New listings slowed substantially, which seems reasonable given the season. Just thirty-three houses and condominiums came on the market, a drop of more than fifty percent compared to last week and well off of the sixty homes listed during the same week in 2008.
Saskatoon MLS listings (all residential) fell rather hard once again losing nearly five percent of total volume and slipping from 802 to 765 by the weekend including 437 single-family detached homes and 280 condominiums. At the present time, listings for 143 Saskatoon homes are scheduled to expire by the end of December, so I expect that we’ll see a fairly significant slide at the end of the month before listing inventory starts to grow again in anticipation of the spring market. It seems likely that our line of active listings for 2010 will come out on the left side of the graph someplace between 600 and 700. However, we only have to look back to 2008 to understand that regardless of where we start we can still peak at a pretty lofty number. I don’t get the sense that there will be an unusually large flow of listings in 2010, unless perhaps, we see a surge in prices that provides a window of opportunity for investors who bought at the peak hoping for a profit. I have no good feel for how much of that kind of inventory might exist today.
Cancelled and withdrawn listings were nearly non-existent at just eight homes, two of those quickly returning to the market bearing the “new listing” flag. Eleven sellers signed a price adjustment, though four of eleven went up in price, rather than down.
The average selling price of a Saskatoon home fell again for the second week in a row slipping less than three thousand dollars to $295,825, about five thousand dollars higher than it was last year at this time. The six-week average remained steady and very near the high for the year finishing at $287,587, a gain of over eight thousand dollars on a year-over-year basis. The four-week median price surged higher trumping last week’s number by nearly fourteen thousand dollars and reaching $280,000, a full twenty-five thousand dollars higher than it was for the same week in 2008. If it’s not already clear, I think it’s important to note that the year-over-year gains we’re seeing now result more from last December’s very tough conditions than they do from this year’s performance. Prices were essentially bottoming out at this time last year after several consecutive months of losses. This year, they’ve pretty much remained stable. The average price has come in between $280,000 and $290,000 more than fifty percent of the time this year. Prices are up year-over-year but they don’t seem to be increasing much more recently. I would say that there is some upward pressure under the $300,000 mark, and condos have inched up some, but the increases are very marginal.
Home buyers must have been in a giving mood this week as the average underbid on Saskatoon homes that sold for less than the asking price fell from $11,371 to just $9,924. That represents an average discount of approximately 3.2% of the asking price, down from 3.6% last week. Five home sales were reported as having traded above the asking price by an average of $750.
The bubble talk that began in October has continued to be a popular story for the national media. Gregory Klump, chief economist for the Canadian Real Estate Association insisted that Canadian real estate markets are balancing with increased listing activity. Meanwhile, Federal Finance Minister Jim Flaherty issued a warningthat the feds are prepared to act “if” a housing bubble occurs. Stuck between a bit of a rock and a hard spot on interest rates, Flaherty suggested that the preferred method of dealing with such a bubble would be by shortening amortization periods and raising minimum down payment requirements. Of course, I have no way of knowing for sure, but when the Bank of Canada is issuing repeated debt warnings, and the Federal Finance Minister starts asking people to cool their jets there may be reason to feel concerned. Aren't these the people whom we expect to feed us the "all is well" side of the argument?
Again, the fact that we’ve seen very little price movement even though demand has been exceptionally strong and inventory has been falling like a rock may be a sign that people are paying about as much as they can afford. Higher down payments and shorter amortization periods will erode affordability further. If there’s no more free income to absorb those increases, prices have got to come down.
Will this overheated Canadian real estate market sort itself out before spring? Are exceptionally strong unit sale numbers the result of pent-up demand from last year’s downturn, and if so, will that pent-up demand be exhausted soon? Will the government intervene and take steps to cool the housing market? There are some tough calls to be made for anyone speculating this year.
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