Saskatoon real estate bidding wars: How much is too much?
If you’ve been shopping in the Saskatoon real estate market for longer than a couple of months I don’t have to tell you that the rules have changed this year, and they’ve changed dramatically.
At the close of 2006, resale inventory had dropped to an all time low of around 250 active listings and while we’ve started to see more homes being listed for sale they are getting snapped at a pace which hasn’t allowed inventory levels to rebound at all. Today, the Saskatoon MLS® system shows 244 active house and condo listings across all price ranges and in all Saskatoon neighbourhoods. 60-70% of those properties probably have offers pending and the majority of what remains are the laggards which most prospective buyers have passed on for one reason or another.
New MLS® listings are attracting attention and viewings quite quickly and in many cases they’re generating multiple offers resulting in a bidding war. Last week, almost 25% of the homes which were reported sold on the Saskatoon MLS® showed sale prices which were above the asking price. The amount of overbids ranged from a low of $10 over list to a high of close to $30,000 above list price. The average overbid in most areas was less than $5,000.
Nobody wants to pay too much for a home. One might look to the aforementioned sale which went close to $30,000 above list and ask, “Are those buyers’ nuts?” I’m going to suggest that they just might be a little sharper than you think. See, these folks now own an interest in some Saskatoon real estate. While the other 37 buyers who viewed this home continue to struggle to find a place in the market, these buyers have locked in and any gains that the market experiences over the coming months will be theirs. If you believe that the market is going to continue to grow at its current pace, you might feel okay about paying a bit too much today in an effort to avoid paying much more tomorrow.
I’m not suggesting for a moment that a $30,000 overbid will be the prudent thing to do in most situations, but you will likely need to think beyond what the home is worth today if you truly want to be the successful buyer in a bidding war. Try to give some thought to where you think the market is going for homes in your price range. Will prices increase 10-20% over the next few months? How many opportunities will come up over the next few months? How might rising prices and limited inventory affect your ability to secure a suitable home at an affordable price if you miss out on this one? Is the property you’re considering under priced for today’s market (some are)? Ask your agent for his or her thoughts on what price the home will sell for when all of the offers are in.
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.
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Norm Fisher
Royal LePage Saskatoon Real Estate
There's 6 Comments So Far
April 3rd, 2009 at 3:27 pm
Wow! this is just so two years ago for us here in Minnesota. Maybe I could move to your area and help out if you have too much work,
April 3rd, 2009 at 3:27 pm
I could use a little help right now and we always love it when Canadians come home!
Just two years ago, eh?
I’m glad to hear that this craziness will eventually end. Feels like there’s no relief in sight right now but I’m sure we’ll find some balance at some point. I have a feeling that we’ve got a wild year ahead of us though.
April 3rd, 2009 at 3:27 pm
Yes, in the Seattle area, we had 2 full years of this type of market. We’ll have pockets of multiple offers this spring. A Seller with a good agent can do very well (when they listen to the agent and take advantage of their knowledge!)
April 3rd, 2009 at 3:28 pm
Thanks Greg and best wishes for a fantastic spring.
April 3rd, 2009 at 3:28 pm
What a market you are in. Things are quite different in Denver, Colorado. We have lead the U. S. for eight out of the past twelve in foreclosures. We have had only 1% to 3% appreciation on homes for the past several years. Needless to say, it is a “buyer’s market” here.
Enjoy the great market while it lasts. All markets cycle.
April 3rd, 2009 at 3:29 pm
Hey Bill,
I’m ready for it to slow down any minute now.
I really prefer a more balanced market where buyers and sellers can both accomplish what they want to.
I think I saw a feature on CNN a couple of weeks ago which said one out of every 400 homes in Denver is in foreclosure. That can’t be fun either. It’s amazing that prices would even go up 3%. There must be a lot of motivated lenders who are eager to sell.
Thanks for stopping.