New construction inventory mounts in Saskatoon real estate market in October, 2014: SRAR

The Saskatoon Region Association of Realtors® (SRAR) released the MLS® residential real estate statistics for October of 2014 recently accompanied by the following release.

Please note that many of the association’s comments touch on “year-to-date” numbers, and some may be based on all sales within the association’s full trading area. The charts which you see, as always, reflect activity within the city of Saskatoon on a month-to-month basis over the past several years.

Inventory continues to remain high in the Saskatoon and area market due to a 15 percent increase in new listings and a seven percent increase in home sales year to date. Currently there are 1,553 homes available for sale in Saskatoon which is up 16 percent over the same period last year. Although the overall market was still positive in October, there are a few clouds on the horizon. The inventory of new homes continues to grow as the number of new homes listed is up over 30 percent while the number of new home sales remains unchanged at 289 units so far in 2014.

Click the images for a larger version of the chart. Currently the months of inventory across Saskatoon sits at 3.9, which is an 11 percent increase over last year. In the neighbourhoods offering new construction, where this figure is generally higher, it would take in excess of six months to clear out existing inventory. Months of inventory simply represents the time it would take to absorb the current inventory of homes for sale based on the current number of sales per month.

A concern raised by some is the price of serviced lots which is a significant factor in the sale price of new homes. Lot prices are set by the City of Saskatoon who is the major developer of serviced land. This cost is then passed on to the consumer in the sale price of the home. At some point consumers become price sensitive, which shows up in new product remaining unsold. According to Jason Yochim, CEO of the Saskatoon Region Association of REALTORS®, "If builders are forced to reduce pricing to sell their product, this reduction comes right off of the bottom line." When home builder’s capital is tied up in spec homes they are unable to purchase lots for new development. This could impact absorption of lots that the city will be bringing to market in new neighbourhoods like Holmwood and Blairmore.

Year-to-date there have been just over 7,300 properties listed in the Saskatoon market with 3,621 successfully selling. This means that only one out of every two homes placed on the market actually sells. "This statistic underscores the importance of seeking the expertise of a professional REALTOR® to ensure that a property is not only priced competitively but to be sure that the homeowner is receiving fair value for their home." States Yochim, "Pricing is the most significant factor in ensuring a successful sale, you only get one chance to make a first impression before a buyer moves on."

Click the images for a larger version of the chart.

I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call of email me.

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Norm Fisher

Royal LePage Vidorra

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