RED HOT HOUSING MARKET SEARING IN SASKATCHEWAN; CONDITIONS FORECAST TO CONTINUE TO YEAR’S END

– Significant price appreciations and strong demand will characterize the market through 2007 –

SASKATCHEWAN, July 5, 2007 – Intense demand, driven by the swell of in-migration of Saskatchewanians returning from prosperous Alberta, fuelled average house prices and market activity in Saskatchewan during the second quarter; the housing market is anticipated to continue at a similar tempo throughout 2007, according to a report released today by Royal LePage Real Estate Services.

Saskatchewan’s housing market led the country in highest average price appreciations, surpassing the typically frenetic market conditions of oil-rich Alberta.During the second quarter droves of buyers flocked east to Regina and Saskatoon where average house prices are considerably less than in the western provinces.Many buyers have returned home with sizeable equity and are now favouring the simpler life that Saskatchewan offers. Despite the rapid spike in average house prices, market activity has begun to stabilize at the end of the second quarter and is expected to continue at a slightly more temperate pace, albeit still very strong, for the remainder of the year.

The average house price in Regina is forecast to increase by 13.8 per cent to $150,000 by the end of 2007.Unit sales are projected to increase by 18.5 per cent to 3,500 units sold in 2007.

Regina’s booming job market and diversified economy will also continue to attract buyers.Employment in the natural resources sector including the production of oil, potash, uranium and agriculture are poised for steady growth, further strengthening consumer confidence in the economy and housing market.

“We’ve had a tremendous year so far, and all signs indicate healthy and robust conditions for the next six months.Our population will continue to grow, mainly due to the fact that compared to the rest of the country, Regina offers buyers an affordable standard of living, ideal for those looking to escape the burden of large or long-term mortgages,” said Mike Duggleby, manager, Royal LePage Regina Realty.

New to Regina’s housing landscape is the rapid growth in the condominium market.Due to their affordable prices, condominiums have become the favoured choice of first-time buyers entering the market, and despite new construction, demand is outstripping inventory.

Based on the surveyed markets in Regina, the average price of a detached bungalow increased by 42.4 per cent to $204,000, while the average price of a standard condominium rose by 25.2 per cent to $118,300, year-over-year.The average price of a standard two-storey home rose by 19 per cent to $181,917, year-over-year.

Added Duggleby: “Proactive media campaigns in the western provinces promoting Regina as a great place to live appear to be successful based on the strong market activity during the second quarter.”

In Regina North, detached bungalows experienced the largest appreciation, with the average price rising by 42.9 per cent to $195,000, followed by the average price of a standard condominium, which rose by 31.3 per cent to $111,600, year-over-year. Standard two-storey homes increased by 20 per cent to $163,000, year-over-year.

In Regina South, detached bungalows showed significant gains, rising by 42 per cent to $213,000, year-over-year.The average price of a standard two-storey home rose by 18.1 per cent to $200,833 while the average price of standard condominiums in the area rose by 47.1 per cent to $125,000 over the same period last year.

With the same fundamental conditions in tact as in Regina, market activity in Saskatoon was frenetic during the second quarter; with even more significant price appreciations recorded.Very limited supply, coupled with fierce demand drove prices up in all housing categories, with huge appreciations in the condominium sector.

“While strong demand dramatically pressured prices upwards for much of the second quarter, the market has begun to temper.Moving into the third quarter and onwards, we expect to see slightly fewer buyers, as first time buyers retract due to the erosion of affordability,” said Norm Fisher, sales manager, Royal LePage Saskatoon Real Estate.“However, our strong employment rates and abundance of job opportunities in diverse sectors like small business, sciences and construction will continue to keep the market buoyant and operating at conditions unparalleled to what we have ever experienced in recent years.”

Based on the surveyed markets in Saskatoon, the average price of a standard condominium rose by a dramatic 84.7 per cent to $205,000, followed by detached bungalows, which increased by 56 per cent to $281,250, year-over-year.The average price of a standard two-storey home rose by 55.2 per cent to $305,000, year-over-year.

The brisk activity and rising prices have also had a ripple effect into neighbouring areas.The typically slower market in Swift Currant has been invigorated by a spill over of buyers from Saskatoon.

Added Fisher:“During the second quarter increased demand drove listing periods down to mere days and stimulated aggressive multiple offer situations, conditions that are not typical of this market.In fact, in recent weeks, as many as 80 per cent of properties reported sold went above the asking price – by an average of $26,000.”

In Saskatoon North, the average price of a standard two-storey home rose by 48.8 per cent to $305,000, year-over-year.Detached bungalows rose by 50.5 per cent to $280,000, while the price of a standard condominium saw a huge price appreciation rising by 101.9 per cent to $210,000 – the highest price appreciation recorded in all housing types in Saskatoon in the second quarter.

In Saskatoon West, the average price of a standard two-storey home rose by 61.7 per cent to $270,000, while the average value of a detached bungalow also increased, rising by 58.1 per cent to $245,000, year-over-year.

In the East End, the average price of a detached bungalow rose by 59.8 per cent to $310,000, year-over-year.The average price for standard two-storey homes increased by 51.4 per cent to $330,000, from the same period last year.

In East Central, the price of a standard two-storey home rose by 60.7 per cent to $315,000 compared to last year, while the average price of a detached bungalow rose by 55.9 per cent to $290,000.Standard condominiums rose significantly by 80.2 per cent to $200,000.

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 average selling price of Saskatoon homes took another substantial jump during the month of June passing the quarter million dollar mark for the first time ever. A total of 452 single-family homes and condominiums changed hands in June at an average of $251,120.

328 single family homes (houses) were sold by Saskatoon real estate agents at an average of $262,145, up from $243,006 in May.

124 condos were sold in Saskatoon at an average selling price of $221,958, an increase of over $12,000 compared to those sold during the month of May.

Note: My research shows that in May only three houses which were larger than 2,500 square feet were sold in Saskatoon. There were seven such homes sold in June. These additional sales added almost 2.5 million dollars to the total sales volume which does have an impact on average prices. For instance, if you took those 4 additional sales out of the equation you’d see average selling prices of $245,989 in the “houses and condos” category and an average of $254,523 for “houses.”

No matter how you look at it they’re still pretty big increases over a thirty day period. July and August typically bring some relief for buyers. Will the Saskatoon real estate market continue to see these dramatic increases over the summer months or are we nearing the end of this bull run? Please let me know what you’re thinking.

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.

Norm Fisher Royal LePage Vidorra

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