The threat of higher fixed term mortgage rates became a reality this morning as the Royal Bank and TD Canada Trust announced significant hikes. The Laurentain Bankfollowed suit and it’s believed that other major lenders will quickly fall in line.

Effective tomorrow, the posted rate for a five-year closed mortgage climbs by six-tenths of a percentage point with all three lenders, the largest one-day rate hike since 1996. Shorter-term fixed rate mortgages will also increase as much as four-tenths of a percentage point.

Fixed term mortgage rates are impacted by five-year bond yields, which have been climbing in recent months. Still, as early as just last week major lenders have been aggressively competing for market share. Just last week, the TD dropped its ten-year fixed rate to its lowest point ever, 4.99 percent. Today's announcement represents a sudden and sharp change that seems to have taken the market by surprise.

All three lenders are currently offering promotional rates on their five-year fixed product that range from 4.54 percent to 4.59 percent, but effective April 19 when new mortgage rules take effectbuyers selecting terms of less than five-years, fixed or variable, will be required to qualify using the five-year posted rates. A Saskatoon home buyer who qualifies for $300,000 in mortgage debt based on the current posted rate of 5.25 percent amortized over 25 years, will see their maximum allowable mortgage drop to $283,000 at the new rate, assuming it’s still in effect on April 19.

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.

Real estate geeks can follow our daily updates on Twitter @norm_fisher.

Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Vidorra

Lake Placid Developments CEO Michael Lobsinger appeared before Saskatoon City Council last night and made an appeal seeking resurrection of a deal his company had made with the city to purchase “Parcel Y” in Saskatoon’s Central Business District. Lake Placid had plans to build River Landing Village, an upscale hotel and condominium development. That deal died on October 30 of last year when the company failed to meet the payment deadline for the land following a number of extensions granted by the city. Lake Placid ultimately faced challenges in securing financing for the project after the global economy went south and lenders tightened the purse strings.

So, what has changed and why should we care?

Well, most importantly, the money is reportedly in the bank according to Lake Placid’s new partner, Dr. Karim Nasser who also attended the council meeting and provided assurances that he has the goods to immediately deliver up full payment for the parcel and to see the project through to its completion. Dr. Nasser is best known to be a respected professor and a generous philanthropist having donated $12 million dollars to the University of Saskatchewan. That kind of gesture should provide some assurance that the guy has access to cash. People don’t often give $12 million bucks away, and those that do probably feel some measure of confidence that money won’t be a big problem for them in the future. I think this guy is the real deal.

Also on hand at last night’s meeting was Manilo Marescotti, vice president of development for Marriot Hotels. Mr. Marescotti has indicated publicly that Saskatoon is a “development priority” for the upscale chain of hotels, and more importantly, that the chain is keenly interested in this particular development. This also strikes me as good news, and if I may say so, a darned good fit for this awesome project.

So what’s a city council to do?

After all, they did give Lake Placid its very “last chance” back in August of 2009 with a pay up or get lost kind of ultimatum, and who can blame them for that? At almost every given moment through the final months of the last chapter, Lobsinger claimed that Lake Placid was just days away from coming through with the cash. He said it like he believed it. I suspect he probably did. Still, council could only stand behind the guy for so long before they all started to look like clowns who had completely misread the situation. They finally dropped Lake Placid like the proverbial hot potato and brought Parcel Y back to the drawing board seeking new appraisals and beginning preparation for a new “request for proposals.” They had little choice at the time.

But…but…here he his again and this time he apparently has the cash!

I say, “Take the money baby! Take the money and run!”

Why?

1. Well, for starters, Saskatoon could really use another $200 million dollar project right now, and apparently cash is still hard to come by, at least at the quarter billion dollar level.

2. We’ve been trying hard to get something going on this land for a long, long time. Starting the process from scratch could easily take another 3 years, if someone else steps forward who wants to take a bite of this one. If it fails again, you and I could be long gone before this parcel sees further improvements. We’ve already jumped through the hoops to make this deal fly. What realistic benefit could we see by turning this opportunity away? It seems like a big risk to float given the history of “Parcel Y.”

3. Lake Placid has an ultra cool plan that has already been approved for the site and it appears that they’re ready to turn some dirt. In the world of $200 million developments, it doesn’t get much better than that.

4. The other guys don’t appear to be lining up to stake a claim. I mean, for goodness sakes, 200 million dollars doesn’t grow on trees, ya know?

5. Michael Lobsinger deserves this project. I know he really pissed us off when he kept promising to show up with the cheque but this is what we ought to expect from passionate people who put everything they have into really big ideas. They get so deeply invested that they can’t accept that they might fail. This is the kind of brain that you must have to get huge projects like River Landing Village off the ground. This is the kind of spirit and determination that it takes to crack tough nuts and do big stuff. Those failed promises weren’t lies. They were the words of a committed man who had already invested millions of dollars and hundreds of hours. Lobsinger is the kind of person who has the ability to believe even when he’s facing of the worst kinds of adversity, and that’s exactly what he faced when we fell into what many have called “the greatest financial crisis since the great depression.” And, while we were busy kicking him back to Calgary, telling him that the deal was dead, and that he’s a deadbeat, he was still getting up every day looking for $200 million dollars. He still believed that he could pull this thing off. That takes a lot of guts! There’s a certain coolness factor to that, so I love this nearly perfect ending.

Sure, let’s make them pony up with today’s fair market value. Let’s have a look at those books and make darned sure these people can pull this thing off. Let’s double check, and heck; let’s even have our smartest accountants count the cash. If and when we’re satisfied that they can do it, let’s let them go build us a village.

More from the Star Phoenix

Developers tout plan

Lake Placid still in contention for River Landing development

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

The final quarter of 2009 saw softer sales and growing inventory “put a damper” on rising house prices in Saskatchewan, according to RBC’s March 2010 Housing Trends and Affordability Study. While housing affordability “eroded mildly” on a national level, Saskatchewan showed “substantial improvement.”

The big bounce in resale activity that took place during the spring and summer of 2009 in Saskatchewan showed signs of letting up late in the year, just as more properties were listed for sale. This put a damper on price increases recently, which allowed affordability to improve further in the province. In the fourth quarter of 2009, RBC measures fell between 0.1 and 1.1 percentage points (for condominiums and townhouses, respectively), in most cases extending the sharp declining trends since about the middle of 2008. Nonetheless, the cost of home-ownership remains historically high in Saskatchewan, with the unprecedented surge from late-2006 to early-2008 only partly reversed. This might not be cause for concern, however, considering that housing prices that prevailed prior to the boom were likely depressed by unfavourable migration flows, which have since turned around. Housing affordability in Saskatoon also improved, though far more modestly when compared to the whole province.

Read the full 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.

Real estate geeks can follow our daily updates on Twitter @norm_fisher.

Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Vidorra

Premier Brad Wall announced today that government funding is being made available for both a public and catholic elementary school to be built in Saskatoon's Willowgrove. The two schools will cooperate in a joint venture that has them sharing a building.

The Willowgrove area has grown rapidly and is particularly popular with young families so the need for schools has also grown quickly. Presently, students living in Willowgrove are bused to various east-side locations. Area residents hope that construction contracts may be tendered by early 2011 with construction being completed by 2013 or 2014.

Related post: Completion of Willowgrove school likely delayed - 10/14/2009.

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

On February 16, Finance Minister Jim Flaherty announced new rulesthat affect mortgage lenders and borrowers starting on April 19 of this year.

One of the changes requires that buyers qualify for their high-ratio mortgage based on the “five-year fixed rate” even if their mortgage payments are actually calculated on an available lower rate. In other words, the lender must calculate and evaluate your debt service ratiosas if you were taking a five-year fixed.

For the most part, the changes were met with a “no big deal” kind of attitude but not long after the announcement questions began to surface about which five-year fixed rate would prevail for the purpose of “qualification.” After all, RBC’s posted five-year fixed rateis 5.39% today, while some brokers have offers for the same term available as low as 3.59%.

CanadianMortgageTrends.com is reporting todaythat the “chartered bank 5-year posted rate” which is currently at 5.39% will be the benchmark lenders use to determine how much house a buyer can afford.

So how might that impact the Saskatoon real estate market?

Let’s assume that you have a household income of $75,000. Let’s also assume that property taxes and/or condo fees will set you back $2,400, and that you’d like to pay this puppy off within 25 years. Mortgage calculators, enthusiastic lenders and motivated real estate agents would suggest that you could afford to service debt of $356,109. Now, bump that rate up to 5.39% and suddenly you can only afford $296,279. Any buyer who is pushing the limits of their debt service ratio at brokerage level rates must seriously adjust their expectations, if they don’t just happen to be borderline enough to fall out the bottom end of the market.

Oh, by the way. If you’ve been thinking about taking a 35-year mortgage, the same assumptions outlined above result in a $90,000 trim to the housing budget.

This suddenly sounds like a tough pill to swallow if you ask me.

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.

Real estate geeks can follow our daily updates on Twitter @norm_fisher.

Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Vidorra

The Saskatoon Region Association of Realtors recently reported February 2010 results for the entire residential category of Saskatoon real estate that includes single-family homes, condominiums, semi-detached properties, duplexes, mobile homes and vacant lots. Unit sales totaled 236 properties across all of these property types, at an average selling price of $291,056. Let’s have a look at how houses (single-family detached homes) and condominiums did in comparison to the entire residential category.

Single-family detached home (houses) sales pushed higher on a month-over-month basis reaching 152 units, a gain of thirty-seven sales compared to the previous month, and topping last year’s rather lackluster performance by just five units. To nobody’s surprise, active listings also grew over the course of the month. Through February, Saskatoon house inventory had grown by eighty-three units to finish at 469, well below the 761 houses available at the same time last year. In spite of inventory growth, increased unit sales caused the “total months” of available inventory to drop to 3.1, down from 3.4 at the close of January.

Stronger demand and less selection added up to a swing in favour of local sellers as houses recorded gains which were frankly, stronger than I had anticipated. The average selling price of a Saskatoon house came in five percent higher than the previous month at $315,000, still a fair bit off of the peak, but higher than the same month last year when houses brought an average of $305,130. The median soared to $312,500 to record a gain of nearly thirty thousand dollars compared to January and thirty-three thousand dollars higher than February 2009. The three-month average selling price grew by six thousand dollars in a month to record a gain of twenty-two thousand dollars over the same month last year.

The average price per square foot paid for a Saskatoon house also grew, though not as sharply as the other measures. Saskatoon home buyers paid $255 per foot in February, up seven dollars from the month before, and just three dollars more than the average in February 2009.

Sales of Saskatoon condominiums showed greater strength through February as seventy-one firm sales were reported to the multiple listing service, up from fifty-eight the month before and eighteen more than the same month in 2009. Inventory grew by fifty-three properties over the month to 305, twenty-five percent lower than the 412 units that were available a year ago. The increase in both supply and demand pretty much balanced out and total supply of available inventory remained steady at 4.3 months.

Even though the inventory situation was far more stable for condos than houses, prices headed towards record territory as the average selling price of a Saskatoon condo spiked nearly thirty-three thousand dollars on the month to gain more than twenty thousand dollars year-over-year. The median price moved about the same amount to close the month at $245,000 and gaining about nineteen thousand dollars over February 2009. The three-month average was far less spectacular with gains of just fifteen hundred dollars for the month and growth of three thousand dollars compared to the same month last year.

The average price paid per square foot for a Saskatoon condominium was also higher than last month by nine dollars reaching $236 for a gain of thirteen dollars from the previous February.

In a nutshell, unit sales are weaker than expected given the pending mortgage rule changes that take effect on April 19. Saskatoon real estate prices, especially condos are showing more strength than I had anticipated. Considering that most people wouldn’t touch a condo with a ten foot pole at this time last year it’s a mystery to me how we could be talking about year-over-year gains of nearly nine percent today.

Remember, averages and cost per square foot numbers can provide some useful insights into pricing trends but they’re not as useful when engaging in an actual transaction. If you’re buying or selling you should be seeking current information on active listings and recent sales, which are most comparable to your property in terms of location, size, features and amenities.

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 @norm_fisher.

Norm Fisher
Royal LePage Vidorra

The Canada Mortgage and Housing Corporation(CMHC) released it Canadian Housing Market Outlook for 2010 today predicting residential resale activity across Canada will grow by just less than five percent to 486,700 while new housing starts rise by roughly as much to 175,150. According to CMHC the average price of a resale home in Canada reached $342,231 in the fourth quarter of 2009 as sales rose ahead of new listings but Canada’s national housing agency expects price increases to lose steam as “new listings catch up to sales and more balanced conditions return.”

In Saskatchewan, a more balanced market will be driven by continued population growth, CMHC predicts. They expect the province’s numbers to grow by ten thousand in 2010 and 2011, a combined result of positive inter-provincial and international migration. CMHC sees single-family housing starts in the province reaching 3,150, up from 2,829 in 2009, and MLS sales growing to 11,500 from 10,856 last year. “Considerable choice” will see price growth of resale homes moderate as they gain just 2.3% to reach $239,000.

In Saskatoon, single-family home starts will rebound from 1,101 to 1,200 this year following a 7.6% decline in the New Housing Price Indexin 2009, the report predicts. MLS sales numbers will increase to 4,100 from 3,834 and the average resale price of a Saskatoon home will see a marginal increase from $278,895 last year to $285,000 through 2010.

Read the full 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.

Real estate geeks can follow our daily updates on Twitter @norm_fisher.

Our Saskatoon home search tool offers MLS listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Vidorra