to show prospective buyers, and tough to process a listing,” said CREA President Ann Bosley. “It was one of the toughest months ever weather wise for REALTORS® in Toronto.” (Brilliant guys!)

Seasonally adjusted residential sales activity declined by more than new listings, making the resale housing market more balanced in February 2008 than in any other month in over nine years.

A monthly decline in sales activity coupled with strong gains in new listings caused resale housing markets to become significantly more balanced in February in Regina, Saskatoon and Newfoundland & Labrador, which had been the three tightest major markets in January. Edmonton, Calgary and Windsor remain the most balanced major markets, while Saskatoon and Winnipeg are now the tightest.

“More balanced” in Regina and Saskatoon? Hmmm.

Read CREA’s press release here.

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.

Norm Fisher

Royal LePage Vidorra

“Saskatchewan is the new Alberta…,” according to RBC’s quarterly Housing Affordability report released yesterday. The catchy subtitle goes on to ask the question, “but for how long?”

“Saskatchewan now holds the top spot on growth across all key housing indicators including housing starts, house prices, residential building permits, and re-sale activity… The major erosion of affordability that has occurred over the last year should gradually take a bite out of current momentum over the coming year.”

RBC measures the percentage of pre-tax income required to service mortgage debt on four popular types of housing. Here’s a quick look at how affordability has been impacted in our province between the fourth quarter of 2006 and the fourth quarter of 2007, the latest numbers this report examines.

Detached bungalows have gone from 31% of income to 40.4% of income.

Standard two-storeys have gone from 33.8% of income to 42.3% of income.

Standard townhouses have gone from 24.8% of income to 34.2% of income.

Standard condos have gone from 19.9% of income to 26.2% of income.

Lower housing prices in Calgary, measured against high increases in Saskatchewan have leveled the playing field between the two areas over the last year. You’ll now pay an equal portion of income to live in either Saskatchewan, or Calgary.

“Nationwide housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990… Only Alberta bucked the trend in the latest quarter.”

RBC is predicting improved affordability across most markets in 2008, largely driven by “falling mortgage rates, cooler forecast house price gains and decent income growth.”

Read RBC’s Housing Affordability Report here.

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.

Norm Fisher

Royal LePage Vidorra

Tenants of Saskatoon’s Milroy Apartments asked Justice Mona Dovell to overturn the City of Saskatoon’s decision to approve an application to convert the apartments to condos on Tuesday.

Andrew Mason, the lawyer representing the group of tenants who are opposing the decision argued that city council either misinterpreted the provincial legislation that governs condominium conversions, or ignored it.

Bill Davern, legal council for the City of Saskatoon maintained that council has jurisdiction to make the decision without interference from the courts, that they “fairly considered” all factors which the law requires them to consider, and that the decision to grant the application was “not unreasonable.”

Davern told Justice Dovell that 21 additional applications for conversion projects are waiting for approval and that if she decides that the courts should have the final say in this instance that it would open the door to future actions.

“I don’t know whether the court, with all due respect, is properly equipped to do that.”

Justice Dovell reserved her decision and promised to deliver a judgment as soon as possible.

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.

Norm Fisher

Royal LePage Vidorra

You’ve got to know that Saskatoon community services manager, Paul Gauthier is having some long days at work. He’s one of the civic officials responsible for processing condominium conversion applications. That can’t be a real funfest right now. In fact, approving condo conversion applications has become so controversial that Gauthier has simply had enough, and he has elected to invoke a clause in the current policy which allows him to toss the political hot potato to city council for review of all existing and future applications.

If you think it’s a hot debate now, rest assured that things are about to heat up.

Council passed a motion on Monday, which essentially puts 21 existing apartment building conversion applications in limbo. Gauthier advised council that a new report would be completed for its March 17 meeting, outlining the current situation and possible policy changes which could be used to regulate condo conversions. Another report, recently brought forward by city administrators was tabled for later discussion following a court date on March 11 when tenants of Saskatoon’s Milroy Apartments will argue against the certificate of approval which was issued on that property. Mean time, no conversion certificates will be granted and those which are already in the hopper would be dealt with in accordance with any new policy council might choose to adopt.

Dealing with a steady flow of angry tenants and concerned citizens can’t be easy. I’m guessing that we’ll have some pretty vocal investors on our hands as we move forward from here. Tens of millions of dollars have been invested and those investments were made with an end goal in mind; conversion and resale.

It’s easy to see valid points on either side of the argument. Displaced tenants have few options and promising them that “the market” will eventually work its magic is of little comfort when you don’t know where you’ll be living in thirty days. Free market proponents will argue that there are major benefits to be realized through conversions. Preventing these units from reaching the resale market limits supply in an already stressed market and puts further pressure on prices. Ultimately, that hurts the rental market as well. It’s a real catch 22.

The complexity of the issue can’t be overstated. At the end of the day, the math is fairly simple. Demand exceeds supply in both the rental and the resale market. We need more property in both arenas if we’re going to see any relief. Development of new rental property is the only solution that serves everyone and it needs to happen fast. Free land anyone? I suspect the city may be open to your proposal.

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.

Norm Fisher

Royal LePage Vidorra