Before we get started with last week’s real estate activity I want to point out a couple of changes that I’ve introduced to the “Week in Review” which you can expect to see on an ongoing basis. First, I’ve added the median selling price for each of the five areas to the graphic that you’re accustomed to seeing each week. A number of people have requested that this information be added. Secondly, at Bookrat’s request I’m adding a graph that plots the weekly average selling price in comparison to the six-week average selling price. Bookrat has been tracking these stats himself and was kind enough to send me an image of his graph. I had to agree that it adds some interesting detail and helps make better sense of the weekly numbers. Thanks for your help Bookrat! Finally, you’ll notice another graph, which plots weekly unit sales against new listings for the week. As always, please remember that most of my stats are based on single-family homes and condos unless otherwise specified. I hope you like these additions. Now, let’s take a look at what happened in the Saskatoon real estate market over the past week.
New listings took a serious nosedive coming in at their lowest levels since the week of January 28 – February 1. A total of 96 properties were offered for sale on the multiple listing service including 76 single-family homes and 20 condominiums. Total active residential listings fell to 1,673 units to find their lowest level since the week of August 18-22. A total of 49 listings were cancelled or withdrawn and 29 of those properties found their way back to the system as new listings. 89 price adjustments were approved over the course of the week. Today’s active listing inventory consists of 1,045 houses and 529 condos. The “units sold vs. units listed” graph indicates that there has been some narrowing of the massive gap that developed between the two through the spring.
Click the image for a larger version of the graph.
Unit sales fell to 45 units from 49 the week before. 42 buyers managed to negotiate a contract below the asking price to the tune of $12,502 on average. The average selling price was down from previous weeks, reaching its lowest level since the week of August 25-29 to settle at $280,096. The average selling price of a Saskatoon home was fairly consistent with the median price, which came in at $280,000 for the week.
Click the image for a larger version of the graph.
See a Google map displaying the boundaries of Saskatoon real estate “areas” here
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.
Follow our daily updates on Twitter @SaskatoonHomes.
Norm Fisher
Royal LePage Saskatoon Real Estate
![[del.icio.us]](http://www.teamfisher.com/wp-content/plugins/bookmarkify/delicious.png)
![[Digg]](http://www.teamfisher.com/wp-content/plugins/bookmarkify/digg.png)
![[Facebook]](http://www.teamfisher.com/wp-content/plugins/bookmarkify/facebook.png)
![[LinkedIn]](http://www.teamfisher.com/wp-content/plugins/bookmarkify/linkedin.png)
![[Twitter]](http://www.teamfisher.com/wp-content/plugins/bookmarkify/twitter.png)
![[Email]](http://www.teamfisher.com/wp-content/plugins/bookmarkify/email.png)
{ 111 comments… read them below or add one }
@Chris,
I work with a guy who mis-managed his money for most of his life (just blew it on cars and crap). He started investing heavily in ‘the markets’ a few years back in an effort to make up for lost ground.
He told me he kissed $100K goodbye in this here ‘crisis’ – and that was almost 2 weeks ago!
lol! captcha = Floor establishment
Some great news today, whatever the relief ends of being, its all good. Hopefully the banks follow the BofC rate cut.
Saskatchewan income tax relief coming
http://www.canada.com/saskatoonstarphoenix/story.html?id=474d5462-0dc6-4e5a-9a91-e850645fa1ac
Top bank cuts key rate a quarter point
http://www.canada.com/saskatoonstarphoenix/news/story.html?id=d72f380f-d95d-43eb-8fbc-37f39d18377f
Gas prices are slowly dropping
http://www.saskatoongasprices.com/
Thank you, Bookrat!
Just curious- can you tell me why you chose to show the 6-week moving average?
Weekly averages are showing massive fluctuations, particularly in late August. Any idea why this might be so?
Crikey,
“Just curious- can you tell me why you chose to show the 6-week moving average?”
I thought that a red line would be a nice compliment to the blue line, but it had to be positioned differently to really work.
I just liked the way it worked on Bookrat’s graph. Kind of smoothed out the peaks and valleys caused by those extreme high and low sales. I was thinking that it displayed the trends rather well.
“Weekly averages are showing massive fluctuations, particularly in late August. Any idea why this might be so?”
That blue line is pretty erratic isn’t it?
Week of August 8 had a very low unit sale number (35) and a sale at $1.1 million. All of the other high points after the August 8 spike have either a $1 million dollar plus sale (2 in September and 1 in October), or several $600K plus deals. I think it’s actually the high points from August 1 on that are lying a little bit.
45 sales, wow!
I thought there was going to be way less. I though the long weekend, low demand and the financial crisis would push sales to the 30’s even 20’s. But, maybe some of the sales can be contributed to the people trying to get in under the wire for 40 year mortgages. And, I think some sellers are finally getting the idea to price their property better than their comparables to get a quicker sale. Slowly, but surely we may enter a buyers market in a few months.
The smart sellers are getting the idea that their property needs to stand out, by either price or by complete reno’s, inside and outside. Otherwise, their property might be on the market for months or possibly over a year, like the hundreds in Calgary and Edmonton.
Thanks for the graphs, Norm and Bookrat.
A little off topic, but is there a way to filter by area in the new MLS.ca site?
I’m currently using the advanced search option because I find the interactive map a very difficult way to navigate the listings (the advanced search takes you back to the old list way). But, I see no option to filter by area.
George,
Typically we start to see some dropping of unit sales through November and December.
Did you happen to catch this story about Calgary and Edmonton?
http://tinyurl.com/64vtc3
Ryan,
You can only search areas by map. I’ve heard this complaint with others. Maybe drop them an email. I’m sure if they get enough they may realize they need to address that.
Crikey, George, Norm (and anyone else): You’re welcome. I’m very glad that Norm found my work useful enough to make it part of his regular reporting.
I picked a 6-week rolling average for my (original) graph because it ‘felt’ right. As my posts here no doubt reveal, I have done a lot of work with numbers and statistics in my time. My personal monthly graph had a three-month average curve on it, just as Norm has started doing; three points seems to be about right when you have a large sample size each month to work with, but the weekly stats are small by comparison so I doubled that and it seemed to work out well. (I also played with an 8-week window, and while it gave an even smoother curve, it seemed to lag too far behind when things started moving.)
Norm, I’m curious: the graph I showed you had a WEIGHTED rolling average, dividing the accumulated dollar sales over that period by the total number of sales. Does your graph follow that pattern, or is it a straight add-the-six-weeks’-averaged-and-divide-by-six?
And one other question that I haven’t seen asked here that I’ll address to Norm specifically (as he might have inside information) but also put open to anyone with a good theory. Given the general malaise about the housing market in general, WHY have we seen so many $1m sales (comparative to history) since the beginning of August?
Bookrat,
“the graph I showed you had a WEIGHTED rolling average, dividing the accumulated dollar sales over that period by the total number of sales. Does your graph follow that pattern, or is it a straight add-the-six-weeks’-averaged-and-divide-by-six?”
Yes, total dollar volume for the six weeks divided by total unit sales.
“WHY have we seen so many $1m sales (comparative to history) since the beginning of August?”
Probably the rush to beat the $0 down, 40 year mortgage deadline.
“Historically” there wasn’t such a thing as a million dollar house in Saskatoon. It’s beyond me really. There have been 17 sales that topped the $800K mark this year. 5 of those averaged close to $1.3 million. Amazing really but I can’t say why.
Congrats Norm on your continued improvement of your blog,a little thanks to Bookrat also.I’m curious to know Bookrat do you graph your own finances?If so I’d be interested in knowing how you break it down,income,fixed expenses,variable expenses?Do you break it down further from these? Also is it possible that with some of the new businesses opening up in town,the higher up execs are also relocating to Saskatoon?I m not sure how else to explain it,there is some serious money needed to fund housing in that price range.
Norm,
Calgary and Edmonton going back to a sellers market? 60-65k average haircut for both places with listings still at very high levels. Demand has fallen off the cliff this month. That story is a bit misleading. I know who pays for much of the advertising in the Edmonton sun and it ain’t the Oilers.
http://www.findcalgary.ca/
No seller’s market around here to be seen. If you look at the stats the conditional sales are dropping off the map. I went to a few more open houses recently for kicks and the first thing the realtors tell you is they are prepared to lower their price.
Once all the condos are completed in this city that will really tilt things against the sellers. Mind you the market seems to affect different areas of the city differently.
OPEC Plans Supply Cut as Crude Oil Heads Toward $50 (Update2)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSARub6YaVDQ&refer=home
“Options contracts to sell oil at $50 by December soared 50- fold in the past two weeks on the New York Mercantile Exchange. Goldman Sachs Group Inc. and Merrill Lynch & Co. analysts say crude, which fell more than 50 percent from a record high in July to a 14-month low last week, may drop another 44 percent should the world economy slip into a recession.”
$35 a barrel? maybe. Time will tell. Hopefully the prices are also reflected at the pumps.
Interbank lending rate eases again
http://www.bnn.ca/news/4167.html
These bailouts are slowly starting to get into the system. Good news for people looking to get mortgages or car loans.
C white: I actually hate graphing personal finances, because I find it far too ‘fiddly’. My own personal finances are very simple anyway, and don’t need graphing:
- all my bills are auto-debit and equalized over the course of a year. (I strongly recommend this course of action, BTW: makes things MUCH easier to budget for when it’s regular and always the same.)
- I put absolutely everything I purchase on a credit card (for reward miles) and pay off the balance in full every payday.
- Other than my mortgage, I have no debt. Anything I want, I save until I can pay cash for it. (That includes my last two vehicles.)
These choices/decisions/habits mean that my money picture is simple enough to keep in my head. Any details I need, I can drill down to individual bank or credit card statements for a given month.
———
George: “45 sales, wow!”
Historical October sales are 200, 241, 303, 280 for 2004-2007. For the last three months, we have been most closely tracking the 2004 line (200 unit sales) but off by ~5% overall. Given rising interest rates, the current slowdown in credit overall, and the public perception of real estate… it would not surprise me to see October come in below 200 unit sales, or to see under 500 sales for the last three months of the year.
George and Vinny,
It seemed a bit of a stretch to me as well. I sent it to a friend who sells real estate in Calgary and he laughed. Says they need to shed about 4,000 listings to get to “balanced.”
Total units sold for October at 129 this morning. With two full weeks left in the month, 200 should be fairly easy. I’m going to guess 225 just for fun.
Ottawa poised to bolster bank lending
Guaranteeing debt would help ailing firms free up cash
http://tinyurl.com/67ry57
“OTTAWA AND TORONTO — Ottawa is poised to guarantee loans Canada’s banks extend to other financial institutions, a dramatic step aimed at ensuring the raft of multibillion-dollar bailouts around the world don’t leave the banks at a competitive disadvantage.
Finance Minister Jim Flaherty arrives in Ottawa today for his first face-to-face briefings with officials since the Conservatives won last week’s election.
He will use the meetings to review a series of measures that Finance has been working on to match the programs that countries such as the United States and France implemented last week to combat the credit crisis, people familiar with the situation said.
Top of the list is a pledge, which could be unveiled by midweek, to back new issuance “wholesale debt” – medium-term loans banks make to fund retail lending and other day-to-day operations.”
My main point in posting the link to the condo development on the last thread was that it was the first one that I had heard of whose demise was attributed to the “credit crisis”.
I’m certain that there will be many unforseen consequences to all of this cash being shoveled into the system, but I suppose “greasing the wheels” of the credit markets is the immediate concern.
The London interbank offered rate, or Libor, for three-month dollar loans fell to 4.05875%, down sharply from 4.41875% on Friday. The TED spread is now down to 3.2. Still very high, but improving.
George,
I read that link about options contracts for oil last night, but oil futures seem to be holding or even rising slightly today, and it it doesn’t seem to have affected th TSX any, at least not yet. Any ideas why this might be so?
http://tinyurl.com/2qmoe
Crikey, you have probably read this one on Mish’s site.
Fool’s Mission By OPEC
http://globaleconomicanalysis.blogspot.com/2008/10/fools-mission-by-opec.html
OPEC wants to stabilize the price, but they run a fine line by cutting production too little or too much.
I think that oil and commodities are on a downward slope charted with the bounce of a rubber ball as it goes forward. I think there are still some speculators in the oil game trying to squeeze out some profit before it goes down some more.
The world is just entering the doorway for the recession. We have not felt the effects of it yet. Less spending, less miles driven, more unemployment, etc. Here is an article of which countries are in financial trouble and the list is not small.
http://theautomaticearth.blogspot.com/
deep financial trouble: Spain, Argentina, Pakistan, Ecuador, Ukraine, Hungary, Serbia, Latvia, Estonia, Lithuania, Romania, Bulgaria, Turkey and Switzerland.
South Korea, Russia, Australia, Austria, Kazakhstan, Brazil, India, Indonesia and China.
You think:
”
South Korea, Russia, Australia, Austria, Kazakhstan, Brazil, India, Indonesia and China.
”
Are in trouble?
What is your reasoning?
Jo,
Not my reasoning, its from the link I posted. Check it out, it is bit of a read.
But I do know that Russia has suspended trading on their stock market a few times in the last month. Over a trillion dollars wiped out.
Hong Kong’s stock market has lost over half the value
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=&pl_errmsg=&iaction=Chart&pl_primary_listing=HK-I&iaction=Chart&pl_additional_listing=0&pl_period=36W&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0
The Indian stock market has lost more than half its value in less than nine months. http://www.indiadaily.com/editorial/20171.asp
Australia is reeling from falling commodities and a real estate bubble. etc.
@George:
“Hong Kong’s stock market has lost over half the value”
… and returned to levels not seen since January 2006.
[quote]The Indian stock market has lost more than half its value in less than nine months.[/quote]
And is back to where it was in early 2006.
2006, I say! Did you hear me, 2006!!! What are we, *savages*? I can’t go back to those dark times, I tell you! The privation, the suffering… the restraint! Oh great Ghu, the restraaaaaiiint!!!
Bookrat,
you are correct, the numbers only fall back to 06 but the idea BRIC could make up for the US slowdown has fallen down face first.
Which country will slither down the slippery slope next?
http://www.independent.co.uk/news/business/analysis-and-features/which-country-will-slither-down-the-slippery-slope-next-965956.html
China: and to top all that off their annualized growth has “withered” to a paltry 9%.
http://tinyurl.com/5ssejn
Norm: “Total units sold for October at 129 this morning. With two full weeks left in the month, 200 should be fairly easy. I’m going to guess 225 just for fun.
”
That’s funny, because I see Oct 20 on the calendar and therefore think that the month is 2/3 over. Are only business days counted in RE? Because from when I bought my house, I recall most of the work being done on a weekend, so I assumed that every day counted…
Bookrat,
The real estate association gets to take the weekends off so all sales are reported Monday-Friday regardless of when the contracts are negotiated. I may be overly bullish here but I was thinking 48 firm sales for each of the two weeks remaining in October to bring us to 225. Though, it remains to be seen if there will be a big post October 15 drop in unit sales.
Looking more and more like my $280 prediction for year end is holding up.
Good market is Stoon so far. But I fear we are not seeing the fallout from the credit crisis yet. New prediction: Nov and Dec sales will fall through the floor with no noticeable uptick until April.
Where’s my graph?
Median,
It took a huge amount of time to get the “6 week average” together. I just couldn’t find the time to crunch the weekly median.
You can find a month to month median here though. http://tinyurl.com/5uadkv
You can expect to see an update on that one each month and it should provide a pretty accurate picture of the current trends.
Sorry to visit your real estate blog for stock opinions norm, but the folks on here always seem to have a pretty good feel with stocks. I was looking for opinions on AIG. I’m feeling like a bit of a gamble today (lol), but it feels decent to me . .
Hey Ringo,
Prudential (U.K.’s second- largest insurer), said it MAY bid for Asian assets of AIG today. Sun Life has recently written down debt holdings by C$636 million including losses tied to Lehman, AIG and WaMu:
http://www.bloomberg.com/apps/quote?ticker=AIG%3AUS
George,
You’re better than CNN! The rate cut is less than I expected, actually, but I guess they have to keep a few bullets in the chamber, no?
Crikey,
thanks!lol. I would not count out another coordinated rate cut with other countries in the near future.
If they would have cut it at 50 points the dollar would have went even lower. Even though we are at historic highs at 82 cents US$, it is a big drop from 1.08 last fall. Eventually this will turn around but at the expense of a collapsing US dollar. The US borrows 2 billion dollars a day. When they reach the point where they can’t pay the interest back, the US dollar will fall.
Worldwide Housing Declines http://seekingalpha.com/article/100789-worldwide-housing-declines-u-s-halfway-down-the-list
Some data sure to win you bar bets in this chart of first-half 2008 housing price declines. Who, for example, would have guessed that the U.S. was mid-pack, with Canada, among others seeing larger annualized tumbles in 2008?
George,
Looks like Korea is the place to be this year.
Norm,
North or South Korea? If it’s North… you go first and tell me how it works out, okay?
Norm,
I am just waiting for my 3 spec houses I put up for sale in the spring to sell and I am there:)
On a serious note, this announcement from the government is quite significant. Tax relief, debt reduction, infastructure building among other tax credits. Add a labor shortage and with the Premier going to Central Canada to promote the province and entice workers, I think we will see more people move here. Great news for Saskatchewan and the people.
Crikey,
I’m just guessing here but I don’t think North Korea reports on house prices.
George,
Good news indeed. Do we know if these cuts are effective for the 2008 tax year, next year, phase in?
Some are retroactive to Jan 08, some are retro to July 08. And I believe more cuts within the years. I heard on Gormley a family of 4 with a income of 35,000 would save 2300. Personal exemption goes from 8900 to 13000, something like that, I kinda missed that one. Child tax credit is increasing by $2,000.
We will find out more about it later.
That’s more or less what the SP is reporting.
http://tinyurl.com/5jwecr
Sweet less taxes = more fun!
Now…i have a question…when you do this raising the tax exemption…isn’t that just lowering taxes for folks that can’t afford to live here? I mean maybe I’ve got it all wrong but If I’m single and make 43 grand a year, will I see a dime?
A family of 4 making 35,000? Better hope they have a house already beucase 35grand….even paying rent would be hard for that….
To me it all sounds like fluff..
It will draw people to the province…really? Those people will be dissapointed when they figure out they pay less taxes but then can’t afford to live here anyways….
Jesse,
As I understand marginal tax rates, you currently pay 13% to the province on all of the income which you earn that exceeds $38,405. The increase in the personal exemption from 9,000 to $13,000 will eliminate the 13% you pay on $4,000, at the upper end of your income. According to my calculations your provincial taxes will go down by $520 a year.
Disclaimer: I am not an accountant or a tax expert. Please contact the appropriate professional for exact tax savings.
Thanks Norm,
That helps me understand that there is a bit of tax savings. Good for sure.
Sometimes I think I sound like a a broken negative record over and over and over….but with something like what was stated above from Gormley’s show about how much a family making $35,000 will save it’s not really adding in that a family making $35g’s a year will most likely not be able to afford to live here for long anyways..
What this means:
Premier Brad Wall announced today retroactive to the start of 2008, the basic personal exemption & Spousal exemption was increased $4,000 each and the provincial child amount was increased by $2,000.
Existing Amounts New Amounts
Basic Personal Exemption $8,945 $12,945
Spousal Exemption $8,945 $12,945
Child amount $2,795 $4,795
So for a family where both spouses are working with 2 children that will mean an additional $12,000 of exemption or $1320 tax refund since tax amounts deducted have been on the basis of the lower exemption (SK basic tax rate is 11%).
Here is the link to the news release http://www.gov.sk.ca/news?newsId=0c32e380-a6ad-4589-ad2d-0e939118bd1a.
Pam,
Thanks for this.
Jesse,
Pam is right here. On $43,000 gross income the saving will be more like $440. Sorry.
You’d have to have $51,445 in gross income before the exemption to realize the $520 savings.
I shouldn’t claim credit – I have a relative who is an accountant – and he forwarded this to me!
A little perspective courtesy of the Globe: http://www.theglobeandmail.com/servlet/story/RTGAM.20081022.wprovinces22/BNStory/National/
Not to judge here Norm, since slowly falling “median” or 3 or 6 month or something house prices are kind of boring,
but a general discussion board or “economy blog” might be nice to actually keep the real estate stories and weekly updates semi-real estate related. I’m sure I’ve been guilty of getting off topic myself, hence the general discussion board. Maybe call it “Hot Topics” and just let people post whatever they want in general within some language censorship of course? Could be a link on the side of the main page.
I’ll be the first to admit that I’m often guilty of adding an item of discussion that is off topic. I do enjoy these discussing broader economic issues and stories (which are certainly related to RE), but it may very well interfering with the straight Saskatoon real estate information.
I do like the flow of the discussion here, though. Adding more blogs/threads may make discussions more pokey and slightly difficult to follow. Could be more time consuming for our good host here, too. What do others think?
Nick,
I know it might be a crazy stretch but i think the economy does effect housing…. just throwing it out there =o)
Nick,
I like it. Thanks for the suggestion.
Anyone interested,
The problem with one post that goes on forever is that it can get difficult to follow. All of the most timely stuff gets plugged in at the bottom. You could easily get to hundreds of comments in a month’s time.
What about a weekly post. Maybe I call it “At the Water Cooler” or something silly like that. Anyone can initiate a discussion on pretty much any topic that’s in the news.
I could post one every Monday (unless there’s a better day?), doing a quick recap on the discussion topics from the previous week and then throwing it open.
If I had Pam gather up the links through the course of each week, it could probably be done without adding a great deal of work to my week.
Further thoughts?
I think a ‘water cooler’ thread would work.
But, does that mean no economic discussion on these threads?
Seems like there’s not a whole lot to say within the tight parameters of Saskatoon RE right now – sort of a ‘wait and see’ feeling.
I agree sometimes posts get quite off topic; but big picture economics have a huge impact on the housing market.
MHO is that I much prefer to see all discussion in one place. Yes, it meanders and sometimes strays far afield, but if you split one viable weekly thread into multiple smaller organisms, you run the very real risk of diluting them below the point of viability.
I assume that part of the problem that this discussion is designed to solve is that people who aren’t keeping up with the flow *on a daily basis* might have too much to read? Or is it just a general desire to keep the ‘chaff’ separated from the wheat?
I don’t know what the technical capabilities of your software are, Norm, but my personal suggestion would be to add a ‘relevance’ box to each post. Before posting — just like you have to with the captcha — each poster would have to mark how relevant this post is to Saskatoon Real Estate, something like this:
———-
The topic of this blog is Real Estate (RE) in Saskatoon. With that in mind, please choose one of the following to describe the relevance of this post.
[ ] Directly on-topic. Specific comments, questions, or observations about RE in Saskatoon.
[ ] Moderately on-topic. e.g. provincial-level economic issues that could affect RE in Saskatoon, discussion of/links to articles about RE elsewhere in Canada.
[ ] Tangentially on-topic. e.g. discussion of wider economic, environmental, legal, or socio-political issues IN THE CONTEXT OF how they could affect RE in Saskatoon; discussion of/links to articles about RE in general outside of Canada.
[ ] Off-topic. chit-chat and personal greetings; theoretical discussion of any topic without specifically linking it to the focus of this blog.
[ ] Meta-discussion. Any discussions about the the blog itself.
Note that the moderator(s) reserve the right to re-categorize any post if they feel that it has been labelled inappropriately.
———-
To go with this, you’d either need a colour-coding scheme, or some way to hide the types of posts you didn’t want to see (e.g. I don’t care about meta-discussions about the blog! Gimme RE news only!) or something like that.
… or maybe you wouldn’t. Maybe just forcing people to make a choice like this with each post might help remind them that there is a need to stay on topic. If you repeatedly find yourself marking ‘tangentially on–topic’ or ‘off-topic’ when you post … then hopefully that will cause people to slow down and think, “Do I really need to say that right here, right now?” And if they do, they still can.
These categorizations (and examples) are just what I came up with off the top of my head – they could easily be expanded or modified.
[This post categorized as: Meta-discussion]
I’ll weigh in. I like the way the blog is right now. Sure as the posts reach 200 some comments you pretty much know it’s nearing the end of it’s ‘run’ or there is a NEW posting. I think it’s good that it strays here and there a bit. I think that’s what part of the reason why this blog is so popular because MORE than just real estate can effect real estate and peoples lives.
I use a RSS reader that updates every 5 mins. It’s handy. I can see updates when they come in.
2 cents.
I like it the way it is now as well because it is alot of useful information from various views and subjects that do have an impact on Sask real estate. We have some very knowledgeable people in some areas and I like listening to their point of view on certain subjects.
Bookrat,
I’m not sure about the relevance box. It sounds pretty complicated, and I think there may be problems in getting people to rate the relevance of their own topic.
I kind of like the flow of the discussion too. I agree that if you don’t visit here often, there might be alot to read.
Just throwing this out there- how about a rating system for posts? At the bottom of your post, there is something like this:
Like this comment? [yes] [no] (Score: 7 by 9 votes)
People can “vote” for which posts they like/find relevant/insightful, by voting “yes” or “no”. If someone is posting things the majority of people like, they get a “high” rating, and if not, a lower rating. Some people don’t like being rated, but I find it’s very good feedback. You can find info about it here:
http://js-kit.com/
I’m sure there are other companies who offer this service too. Just throwing it out there.
@Crikey,
I find the old ‘rate this comment’ feature mostly serves to highlight the dominant bias of a discussion.
Is there anyway to see the properties by listing date on realtor.ca?
Like, if I check every day I just want to see the new ones for the day, not search through all the damn dots.
guy_in_regina,
“I find the old ‘rate this comment’ feature mostly serves to highlight the dominant bias of a discussion.”
That is a very good point. Any system is going to be biased in some way, however.
I think we’re pretty good at giving each other feedback, but the rate-a-comment does tend to keep wildly irrelevant and/or pugilistic comments in check. I don’t see much of that at all on this site, I have to say.
Locked Stand,
I don’t believe that you can.
You could give this website a try. You do have to sign up, but we will never bother you if you do.
It draws data from the local MLS and is updated several times a day. Much more current than mls.ca, plus you can save searches that meet your parameters and you can sort listings a number of ways including days on the market.
http://www.mysaskatoonhome.ca
Everyone in the water cooler discussion.
Generally, I have no problems with discussions that take off in different directions. I am not able to incorporate a “relevance” rating or a “rate this comment” option without changing platforms. I’m probably not into that right now.
I like the blog the way it is, also. The one string per week is easier to follow.
I start reading the post and if it isn’t something I’m interested in or get too congested in economic detail, I just skip to the next one.
Home price slide may be overstated: TD Economist
http://tinyurl.com/6gf7yw
From the last link:
“The average price of a resale home across the country’s 25 major markets fell by an estimated 6.2 per cent year-over-year in September, according to a report last week from the Canadian Real Estate Association (CREA).
The decline was larger than many market watchers had expected, and added to fears the Canadian housing market could go into a U.S.-style freefall.
However the price drop was led by a 43 per cent plunge in the number of homes sold last month in Vancouver, the country’s most expensive market.
“The crux of the issue is that unless the underlying cities are properly weighted…the results can be biased by dramatic changes in the volume of the sales in certain cities,” said the report by TD economists Millan Mulraine and Eric Lascelles.
Currently, the average existing home price is calculated by using an average that gives each city a weighting based on its contribution to overall sales, Mr. Mulraine said. TD recalculated the data by fixing the weighting to last year’s data instead, which is a more standard method of calculating year-over-year comparisons for economic data, he added.
Under the new weighting system, last month’s average existing home price decline would be a more moderate 1.3 per cent from Sept. 2007, the TD report said.”
Norm- can you explain to me how they recalculated the data? I’m not really sure I understand. TD recalculated the data by fixing the weighting to last year’s sales data instead?
During the years when we saw an unusually high number of sales, why did they not recalculate the data? Were the price surges that we saw on the upside “overstated” nationally then too?
Crikey,
I don’t know that I completely understand myself.
It sounds to me like “weighting” is a standard part of the process, however, Vancouver’s decline in unit sales is so significantly steeper than most markets that last year’s weighting calculation is not valid. Does that make sense?
Yes, that makes sense.
My point is, I guess, that when the rise is sales was significantly steeper (say, 2006), did anyone reweight the stats so the national appreciation in housing values would be more “valid”?
Perhaps they did. In which case, I’ve just wasted alot of time.
If you really believe that it’s going to turn into a seller’s market in Alberta or in Sask, go ahead and start hoarding houses again. Be my guest. The small shack will be work a million soon. Don’t miss out. What a load of BS that some realtors are trying to sell in the economic downtimes. The listing is down, because some sellers want to wait for a better market and took listing off. But the demand is simply not strong for homes priced over 300,000. Trades people are getting laid off left and right, and soon the oil and gas industry. By the way, potash is not so hot either.
James,
Thanks for the comment.
What leads you to believe that I think a seller’s market is coming, and what reason might I have for favouring one?
Armoth,
I figured you might know the answer and if someone else has something to add please do. With the income trust taxation coming in the future how does hurt the funds out there? Will they cease to exist trading or no longer pay double digit dividends? And why isn’t the one you mention XRE not affect by it? Will this make them all (or most) investments to stay away from? Thanks guys
I found this quite humorous, as i was reading some historical info from 2006. It made me realize the banks predictions on what he housing market is going to do in the future is about as accurate as spinning someone 10 times blindfolded then asking them to pee in the toilet.
http://saskhouses.blogspot.com/2006/12/homes-expected-to-be-more-affordable.html
dont know if the link works so Ill summarize,
its 2006 and the Royal Bank makes a prediction the houses in saskatchewan will be more affordable in 2007.
haha 2007 comes around and the house prices shoot off like a drunken Usamity Sam on speed through the roof, to hights never imagined before.
anyways Im not sure if anyone finds that as funny as me, but the message Im trying to convey here is the banks dont know crap about whats going to happen in the future with the housing market or any market so dont believe all the crap they feed you.
peace
P.S. I like the blog just how it is, dont change it
I like the blog the way it is – please don’t make it to complicated – thanks
Norm,
I think it is great the way it is.
Vinny,
When I checked last week XRE was exempt from the new tax because it is real estate trusts.
http://www.cbc.ca/money/story/2006/10/31/flaherty.html
Im thinking about just doing just the Index XIU and this XRE because I notice even with the “crash” I only lost 31.54% of my XIU money if it never goes up but at least with XRE it nice dividend and get the safety of the index of many companies. Tell me what you guys think
James,
Potash prices are still higher than they were last year so I doubt the world is ending at Agrium and Potash Corp and if you would like they would probably give you a job. I know both mines are hiring like madmen. But hey what do I know I just work there…
There was some talk recently about violent crimes in Saskatchewan so I thought you might be interested in the latest homicide stats from Stats Can.
It appears that the odds of getting murdered in our province got much slimmer in 2007. 3.01 per 100,000 people were victims of homicide compared to 4.25 the previous year. Manitoba saw the largest increase going from 3.31 in 2006 to 5.22 in 2007.
I like them odds!
http://www.statcan.ca/Daily/English/081023/d081023a.htm
@Norm: yabbut, put in *all* the relevant quotes, eh?
“Saskatoon, although a smaller metropolitan area, reported the highest homicide rate of all cities (3.60 homicides per 100,000 population).”
Not trying to be a negative Nellie, but they did mention us by name…
Thanks for the link, though. Of interest to me was the stat that there is only a 16% aggregate chance — 20% for men, 8% for women — to be killed by a total stranger. Most women are killed by spouse or family member (61% total), and most men by an acquaintance or criminal partner (58% total).
Bookrat,
Lol! Sure shut my mouth.
I hadn’t caught that part.
With all the bas news swirling around about recessions and bank-propping, I thought I’d share these bright spots that I’ve come across lately:
A tale of two provinces
http://tinyurl.com/63h6fu
“The resource-rich province is well positioned to usher in the measures because it has the brightest prospects of any region in Canada. Its coffers are brimming from record prices for oil and potash. In the first quarter ended June 30, revenue was $3-billion higher than forecast. Even though commodity prices have fallen, Saskatchewan’s economy is poised to grow 3.9 per cent this year, the highest in Canada, according to economists at Royal Bank of Canada.
It’s a starkly different tale in Ontario, which is struggling with what many economists see as permanent changes to its economy that set in long before the current financial crisis. More than 230,000 jobs have vanished in the province’s manufacturing sector over the past five years. The bleeding is expected to continue amid weak demand for its export goods.”
Potash profit hits record $1.24-billion
http://tinyurl.com/6hr2yo
More goodies unveiled for Saskatchewan
http://tinyurl.com/5hu2sr
Enjoy!!
as far as I can see Mr Walls tax cuts dont really amount for too much to middle class families. I would be way more excited if he anounced something along the lines of reducing the PST or even eliminating it, as I spend more in PST in one month than Im going to save all year on this magnificent tax cut. eh baby steps I guess
I do like the scholorship for returning and fallen soldiers however, that put a big smile on my face this morning when I read that.
mr who – I don’t think that is a very insignificant tax break. Our family will very much appreciate an extra $1300 a year. We will also appreciate any and all property tax relief that comes our way. As you say – baby steps. I agree with you that a cut or elimination of pst would be great, but perhaps that will come soon. Would have been nice last year lol. Our money has been painfully flowing faster and faster – I don’t even want to go through the recipts to find out how much was tax lol.
Has anyone heard any discussion about addressing the property tax issue RE: education portion. This is a significant part of the property tax – and there was some discussion in the past about needing to re-visit how schools are funded.
Happy to hear that the province got more revenue so far this year.
Does anyone has statistics about how much the average household income in the province has been increased? I have several friends who went to other places this year for higher salaries.
Thinking about the economic booming during the past two years, I suspect that the high risen housing price has poisoned local economy and society although oil, farm, potash helped.
Don,
I don’t think there’s anything current available on “household incomes” but StatsCan does regular reporting on ‘Average weekly earnings.”
According to their reports, Saskatchewan experienced 5.4% growth between December ‘06 and December ‘07.
http://www.statcan.ca/Daily/English/080226/d080226c.htm
The most recent report I could find is for May ‘07 to May’08 and it shows a more modest 3.8% growth.
http://www.statcan.ca/Daily/English/080729/d080729a.htm
ringo,
Once we get that debt paid down we should be able to manage a PST reduction.
Pam,
I heard on the radio just yesterday that the government is going to make that issue a priority over the next couple of months.
Crikey,
Thanks for sharing the good news.
@Pam,
This is from the Throne Speech delivered yesterday:
“Another important priority of my government is to fulfill its promise to reduce the education portion of property taxes.
This too will help sustain economic growth and ensure all women and men across the province benefit from our prosperity.
The Legislative Secretary to the Minister of Education continues to work diligently on this issue.
He has conducted meetings with people and organizations in the education field and has also made a call for submissions from those who want to have a further opportunity to make their voices heard on this important issue.
A final report on this important issue will be delivered to the Minister of Education in early 2009 – a report that will form the basis for reforming the education tax system and reducing the education portion of property tax.”
sounds to me like someone didn’t get their report in on time
@Norm & Bookrat,
Winnipeg now Canada’s murder capital with 3.55 homicides per 100,000 people:
http://www.cbc.ca/canada/manitoba/story/2008/10/23/manitoba-homicides.html
Norm, thanks for the numbers. I am not sure if the major contribution of average person/household income increasing is the sale of houses. Do they have the data of salary or payment increasing? I saw a house close to the university that had been sold for 4 times last summer.
Don,
Household income data is available following each census. I don’t believe that there is anything like that available.
In any case, there is certainly no argument that can be made that house prices have risen as a result of income growth. This little “boom” was driven by cash rich migrants and speculators who saw this happening. That’s exactly why we are going through this correction.
Four times last year? That certainly isn’t typical. I think house prices are roughly 10-15% higher than they were in October of last year. The average price for October last year was $255K. I’ll bet it comes in around $280K this month.
I am pretty happy with the provincial government’s announcements this week. Tax relief, debt reduction and infastructure spending, all good things. But if one leaves the provinces borders, there is financial trouble in every part of the world. The provincial government is holding onto 1.9 billion “just incase”, but I have a feeling they know this province is headed into deeper waters than most who live here realise.
I think big changes are yet to come and we are not immune in Saskatchewan.
America’s financial dominance is ending, warns Nouriel Roubini
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3246779/Americas-financial-dominance-is-ending-warns-Nouriel-Roubini.html
Professor Roubini, who is known for predicting some of the trouble engulfing the financial system, said he would not be surprised if the US and other countries soon had to close their stock markets for more than a week.
“It’s like we’re walking blind in a minefield. Every situation has become risky and no-one can trust each other,” Mr Roubini said.“The banks are too big to be allowed to fail, but they’re also too big to be saved.”
Venezuela’s oil minister said on Thursday, adding it was possible oil could fall to as low as $10 a barrel
http://www.forbes.com/afxnewslimited/feeds/afx/2008/10/23/afx5597572.html
If this happens, maybe gas prices would drop below $1/liter:)
You’re a prescient guy, George:
Oil Options at $50 Soar After OPEC Cut Fails to Support Prices
http://tinyurl.com/6mcjuk
“The cost of the $50 December 2008 put option, which gives the holder the right to sell oil futures at $50 a barrel, rose as much as 142 percent to $1.50 on the New York Mercantile Exchange, compared with 62 cents yesterday, according to exchange data.
“It certainly seems to me that we could get down to $50 a barrel,” Adam Sieminski, Deutsche Bank’s chief energy economist, said in a Bloomberg Radio interview today. “You could look at the OPEC cut as a sign of weakness, not strength.”
Crude oil futures for December delivery dropped as much as $5.19, or 7.7 percent, to $62.65 a barrel in electronic trading on Nymex. The Nikkei tanked last night, as did furtures. I thought for sure this was going to be a “circuit-breaker” day, but it seems to have stabilized.
Suncor and PetroCan are delaying some projects as well:
Oil sands projects slashed as credit crisis hits Alberta
http://tinyurl.com/6g6tkw
We live in interesting times. Not unexpected, but interesting.
If the crude price dropped to lower than $50 a barrel. The oil sand in AB would be kind of big bone without meat, and consequently many houses in Saskatoon bought by people from Calgary and Edmonton would have to be sold again.
Don’t forget that oil prices are quoted in US dollars. With the current strength of the greenback in comparison to the loonie I think we’ve actually seen a net gain in the value of a barrel of oil. At least that’s what I heard on the radio this morning.
I pulled most of my money out of the market. I have better uses for my money than seeing it disappear in thin air. Converted into cash and paid off debt. If the market bounces back, wife and I have company pension plans. But I feel that we are a long way down yet for TSX and DOW. I have read where the bottom is 3000 and 4000 respectively. I knew better but I had false hope. I have come to the understanding that this sort of thing happens every 70, 80 years.
http://www.generationaldynamics.com/cgi-bin/D.PL?d=ww2010.weblog
As I’ve said many, many times, from the point of view of Generational Dynamics, if you go back through history, there are many small or regional recessions. But since the 1600s there have been only five major international financial crises: the 1637 Tulipomania bubble, the South Sea bubble of the 1710s-20s, the bankruptcy of the French monarchy in the 1789, the Panic of 1857, and the 1929 Wall Street crash.
These are called “generational crashes” because they occur every 70-80 years, just as the generation of people who lived through the last one have all disappeared, and the younger generations have resumed the same dangerous credit securitization practices that led to the previous generational crash. After each of these generational crashes, the survivors impose new rules or laws to make sure that it never happens again. As soon as those survivors are dead, the new generations ignore the rules, thinking that they’re just for “old people,” and a new generational crash occurs.
It seems whatever the governments do, they just postpone the inevitable.
Money markets start to seize up again
http://www.reportonbusiness.com/servlet/story/RTGAM.20081024.wmoneymarkets24/BNStory/Business/home
Stocks dive on fears of global recession
http://www.reportonbusiness.com/servlet/story/RTGAM.20081024.wmarketsstaff1024/BNStory/SpecialEvents2/home
When it comes to countries, I think Iceland was the canary in the coal mine.
3000 and 4000???
Holy crap George. That’s scary!
Have to share my captcha: “is sadness”
The Dow was under 3000 in 1990 http://finance.yahoo.com/echarts?s=%5EDJI#chart1:symbol=%5Edji;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Who knows what will happen and where the markets will hit bottom. But according to Standard & Poor’s, there are at least 140 large US companies in danger of not being able to pay their bills in the next few months. Many are on the verge of bankruptcy. The government can not bail them all out.
http://thecomingdepression.blogspot.com/2008/10/get-ready-for-tidal-wave-of.html
Once we see some of these bankruptcies and we will, the markets will dip even further.
http://fresh.bnn.ca/reuters_story.aspx?story=2008-10-24T153441Z_01_TRE49B3Y6_RTROPTT_0_CBUSINESS-US-MARKETS-OIL.XML
“However, we believe production cuts will not rescue the oil price,” he said. “We target WTI (U.S.) crude oil prices hitting $50 a barrel next year.”
As for oil, I think we will go below 35/barrel by 2010, unless there is a war.
Once the dust settles from the market implosion, worldwide debt and cheap credit, expect major regulation changes. How does this pertain to housing? Some talk from governments is stricter lending, such as 25% down over 25 years. Where Canada goes with this, who knows, but getting rid of 40 years and 0 down is not the last step for mortgage changes in this country.
“The government can not bail them all out.”
I think all of these bailouts are just adding cost and prolonging the inevitable.
According to Wikipedia
http://en.wikipedia.org/wiki/Tar_sands
“With 2007 crude oil prices significantly in excess of the current average cost of production of $28 per barrel of bitumen”
“With oil prices setting new highs in 2007, tax incentives were no longer necessary to encourage oil sands projects in Canada. In July Royal Dutch Shell released its 2006 annual report and announced that its Canadian oil sands unit made an after tax profit of $21.75 per barrel, nearly double its worldwide profit of $12.41 per barrel on conventional crude oil.”
The oil sand projects got hot since 2003.
http://en.wikipedia.org/wiki/Image:Oil_price_chronology-june2007.gif
So the edge price for oil sand is about 28 and below 40 investment will flee from oil sand.
Hey George,
How are you felling about the whole thing? I found it scary but a big relief at the same time. Like you’ve said, the liquidity is there, and once the bottom is in sight you can always jump back in if you choose. I maintain (and I’d think you’ll agree) that this is not a normal bear market.
Unless you have long time horizon, this is a risky market, IMHO. If you are buying today and holding for years, you’ll probably be fine. If you are down 40-50% YTD, it may take you years to recover. If you are ok with this, then fine, risk may not be that high. I am waiting for the near-term risk to dissipate before entering back into this market.
I recently saw this chart that shows the performance of one cash equivalent vs. other investments during the past (almost) eight years. BTW, the numbers for non-cash investments have worsened considerably in the last couple of weeks:
http://tinyurl.com/5bjgwq
BTW, captcha = “tempt corporate”. Do you think someone is trying to tell me something?
More numbers from
http://en.wikipedia.org/wiki/Athabasca_Oil_Sands
“In mid-2006, the National Energy Board of Canada estimated the operating cost of a new mining operation in the Athabasca oil sands to be C$9 to C$12 per barrel, while the cost of an in-situ SAGD operation (using dual horizontal wells) would be C$10 to C$14 per barrel.[10] This compares to operating costs for conventional oil wells which can range from less than one dollar per barrel in Iraq and Saudi Arabia to over six in the United States and Canada’s conventional oil reserves.
The capital cost of the equipment required to mine the sands and haul it to processing is a major consideration in starting production. The NEB estimates that capital costs raise the total cost of production to C$18 to C$20 per barrel for a new mining operation and C$18 to C$22 per barrel for a SAGD operation. This does not include the cost of upgrading the crude bitumen to synthetic crude oil, which makes the final costs C$36 to C$40 per barrel for a new mining operation.
Therefore, although high crude prices make the cost of production very attractive, sudden drops in price leaves producers unable to recover their capital costs—although the companies are well financed and can tolerate long periods of low prices since the capital has already been spent and they can typically cover incremental operating costs.”
“As a result of the oil price increases since 2003, the economics of oil sands have improved dramatically. At a world price of US$50 per barrel, the NEB estimated an integrated mining operation would make a rate return of 16 to 23%, while a SAGD operation would return 16 to 27%. Prices since 2006 have risen, exceeding US$145 in mid 2008. As a result, capital expenditures in the oil sands announced for the period 2006 to 2015 are expected to exceed C$100 billion, which is twice the amount projected as recently as 2004. However, because of an acute labour shortage which has developed in Alberta, it is not likely that all these projects can be completed.”
So the sand oil production may stop at a price at 20 to 40.
Crikey,
it is a risk, no doubt, but like I have mentioned, wife and I have company pension plans so if I am wrong about the markets collapsing we have those to fall back on. We are young, we will possibly enter back into the market after a few years. Like I have mentioned before, if one has food, water, shelter and freedom, everything else is gravy. Billions in the world do not have this.
But I feel sorry for many people who are close to retirement. Some will have to work a few more years and others you have lost all, will work until the die. In a short time horizon, shorting would be an option for some people, otherwise people should be prepared for more losses. The driver of the North American economy is the consumer. And the consumer is tapped out without the ability to get more credit to grow the economy. People have talked about peak oil, I disagree, we have reached peak credit and now the downturn is gonna hurt, even on the island of Saskatchewan.
About the chart. Yikes 67% loss for the Nasdaq!
Kind of hard to feel sorry for some that have to delay their retirement due to the market. I mean why in the world would you have any of your investments in something risky if you are close to retiring?
Hey Norm – have you heard how condo sales at The Milroy are going?
How does all this economic turmoil affect Saskatoon real estate?
Confidence. Confidence in the market was slowly eroding with price drops and slowing sales just before the summer. Add a possible severe world wide recession to that and not people are confident in sinking 450k into a house that will probably continue depreciating in value for x amount of years.
Credit. Now this is the biggest factor for this market, IMHO, even bigger than the speculators trying to cash out now. Even though variable rates are low, with more rate cuts to follow, credit is not as easy to get as it used to be. And the amount given out is less everyday. I would not rule 25% down over 25 years becoming the min in a few years.
Fear. 2007 was the year that people had the “fear of being priced out”. 2009 will be the year of ” fear of being priced in”. Meaning many sellers NEED to sell and will slash their price just to get rid of the house.
I said before this economic turmoil that the average house should be around 200k. Now, I think that might be a bit high.
Prices are going to come down and I think pretty hard. For first time buyers this is great. On an average house you saving at least 5,000 every month you wait. For upgraders, I would recommend selling your house first, then start looking because there is so much inventory to choose from. Offering 20% less than asking?
I think real estate will become a boxing day sale but with only a handful of people in the store. Crikey, you will be one of few smart ones:)
Chris,
I doubt if you were close to retirement that you would agree your statement.
pension funds have lost money
the housing atm is losing money
Expect retail sales continueing to drop not due to people saving, but less people feeling wealthy and tapping into their home equity.
There are only 2 low risk investments right now.
Going into cash and paying off debt. Everything else is a fool’s game.
Chris,
It’s true, pension plans are taking a hit from the market turmoil. People do not have to be directly investing money in stocks to be losing money right now. Plans will differ in their investment startegies-you’d have to check your particular fund.
The three months leading up to the end of September was the largest quarterly decline in a decade for Canadian pensions. Funds have likely fallen a lot further since then. In fact, since Oct. 1, the TSE S&P/TSX composite has fallen from 11,285 to 9,294 (at the close of trading today). I was able to cash out a pension fund in the spring that originated with an employer in another province. I have not cashed out my pension with my current employer, and I’m not sure I will. I haven’t worked here too long. It’s quite a lengthy process, and you take quite a hit unless you cash out into an RRSP (which I did). Most of that money is now in short-term cash equivalents.
George,
I’m not sure everyone would agree with you that I’ve been smart, but thanks. I guess we’ll see how it all shakes out.
Guess I should have been more specific – “why would a person who controls their investments and near retirement be in anything risky?” is what I should have said. I fully realize if it’s a company pension all you can do is shrug your shoulders and hope it recovers before you retire. Sorry for not adding that condition to my statement earlier. Go Riders.
ROFL!!! Never thought you’d pull out “holy crap” on here Norm! Well done! :’) And I agree, bailouts are just a short-term solution, if even that.
Chris,
Good question, I’ve been wondering that myself. It’s downtown so I’m thinking sales have fared better compared to other areas. (but hope I’m wrong)
One last one for today and I’m done.
How the hedge fund squeeze will push stocks even lower
http://www.moneyweek.com/investments/stock-markets/how-the-hedge-fund-squeeze-will-push-stocks-even-lower-13913.aspx
Well, because of the hedgie effect, share prices could easily fall some way further than anyone expects. “The market’s going to overshoot on the downside”, says Peter Boockvar at Miller Tabak, who sees the Dow tumbling to 5,000 next year, more than 40% below today. “When that occurs, I’ll be a raging bull”.
The credit crunch claims its biggest victim – Argentina
http://www.moneyweek.com/news-and-charts/economics/the-credit-crunch-claims-its-biggest-victim-argentina-13892.aspx
Which country will go bust next?
http://www.moneyweek.com/news-and-charts/economics/which-country-will-go-bust-next-13906.aspx
@Don,
2006 is ancient history…
I was in Calgary over Thanks Giving. The Calgary Herald ran an interesting piece on oilsands development. Basically it said projects that are up and running are relatively safe. But new ones in the works are being hurt badly by the perfect storm of lower oil prices (this was when it dipped just below $80), skyrocketing construction materials and labour costs. Construction and labour costs have went *way* up since 2006.
George,
“Prices are going to come down and I think pretty hard. For first time buyers this is great. On an average house you saving at least 5,000 every month you wait.”
I sure hope you are right. As a renter in my early 30s, I’m really sick of the “I’m sorry you have cancer” look I get from people when I tell them that I am renting. I’ve come to realize that owning your own home is a social status and for some reason people think my husband and I have “failed” or have been poor managers of money because we are renting.
Without going into a lot of detail, there are so many reasons why we are still renting. But I think we are actually ahead of many people because we have learned the discipline of saving and paying cash for everything (even a car) and haven’t had consumer debt for about six years.
My heart also goes out to those who are relying on the markets for their retirement, but I hold onto the hope that somehow first time buyers will benefit for waiting to purchase a house.
Why, here’s that Calgary herald article I just alluded to, from Sat. Oct. 11, 2008:
http://www.canada.com/calgaryherald/news/calgarybusiness/story.html?id=cd79bccc-3fd5-4939-8846-d9b87675cdb2
” oil prices are reaching the point where they could threaten new oilsands projects in northeastern Alberta, experts said.
Justin Bouchard, an oilsands analyst with Raymond James in Calgary, said new projects such as Petro-Canada’s $21-billion Fort Hills mine could be threatened by a combination of skyrocketing costs and lower oil prices. “You’d never go ahead with it at $80,” Bouchard said. “It would be very difficult to imagine sanctioning it today.”
Bob Dunbar, an oilsands expert with Strategy West consultants in Calgary, agreed prices have taken a back seat to costs for the past few years as developers have struggled with rising prices for labour and materials like steel.
He reckoned that Fort Hills would need a sustained price of about $90 to be considered economic.
Older projects like Suncor’s Millennium expansion still continue to generate healthy returns at $80 and even newer projects such as Canadian Natural Resources’ Horizon mine and the OPTI/Nexen Long Lake thermal operation are probably resilient to the latest price crunch.
But companies that rely on significant outside funding sources without internally generated revenue are in trouble. ”
They throw in a bull at the end…
” “it’s not the prevailing price today that matters, but where oil prices will be in 2012 and beyond.
“Unlike conventional oil and gas, oilsands is really about your long-term view. And we’re still really bullish on crude over the long term.” “
A sobering view on all of this economic mess:
http://market-ticker.denninger.net/
Does anybody have any comments on the Sept, 2008 Western Investor article I read, that says this:
“Investment banker Merrill Lynch Canada
singles out Saskatoon and Regina as the most overpriced housing market in the country, estimating prices are overvalued by 50 per cent” ??
http://www.westerninvestor.co/Last%20months%20issues%20pdfs/wi-C.pdf.
Hey Darren,
We had quite a discussion about that report in a previous post.
http://tinyurl.com/5raz4d
Chris,
Sorry I missed you there. I don’t see any Milroy sales recorded on the MLS but it’s possible that they are not reporting. Some builders and developers actually remove listings from the system when they sell.
This sounds like a repeat of history all over again I believe you might as well beat ur head into a wall if you turned in ur mutual funds or stocks and join the fear club. You guys like to talk about the crashes and how the world is screwed yet when i look at the stats the market has always recovered. Ive been working 60 hours a week lately and do you know where Ive been putting all that cash? Mr Market! See you at the bottom your predicting muhahahaha!
XIU.TO down from the first purchase $20.58 31.54% Aug 29 the safety of indexes =o)
BQI bought again at 1.64 luckily when the exchange rate was much more favourable.
Now you guys can watch me burn or turn =op
George (and anyone else who cares to take a stab at this question),
It’s my understanding that in 1929 companies listed on the exchanges routinely sold shares at 30-40 times earnings. Today, you can find a multitude of shares trading between 5 and 10 times earnings. It’s hard to find any that trade above 20 times earnings. Why do you think that our markets are going to drop by another 50%?