Comments on: Saskatoon new and resale house prices to slide in 2009, rebound in 2010: CMHC http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/ We're bringing Saskatoon real estate to life Fri, 10 Sep 2010 16:42:36 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: realist http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12319 realist Mon, 01 Jun 2009 03:32:52 +0000 http://normfisher.ca/?p=3344#comment-12319 when the ultimate booster is already calling for a 6% drop in house prices this year, you know it's going to be worse than that! amazing prices remain so high, with so many houses and especially condos for sale! prices have a way down before making sense for the amount of product out there when the ultimate booster is already calling for a 6% drop in house prices this year, you know it’s going to be worse than that!

amazing prices remain so high, with so many houses and especially condos for sale! prices have a way down before making sense for the amount of product out there

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12304 Jason Sat, 30 May 2009 04:45:17 +0000 http://normfisher.ca/?p=3344#comment-12304 Peter, I was was using an (~) 10-year rate on the extreme end to emphasize the point. Rick, I think you're absolutely right. It *is* expensive. Myself, I think renting is the best option (particularly if you sold at the peak, as what you've saved essentially pays for several years of rent - and you're still ahead of the game). Do you ever feel like we're watching the last pigs stampede to the trough? (remember what happens to the last pigs at the trough) Peter, I was was using an (~) 10-year rate on the extreme end to emphasize the point.

Rick, I think you’re absolutely right. It *is* expensive. Myself, I think renting is the best option (particularly if you sold at the peak, as what you’ve saved essentially pays for several years of rent – and you’re still ahead of the game). Do you ever feel like we’re watching the last pigs stampede to the trough? (remember what happens to the last pigs at the trough)

]]> By: Peter http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12303 Peter Sat, 30 May 2009 03:54:02 +0000 http://normfisher.ca/?p=3344#comment-12303 Jason, "3 years ago, $150,000 (5% down, 8% over 25 years) would run the same payment as a $275,000 home today (5% down, 3.5% over 35 years)" While I would agree with you on the price of a house 3 years ago, you are way off on the interest rates. I picked up a house over 3 years ago and my intest rate was under 5% at 5 year fixed. Jason,

“3 years ago, $150,000 (5% down, 8% over 25 years) would run the same payment as a $275,000 home today (5% down, 3.5% over 35 years)”

While I would agree with you on the price of a house 3 years ago, you are way off on the interest rates. I picked up a house over 3 years ago and my intest rate was under 5% at 5 year fixed.

]]> By: Rick http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12302 Rick Sat, 30 May 2009 03:40:39 +0000 http://normfisher.ca/?p=3344#comment-12302 Bears, now is the time to show patience, after last years peak in prices many were expecting the local housing market to turn downward on a dime and crash and burn. Strong sales is an indication that many buyers have run out of patience waiting for lower prices, which is a strong indicator that prices are heading lower. First timers are typically looking at mortgage payments of $1500 or more plus taxes, insurance, utilities, possibly condo fees, renovations, car payments, credit card debt, and large discretionary expenditures. I don't care what the average income is, this is expensive. Talk about being house rich and cash poor. The U.S. is not even close to being out of their housing mess and we are way behind them. When prices were on the way up here, we did'nt make all our gains in one year, and we will not see all the declines occur in one year either, look south of the border for evidence of that. It could take awhile for this to unwind. Perhaps a another way to look at this would be if a person was paying cash rather then borrowing to make a home purchase, would it make sense? Or would renting be a better option? Bears, now is the time to show patience, after last years peak in prices many were expecting the local housing market to turn downward on a dime and crash and burn. Strong sales is an indication that many buyers have run out of patience waiting for lower prices, which is a strong indicator that prices are heading lower. First timers are typically looking at mortgage payments of $1500 or more plus taxes, insurance, utilities, possibly condo fees, renovations, car payments, credit card debt, and large discretionary expenditures. I don’t care what the average income is, this is expensive. Talk about being house rich and cash poor. The U.S. is not even close to being out of their housing mess and we are way behind them. When prices were on the way up here, we did’nt make all our gains in one year, and we will not see all the declines occur in one year either, look south of the border for evidence of that. It could take awhile for this to unwind. Perhaps a another way to look at this would be if a person was paying cash rather then borrowing to make a home purchase, would it make sense? Or would renting be a better option?

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12301 Jason Fri, 29 May 2009 21:46:24 +0000 http://normfisher.ca/?p=3344#comment-12301 Norm, sorry, what I meant to say was "...the majority of average sales", ie: most of the properties in the average price range are going to first-time buyers - not necessarily average buyers (or buyers who are on the second, etc. home) Norm, sorry, what I meant to say was “…the majority of average sales”, ie: most of the properties in the average price range are going to first-time buyers – not necessarily average buyers (or buyers who are on the second, etc. home)

]]> By: Crikey http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12300 Crikey Fri, 29 May 2009 21:31:09 +0000 http://normfisher.ca/?p=3344#comment-12300 Yields on Canadian bonds have trended that of US bonds as well. Canada’s 5-year bond closed Wednesday at 2.56%, and closed down ever-so-slightly yesterday at 2.54. There's some nice coverage of the action here: http://tinyurl.com/ojunso "As most know, fixed mortgage rates are linked to bond yields. Certain non-bank lenders have already reacted by raising rates 0.05% to 0.20%. While no big banks have moved yet, they may be getting anxious. The cost of funds on 5-year money has soared roughly 30% (relatively, not absolutely) in the last month." Yields on Canadian bonds have trended that of US bonds as well. Canada’s 5-year bond closed Wednesday at 2.56%, and closed down ever-so-slightly yesterday at 2.54.

There’s some nice coverage of the action here:

http://tinyurl.com/ojunso

“As most know, fixed mortgage rates are linked to bond yields. Certain non-bank lenders have already reacted by raising rates 0.05% to 0.20%.

While no big banks have moved yet, they may be getting anxious. The cost of funds on 5-year money has soared roughly 30% (relatively, not absolutely) in the last month.”

]]> By: George http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12295 George Fri, 29 May 2009 20:19:57 +0000 http://normfisher.ca/?p=3344#comment-12295 A better way would be "the average income of a first time buyer" which I would suspect would be quite a bit lower than 75k and you could add in some debt. So I would agree with Another George's point in that most of these buyers can not afford an average house. Which in itself is sad. I have mentioned many times why it is beneficial for the whole economy to have inexpensive housing. A better way would be “the average income of a first time buyer” which I would suspect would be quite a bit lower than 75k and you could add in some debt. So I would agree with Another George’s point in that most of these buyers can not afford an average house. Which in itself is sad. I have mentioned many times why it is beneficial for the whole economy to have inexpensive housing.

]]> By: Norm Fisher http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12298 Norm Fisher Fri, 29 May 2009 20:13:34 +0000 http://normfisher.ca/?p=3344#comment-12298 Jason, "Norm, yes, but what is the "average" buyer right now in the Saskatoon market? I think the majority of sales is comprised of first-time homebuyers, so I wouldn't necessarily say this group fits the 'average', would you?" I'm sorry, but I could not agree with this at all. Our last ten house sales include three first timers. The other seven have owned at least one property. Five are people moving to Saskatoon. Jason,

“Norm, yes, but what is the “average” buyer right now in the Saskatoon market? I think the majority of sales is comprised of first-time homebuyers, so I wouldn’t necessarily say this group fits the ‘average’, would you?”

I’m sorry, but I could not agree with this at all.

Our last ten house sales include three first timers. The other seven have owned at least one property. Five are people moving to Saskatoon.

]]> By: Norm Fisher http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12297 Norm Fisher Fri, 29 May 2009 20:06:18 +0000 http://normfisher.ca/?p=3344#comment-12297 Jason, "Average, I don't think $75k is the average household income for Saskatoon. Wasn't it substantially lower in the affordability study they released earlier this year?" That "study" used some warped medians that nobody could explain for both incomes and house prices. There was some speculation that the numbers were all converted to U.S. dollars to make comparing make sense but no explanation of how that worked. The City of Saskatoon has the average household income at $65,450, and I'm pretty sure that's from the 2006 census. We've has three pretty strong years on income growth here but even with that in mind, I suspect we'd be somewhere below $75,000. Jason,

“Average, I don’t think $75k is the average household income for Saskatoon. Wasn’t it substantially lower in the affordability study they released earlier this year?”

That “study” used some warped medians that nobody could explain for both incomes and house prices. There was some speculation that the numbers were all converted to U.S. dollars to make comparing make sense but no explanation of how that worked.

The City of Saskatoon has the average household income at $65,450, and I’m pretty sure that’s from the 2006 census. We’ve has three pretty strong years on income growth here but even with that in mind, I suspect we’d be somewhere below $75,000.

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12294 Jason Fri, 29 May 2009 19:57:40 +0000 http://normfisher.ca/?p=3344#comment-12294 Norm, yes, but what is the "average" buyer right now in the Saskatoon market? I think the majority of sales is comprised of first-time homebuyers, so I wouldn't necessarily say this group fits the 'average', would you? What I'm saying is that the first-time homeowner is paying the average price for a home that they cannot really afford on a below-average income. Also, being typically younger, with less work experience and seniority, isn't this same demographic at a much greater risk from an income standpoint (wage reductions, layoffs) if we see a prolonged recession? This isn't really a good scenario. Norm, yes, but what is the “average” buyer right now in the Saskatoon market? I think the majority of sales is comprised of first-time homebuyers, so I wouldn’t necessarily say this group fits the ‘average’, would you? What I’m saying is that the first-time homeowner is paying the average price for a home that they cannot really afford on a below-average income. Also, being typically younger, with less work experience and seniority, isn’t this same demographic at a much greater risk from an income standpoint (wage reductions, layoffs) if we see a prolonged recession? This isn’t really a good scenario.

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12293 Jason Fri, 29 May 2009 19:45:24 +0000 http://normfisher.ca/?p=3344#comment-12293 Another, is the average buyer able to afford the average home, or have we simply indebted them for a greater period? A casual glance around at the barren landscaping, unfinished homes and 'for sale' signs on prized possessions tells me people are tapped. 3 years ago, $150,000 (5% down, 8% over 25 years) would run the same payment as a $275,000 home today (5% down, 3.5% over 35 years), except there was a $125,000 principal savings, no likelihood of interest rates going up and both an incentive and ability to pay the loan down early. By the time they are ready to refinance, they'll face not only higher interest rates but a deluge of homes from other buyers in similar situations - including a wave of boomers looking to downsize and retire. Average, I don't think $75k is the average household income for Saskatoon. Wasn't it substantially lower in the affordability study they released earlier this year? Another, is the average buyer able to afford the average home, or have we simply indebted them for a greater period? A casual glance around at the barren landscaping, unfinished homes and ‘for sale’ signs on prized possessions tells me people are tapped. 3 years ago, $150,000 (5% down, 8% over 25 years) would run the same payment as a $275,000 home today (5% down, 3.5% over 35 years), except there was a $125,000 principal savings, no likelihood of interest rates going up and both an incentive and ability to pay the loan down early. By the time they are ready to refinance, they’ll face not only higher interest rates but a deluge of homes from other buyers in similar situations – including a wave of boomers looking to downsize and retire.

Average, I don’t think $75k is the average household income for Saskatoon. Wasn’t it substantially lower in the affordability study they released earlier this year?

]]> By: Norm Fisher http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12296 Norm Fisher Fri, 29 May 2009 19:44:44 +0000 http://normfisher.ca/?p=3344#comment-12296 Jason, "If memory serves me, didn't CHMC predict an increase this year over last year with both sales and average prices?" Yes. This from CMHC's spring 2008 Housing Market Outlook for Saskatoon. "Our forecast calls for an increase in the average residential resale price of 18.1 per cent in 2008, with a slower increase of 8.2 per cent in 2009." Average First Time Buyer, "Is $75k/yr an accurate average salary for first time buyers?" Oh, yes! Everyone but you is making that. :) Actually, the average "household income" in Saskatoon is somewhere below $75K. I think Another George raises an excellent point though. The average house should be affordable for the average family, and not necessarily the average first time buyer. An apartment, town home or a smaller than average house would be more typical of a first time purchase. Jason,

“If memory serves me, didn’t CHMC predict an increase this year over last year with both sales and average prices?”

Yes. This from CMHC’s spring 2008 Housing Market Outlook for Saskatoon.

“Our forecast calls for an increase in the average residential resale price of 18.1 per cent in 2008, with a slower increase of 8.2 per cent in 2009.”

Average First Time Buyer,

“Is $75k/yr an accurate average salary for first time buyers?”

Oh, yes! Everyone but you is making that. :)

Actually, the average “household income” in Saskatoon is somewhere below $75K.

I think Another George raises an excellent point though. The average house should be affordable for the average family, and not necessarily the average first time buyer. An apartment, town home or a smaller than average house would be more typical of a first time purchase.

]]> By: Average first time buyer http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12292 Average first time buyer Fri, 29 May 2009 18:29:09 +0000 http://normfisher.ca/?p=3344#comment-12292 Is $75k/yr an accurate average salary for first time buyers? If so, I think I need to demand a raise. And don't get me started on debt. Is $75k/yr an accurate average salary for first time buyers? If so, I think I need to demand a raise.

And don’t get me started on debt.

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12291 Jason Fri, 29 May 2009 18:06:47 +0000 http://normfisher.ca/?p=3344#comment-12291 George, no problem (suspected that might have been the case). Still, this should serve as a warning as to how volatile increases could potentially be with interest rates this low: "Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day." George, no problem (suspected that might have been the case). Still, this should serve as a warning as to how volatile increases could potentially be with interest rates this low:

“Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.”

]]> By: Another George http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12290 Another George Fri, 29 May 2009 17:38:31 +0000 http://normfisher.ca/?p=3344#comment-12290 George, Most first time buyers buy below average homes. I know my first home purchased years ago was below average. My second home was closer to average and my third home is above average. Point being - the average price is made up of first, second and third time home buyers and so on. Most often, the second and third time buyers purchase more expensive homes then the first time buyers. Why are you so concerned if the average first time buyer can not afford the average home? So long as the average home buyer can afford the average home (and I am not saying that is the case in Saskatoon yet - we have a more or less sustainable housing market. George,

Most first time buyers buy below average homes. I know my first home purchased years ago was below average. My second home was closer to average and my third home is above average.

Point being – the average price is made up of first, second and third time home buyers and so on.

Most often, the second and third time buyers purchase more expensive homes then the first time buyers.

Why are you so concerned if the average first time buyer can not afford the average home?

So long as the average home buyer can afford the average home (and I am not saying that is the case in Saskatoon yet – we have a more or less sustainable housing market.

]]> By: George http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12289 George Fri, 29 May 2009 17:24:15 +0000 http://normfisher.ca/?p=3344#comment-12289 Jason, I should have mentioned that it was in the US, (in a rush) no effect in Canada Jason,

I should have mentioned that it was in the US, (in a rush) no effect in Canada

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12288 Jason Fri, 29 May 2009 17:10:59 +0000 http://normfisher.ca/?p=3344#comment-12288 That was in the US, yes? (was there any effect in Canada?) That was in the US, yes? (was there any effect in Canada?)

]]> By: Jason http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12287 Jason Fri, 29 May 2009 17:03:42 +0000 http://normfisher.ca/?p=3344#comment-12287 "Saskatoon resales will continue to slow in 2009, slipping 15.3 per cent to 3,000 sales." What are we off (±, % variance) for sales this year (YTD) compared to last year? Just wondering how close to that projected -15.3% average we are. "In March, there were 2,399 active listings, more than double the 2008 March figure." Is this a typo... (1,399 perhaps?) "Price reductions should contribute to a rebound in 2010 with sales of 3,150 units, a five per cent increase over the 2009 figure. There will be a modest increase of close to two per cent in 2010, bringing the average price to the $280,000 mark. The firmer market expected in 2010 will allow modest price gains." What exactly are they basing these projections and estimates on? Wishful thinking? I can't see that with a $50B deficit (and who really believes that's the final number/) we're going to see any economic recovery until at least 2011 (at the earliest). CHMC has a vested interest in writing up even more 35-year mortgages for first-time homebuyers, so doesn't one need to question the motives behind these projections? If memory serves me, didn't CHMC predict an increase this year over last year with both sales and average prices? “Saskatoon resales will continue to slow in 2009, slipping 15.3 per cent to 3,000 sales.” What are we off (±, % variance) for sales this year (YTD) compared to last year? Just wondering how close to that projected -15.3% average we are.

“In March, there were 2,399 active listings, more than double the 2008 March figure.” Is this a typo… (1,399 perhaps?)

“Price reductions should contribute to a rebound in 2010 with sales of 3,150 units, a five per cent increase over the 2009 figure. There will be a modest increase of close to two per cent in 2010, bringing the average price to the $280,000 mark. The firmer market expected in 2010 will allow modest price gains.” What exactly are they basing these projections and estimates on? Wishful thinking? I can’t see that with a $50B deficit (and who really believes that’s the final number/) we’re going to see any economic recovery until at least 2011 (at the earliest).

CHMC has a vested interest in writing up even more 35-year mortgages for first-time homebuyers, so doesn’t one need to question the motives behind these projections? If memory serves me, didn’t CHMC predict an increase this year over last year with both sales and average prices?

]]> By: George http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12286 George Fri, 29 May 2009 16:42:24 +0000 http://normfisher.ca/?p=3344#comment-12286 In relation to fixed rate mortgages going up, Mortgage Market Locks Up http://globaleconomicanalysis.blogspot.com/2009/05/mortgage-market-locks-up.html "the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST" Crazy times continue In relation to fixed rate mortgages going up,

Mortgage Market Locks Up

http://globaleconomicanalysis.blogspot.com/2009/05/mortgage-market-locks-up.html

“the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST”

Crazy times continue

]]> By: George http://www.teamfisher.com/saskatoon-new-and-resale-house-prices-to-slide-in-2009-rebound-in-2010-cmhc/#comment-12285 George Fri, 29 May 2009 16:34:05 +0000 http://normfisher.ca/?p=3344#comment-12285 $275,000 average for 2009 possible for the average first time buyer who makes at least 75k has no debt and a mortgage rate of 3.5%. But how many first time buyers have no debt and how long will rates stay this low? At 6% no debt and making 75k, 252k is the most they can get. Every market needs a stream of first time buyers and I believe there are quite a few first time buyers jumping in at the moment for two reasons. Low mortgage rates and a rental bubble (the rent bubble we have is worse than the housing bubble) Rents can only increase relative to wages because there is no creative financing for monthly payments for rent unlike many mortgages seen in the last few years. Once rents come down and they will come down hard for some places and mortgage rates increase a bit, the first time buyer really has no incentive to enter the market. CMHC really has not looked at other possibilites that prices may come down more than 2%. Oh well. $275,000 average for 2009

possible for the average first time buyer who makes at least 75k has no debt and a mortgage rate of 3.5%.

But how many first time buyers have no debt and how long will rates stay this low?

At 6% no debt and making 75k, 252k is the most they can get.

Every market needs a stream of first time buyers and I believe there are quite a few first time buyers jumping in at the moment for two reasons. Low mortgage rates and a rental bubble (the rent bubble we have is worse than the housing bubble)

Rents can only increase relative to wages because there is no creative financing for monthly payments for rent unlike many mortgages seen in the last few years. Once rents come down and they will come down hard for some places and mortgage rates increase a bit, the first time buyer really has no incentive to enter the market.

CMHC really has not looked at other possibilites that prices may come down more than 2%. Oh well.

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