Unit sales of single-family detached houses and condominiums saw a small increase to sixty-six units this week, up seven properties from last week and sharply higher than the same week last year when Saskatoon real estate agents reported just thirty-eight sales to the multiple listing service. While our market is unquestionably seeing a typical seasonal slow down, interest and activity seem to be stronger than we would expect for this time of year. Month-to-date, total residential sales sit at two hundred and twenty-five properties with a full week remaining in the month. Total sales for October of 2008 were two hundred and thirteen while the five-year average for the month of October is two hundred and forty-eight, a number which we will certainly see beat this year by around twenty percent, even if it’s a slow week.
New listings of Saskatoon homes also bounced slightly higher to seventy-two units, up from sixty-four listings last week, but lower than the same week last year when ninety-five properties were offered for sale.
Active listings in the residential category declined again. The change was small, but enough to pull the total inventory of Saskatoon MLS listings below the one thousand unit threshold for the first time in sixteen months. The week closed showing nine hundred and ninety-six active listings, ten fewer than last week, and well off of the sixteen hundred and ninety homes that were available last year at this time. The total active inventory consists of five hundred and eighty-three single-family homes and three hundred and forty-eight condos. Last year at this time, those two numbers stood at one thousand and fifty, and five hundred and thirty-three respectively.
Just twenty-one listings were cancelled or withdrawn from the market this week and fifteen of those re-appeared amongst the “new listings” for another kick, most at a new price. An additional thirty-nine home sellers adjusted the asking price on their home hoping to bag a buyer before winter sets in and demand softens further.
Twenty-seven of this week’s sixty-six sales were condos, and consequently, the average selling price of a Saskatoon home took a huge dip falling to its lowest point since June. The average finished at just $265,032, thirty-eight thousand dollars behind last week, and fifteen thousand dollars lower than it was at this time last year. The six-week average fell fifty-four hundred dollars on a week-over-week basis to close at $280,016, about fifteen thousand five hundred dollars off of last year’s number. The four-week median fell to $270,000, down from $272,900 last week, and falling below last year’s number by five thousand dollars.
Click the image for a larger version of the graph.
In spite of lower prices overall, Saskatoon home sellers did reasonably well when it came to negotiations with eight sales at list price, six sales above asking price, and the remaining fifty-two properties averaging a discount of just $9,807, down from last week in real dollars, but a higher discount as a percentage of the asking price. The average discount where sales occurred below asking price was 3.6%, up from 3.2% last week. However, a significantly lower median led to many more sales within $5,000 of the asking price as this category accounts for fifty-three percent of all sales, up from thirty-five percent last week, and about as high as I ever recall it being.
Aggressive price growth in Canada’s largest markets continues to push the average price of a Canadian home higher, and in fact, they’re now at record levels of $331,602. Toronto’s average selling price is up $40,000 year-over-year to $406,877 and Vancouver’s prices have increased $75,000 over the same period. I suppose we can consider ourselves lucky to have what appears to be some measure of house price stability in Saskatoon, but it’s hard not to feel that something is going terribly wrong in Canadian housing and I can’t help but wonder how we’ll be impacted if a house of cards begins to fall in our nation’s largest markets. This week, the media was buzzing with talk of a Canadian real estate bubble. Here are a handful of the stories that ran this week.
Bank of Canada monitors real estate surge
CMHC bubble is 100% Canadian made
Why Canada’s housing bubble will burst
CMHC’s growth fuels worries over new risks
Carney urges prudence in housing market
Expect to hear more of this talk in the weeks ahead as our government attempts to throw some cool water on a housing market that appears to be out of control.
Personally, I think prices are reaching their peak across the nation and that some cracks are beginning to show. In Saskatoon, where prices have remained flat for most of 2009, there is probably little hope for sellers that better times than these are on the horizon. If you want to sell your home, you should probably put that goal at the top of your priority list to complete before the end of 2009. This little real estate boom could end as abruptly as it started earlier this year. That’s what my gut is telling me today.
Map displaying the boundaries of Saskatoon real estate areas
Data collection and calculation for our statistical reports
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
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{ 23 comments… read them below or add one }
In an email, Tim asked me to “reflect” on my comments at the tail end of this week’s post. He has interpreted my words to be a “sell order, if not a panic sell order” so I thought I should clarify.
I am not suggesting that everyone should sell. I have no intention of selling my home, and in fact, we are in the process of increasing our investment in our home. I feel fairly good about the long term potential for real estate in Saskatoon. Like some of the others that visit this blog, I wouldn’t be completely surprised if we see a continuation of the correction that began last summer but given that the weirdest of things have happened over the past year I’m open to the idea that that may not happen. Of course, I don’t know.
I simply meant to say, “Hey, things are looking pretty darned good right now if you’re a seller wanting to unload a property.” Demand is strong, but we’re also moving into our seasonal slow down period and the supply of homes, while still decreasing, is likely to grow in terms of “total months of inventory.” It’s a good time to be a seller, however, the market will eventually change. Considering that under the absolute best circumstances (economy aside – ridiculous interest rates and strong demand) prices have remained pretty much steady here through 2009, I think it’s unlikely that much could happen in the short term to create a better selling environment than we have right now.
That’s why I said, “If you want to sell your home, you should probably put that goal at the top of your priority list to complete before the end of 2009.”
I think even the most optimistic among us would be inclined to agree that the current momentum in the Canadian real estate market is unsustainable. Given the amount of “bubble talk” that we’re hearing, and the concern being expressed by banks I think it’s fair to say that we’ll see some real efforts to cool the housing market. Pay attention to the discussion in the weeks ahead and I’m willing to bet that if you’re listening closely you’ll hear lots that may cause you to feel, as I do, that this little boom is reaching it end. Does it mean a collapse for real estate prices across the country. Not necessarily, but it probably means a lot more questions about “values” and whether real estate is a wise investment at this time.
In a nutshell I see pretty good conditions for sellers right now, and some legitimate reasons to feel that the current momentum may be reaching the end of its run. “Personally,” if I’m wanting to sell my home, I’m going to get serious about getting it done while the market is still strong.
Personally, I think prices are reaching their peak across the nation and that some cracks are beginning to show.
Norm, I’m with you, but boy- what a time to be a recent buyer.
Oh well, can’t say a further downturn wasn’t at least partially expected and planned for. The current state of the market has left me feeling very grateful we factored in higher interest rates at the time of renewal, and very glad we bought well under what the lender said we could technically “afford”. I’m also very glad to have gotten such great information on this blog prior to our purchase… many thanks to all who contributed in the discussion.
Jen,
I’m far more concerned about Vancouver, Toronto and places like that where prices have taken a serious jump again. Of course, those big markets count for so much of the total volume if they tank the media will host lots of talk about how bad the real estate market is.
I agree with everything you said Norm, but the way the federal government is intervening, by protecting everybody from themselves, the government is spreading the pain equally to all the taxpayers, this is to bad because the savers and those who are responsible with credit, as well as those who could benefit from the financial mishandling of careless sometimes reckless consumers are shut out by the governemnts “were going to make everything right approach”.
Rick, did you ever nail it man. Couldn’t have said it better myself.
The only thing I might add is that while you see this bungling, most people do not. Average joe on the street is brainwashed and is of the opinion that the government is doing what they have to to fight the recession. Keep spreading the word.
Rick and Peter,
So true. Wasn’t it one of you guys who said, “We’re living in oppositeville,” or something like that?
When the American housing bubble burst, I was not too concerned about the Canadian market, especially the Saskatchewan market. However, now I’m starting to see that the CMHC has become like Freddie and Fannie, maybe not quite as unregulated, but not much different. Have they learned nothing from our neighbours to the south??? Making credit available like water is not a good idea ever. This can only end one way…. badly!!
This will have the exact opposite affect of what the government was trying to do with the stimulus. Just as it appears the Canadian economy will be in recovery, interest rates will shoot up and many of these people will not be able to afford their mortgage payments.
But then I’m no economist, maybe they know something I don’t….. but I doubt it.
Boomers shape market — again
http://www.financialpost.com/news-sectors/story.html?id=2139500
“Tom and Jane, long-time friends of ours, last year sold the house they had lived in nearby in east Toronto for more than 30 years and bought a condo on Lake Ontario in Burlington, 60 kilo-metres away. Retired and in their mid-sixties, they had three reasons for selling up and leaving the house and neighbourhood they loved: First, they wanted to be nearer their daughter and their grandchildren. Second, they came out $250,000 ahead on the transaction. And third, they wanted the convenience of living on one floor in a brand-new condo they could lock up in the winter and head south to the sun.
“Tom and Jane are part of a vast cohort of retirees and Boomers heading into retirement who are in the throes of making life-changing decisions about where they will live out their years, helping to stir and shape the real-estate market.”
Housing affordability eroding during in a recession? My word. I wonder what the implications of this might be…
Housing affordability eroding, study says
“The rebound in Canada’s housing market has been so sharp that affordability is eroding, a new study say(s). The Desjardins Affordability Index, reported quarterly by Desjardins Economic Studies, dipped below its historic average in the third quarter, meaning houses were less affordable to purchase, after a little more than a year in affordable territory.”
Here’s the link to the Desjardins Affordability Index PDF. Western markets covered appear limited to Calgary and Vancouver:
http://tinyurl.com/yfw68gm
Jen,
It’s still not a bad time to sell.
Jason,
Echo boom will bail out housing: Harvard University’s Joint Center for Housing Studies
Lol. I won’t question Harvard’s ethics but check out the crew who funded this study.
Dana,
It’s a little unsettling, for sure. My mortgage contacts are telling me that buyers are going all in at today’s low rates. Without some decent income growth there will be some people having trouble meeting the payments at renewal.
Goodness, look who’s back.
Bank of Canada governor Mark Carney has repeated his concern that Canadians may be getting in over their heads in the purchase of homes, saying the government has ways of slowing the market.
Norm, well, that’s wishful thinking anyway… if memory serves me, I read an article/study/survey not to long ago which concluded that the majority of the echo boom (generation “why?”) still expected their parents to help out with their first house purchase and receive a sizeable inheritance (quite obviously this generation hasn’t been paying attention to current events).
Thanks for that link – Mark Carney is certainly coming into his own as of late. I think his comments are probably about 6 months too late, but there’s definitely more than a passing reference to regulating CHMC and revising amortization periods (so there’s hope yet). It left me with the distinct impression that some of these tools will be implemented sooner as opposed to later. I’d say more than a little unsettling, to be sure. In any event, I’d hazard that there’s a good chance we’ll see a seller’s market (albeit briefly) in the not-too-distant future…
“Additional support was provided by: Federal Home Loan Banks, Freddie Mac, National association of Home Builders, National association of Realtors…” Completely unbiased.
“It left me with the distinct impression that some of these tools will be implemented sooner as opposed to later.”
Let’s hope this isn’t just Mr. Carney jawboning. Like you say, Jason, the time to defuse this would have been some time ago, but it’s good he sees that picking up the pieces after the explosion is a far less preferable option. Extended amortizations nicely cover for the fact wages have been stagnant for some time, though.
IMF deems Sask. housing “stabilized.”
Funny, hasn’t affordability (or lack thereof) been the talk of late?
I think you’re thinking of these other places where prices are rising. Affordability has improved “significantly” in Saskatchewan, according to the Royal Bank’s September report.
Employment down, but average weekly earnings in SK overtake BC to become third highest in Canada behind ON and AB.
Saskatchewan loses title as Canada’s murder capital.
U.S. out of recession, but Peter Schiff says “Not so fast people.”
Tick, tock. Tick, tock. Lake Placid deadline looms and I’m betting another extension is already in the works, and so what?
Canada’s GDP shrank 0.1% in August
http://www.financialpost.com/news-sectors/story.html?id=2162716
“Canada’s economy fell back unexpectedly in August, despite initial signs that the country was climbing out of recession.” No real surprises here.
Market Cheers Over Ugly GDP Report
http://globaleconomicanalysis.blogspot.com/2009/10/market-cheers-over-ugly-gdp-report.html
“Today [yesterday] the market is cheering over what is actually an ugly report. A misguided Cash-for-Clunkers added a one-time contribution of 1.66 percentage points to GDP. Auto sales have since collapsed so all the program did is move some demand forward.”
“Government spending increased at 7.9 percent in the third quarter which is certainly nothing to cheer about. Personal income decreased $15.5 billion (0.5 percent), while real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent last quarter. Those are horrible numbers.” Nothing but smoke and mirrors.
Easy credit, soaring prices raise new concerns.
I read the easy credit article, Norm. A bit scary.
“In April, 1989, the value of an average existing home in Toronto was $261,650. This was the peak of the 1980’s boom, with prices 267 per cent higher than at the beginning of decade. The bust that followed was nearly as dramatic: The trough didn’t come until August, 1993, when the average price sunk to $189,620. The average price didn’t top the 1980’s peak until January 2002.”
The numbers on Toronto remind me of where we are today in Saskatoon. It took them 13 years to get back to their peak levels and even then it was only triggered by the government lowering interest rates in 2001-2002. I don’t know exactly what will happen with interest rates but I am confident they won’t actually be going lower over the next decade to bail us out.
Peter,
“I don’t know exactly what will happen with interest rates but I am confident they won’t actually be going lower over the next decade to bail us out.”
Something we can probably all agree on.