Unit sales of houses and condos in the Saskatoon real estate market continued in the zig-zag pattern of one up, one down that we’ve been seeing over the past eight weeks. This was a down week with total sales reported in the house and condo categories slipping to sixty-two, off by twenty-three properties compared to last week, but still managing to beat sales numbers for the same week last year when just forty-nine Saskatoon homes changed hands. Clearly, the trend is towards fewer units trading and as the weather gets cooler, this is a trend that we should expect to see continue as it does historically, until unit sales bottom out in December.
New listings of Saskatoon houses and condominiums were up just two properties on a week-over-week basis to one hundred and six, but well below the one hundred and fifty-one properties listed during the same period in 2008.
Click the image for a larger version of the graph.
Active listings in the residential category grew slightly and finished the week at one thousand and forty units, up eleven properties from the previous week, but well below the sixteen hundred and eighty-eight properties available at this time last year. The trend towards lower inventory levels certainly has slowed. The number of Saskatoon homes for sale fell by nearly five hundred properties over June, July and August. We’re only down about forty units in the past five weeks.
Thirty-seven home sellers canceled or withdrew listings this past week. Twenty of those quickly changed their minds and signed a new listing agreement. An additional sixty-one sellers adjusted their asking price in hopes of attracting a buyer before the city freezes up.
The average selling price of a Saskatoon home climbed again for the third consecutive week reaching $292,637. The six-week average moved in the same direction but grew far more modestly climbing to $285,295, a gain of about nineteen hundred dollars over last week, but well below the $301,380 recorded during the same week in 2008. A nineteen thousand dollar week-over-week tumble for the weekly median sale price pushed the four-week median in the opposite direction to just $263,000, its lowest level since the week of April 24, and just sixty-five hundred dollars behind last year’s number of $269,500.
Click the image for a larger version of the graph.
The average underbid on the Saskatoon homes that sold for less than the asking price grew from $9,236 last week to $10,626, but the higher asking prices this week meant that the average discount actually fell from 3.1% last week to 3% this week.
Map displaying the boundaries of Saskatoon real estate areas
Data collection and calculation for our statistical reports
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Norm Fisher
Royal LePage Saskatoon Real Estate
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{ 30 comments… read them below or add one }
Norm, “Thirty-seven home sellers canceled or withdrew listings this past week. Twenty of those quickly changed their minds and signed a new listing agreement.” Good one.
The lower median is curious. Around this time last year we saw a progressive decline in the average, 6-week average and median price, so it will be interesting to see if we experience a similar reduction or whether high demand will keep the averages up. There does seem to be a lot of new construction happening everywhere, though.
I’m now a homeowner, once again. We weren’t necessarily looking to buy, but a timely and rare opportunity presented itself which was hard to pass up. Without going into specifics, we probably got it for between 4-7% under current market value, and about 18.4% from the peak last year, so we’re happy. As has been pointed out, the averages don’t necessarily tell the whole picture.
The only caveat is that I entirely expect that we’ll lose money on our investment – or, at best – break even if we go to sell in 3-4 years time. However, to a certain degree, this is largely offset by any rent we’d have had to pay during the same timeframe, so for the most part it’s a wash.
I’m still bearish on housing, and believe there will be opportunities from now until Spring 2010, but I think all bets are off next Summer as an anticipated increase in interest rates will probably entice many first-time homebuyers to throw caution to the wind and enter the market. I believe a further correction of 5-10% is still realistically possible by the end of next year, although this really hinges on whether we’ll see the start of an economic recovery or continued recession.
Thanks to many of the regulars (Jen, Bookrat, George, Mark and others) for their insight, comments and suggestions, and of course to Norm, for this invaluable resource and some last-minute assistance with some market data – which I greatly appreciated (at the very least I owe you dinner some time Norm!)
Interesting the local media is calling 4th in Canada in population growth a sign of strength, yet Calgary, Kelowna and Edmonton all grew by significantly more people, and yet have seen even bigger drops in housing prices from peak.
ie. Population growth cannot be justification for housing prices in Saskatoon, as bigger, higher paying, and faster growing Calgary and Edmonton can’t justify their housing prices.
Still amazed that cheaper, higher paying Regina continues to grow less than Saskatoon…
When hardcore bears throw in the towel and buy, prices surely must be headed lower. It’s anticipated that when the Canadian economy picks up, Saskatchewan will lag and people will head back to Alberta and Ontario, with inflation rising at that time, interest rates could rise as well putting the brakes on our local economy, causing home sales to stall and prices to deflate. Of course we won’t be completely immune to a global and national pickup but we had our kick at the cat and were not going to get another shot for a good long while.
Congratualations Jason on your purchase, it should be interesting to hear your future opinions now that you have a vested interest once again, good luck!
Wow, Jason! You broke far earlier than I thought you would. Just kidding!!
Seriously though, it sounds as if you were very sensible and thorough with the purchase, which isn’t surprising to me at all. Congratulations on the amazing find!
Much happiness to you and your family in the future in your new home.
Jason,
Congratulations! I’m not completely surprised. If I recall, you suggested a while ago that you’d be back in by fall of 2009 or winter 2010. Glad to hear that things worked out so well for you.
Rick, “When hardcore bears throw in the towel and buy, prices surely must be headed lower.” I’m definitely in agreement with you. “Congratualations Jason on your purchase, it should be interesting to hear your future opinions now that you have a vested interest once again, good luck!” Thanks Rick. Although it may come as a surprise, I don’t think my perspective will actually change that drastically. While we obviously didn’t purchase at the peak, I’m under no illusions that we’re anywhere near the bottom yet. The thinking was that we’re somewhat insulated against a slight market correction (5%), and if we see anything more substantial (10%) we’re still about break-even with the cost savings through ownership vs. rent.
Jen, “Wow, Jason! You broke far earlier than I thought you would. Just kidding!!” Haha, touche.
“Seriously though, it sounds as if you were very sensible and thorough with the purchase, which isn’t surprising to me at all.” Thanks – I’d like to think I was somewhat thorough in my homework! (this site was a great help!) Time will ultimately tell…
Norm, “Glad to hear that things worked out so well for you.” Always appreciated, thanks! Yes, Fall or Winter’10 was the tentative plan, and while this happened a bit sooner than we’d anticipated, we’re very happy with how everything worked out.
“It’s anticipated that when the Canadian economy picks up, Saskatchewan will lag and people will head back to Alberta and Ontario”
I doubt it. Saskatchewan was doing well before the global financial crisis, continued during and I don’t foresee that changing as things pick up. The factors behind our success remain intact. Oil prices are high with peak oil still on people’s mind. Agriculture prices are strong. Potash prices are down but still very profitable. I can see your point on Alberta stealing our people but Ontario? Domestic manufacturing is dead, I don’t see that story turning around anytime soon.
I’m just not sure about the whole commodities outlook in Saskatchewan, the massive artificial global economic boom was brought on by the equally massive subprime housing bubble in the United States. Granted virtually every investor world wide has taken a hit on their investments to help soak up the financial carnage left behind. But with out much value added to our commodities and the world ecomomy manufacturing less, it seems that they will need our resources less then before. Resources have always been highly cyclical, and what some people just don’t seem to get is that less global manufacturing requires less resources and commodities. It seems that we had the biggest boom times ever for a year or two, based on perhaps the biggest artificial global boom bubble ever. Without the housing bubble in America, Saskatchewan never would have boomed and seen our own house prices reach levels that people never would have thought attainable before it happened, of course we now are in our own massive housing bubble that will correct with such force that it will surely cause the pillars of our financial institutions to tremble.
Rick,
The factors you speak of apply to Canada as a whole. Please explain why they will cause Saskatchewan specifically to suffer so much more than say Alberta? You throw out these vague arguments that amount to little more than “we’re screwed” and then jump to very specific forecasts. Don’t even bother responding to my question as I know your type doesn’t like to get nailed down to any specifics.
Peter, I don’t believe Rick suggested that Saskatchewan would fare worse than Alberta or Ontario, only that we may see an outflow of people returning to their home provinces if we were to see a correction in commodities (arguably, if they’re facing the same unemployment situation anywhere, they’ll likely go where they have family and other resources available to them).
And I wouldn’t say Saskatchewan was doing well as a whole before the global financial crisis; up until recently we were still producing annual budget deficits. It wasn’t until 2006-2007 that oil, potash (etc.) royalties and revenues really allowed this province to take-off and start paying down our deficit.
That being said, I do believe Saskatchewan is better situated to weather the storm than Alberta, BC and certainly Ontario – provided we apply some of the lessons learned with respect to public spending: deficit first, followed by tax reductions.
“But with out much value added to our commodities and the world ecomomy manufacturing less, it seems that they will need our resources less then before. Resources have always been highly cyclical, and what some people just don’t seem to get is that less global manufacturing requires less resources and commodities.”
If that were actually happening, you would have a great point, Rick.
Yes, the US economy is producing far less, and yes, it has had a considerable impact on commodities prices. Less liquidity will mean less investment, and that will probably continue to be the case for some time. Globally, however, production appears to be picking up in many Eastern markets (specifically China and India), and Canada has shown admirable willingness to diversify its markets beyond US ones in the last year. I personally think that if some sort of recovery is taking hold (rather than this being a reaction to a massive global liquidity injection- it’s hard to tell) , commodities will show strength before many other sectors. If this is the case, SK should actually do better than many other provinces in the near term.
Jen
“Globally, however, production appears to be picking up in many Eastern markets (specifically China and India), and Canada has shown admirable willingness to diversify its markets beyond US ones in the last year”
Canada selling commodities to the east is only gonna help drive down prices. On the global scale Canadians have to consider Russia’s economy of -10.9% GDP growth. They are worse off than the US (-3.8%) and Canada (-3.2%). Therefore I reason, Russia is more motivated than Canada on getting deals made. Potash prices are falling because the russian’s signed a deal to supply India for $550 tonne. Is Canpotex gonna put its head in the sand over that? I think a lot of people in SK are! As of late, Canpotex is being seen by the rest of the world as a price fixing “OPEC” of potash.
Attention: Jason
“And I wouldn’t say Saskatchewan was doing well as a whole before the global financial crisis; up until recently we were still producing annual budget deficits. ”
I appreciate your input but you may want to check your facts on the history of the provincial government’s budget.
As of 2006 the provincial government posted 13 consecutive balanced budgets. Please see the following link for my reference.
http://www.gov.sk.ca/news?newsId=57b5240c-dc62-45d4-88cd-5e24d39c69e3
Thank you.
13 consecutive balanced budgets, really! I did’nt know that and that’s pretty good. Give the NDP some credit as they were leading government for some of those years although I don’t know how many.
Yes China and India are apparently not suffering as much as America, however they are a developing not a developed country, there is a big differance. The majority of there exports you can purchase at the $1 store, yes the government there has a fair amount of money, but the average person working in a major city has a salary of abouut $80 CDN a month, subsistance farmers and others living in the countryside are lucky if they earn that in a year. My point is the Chinese don’t like our western prices, which are based on our much higher standard of living, they have’nt signed a potash deal because there intention is to get those prices a lot more to there comfort zone, I would suggest that since they have the cash they hold the hammer not Canpotex. There stimulas was perhaps 10 times that of Canada, which would prove they were not exporting to there satisfaction, because they are a nation of savers rather then a credit economy like ours, don’t expect China to help us nearly as much as people hope they will, information technology may be the better long term bet rather then commodities, further due to there proximity Australia has and will continue to be a much larger trading partner with China.
Further a lot of people like Saskatchewan that’s why they live here, and they liked it even better before our mini boom. Sure we don’t have the long work commute with the bumper to bumper traffic like Toronto and Calgary nor do we have the wait in line no matter when or where you go, who knows maybe that’s what some people like about small city living. The idea that a rapidly growing economy floats all the boats and that one and all enjoy a higher standard of living just is not accurate, a little thing called inflation really screws things up, if anything a person buying or renting a place to live can attest to that.
Steven,
Russia cannot produce all of the world’s oil, potash, and agricultural commodities. They can influence prices by undercutting but to date these commodities are all still being sold at profitable levels. Oil is around $70 a barrel, in 2004 $50 was considered very high. Potash at $550 / tonne is still a very high level compared to a few years ago. Wheat is down to around $5.25 / bushel (depending on the market and delivery date) which is not fantastic but still much better than $3/bushel range it was at a few years ago. Wheat prices are lower than they have been due to two consecutive years of bumper harvests.
Peter,
To me you are kinda seeing “unrealized gains”. Profits are obtained when you actually have a signed deal, and are moving product. Russia has a signed deal with India. Canada does not. Canada is sitting on its inventory with dollars in its eyes and not in the bank. Russia may not be able to supply the demand, however whatever demand exists right now is going to Russia. Under-estimating the russian’s capacity may be a mistake when they are motivated to sign a deal. Maybe a deal with China to increase production could happen. -10% GDP says they are motivated to me. At what price should Canada be motivated to show the russian’s that Canadians have the capacity to operate profitably and ship commodities to China? Potash workers have been laid off, and oil sand projects have been cancelled. Is that showing we have capacity to operate profitably or greedily?
The oils sands are still going strong. They are continuing extraction just pulling back on the new initiatives.
As far potash, from what I have read Russia doesn’t even come close to having the capacity to meet the entire world’s demand. Their only impact is to set a lower price precedent. I guess you could say that because there hasn’t been much domestic product movement this year there will never be any again but to me that isn’t realistic. It’s like everybody selling their stocks in February because the financial system seemed like it was going to collapse. The cycle turned as it always done and the stock market has rebounded strongly. I am of the opinion that potash is the same. It may take a bit of faith and can’t be proved mathematically but ultimately people need potash.
Ultimately from year to year things are a bit of a crap shoot with commodity prices, I won’t deny that. However, the original point which started all this was that Saskatchewan was about to lose people to Alberta, BC and Ontraio as soon as the recession turned. I still see no evidence of this.
13 consecutive balanced budgets? Really? I think if you did a little research, you’ll find that those “Balanced Budgets” were a result of draining the liqour and gaming revenues. Not really something to brag about…”Thanks to your drinking and VLT abuse, we were able to balance the budget.”
We can talk all we want about resources but the plain truth is that resources fluctuate and are never constant. Yes, oil is at 70.00 but if any of you know retail business owners in Weyburn, Lloyminster, etc., ask them how business has been the last 6 months. I do business with some of those business owners in those locations and they have told me that business has nosedived.
Same goes with Potash. There is no choice but to sell at 550 a tonne. Guess what happens when the average price stabilizes at 550? Yes, you guessed it. The Russians will drop thier price even more because they need to sell it.
Real Estate hasn’t dropped because society isn’t ready to accept that the global boom is over. It’s human nature to not let go of something that’s good….even if its just a perception. Besides, money is still cheap…for now. Rates have now gone up in Australia. The state of Caliornia just issued bonds with a 5% yield and the Alberta Gov’t has just done the same although I don’t believe the yield is as strong. I could be wrong about the rate. Regardless, mortgage rates are based on the Bond Market and those bond rates are creeping up around the world. I’m sorry but it has to happen.
Regardless of what the economy does, young families need places to live. 1 or 2 bedroom apartments just doesn’t cut it for this emerging demographic. Any way you slice it, the need for housing is not going to wane. Boomers aren’t giving up thier cushy homes anytime soon.
Rick,
“The majority of there exports you can purchase at the $1 store”
Do you purchase your electronics, power tools, appliances at the $1 store? You are living in a different decade buddy. The standard of living may be low but China is much higher up the production value chain than you realize. They are also getting into auto manufacturing, software development, medical devices, drug research, you name it. This is actually one of the main reasons I think Sask is a relative safe haven. I have no idea how more service or manufacturing oriented areas of the country can compete against China in the long-run. Sask at least has an abundance of natural resources relative to our population to backstop us.
Tex, thanks for the link. We didn’t really start posting consistent surpluses until the 2004-2005 fiscal year. “As of 2006 the provincial government posted 13 consecutive balanced budget.” The office of Public Accounts does tend to disagree with the official Government line, showing deficits in 2002-2003 (-$653.6M) and 2003-2004 (-$146.8M), respectively (these are the reports that use ‘established’ as opposed to ‘government’ accounting rules…)
http://www.finance.gov.sk.ca/paccts/paccts03/03state2.htm
http://www.finance.gov.sk.ca/paccts/paccts04/04state2.htm
Jen, “Globally, however, production appears to be picking up in many Eastern markets (specifically China and India).” Might these be the lingering effects of stimuluses in these regions and not necessarily a true sign of recovery?
Steven, “Therefore I reason, Russia is more motivated than Canada on getting deals made.” I would tend to agree, especially with who’s running the show (Putin).
Rick, “Give the NDP some credit as they were leading government for some of those years although I don’t know how many.” About 16 too many… (Sorry, couldn’t resist…
)
“I would suggest that since they have the cash they hold the hammer not Canpotex.” Indeed, the Golden Rule: “He who hath the gold, makes the rules.”
westcanguy, “…those “Balanced Budgets” were a result of draining the liqour and gaming revenues.” Don’t forget the $730M from the sale of Cameco shares.
Jen, “Globally, however, production appears to be picking up in many Eastern markets (specifically China and India).” Might these be the lingering effects of stimuluses in these regions and not necessarily a true sign of recovery?
Yes, they certainly may. I do believe that when a recovery takes hold (if it has not already, and yes, it is difficult to tell for the very reason such massive walls of money have been thrown at the problem), that these regions will play a much larger role in leading the way out.
Peter, excellent points about emerging markets. Many of the jobs that used to be based in North America were absorbed by these countries some time ago- particularly in the manufacturing and IT/telecom sector. They are also currently playing a much larger role in health care training and research. This adds to the reasons why the N. American consumer likely won’t respond quickly in this recovery- too many formerly “middle-class” jobs have been transferred offshore.
Great discussion!
I’m kind of surprised that nobody has jumped on the increases in mortgage rates. Royal moved first on Friday and the other major banks followed today with increases in the fixed rate products of as much as .35%. A five-year mortgage can still be had for 3.79%, according to TMG’s rate chart but that small increase moves the carrying cost of an average Saskatoon house by $55 a month on a 25-year amm.
Or another way to look at it is that if you could previously afford to finance $250,000 (@3.44%/fixed 5/35 years) you can now only finance $238,250 (@3.79%/fixed 5/35 years). While that may not seem like a lot, that’s more or less the 5% down required for most CHMC-backed mortgages, so it’s the equivalent of having to now come up with 10% down, looking for something slightly cheaper or hoping to negotiate an additional 5% discount from the vendor.
Jason,
Thanks for backing me up with your comment “who’s running the show (Putin).” You come across as being well informed and I don’t mean to flame you in anyway, but Putin is not the President anymore. Dmitry Medvedev has been in power since March 2008 and has a wife (Svetlana) educated in economics!
With that being said, I wonder how many people in SK are being ignorant and under-estimating Russia. (ain’t calling Jason ignorant).
Norm,
As for interest rates, I have no concerns. I locked my rate in with a discount- cha ching! You can see my Sept17th Tweet about it.
Steven,
“As for interest rates, I have no concerns. I locked my rate in with a discount- cha ching!”
Pheeew. I’m delighted that I don’t have to worry about you.
Jason,
…or, roll the dice baby with a cheap variable rate mortgage. What do you think will happen?
Steven, “but Putin is not the President anymore.” Not officially, anyway. I thought you might find this Time article of interest (I’ve highlighted some select quotes below). “With that being said, I wonder how many people in SK are being ignorant and under-estimating Russia.” I would hesitate to use the word ‘foolish’, but I think it would be wise not to underestimate one of the richest men in the world and the former head of the KGB.
Why Putin Will Still Run Russia
http://www.time.com/time/world/article/0,8599,1718775,00.html
“In mid-December, Vladimir Putin settled Russia’s succession question by declaring his support for Dmitri Medvedev, a deputy prime minister and former Putin chief of staff… Medvedev’s rise means the presidency is now in the hands of a Putin loyalist…”
“The transition, in other words, is fooling no one… But now that Putin is moving office, it seems safe to assume that real power will reside with the Prime Minister. In case there are any doubts, Putin himself recently said as much: ‘The Cabinet, headed by the Prime Minister, is the highest executive authority in the country.’”
……….
Norm, “…or, roll the dice baby with a cheap variable rate mortgage. What do you think will happen?” I’d say your odds are better in Vegas betting on black.
Peter, “I have no idea how more service or manufacturing oriented areas of the country can compete against China in the long-run.” Neither do I, unless it’s something very specialized and not easily-duplicated elsewhere. “Sask at least has an abundance of natural resources relative to our population to backstop us.” This is certainly true, and let’s not forget to highlight agriculture as probably one of the more important aspects in the long-run.
“Putin is not the President anymore”
Right, and the US believes in a strong dollar and china is a communist country. Factually true, but all the evidence points otherwise.