Saskatoon Real Estate Resource Centre Blog

Norm,

Happy Easter to you, your family, and all the participants of this blog. Thanks again for all the work with the stats, articles, and responses.

Quick question regarding condos,

with all the conversion it seemed that there was supposed to be a mass flood of invetory. What we have seen is the number of condos go down each week. Are they just not on the market yet or why are we seeing this trend?

Anyone,

    from Calgary have any insight in to what's going on there?  It seems as if your market is starting to show signs of life.  

http://www.canadian-housing-price-charts.235.ca/canadian_housing_price_chart.htm

    By no means would I consider that a start of another up trend, but a couple more months in that direction and I might.

Norm,

   Quite an average sales price there.  I'm looking forward to the month end numbers.  Are you as busy right now as you were this time last year?

Condo inventory has definitely been dropping:

From Norm's weekly stats:

Condos available

Dec 3-7:   194

Dec 10-14: 187

Dec 17-21: 174

Dec 24-28: 164

Dec 31-4:  156

Jan 7-11:  172

Jan 14-18: 178

Jan 21-25: 157

Jan 28-1:  142

Feb 4-8:   154

Feb 11-15: 133

Feb 18-22: 135

Feb 25-29: 127

Mar 3-7:   ?

Mar 10-14: 116

Mar 17-20: 112

If this trend continues it looks like condo prices will continue to increase.

Norm, is there an easier way to get these stats rather than scouring through old posts?

Here's another interesting chart.  Inventory for Feb08.

http://findcalgary.files.wordpress.com/2008/03/marinventory.gif

A very interesting time for calgary.  I'm not sure that I understand why inventory is up over 100% from last year and unit sales are half of what they were... and yet sales prices continue to climb.  Norm, any thoughts on indications?  

J.

Johny,

It is not so simple to understand why prices are up over last year in Calgary. It is because of speculative buying and overbuilding. Prices were drivin' up by many to make the fast buck. Speculative buying outpaced the need. Many people were priced out of markets in Alberta. There will be an oversupply problem for a while as there inventory is up over 40  percent in many places in Alberta. The question lies will this happen to Saskatchewan. The problem is caused by easy credit, and was made worse by 40 year mortgages. There have been numerous examples of housing prices skyrocketing, and then it caused oversupply, especially in the states. I refuse to call Alberta situation a bubble, as a average home in Calgary is still 477,000, and Edmonton is up over 390,000, and prices have held firm for a few months. Will Saskatchewan have this problem.  Is there too much construction and over supply. Will the weakening commodity prices slow down the economy. Will the recession in US negatively effect us here, or are we immune. If I have learned one thing with this boom, hardly anyone saw it coming, and there are too many factors that led to it. I am curious if the housing boom will continue for a while in Saskatchewan. Prices have gone up, and in Alberta, builders did eventually catch up, in many centers. Will Saskatchewan builders eventually catch up to the need. Anyones guess. The only thing I know in regards to Alberta situation is that economics 101 is thrown out right now. No one can explain the psyche of buyers to pay the prices there when there is so much inventory. Maybe the problem is that new home buyers pay the sticker price too much, and we lack the financial savvy of previous generations. There was a graph that I saw that I wish I had the link too, that indicated that when a bust is on, prices drop twice. That often there is a period where people buy again thinking that prices have gone down to where they will go. Then the prices fall again after prices stabilize for a short period. I think the term the graph used was the "dead cats bounce." If history shows that prices held firm, then I will be surprised. You got to think something has to give. The only thing that I really know is that I really don't know all that much.

I'm glad sales didn't increase, but the average sale price this week is just ridiculous!!!  The more this market inflates the bigger the correction necessary.  IMO these people buying in right now are guaranteed to lose money on their investment over the next couple years.  I hope next weeks stats look better...

Smokey,

You're presenting some very interesting points.  I really do think that younger generations pay the price tag ALL too often, rather than questioning it.  40 year mortgages certainly don't help the situation.  Take a look at the saving habits of Canadians.  Not good.  We've followed the American trend of acquiring more and more debt while saving less and less.  Certainly not like older generations who knew the value of a dollar.  This lack of responsibility makes me concerned for the future.

I really enjoy reading this blog but the repetitive doom and gloom story after 6 posts are sooooo boring!!!

Surprised I haven't read the popular "greed" reference yet.

Just for you tb:

Ohhh noooo prices are just tooo high. *greed*.

The condo market has been relatively soft compared to the housing market. Do we expect the condo market to pick up when affordablity becomes a serious issue? Buyers will start to look more into affordable condos instead of houses.

Mike,

Please explain condo market being soft. They are selling like hotcakes. Do you mean in regard to pricing?

I think we are seeing affordability become a serious issue and that is why we're seeing the condo market pick up.  

J.

Hi Norm,

Do you think the west side is a good buy right now?  Just curious with the recent crime report (saskatoon being number 2 in the nation for crime reports)

I don't get it, the comment on condos was mine but my name isn't Ben.  Norm, better check those mice under the blog-hood ;)

J.

Northstar:

The explanation of the apparent contradictiction to normal market behaviour in Calgary (high inventory and a rising average price)that is gaining credibility is that the sales mix has moved up. That the rising average price indicator is not indicative of the market price direction or of the state of the market.The graph on this page seems to support this.

http://calgaryrealestatemarketblog.wordpress.com/

The west-side question was mine but thanks for the response Norm!  

Norm,

could the drop of listings and sales be due to Good Friday and the long weekend?  I am actually amazed at the amount of sales this week.  I thought there would be a bigger drop.  Very surprised by the average price being so high, that is a big jump.

I agree, but come month end when SREB and the Star Phoenix publishes 280k  for an average home, it will be viewed as home prices increasing quickly.  Most people out there are told of 15-30% increases in Saskatoon this year. More people will try to get in the market when they hear prices going up.  It's almost as if both feed of each other. (rising prices= more people in the market and vice versa)  

yeah, I agree.  Meadow Green condos and any conversions in the abc jungle will be Tee-rashed in a year or so.  Condos like that put the average down.

Because the market is so over-inflated I expect that lower priced condos will help keep the average price down because that's all entry-level buyers can afford now.  These kinds of properties will continue to sell because of Saskatoon's unaffordability.  (As what Johny was pointing out)

Last week was the perfect time to pick up some stocks  in commodities.  The future for commodities looks very bright for Saskatchewan even though the US may hamper some of this growth.

Because of the US recession the markets will be up and down the next while and nothing will be immune even commodities.  But I feel commodities will be the least affected during this time and will do very well in the short (2 years) and long term.

Norm, I think I am a little scared to get involved with this cyclic arguments.

Wondering though, how much hassle would it be to look at an average selling price per sq foot?  Would this provide a more stable weekly price figure?

My memory does seem to be working so well, a couple of weeks ago, i remeber reading postings about the costs of building a house.  One person mentioned that they were quoted $300/sqft, and somebody pointed out that they should be able to get $200/sqft.  Can somebody let me know who these builders are?

Carl,

The less expensive builders are usually smaller companies.  Drive around some of the newer neighbourhoods and write down comapanies and contact numbers.  Then phone them and ask what they're approximately building for right now.  This is the biggest purchase of your life, it's wise to shop around and ask questions.

If a builder asks you for 300k, you should only be thinking one thing, RUN!!!  I can't imagine why anybody would agree to that.  Large builders usually only want something like 5% up front with the balance at possession.  If a smaller builder will save you 5 or 10k but wants you to pay for most of the house before it's finished and you do it, sounds like you are begging to get bent over.

Would you build someone a house with a 5% deposit?  You agree to build a 400k house on 20k and HOPE the market doesnt dip...what you think happened down south when people signed to have a home built and the market value dropped 100k and they only have 5% on the line...they RUNNNNNN and the builders go belly up!!  The best and safest route for any builder and buyer is a draw mortgage.  We are building a home at the last mountain lake and our builder required 50k up front upon signing the contract to order windows and doors then nothing further until the house is framed.  At that point its an additional 20% of the house price, then at drywall stage another 30% of the funds, then at completion another 30% and then theirs a 10% holdback until 30 days after completion to ensure their are no leins put on the home by any trades then the final payment is due.  In this case it ensures fairness for both builder and client.  I think you are OFF YOUR ROCKER to use a big builder.  I take for example ***** homes in regina.....the skimpiest cheapest no quality control builder and yet they signed to build 500 homes last year...why?? Price...Our builder does 5 homes a year that's it.  Who do you think has more quality control??  The Small guy!! He cares about his clients!!  We built a home last year with ***** and it was a mess!!  Walls framed completely wrong, door locks not working, siding cracked, paint not completed, on and on and on...why?? because they build 10 homes per month in regina alone....no quality control and the cheapest of cheap used for material.  The old saying always applies when building.. YOU GET WHAT YOU PAY FOR....take a look at a crawford home its all OSB sheeting and cheap lumber, go look at a yakobovich home (small builder) they are probably 5 - 10% more in price but they use FIR for all their lumber and sheeting, ***** only does their basement concrete strength at 20 MPA, Yakobovich 25 MPA....whats the difference in price under $500....so yes go ahead use the big builder they WILL be cheaper I dont know what kind of glue your on in saskatoon but the more product you sell the cheaper you can supply isnt that a principle of economics?  In regina its approx $200 a sqft for a 2 storey and $240 a sqft for a bungalow currently to give you some price range ideas

Brett,

I agree with you totally on the small builder thing.  I am currently building, and would not even think about using a big builder.  Too many horror stories about them.  My smaller builder is not perfect, but I'm happy with him.  I have a friend who used Yakobovich in Regina, and he absolutely loves his house.  They are slow, but the quality of work is unmatched.

I just want to point out that all small builders usually don't have the lot, you supply it.  So when you ask a sq/ft price, that is just for the building.  When you add in the land, it's substantially more.

Thanks for the responses about home builders, is there any builders in saskatoon that people would recommend?, and is there builders I should stay away from?  Thanks in advance for your respones

Brett,

Do those prices/sq ft include the lot?  From what I understand in Regina it costs 25% less to build than in Saskatoon, or possibly cheaper still.

The draw mortgage is how my builder invoices too, it's fair for both builder and client.  I know my guy takes a lot of pride in the quality of house he builds, he is there supervising all the time, and only builds 5ish houses/year.

Interesting discussion.

I would love to contribute, but don't know the full application of libel and slander laws.

Norm, is it appropriate to discuss poor experiences with builders? I am not questioning the appropriateness or value. I just don't want someone going to court for calling out these companies.

Well the lot price has nothing to do with square footage cost.  If you pay 100k for a lot and build a 1000sqft bungalow your square footage cost is $340 sqft but if you build a 2000sqft bungalow and included the lot cost then your cost is only $290 a sqft so why would you include lot price?  Lots down here are between 80 - 100k in most area except the new wascana view area called the creeks.  The lots there are out of this world 105 - 230k for DIRT!!  You have to be off your rocker to pay that kind of cash for land especially when it doesnt back a lake, golf course or is even a walkout lot.  And I think yes you should slander the builders who are doing poor jobs.  It should be everyones right to know whos doing a great job and whos doing a horrible job.  I keep hearing from a finishing carpenter i know that this is the 1980's all over again with shotty workmanship everywhere.....you wait 5 years people will be saying " you built your house in 2007, 2008 and 2009" Oh man i'd NEVER buy one of those...I can actually think of another example of the shadyness going on.  A fellow agent of mine is building with ***** and they had the basement forms all in ready to pour the basement and he went over to check the progress and they hand not put in any vertical rebar in the basement!!!  He called ***** and they told him they dont insert it till the last thing done but then he went and watched the basement next door put in and they did it while they were putting the forms up because they need to tie the rebar at the bottom and on his house they couldnt do that at that point so they just stuck them in there and hoped for the best....THEN it gets even better!! He went over a week or so later and noticed they had put down the crushed rock for the weeping tile.  But it looked not like it should with a big 4 inch perforated tube with rock over it, it seemed to small.  So he jumps down and kicks the rock aside...NO WEEPING TILE....they were going to just leave out the weeping tile and hope the water finds its way out to drain aroudn the foundation....man I could keep goin on about this company but this is enough for now.

I didn't mean to start something illegal, but the information will be valuable, so maybe it's best to focus on the positve experiences.  So I will rephraise my question.  Has anybody had a positive experience with a smaller builder they would like to share?  Is this ok Norm?

Norm,

I very much support what you're saying.  I often find that anonymous complaints are met with very broad anonymous rebuttals!

I lay out some pretty thick blame for politicians these days, but it isn't without direction.  Certainly we can see that we have disinterested and selfish individuals in positions of power.

This goes against everything "representation" means to me which I think - without being unfair - is a position of humble sacrifice.  Not entitlement and opportunity.

Anyway, when the rebuttals have to have a name attached, suddenly respondents grow a conscience...

We've even seen that here.

If a person slanders a generalized group there's nothing to be held accountable for, LOL!  I say stay AWAY from the large building companies, they'll milk yah for all you're worth!  I had one company tell me they won't build a house for less than $400K.  Sure they can be picky now, but when things slow and they're anxious for jobs I'll be making sure to tell everyone I talk to which companies were the dirtiest.  Word of mouth is a powerful thing.

Brett,

Somebody on here questioned my price/sq ft estimate whether or not it included lot, so I didn't know if that's what you had included.  Obviously lot prices can differ, but if you call some of the larger builders some will quote you a price/sq ft that includes the lot.

I'm surprised at your price/sq ft!  That's pretty steep yet.  Minus a lot I have two builders telling me they're building right now for under $200/sq ft.

Carl,

Sorry I can't share any names for small builders at this point.  I have 2 estimates from 2 different contractors and I've got to wait and see when I can get a lot.  Once I'm in a contract with one of them I'll be pass along their company names.  If you don't get any referrals from others, I again recommend driving around construction areas and taking down some names and numbers.

Just read that the government has pulled funding for the Station 20 Pleasant Hill revitilization project. Apparently in the new "booming" Saskatchewan, people who happen to live in one of the most violent, crime neighbourhoods don't deserve a break to help turn things around. The eco friendly project was to include health and dental facilties, a grocer, as well as a library. Quite a loss for the residents of the neighbourhood. This could have really helped to turn around the area.

With stories like the new government selling off the affordable Sask housing units in Watrous and Young, and then this, you have to wonder whats on the horizon next.

Norm,

You found me out!  :'O

BTW neither of my contractors/builders are on that list.  Those are only larger companies again that build prob 20+ houses/year.  These are the companies I recommend boycotting!  But who knows, if a person did some calling around to the lesser known names on that list they might be able to find a deal, but I doubt it.

I understood what Brett was saying, but if you call a builder that supplies the lot they give you a rough estimate of PPSF that includes the lot.  These builders are holding lots hostage and waiting to see who will come along and pay the highest price for it.  There was 1 lot listed "for sale" on Point2Homes not too long ago for ~$30K over the purchase price, and you STILL had to build with the guy who was selling it.

Jason,

That's sad to hear, a handful of places on the West side need some revitalizing.  Not that Atch cares, how is that going to contribute to the bottom line?  I guess they're just hoping that entry level buyers will be forced to buy in the slums, and the undesirables will be forced to live in the streets.  :')

Warranty means nothing....Anyone catch the story on the news not too long ago about bad home warranties?  They do nothing to help you.  In fact, a freind of mine bought new 2 years ago - still waiting on some of the warranty work - including leaky basement!!!!

I heard, through friends that built that Fraser Homes did a great job and they came right away to address a couple of minor concerns.  They were very happy with the quality of workmanship and the professionalism.  

No affiliation - it is okay to say good things isnt it:)

Norm,

Both of my builders are under the new home warranty, but like Cindy is saying, I'm not sure how much that warranty will help when stuff actually goes wrong...

Building a house and selling at today's rate is no different than buying in to the futures market, or stocks/bonds.  You're taking a gamble.  Would I build a house with only 5% down?  You're damn right I would, because prices aren't going to crash before it's finished.  They might dip or decline, but not enough for a builder to lose money.

Do you really think building a house costs anywhere even remotely CLOSE to what they sell them for?  I bought my house brand new in 2002, and insurance pegged the structure replacement cost at $120k.  Lets be pessimistic and assume that the cost to build has doubled since then.  That same house now costs $240k to build, and the lots have increased by about $50k since then, for a grand total of $290k (this is just my guessing but i bet it's close).  

Now how much do they sell that house for that cost them 290k?  Well a house comparable to mine in stonebridge or willow grove will cost you in the neighborhood of $420k.  That means that our housing market would have to crash by about 31% in one year before the builders would lose money on a sale.

So no, I wouldn't give a builder more than 5 or 10% down, and I wouldn't give them more at intervals as the job was done either.  If they can't afford to finish my house without closing shop if i'm not financing it, then I don't want them building my house.  The down payment is only to guarantee that once the house is finished that i'm the one to get to buy it at the agreed on price.  

Don't forget that when prices were shooting up, builders ran away from contracts so they could sell at the higher price, so I don't see why they should deserve special protection from buyers running if the market crashes.  What's good for the goose is good for the gander.  Sometimes when you play the futures market you get screwed, and sometimes you win big, it's a risk you have to take if you want to play.

Chris,

Those are some good points you make.  I'm pretty sure the profit margin you estimate is fairly accurate, they're making big time money right now!

Residential listing activity picked up the pace this week with a total of 164 single family homes (houses)

Last Friday night, I went to a meeting put together by Shannon Christensen. She's a homeowner who isn't directly affected by the housing crisis, but is deeply concerned with the city's (and the province's) lack of concern and blatant ineptitude with this very important issue. I just received this email from her, and I wanted to post it here, in the hopes that any of us who are concerned about the low vacancy rate in this city and the number of pending condo-conversions that could be approved could have a chance to act and write a letter to the city by 5PM today.

I apologize for the short notice--in hindsight, I wish I was more on the ball on this one, but here we are...

PLEASE READ THIS, AND WRITE TO CITY COUNCIL!!!

===============================================

Good morning,

If you are having difficulty finding a place to live or if your rent has been increased I'd like to suggest that you send your concerns to City Council.

You can use the contact form on the city's web site to do this:

http://saskatoon.ca/org/clerks_office/council/council_write_a_letter.asp

The next Council meeting is April 7. You must send your letters today, April 1st before 5:00 pm.

Your letter does not have to be long. A brief summary of your concerns is all that's required. You may also want to point out if/how much your rent has increased in the last 12 - 18 months.

Also, be clear about what you are asking from Council. For example, if you are writing to ask them NOT to approve the 21 condo conversion applications, state that.

Just a reminder that the city does not have authority to implement rent control. That is a provincial issue. We'll keep you updated on this.

As soon as David Forbes, Saskatoon MLA has drawn up the petition to the City to put a freeze on condo conversions we will have it available for download. You can print it out, fill it with signatures and return it to David.

NOW IS THE TIME TO ACT. Don't sit back and wonder how this will all pan out - we already know the answer to that question. Please take a few minutes today to send your letter to Council.

Also, even if you are not a tenant you can still express your concerns! Several people have sent letters to Council because they see how the housing crisis is affecting their friends, loved ones, clients or someone else they know. Others just feel that what's happening is wrong. Every letter will help!!!

Thank you for passing our emails on to others.

Updates to come.

Have a great day : )

Shannon Christensen

===============================================

As SOON as I get this petition, I'm going to do my best to get it out to everyone I know. I'll post a link to it on facebook so that you all can distribute it as well.

As Shannon says, now is the time to act.

Thanks everyone.

Here's a bit of an update from Martin Been (who lives in the Milroy):  please attend this meeting if you can.

====================================================

Greetings Everyone

The tenants of the Milroy have arranged for a meeting at:

the Parktown Hotel

Friday, April 4, at 7:00p.m.

room 140.

 After  meeting with various groups concerned with the housing crisis on Friday, March 28,  we realize that the scope of this ongoing struggle has changed, as the court's decision could potentially create and has already created a great deal of hardship on  the rental community.  

A round-table discussion will be "whether to appeal" the Court of Queen's Bench decision allowing the city to approve The Milroy for Condo Conversion.  The lawyer representing the Milroy, Mr. Andrew Mason, will be present at this meeting.

We are extending this invitation to everyone who has been affected by the housing crisis created by our municipal government.

Please bring any questions or concerns you may have, regarding this decision, to the meeting.

Milroy case documents including the Court Of Queen's Bench decision are available at:  www.dufourlaw.com

Martin Been

Jason, I'd argue Station 20 West was not a complete "health care" project (similar to what the government said) and should not be funded with money for hiring doctors and nurses.  It would have been nice but probably more than essential.  Also, the fact that no private company wants to build a grocery in that neighbourhood speaks to it being not feasible.  If it's such a great idea, why don't a couple wealthy people (like all the doctors/politicians who were for it) open up a private grocery store?  Because they know they'd lose money, and be subject to high security costs.  A small grocery store would not be expensive to set up and that none of these boosters are putting their money where their big mouths are shows that they don't believe in the grocery aspect from a pure economic standpoint - unless funded with taxpayer health care money.

There is definitely no shortage of health care in that area, a drive down 20th shows lots of doctors offices, dentists and St. Paul's Hospital.  Also, Station 20 West is a short drive away.  I wish my area had that kind of health care available.

So Brett, with regards to your assertion that 5% down for builders is too risky, I completely agree, prices could easily slip 5% and I think it speaks to the fact that they are worried about a drop in prices of more than 5%.  When the people building houses are worried about prices falling, it means they just might.

Having said that.  5% isn't how much they'd lose, houses are more than double a couple years ago, it just means that if they agreed to build a house at a set price, and the buyer walked away, even if prices were down 10 to 15%, they could still sell them for far more than even one year ago, still keep the 5% deposit and make a lot of money, being that while prics are double last year, wages are up only a bit, and materials are up, but no where near double.

Interesting though that builders are afraid of prices dropping and don't want to take a chance of the Saskatoon market keeping prices up.

Jason, I'd argue Station 20 West was not a complete "health care" project (similar to what the government said) and should not be funded with money for hiring doctors and nurses.  It would have been nice but probably more than essential.  Also, the fact that no private company wants to build a grocery in that neighbourhood speaks to it being not feasible.  If it's such a great idea, why don't a couple wealthy people (like all the doctors/politicians who were for it) open up a private grocery store?  Because they know they'd lose money, and be subject to high security costs.  A small grocery store would not be expensive to set up and that none of these boosters are putting their money where their big mouths are shows that they don't believe in the grocery aspect from a pure economic standpoint - unless funded with taxpayer health care money.

There is definitely no shortage of health care in that area, a drive down 20th shows lots of doctors offices, dentists and St. Paul's Hospital.  Also, [West Winds health clinic] is a short drive away.  I wish my area had that kind of health care available.

Ignore my previous typod post

Why is everyone so against condo conversions?  Sure, a few more people may need to rent basement suites, or rent condos from the new owners, but for everyday people, who want to buy a condo, increased conversions will keep prices in check on other units, and increase the number of affordable units on the market.  Also, those condo conversions will be good for the renters when they save enough money to buy a place.