The Saskatoon Region Association of Realtors recently reported October results for the entire residential category, which includes single-family homes (houses), condominiums, semi-detached properties, duplexes, mobile homes and vacant lots. Unit sales totaled 215 properties across all of these property types, and an average sale price of $285,310. Let’s have a look at how houses and condominiums faired.
Residential listing inventory declined modestly on a month-over-month basis reaching its lowest level since July of 2008. The stock of available Saskatoon houses dropped 63 units from 1,053 at the close of September to 990 by the time October had closed. However, all of the declines were in the single-family home category as condominium inventory still managed to creep up a bit from 519 to 530 units. Sales weakened in both categories with house sales falling to 162 units, down from 183 in September, and down 44 units from October of last year when 206 houses changed hands. Condo sales fell for the third consecutive month finishing the month at 40 units, compared to 48 in September and down from 55 last October.
Based on the average number of units sold over the last three months there is currently a 10.6-month supply of condos and a 6-month supply of single-family homes.
The price of a Saskatoon house took a hit according to all four of the price trend measures that we use to track values. The average selling price of a house fell to $305,021 from $319,596 in September while the median sale price took a softer blow falling just $5,000 from the month before. The three-month average continued its downward trend for the fourth consecutive month reaching $310,959, down over 6% from its peak of $331,630 in June of this year, while both the median and the average selling prices came in nearly 10% lower than their previous highs. All three of these measures continue to show gains when compared to October of 2007 with the average selling price of a Saskatoon house sitting 12.5% higher than it was last year at this time.
The price per square foot measure shows the greatest change to date as single-family homes traded at $241 per foot, down nearly 14% from the high of $280 which we saw in May.
Saskatoon condos took the larger hit as the average selling price fell to $224,970, down from $242,040 in September and more than 13% off of its peak high of $259,467 in April of this year. For the first time, were actually seeing two of the value indicators showing a drop over the previous year with the average selling price coming in about $5,000 lower than the previous October and the median falling $10,000 short of last year’s number.
On a price per square foot basis, condos traded at $231, down from $240 last month and about 13% off of their high of $262, which was reached in May of this year.
Clearly, the gap between the price of a Saskatoon condo and a single-family home has grown wider in recent months. This strikes me as a correction that was long overdue as the two categories were just too close to each other through much of the past two years.
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 Saskatoon Real Estate
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{ 27 comments… read them below or add one }
Hey Norm,
Excellent charts that are very telling of where we are going. Every chart has rolled over, shocking.
Norm, what do your peers think of this blog?
Thanks,
Nix
The monthly posts are always informative, but this is the best one yet. Lots of great data, very nicely presented.
Well done!
I find it interesting that while listings of houses seems to have peaked, condo listings continue to grow (all those condo conversions still coming on the market?) while condo sales fall.
Surprising then, that condos, which at least graph wise look like they’re still on the decline, haven’t seen a sharper drop in price, with your last graph showing a similar drop in price per square foot for both condos and houses.
I can see house prices continuing a slow down ward trend for the next year. To me, and based on all the for sale signs in front of condos/town houses when I left Saskatoon a few weeks ago, condos are still in for a large correction. Especially if the inventory is still on the rise and less people than ever look like they’re buying condos in Saskatoon.
Good news for the rental market as a lot of these speculation condos will likely make it there in the coming months.
–
Norm, you’ve out down yourself this month. Good job.
Thanks everyone. SaskatoonOnline.com. Tell all your friends.
Nix,
For the most part my peers have been very supportive. After all, where else can they get all of this market data without having to do the work.
Nick,
I actually think that the declines shown on the graphs fall short of the whole story, particularly with condos. There are certainly examples of comparable condos selling 20% off of their highs.
I’m so glad I moved from my condo to a bungalow last month. With all the condo conversions being approved by the city just a few months ago, there is going to be a glut of them on the market. I hope that leads to lower rents, since I have friends who have been squeezed by the rising rents.
But then what happens to people who bought expensive condos that they can’t sell and can’t afford to rent for less than their mortgage payment? I forget, is Saskatchewan a province where people can walk away from a mortgage or not?
Great stats Norm, thanks a ton!
Norm and to anybody else,about why I see stocks going lower,
A credit crater too big to fill?
http://finance.sympatico.msn.ca/Investing/JonMarkman/Article.aspx?cp-documentid=12254739
“As the movement of money across borders comes to a grinding halt, governments can only manage the decline. Don’t be surprised to see markets roll back to 1995 levels — or lower.
As a result, once the current rally interlude is over, it’s not hard to see the Dow Jones Industrial Average ($US:INDU) sinking to around 4,000 — a level it last hit in 1995, before debt started to play such a large role in corporate and personal finance.”
There is a reason why the gov of Sask is keeping 2 billion of cash in their pockets for the rainy days ahead. They just won’t tell the public why.
Norm, great work again on those monthly stats.
Pungo,
Thank you.
There are protections in Saskatchewan which would prevent a lender from pursuing a mortgagor for a shortfall provided that the property which was mortgaged is a principal residence. I believe that investment property does not have the same benefits.
George,
“why I see stocks going lower”
Right now, I’m banking on it.
Did you see this story?
Cambridge University’s Clare College is borrowing big bucks to buy stocks
http://tinyurl.com/6ht9br
I wonder how long it will take these condo’s to drop to rental units, to rent for somewhere ‘reasonable’ in price. What is reasonable to one person may not be to another. Myself? if it’s a fixed up condo with washer dryer in the unit? $850 a month is probably max for a 1 bedroom…
So that being said, I wonder what sort of conditions and what time periods would need to happen in order for this to become a reality…it’s one of those ‘can’t really predict’ variables. The last time I looked (which has been a while though) the one bedroom fixed up units were being rented (or attempted to be rented) for somewhere around the $1200 mark.
George,
I have a nice challenge to throw out to all the bears. Say we are back at 1929 the greatest depression of our lives and I invest a dollar just a single dollar into the stock market now tell me how much i have after pulling out my dollar at 2009. I already know the answer but just wanna see if any of you can actually rain on this parade =)
Jesse,
I think it really depends how fast and how hard prices drop on them, but if those apartments end up at $140-150K I don’t think it’s possible to rent them for $1200 a month any longer.
Armoth,
If you were around in 1929 to invest a dollar in the stock market, I believe that you’d be dead about five years ago, assuming you were an infant when you made the initial investment.
With your time frame, you should do very well but you can never blame a guy for wanting to buy lower.
Armoth,
I think this is what you mean. I used the Dow Jones and pick 343 for July 1, 1929 until November 6,2008 up to 8,695. It has increased 25 times. Now you have $25 out of that $1, is this where you are going with that?
http://finance.yahoo.com/echarts?s=%5EDJI#chart2:symbol=^dji;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
If these times are comparable to the Great Depression for the markets, is it possible we don’t see summer 08 prices again until around 2025?
Hard to imagine the DJ was under 4,000 in 1995. Since then it has entered bubble territory off an on.
If it does get bad and I hope it doesn’t, I hope it ONLY gets as bad as the Great Depression and not 1873.
Nice graph, George.
If you were really smart, you would have had the cash to invest in 1932, not ridden it all the way down from 1929, if you ask me.
George,
I have a nice challenge to throw out to all the bears. Say we are back at 1929 the greatest depression of our lives and I invest a dollar just a single dollar into the stock market now tell me how much i have after pulling out my dollar at 2009. I already know the answer but just wanna see if any of you can actually rain on this parade =)
—————————————————-
I calculated a yield that doesn’t look very pretty especially when you factor in 79 years of inflation.
The DJIA had an annualized return of 4.3% over that time period.
Annualized inflation of the US dollar was 3.2% over that time period.
Sources:
http://www.measuringworth.com/DJIA_SP_NASDAQ/
http://www.measuringworth.com/inflation/
Glen,
Should’ve been more specific with my request but the calculator you provided does not include reinvested dividends.
So I think we have done a good job on why it is bad to buy at the peak. Anybody want to do one for real estate? Other than Calgary, cause that is way, way too easy:)
http://photos1.blogger.com/blogger/4027/164/1600/long%20run%20trend%20-%20real%20prices.jpg
http://photos1.blogger.com/blogger/4027/164/1600/History%20of%20Calgary%20RE%20prices%20-%201973%20to%20today.jpg
Worth than the Great Depression
http://leavittbrothers.com/essays/20081104%20Worse%20than%20the%20Great%20Depression%20by%20Krassimir%20Patrov.cfm
The most extraordinary thing is that the mainstream media has never attempted to compare the current economic environment to that preceding the Great Depression. It is assumed outright that the Great Depression could never happen again, thus obviating the need for such a comparison.
A great read with charts and graphs and it talks about the derivative market.
Hi Norm,
You recently mentioned that more builders are advertising houses that they haven’t built yet, instead of pre-building a spec house and selling the house during construction. This removes the risk of not selling he house, and having large carrying costs. Will this remove pressure from builders to lower their costs? I am not sure on how land sales with the city works for builders, but do they have a time limit to put up a house? And do they have to put down a sizeable deposit on the lot. If they have time limit to put up a house, and they have the risk of losing a sizable deposit perhaps building costs will come down.
What are your thoughts
I need some help from the smart cookies around here, since its clear to me that economics isn’t my strong suit.
My brother (a bullish sort if you’ve ever met one) was talking about some sort of measure or ratio to do with the markets that was inverted at the end of 2007. (I can’t remember what he said exactly) He said that when this dealie was inverted it successfully predicted every recession in the last century save one in the eighties, and thats why he switched most of his investments to bonds early this year.
What the heck is he talking about? At the time I didn’t want to ask questions and look stupid, but I don’t mind doing that here for some reason.
He’s probably referrring to an inverted Yield Curve
http://www.investopedia.com/terms/i/invertedyieldcurve.asp
That’s it!
Thanks Doc!
@Laura:
I just read the article George pointed to in the post two above yours (Worse than the Great Depression). In there, point 4 discussed the Dow-Gold ratio as a predictor of financial collapse. Could this be what your brother mentioned?
Headlines today:
•GM Says It May Not Have Enough Cash to Finish Year, Suspends Merger Talks
•Jobless Rate in U.S. Jumps to 6.5%, Highest Since 1994, as Payrolls Tumble
•Ford Has $2.98 Billion Operating Loss, Burns $7.7 Billion Cash in Quarter
•Goldman Sachs Predicts Worst U.S. Recession Since Reagan Era as Jobs Lost
•Merrill Lynch Plans to Sell About $4 Billion of Distressed Debt in Europe
•Pending Sales of Existing Homes in U.S. Decline 4.6%, More Than Estimated
And the markets are UP.
Hey-what’s not to like?
Adrian,
From the City of Saskatoon website.
What is the minimum down payment required?
The minimum down payment required is 13% of the total price of the lot plus GST on the total price of the lot. For lots that are unserviced at the time of selection, a $3,000 non-refundable deposit is required. This will be applied against the 13% down payment that is required when servicing for the lot is complete. Interest on the unpaid balance is charged at:
1. The prime rate of interest, as set by the City Treasurer on the date of the purchase; and,
2. Five percent above the rate established in the agreement for any time beyond the term of the agreement.
When must I pay the balance?
The full balance (principal plus interest) is to be paid within the time of the agreement (i.e. eight months). The balance may be paid early with interest charged to and including payout date.
When may I begin construction?
Upon effective date of the Agreement for Sale, the Land Branch will allow possession of the lot for construction purposes. Please note, you must complete construction within two years.
When am I responsible for the Property Taxes?
Property Taxes become the responsibility of the purchaser from the first of the month following the date of sale. For example, if a lot is purchased June 19th, the Property Taxes commence July 1st.
When can I get the title transferred to my name?
The title will be issued upon receipt of payment in full or may be forwarded under appropriate trust conditions to a recognised solicitor.
What happens if I do not meet the Terms of the Agreement?
An agreement is defaulted when any of the terms are not met within the time of the Agreement. If this occurs, the Land Branch will take the necessary steps to cancel the sale.
What if I want to cancel the sale?
In the event of cancellation, rent for the right of possession is charged for the time the purchaser has held the lot. The rent is one percent of the total price of the lot (pro-rated to include any days in excess of the first 30 days) plus GST for each month the lot is held plus a $100 processing fee. The rent and GST are deducted from monies paid (i.e. down payment) and any remaining portion is refunded.
Norm,
Just heard this from a quasi reliable source. They said there was talk of CHMC dropping their fees and buyers required to put 10% down. I find this hard to believe. Have you heard anything (if you are allowed to disclose)?
Rumour mill,
I haven’t heard anything about potential changes to CHMC policies. I can’t say that it would come as a total surprise if they did. There must be some concern about potential losses as the housing market cools significantly. For some, if the value of their house goes down, 5% wouldn’t be a lot to walk away from leaving the bill for the Canadian taxpayer.
George,
Thx man for the research I just noticed today when i was checking out comments. I think over the long term Ill be safer putting as much as I can into stocks rather than paying down my mortgage. But only time will tell =o)
Armoth,
I agree, but in the short term, I think it is best to pay down the mortgage. I don’t know if there are many stocks that will get a person 6% in the next while.