Saskatoon real estate: Week in review (October 15-19 2007)
I am officially declaring an end to the Saskatoon real estate “boom.” 
It’s not like it was a terrible week for real estate sales, or for sellers of Saskatoon homes. Unit sales were up over the previous week with 63 houses and condos changing hands. The average list price of the homes which did sell reached an annual high of $264,430 and average selling prices were also among the highest recorded at $259,990. It’s looking almost certain that October will produce a new “average price” high with month to date sales coming in at a whopping $266,000, up sharply from $241,537 in September.
On the other hand, it appears likely that October may see a decrease in total unit sales when compared to October, 2006. There’s no question that decreased demand and increased supply is providing active buyers with more options and less competition in the Saskatoon market. Total active residential listings closed the week at a new high for the year (and last year); 675 units.
Most notable though was the sharp decline in aggressive overbidding. A full 70% of the homes which sold last week went for less than the asking price, and by $7,658 on average. Only 13% sold above the list price which is almost half as many as the previous low. The decline was sharpest in areas 1, 2 and 3 where only 3 of 38 sales managed an above list selling price. The average overbid declined to its lowest level since the week of February 26 at just $7,150.
So while it may not say “boom,” it’s certainly not a bust. To me, current activity levels look pretty typical of what we normally expect of October in Saskatchewan.
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.
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Norm Fisher
Royal LePage Saskatoon Real Estate
There's 43 Comments So Far
May 27th, 2009 at 11:47 am
The price of homes keeps creeping higher seems pretty positive to me…..listings are increasing as well, however I personally think that will plateau soon in the coming weeks. Home prices I feel will trend higher to around $270,000 in the near future. Just my opinion.
May 27th, 2009 at 11:49 am
Hey Bruce.
Thanks for the comment. More than anything, this fluctuating average is an indication to me that prices probably aren’t dropping much, but I don’t think it can be assumed that they are increasing a whole lot either. Given the small number of unit sales which are contributing to the average over any given week, or even a month, these numbers can be significantly impacted by a few sales at the very high end of the market.
Let’s look at the “drop” that we saw in September as an example. Over September, the average selling price of a Saskatoon home (houses and condos only) was about $241,500. In August, it was $258,500. Following the release of those numbers, it was widely reported that “prices are falling.” Now, there may have been a marginal decline but there’s no way that we were paying a full $17,000 for the same home in September as compared to August. A close inspection of the unit sales activity between the two months shows the following. In August, there were 6 homes sold for $600,000 or more. In September, only 3. The difference in dollar volume with this small handful of sales was about 2.5 million dollars which skews September’s average down (or it skews the August number up) by close to $10,000. Consider next that in August, only 30% of the total units sold were in areas 4 and 5. In September, we see 40% of our activity in these two areas, further skewing the numbers.
Sales activity in recent weeks is coming in on the higher side. It looks almost certain that the average will spike back up again. I suspect that this spike will once again be attributable to a shifting in activity, more than an “increase in prices.” In fact, with the increase in supply and the lower demand, my sense is that a buyer could probably do a smidge better in October than they could have in August.
It is interesting to me to track these averages as I think that they will nail the trend over longer periods of time but they have to be used carefully over short periods of time. While the numbers are up and down in recent months, the “moving average,” as Northstar calls it has been fairly stable over the past few months. Here’s an overview of the monthly averages followed by the year to date average for each month, as reported by the Association of Saskatoon Region Realtors.
January $190,037 $190,037
February $187,594 $188,585
March $200,938 $194,082
April $220,862 $202,867
May $233,917 $211,812
June $252,442 $219,531
July $245,151 $223,210
August $253,240 $226,783
September $242,091 $228,095
When you factor the smaller numbers of monthly sales into the full year, you can see that the average is not much different in September than it was in July, or even June for that matter. It also starts to look like the upward pressure is coming off.
May 27th, 2009 at 11:53 am
Hi BW,
Thank you for the feedback. I appreciate hearing from you, finally!
Feelings in the real estate community vary as widely as they do here. Some feel certain that prices will continue to rise, some feel that they will decline and others predict stability. It seems to me that a plausible argument can be made for any of those three possibilities and that a number of “what ifs” are at play. As one wise Saskatoon business person once said, “We are all speculators.” It seems that where you lean comes down to “gut” and experience. Neither of those seem to have been very reliable in making predictions over the last year.
Most builders don’t have a lot of “inventory.” There are a few smaller builders who may have a few homes. They are probably small enough players that it would really hurt to be stuck with a few properties and they may be willing to sell them off for less just to get them out of inventory.
At any given time, there are some number of “private” sale listings on the market. They’re difficult to track. Personally, I think prospective buyers are more likely to shop those when there is very little selection on MLS®. That’s not a big problem right now. That’s not to say that there is no market for private sellers but the numbers are not real significant. As you point out, there are over 200 properties offered there. On the other hand, they report only 18 sales for Saskatoon in September, and none so far in October.
I don’t see us moving in the same direction that Phoenix did. My understanding is that builders were going crazy, putting houses up faster than people could buy them. As you point out, we have the opposite problem with a shortage of serviced land and labour. Many builders have enough work to keep them busy for a year. They’re not spending a lot of time building spec houses right now and I think there’s little chance that they may be stuck with inventory that they can’t sell (some danger here for a small builder getting pinched with a few but probably not enough to influence the market one way or the other). Having said that, I suppose that there is some chance that the city could find themselves holding more serviced land than they can sell immediately. One would expect that the city would be capable of carrying that burden and would not likely unload the land at bargain prices.
I think the market which is most exposed to a correction is condos, particularly those smaller three-storey wood frame walk ups, similar to those which can be found on Kingsmere Boulevard. They have just increased too much and supply is already exceeding demand.
May 27th, 2009 at 11:54 am
Haven’t been following the Saskatoon situation as much as I used to (I’m still in shock over my old home going for $676,000).
Just thought I’d give a little Alberta update. As many people insisted on using Calgary as a benchmark for prices, I thought people would be interested to know that SFH have now fallen 10% in the 30 day average price. A drop of %49,989 in 73 days. Inventory meanwhile continues to hit all time highs, there are now 5587 SFH on mls alone (not including FSBO).
Many people will try and spin this and say that it’s seasonal, but I don’t get that feeling. We’ve already almost doubled last year’s autumn decline, and inventory is 35% higher than last year. Something is different this time I think.
Of course I’m sure that many people will argue that Saskatoon lives in a nice little bubble and isn’t affected by price movements anywhere else. Just like how Canada lives in a nice little bubble and isn’t affected by price movements in the States. But I thought that I’d give a little update to the Saskatoon board.
May 27th, 2009 at 11:56 am
Warren,
Thank you for your update. It’s really nice to hear about what’s going on in Calgary.
May 27th, 2009 at 11:56 am
Norm,
Thanks for your information and reasonable analysis.
I am still wating for the price falling down. In saskatoon the university is the biggest employer. A new collective agreement had been made in this Spring between university and Faculty. Professors have new salary standard.It means $20,000 more than before.At the same time, They gained about $60,000 of make-up for the last 3 years for a time .I guess it is one of the reasons houses in area 1 went fast in this summer. But now, they have done.I can’t see other big buyers coming. Saskatoon is not an attractive place for immigrants. what can we expect? Oil?
May 27th, 2009 at 11:58 am
Hi Warren,
I actually think that our market will be quite closely tied to the major Alberta markets this next year. It will play a key role in whether or not the “migration” trend continues or falls flat. If people can’t sell their homes in Calgary and Edmonton they won’t be moving here. Those are some wild price swings there.
Outside of that, we do have a fairly diverse economy and it looks pretty promising that some of the big petro players may be looking towards Saskatchewan.
Iris, according to the reports I’ve been hearing Saskatchewan is pretty much at full employment and crying for more workers. The workforce is much like the real estate market. When demand is high, and supply is low, prices go up. I’ll be surprised if we don’t see a good year ahead for income growth. I also wonder about your comment regarding immigrants. Lately, I’ve been getting a lot of inquiries on my listings from Asians. Saskatchewan is working hard to attract immigrants. There have been dozens of organized tours in our area. I’m not sure how it will pan out but I understand there are some good incentives in place that may cause them to give this province a serious look.
May 27th, 2009 at 11:59 am
I think I’m a lot more optimistic on the price trending higher. Due to the rental market being way out of whack with home and condo prices, for now its taking a breather. But over time home prices will trend higher with rental increases following suit. Home prices went up way to quick so it is obvious that type of increase is unsustainable. However prices for homes should continue to increase at a more stable rate. There is no reason why Saskatoon should have lower prices for homes under the national average given the current economic conditions in the city.
May 27th, 2009 at 12:01 pm
“Economic conditions”. This kind of vague assertion is getting old. The best in economic conditions is a flood of service industry demand and a lack of low wage workers.
If $18 an hour can barely afford you rent, it sure as heck isn’t going to get you a house. Going higher still barely gets you any further as well.
What do you want, a city full of poor and possibly even homeless people?
Good god, when is someone going to see the big picture for once? Are right wingers just wired to not care about others?
May 27th, 2009 at 12:02 pm
Great blog!
Just to inform your readers about their options regarding mortgage insurance, which traditionally has been offered by the lender. You can also purchase a term life policy in an amount that covers your mortgage. Term life can be cheaper, so research your options before you commit.
May 27th, 2009 at 1:11 pm
Rising home prices is a natural phenomenon in cities that are expanding, improving, and becoming more and more livable. Seemingly it is a contradiction, because the higher the prices are the more difficult it is to buy a decent property in the given city. So you may argue that thus the city is becoming less and less livable. Well, there really is a price you have to pay to move to, or continue living in, the city.
May 27th, 2009 at 1:25 pm
I’m completely,
off topic here but I have to vent. The violent crime in this city is absolutely out of control. Something needs to be done about this!!! Since I’ve been here, I’ve known “personally”, 4 people who have been either beaten or stabbed. My next door neighbour lost her son because a gang memeber wanted his hat. Another guy while walking home from the fringe was jumped by a group of gang memebers. They stabbed him in the neck for the fun of it. It wasn’t for his wallet or gold necklace… It was because they wanted to. He was about 15 minutes from dying because he lost so much blood. Another friend’s roomate was supposed to get it but he wasn’t home. So they beat him instead with a baseball bat. Finally another friend of mine just got chased down and beaten with a baseball bat. He lost 16 teeth, his chin and got 5 staples in his head for a fractured skull. He now has to get reconstructive surgery on his face.
Although these are all brutal attacks, the worst thing about it might be that the police won’t do anything about it. It was all done by gangs and the police refuse to investigate because “there’s no point” <— actual quote from an officer. Here’s another actual quote. “I’d advise you not to press charges.” Apparently the gangs will come back and take you out if you testify against them.
5 of my neighbours (including mine) garages/fences were run in to back in June by gang memebers trying to run over other gang members. We know who did it, the vehicle involved, the licence plate number and have pictures of the truck. The police took statements and refuse to persue it more. We’ve called back the attending officer on numerous occasions to re-open the file and don’t get a response.
It seems like everyone I run in to knows someone that has had events like this happen to them. The crime stats in this province are a full 2% higher than any other major province in this country. It’s time to double the police force and double the funding for them in this city.
May 27th, 2009 at 1:28 pm
Hey Elli,
Thanks for the visit. Hope that you’re having a good fall.
May 27th, 2009 at 1:28 pm
Northstar,
Juvenille crime is indeed outrageous and I’m really concerned to hear of the attitudes that you’re getting from law enforcement.
My wife and I were just discussing the totally inappropriate sentences that these little deliquents get. It’s ridiculous.In my opinion, if you stab someone you should be looking at a minimum of ten years.
Maybe we do need a “guardian angels” chapter here.
People need to start holding politicians accountable.
May 27th, 2009 at 1:29 pm
The average Joe doesn’t know how to hold a politician accountable for anything other than potholes.
Either other peoples’ causes aren’t valuable enough to them, or they are so focused on their own, nothing else should be allowed to matter.
I found the youth in Saskatoon to be rather edgy in all areas of the city. What Northstar says doesn’t surprise me and it will only get worse unless something specific is done.
Norm, did I not mention something about increases in crime in a prior comment? Though I think it’s too early to say it is happening with a comparison, perhaps this is a start…
May 27th, 2009 at 1:30 pm
Im back. Couple of interesting things here.
Northstar, are you aware that the rising gap between the rich and poor is directly related to increasing crime rates in every major city? Now you take a city that basically overnight booms into massive unaffordability crisis, and what would you expect….a massive increase in crime. You can statistically associate the two. However, to neatly say money problem = crime, not so. They are very complex interactions that arent easily solved. Well, no surprise that we now have major gang related problems. Not to pick on you, but you do seem to be quite happy about the increase in your investment. Does that mean I think anyone deserves to be attacked? absolutely not. Its just that some of the crime is related to desperation and the relationships these gangs develop provide some social stability to the kids…..messed up. But, what will it take to make it politically important and adressed in a timely manner? The infrastructure is a long way of to have such as Vancouver ect. Oh right thats another problem with an overnight boom – the infrastructure takes years to catch up. Jeez Im cheery. I hear that oil is about to boom though, that should be good. Uranium, good article about it on the weekend. Looks like we are so smart, lets mine the heck out of it but not feel guilty if anyone gets hurt and make lots of money. Hope that’s not your mother or sister I was talking about. Anyone out there ever heard of a country called Sweden? They arent capitalist but socialist and seem to actually have their stuff together. Wow, maybe we don’t need to reinvent the wheel, but lots of rich people would suffer. Ahhh I guess it wont work. We need them. They pay more tax than all of the middle class put together (sarc).
May 27th, 2009 at 1:31 pm
I’m pretty discouraged to hear about those police comments… how is someone supposed to feel safe right after being assaulted when the person we pay to protect them says to shut up and hope it doesn’t happen again.
I see things getting a lot worse with the residential school payouts. I agree with the payout but there just seems to be no structure to it… just a lumpsum. It’s almost like the government’s expecting it to get thrown right back into the economy irresponsibly as quickly as it’s paid out. They need to put structure around the money like investment strategies or allowances. If the violent gangs in question are willing to stab a guy in the neck for nothing, I’ll bet they’d be willing to do the same with anyone they suspect to be walking around with a chunk of a 50K payout in his pocket. Things could get pretty violent over on the westside.
I don’t want to generalize and assume that every person receiving a residential school payout is going to spend it irresponsibly but my guess is there are quite a few. That’s frightening. I’ve been a little weary of the state of crime here too lately. It seems to be growing exponentially.
Sorry to hear about things like that happening to you Northstar. I remember when I was younger, living in a condo in calgary. The guy who lived above me was a total jerk cranking his music and having parties all night. I confronted him once and things got ridiculously violent… I really felt uncomfortable afterwards until I moved. It’s a horrible feeling to not feel safe.
J.
May 27th, 2009 at 1:32 pm
Northstar,
I think you may have found something we agree on. Crime is definitely out of control in this city and nobody seems to care. Most people are content to live in their comfy little suburb areas and say things like ‘I’ve never personally been attacked.’. Makes me sick.
I just don’t agree that more police is the solution. I think the legal system itself needs to be overhauled. The sentences are just too lenient and violent offenders keep getting back on the street.
Changes to the legal system seem to come down to the federal government so if you really want to do something that is another avenue to pursue. Not that there is too much you can do.
I found this site which has a pretty good breakdown of young offenders act/sentencing/conditions in canadian prisons/parole/recidivism, basically you name it. It also makes fairly clear which political party is most likely to actually do something about the legal system.
http://www.justicemonitor.ca
May 27th, 2009 at 1:33 pm
Cindy, Saskatoon has had 1 of the highest homicide rates per capita for years, long before the current boom. To blame gang-related violence on property prices going up 50% y/y is an opportunistic but very feeble argument.
May 27th, 2009 at 1:33 pm
Thanks all.
Alex, I do recall you saying that and I didn’t doubt it for a moment.
Poverty is certainly an issue and we can’t expect people that cannot honestly meet their basic needs not to steal in order to do so. That’s just a fact. I’m not sure why a guy needs to be stabbed in the neck or have his head caved in with a bat. All that said, poor people have been living honest lives since the beginning of time.
The bigger problem is society’s indifference. As Alex says (more or less), “don’t bother me with your problems. I still have all of my teeth.”
Parents don’t seem to give a rats ass what their kids are up to. They’re too damned lazy to care. Kids know that they’ll never be held accountable. Cops are frustrated that their efforts go nowhere.
This society will eventually go to hell in a hand basket if we don’t get busy making a big stink right across the country. Let’s start locking these useless idiots up, for a long, long, long time. Don’t give me “prisons overcrowded!” Stack them up 5 high, and two feet apart if we have to. Feed them rice and beans. Put them to work. Make prison an ugly place to be.
When some of these punks start getting 10-20 years for attempted murder they’ll start to think twice about stabbing someone for nothing.
There’s no doubt that residents of the inner city areas are more likely to fall victim to this type of criminal activity, but let’s not fool ourselves and pretend it doesn’t happen everywhere. Last week, an elderly woman (70 years old) was attacked by a group of youths on 3rd Street East in broad daylight. Of course, they were after the poor woman’s purse but that didn’t stop them from hauling her to the ground by her hair. Shameful!! Makes me want to scream! They’ll never catch the little fucks and if they do they’ll get probation, which of course, they’ll violate repeatedly. Which brings me to another point. These kids are often released to the custody of their parents, usually with a curfew, which pretty much goes ignored. The parents should be responsible to report the kid awol 5 minutes after curfew or face “aiding and abetting” charges.
The community is much larger than this problem. We just need to decide to be pissed off and to let it show. Maybe we can start a movement. Maybe we can get couple of hundred people to picket and make some noise. One thing is for sure, something needs to be done.
May 27th, 2009 at 1:35 pm
Holy cow!! I also finally agree with Northstar, lol. The crime and social conditions in Saskatoon was one of the major contributors to my leaving for Alberta. My girlfriend worked on the west side for six years and the stories she has…
That being said, I’m going to have to go and disagree with you Norm. You wrote “When some of these punks start getting 10-20 years for attempted murder they’ll start to think twice about stabbing someone for nothing.” My personal experience, as well as most of the studies I have read on the subject show that increasing punishment of (most) offenders just doesn’t work.
Yes, it would likely discourage the preppy Lawson kids from jacking cars. But the real crime in Saskatoon is directly linked to poverty and bad social conditions. If you want to reduce crime, make people wealthier, it’s that simple. When people are cold and hungry, they become desperate and do desperate things. Needless to say, I don’t see this “boom” Saskatoon is having as being beneficial to the situation.
I’m not explaining all crime by any means, but a large part of it. I’ve (fortunately) never been the target of a violent attack but I had more crimes against my property than I could count. My truck was actually broken into while I lived on the wealthiest street in all of Saskatoon twice (which happens to be a short walk from some of the worst neighborhoods on the west side).
Back when I used to work nights, I was actually lucky enough to catch the punk who smashed a window. To be honest, he was very lucky that there were other people around, lol. The cops came and took statements and it ended up going to the John Howard society (mediation). I actually got to talk to the kid and his mom and locking him up would have accomplished nothing. His dad was gone, she was working a lot to support them, he started hanging around older kids, it was all very straight out of a psychology textbook. I’m not saying the kid shouldn’t be punished, but you need to proactively address the causes of crime, not just reactively punish the criminals.
And Northstar, I worked with people who knew Justin very closely. I would never excuse what happened to him, nobody deserves to be stabbed to death. I will say though that the officers I knew told me the situation was a lot more complex than the general public believed (some of the people involved and at the party were ‘known’ to the gang unit, and it wasn’t the kid who did the stabbing). I imagine you have better information that I have (mine is second hand knowledge at best), but that’s just what I had heard. The point I want to make though is that there were reasons in that kid’s life that he ended up murdering someone. Not necessarily justifiable reasons, but you can’t just throw him in jail for life and assume the problem is solved and justice served. There are a dozen more kids growing up just like he did and will turn out just like he did unless we do something about it.
And I agree completely with SomethingDoesntAddUp. So many people I know live out in the boonies of Saskatoon (Willow Grove, Briarwood, Stonebridge, etc) and think Saskatoon is a perfect city. I used to complain to them about all the crime and poverty in the city and they had no idea what I was talking about because they literally never left their suburb.
The sad thing is that there are so many things that could be done in Saskatoon, but the city doesn’t seem to have the pragmatic commonsense to do it. News flash to Saskatoon – you will never get rid of prostitution. It’s called ‘the world’s oldest profession’ for a reason. So you only have two options really; continue to demonize it and push it further and further underground where it continues to prey on the poor and underage. Or you could legalize it, regulate it, move it out of your core residential areas, and see the difference it makes.
Or take gambling for instance. I voted for the casino in the civic election a few years back. But the religous right got together and defeated the movement, because gambling is ‘bad’. Yet Saskatchewan has more VLT’s per capita than any other province in Canada (a little hypocritical, don’t you think?). Why not take the VLT’s out of the neighborhood pubs and bars and put gambling in a more centralized location and reap the tourism benefits? Or vote the motion down, and have the casino be built anyways twenty minutes outside of town where you will receive zero of the economic benefits.
Just some of my ideas, I welcome any feedback.
May 27th, 2009 at 1:36 pm
For once,
the blog is in agreement. :-0
The major issue with these gangs are that the older gang members recruit the 14-15 year olds to do the crimes. They’ll only go to juvenile hall where they get to hang out around all of their friends and probably live better than while at home.
Something,
I agree with your post. I looked up the stats before I posted my last post and Saskatchewan has been the worst in crime for years. In fact, Saskatoon’s crime rate has been decreasing the past number of years. You’re probably right in stating that the whole system needs an overhaul. I’d hate to see what is was like 5-10 years ago.
May 27th, 2009 at 1:38 pm
Warren,
Yes, I agree that kids come from bad situations. If you know a solution that doesn’t involve locking them up for 25 years (that is a proven solution), I’m all ears. Until then I agree with Norm
I’m not sure about the Justin thing. I’ve only seen stickers in people’s windows. The kid I was speaking of that died was my next door neighbours son. In that case the kid that did the stabbing was put in jail. Although he only got 4 years for murder.
As far as prostitution and VLT’s… The city blew it big time on the casino thing. (Pun intended). Don’t know what I think about legalizing prostitution but if it takes the pimps and street walkers off of the street then sure.
May 27th, 2009 at 1:38 pm
Hey Warren,
You wrote, “That being said, I’m going to have to go and disagree with you Norm.”
Hey, this is allowed here. I almost always appreciate being challenged.
I’m not talking about throwing away the key on a kid that smashes a window, or steals a car but if you stick a knife in my head, and I’m lucky enough to survive, I don’t think it’s too much to ask that I don’t have to worry about you for a good ten years or so.
In my humble opinion, I think you’ve proven yourself to be a danger to society and we should have a little time to work on you before we trust you on the street again. It’s as much about public protection as it is about punishment. I’m willing to error on the side of the 70 year old woman who didn’t have a chance against these pukes. Most of these victims will live with the scars of an attack for the rest of their lives.
Yes, poverty is a big issue but many of these gang related problems can be pinned on useless parents who can’t be bothered to teach their kids some basic respect for life. There are plenty of poor people in our community who have managed to raise children with some values.
Have you ever seen that warden from Texas who refuses to house prisoners in the prison? He makes them live in tents and works their butts off all day long. I can’t remember the stats they were quoting but very few of his inmates return for a second stay.
My point is this; if these kids know that there are no serious consequences they will continue to behave as if there are no consequences. We need to catch them when they’re young and show them that there are consequences for crimes against society.
May 27th, 2009 at 1:40 pm
It’s a big night for Northstar!
Four years?? Out in two. Regardless of who was involved in this killing, are we to believe that four years is sufficient to give us any confidence that other lives will not be lost? The message here is loud and clear. Your children’s lives just don’t mean that much to the justice system anymore. This is a sickening story.
May 27th, 2009 at 1:41 pm
Thats why we left that @#*!hole and moved to Alberta.Too much crime and no one does nothing about it there!Poverty is high and jobs are scarce.Sask SUCKS.Move to Alberta.Gods country.We did!!!1
May 27th, 2009 at 1:43 pm
Norm and Northstar:
I unfortunately don’t have any answers, I’m just good sometimes at pointing out the problems, lol. There are good arguments to be made on both sides of the discussion.
Shirley and Don:
Your lack of basic punctuation skills typifies what I have to deal with every day out here. I didn’t know the good lord made such ignorant people as there are out here in cowtown. Anyways, I appreciated your well thought out and factually backed opinion. FYI: saying “no one does nothing about it” is a double negative and makes you come across as a typical uneducated Albertan. But please, do share more often.
I swear Norm, there are some days that I can’t wait for the crash to happen out here, lol.
May 27th, 2009 at 1:45 pm
Not to change the subject but did any of you consider the effect of the decision today by Alberta to substantially raise royalty rates on energy companies? I think your province should give Alberta Premier Ed Stelmach a big “thank you” for suddenly making Saskatchewan a more consistent and surprisingly more business friendly place to do business for the energy sector. Expect lots of new investment . . . .
May 27th, 2009 at 1:50 pm
Ron,
I definately paid attention to that news. That’s a pretty steep royalty and I can’t understand what they’re thinking. Whenever government gets involved with business, things get screwed up.
I’m quite happy to hear it though being in Saskatchewan
. Although I’ll probably take a hit on a couple of Alberta oil sand stocks and trusts.
May 27th, 2009 at 1:51 pm
After reading these comments here I just wanted to add my half buck’s worth to the discussion.
First don’t expect a boom to fix a lot of social problems. From what I see here in Calgary there is not enough financial spll off to do much more than give you a bigger house and newer car to view the same problems from. But you care less because you’re a little more insulated and a hell of a lot busier.
If some of the “boom” money went to putting incentives in place for people that fall through the cracks to become educated and productive it would be well spent. But I haven’t seen it happen here to any large extent.
Until maybe now.
Premier Stelmach has responded to an oil resource royalty panel’s suggestions that royalties be raised by (heaven forbid!!)…raising royalty rates.
Some people are thinking that Stelmach is making a big mistake; that Ralph Klein created a lot of wealth for the resource exploiters and in return Albertan’s got the benefits of a robust economy. I am looking at this event from another perspective. The economy that Albertans got was an over heated juggernaut.Yes there are lots of high paying jobs, and long work days, and less time for family and hobbies, and lineups for brunch and gridlock and… well you see where I’m going.
I think Stelmach knows the oil companies will pull back on some future investment. That money will go to Saskatchewan or elsewhere… but so what! Does all the resource have to come out of the ground by a certain date? Sure oil prices are high and now is a good time to exploit them but there will be high and low resource prices in their time for as long as there is a resource industry.
Perhaps what our premier is doing is trying to balance our economic success with a more pleasant social environment.
Spreading the resource investment dollars around is not a bad thing.
I have listed my house in Calgary and want to relocate to Saskatchewan after it has sold. After several trips to Saskatoon to view properties and visit relatives, I was impressed with the fact people could take time during their work day to come and see me. I could get across town in half an hour even with some traffic snarls. I could go for brunch or dinner and be seated right away. All of these things are special treats to a “boom fatigued veteran”.
Events in Alberta’s oil patch will impact Saskatchewan’s economy as these changes take effect if labour shortages can be addressed.
I hope that as resource royalty investment shifts and Saskatchewan’s economic fortunes improve even further that some lessons are learned from the neihbour to the west.
Don’t let economic prosperity mess up a good thing.
Thanks
May 27th, 2009 at 1:52 pm
I am not so sure that the crime is due to poverty. I am denying that is a part of it, but I think what is at the heart of the matter is that these kids want belonging and structure and unfortunately finding it in the wrong places. Combine that with a parent or two who doens’t love a child and you have what is going on in saskatoon. The whole mentality needs to be shifted. I don’t have a clue how to bring this about. There is a very troubling web of interconnectedness between various levels of gangs> More policing isn’t the answer. Good parents is a good start.
For those new to Saskatoon, these sorts of problems aren’t anything new to Saskatoon. They were here long before the boom. The boom is in no way the cause of them, but could definitely contribute to the problem.
May 27th, 2009 at 1:52 pm
I’ve looked more carefully at the proposed royalty hikes in Alberta and they are much larger than I thought they would be. This definitely changes the landscape! Saskatchewan looks positively cheap by comparison for energy investment. I believe we will be seeing the Saskatchewan Boom Part II commencing shortly. There are tons of industry execs now talking even tonight as a write about a movement to Saskatchewan! Encana, Suncor are all down 6% in after hours trading. I think Stelmach forgot to consider that while oil appears high at $90 a barrel – that’s in US dollars. If you price oil in Canadian dollars, its actually been dropping a little. With the rising Canadian dollar, I think they notched things up just a little too much but I guess that will be good for investors in Saskatchewan.
May 27th, 2009 at 1:53 pm
Alex,
Well said! All excellent points. There is certainly no easy fix when it comes to attitudes that see violence as normal.
Ron,
Thanks for the input. Boom II? Hmmm. We really could use a little time to finish recovering from Part 1. This bit of news certainly has the potential to bring some big revenues to Saskatchewan and some decent paying jobs.
Ken,
Thanks for the thoughtful comment and for reminding us of the perks of living in a place like Saskatoon and the potential pitfalls of failing to keep some perspective on what is really most important in life. I know that I already feel “tired” after a year of hectic activity. Things have just been settling down here recently and while I see how this royalty review thing could be really good for our province, I am hoping it doesn’t turn our real estate market back on its ear. Good luck with your move goals.
May 27th, 2009 at 1:53 pm
We’ll definitely see more investment but let’s not get ahead of ourselves. My guess is readdressing Saskatchewan royalties will be a topic for discussion either during or post election, royalties that aren’t far from what Alberta’s moving to. Keep in mind, there’s currently very little oil development in sask, comparatively speaking. We will see activity but, considering what’s involved in an oil sands operation, don’t fool yourselves into thinking it’ll be an overnight endeavor. We won’t see a boom II shortly. Norm’s right, we need to right our economy back to sustainability before we move forward, it’s very important for us to learn the mistakes of our neighbors.
Also, has anyone considered what kind of impact an oil&gas slowdown in Alberta will have in Saskatchewan? I’m sure that no one will argue when I say, our boom 1 is the result of Alberta equity whether it be investment or immigration… and those dollars are contingent on a strong Alberta economy. An impact that will be felt before a positive impact of oil companies moving to sask.
I’m excited, so don’t call me a naysayer… but the issues we’ve been discussing in crime and poverty are a clear indication of an economy out of whack. If managed properly, we will see success for Sask, but this isn’t going to come over night!
J.
May 27th, 2009 at 1:53 pm
Johny,
Alberta is definately oil king in this country. If your “comparatively speaking” is in reference between Saskatchewan and Alberta I understand your point. Although being Canada’s 2nd leading producer at 19% of the country’s oil, I’d hardly say “there’s currently very little oil development in Sask”.
I do agree with you that this province needs to recover economically and that “Boom II” is further away than Ron thinks.
Ron,
Great point about the price of oil in U.S. dollars. A lot of people don’t realize that. Same thing with gold. It’s up 15% in the past 3 months, however the U.S. dollar has dropped 10% in the same time frame.
I think for “Boom II” to happen, the companies have to decide to come here. Then more infrastructure will need to be built. I see all that being at least 3 years away. However I’ve also stated in the past that I believe there’s still 10-15% left in “Boom I” through the spring as more B.C. and Albertan’s cash in on equity. There are a lot of nervous investors starting to pull their money out of those 2 provinces and looking to put it in other places. I believe Saskatoon to still be an attractive place for that money (Although a lot less attractive than 1 year ago). I mentioned Winnipeg a week or so ago. I like it’s constant 8 – 10% per year appreciation and it’s cheap. Wouldn’t suprise me to see some of that Western money end up there.
Norm,
Are you still getting an increased amount of calls from asian investors?
May 27th, 2009 at 1:54 pm
Guys,
I am all for growth and I could easily get pumped up about new business and more development in oil. I learned this year that I’m just not excited about working in a speculative market. I’ve had a good year. I’m not complaining about that. When everything around you feels like it’s out of control it’s hard to ever feel real comfortable. I’m not going to be thrilled if housing starts blasting ahead of the rest of the economy. I’m particularly nervous because “investor” inquiries are way up over the past week. If one more person feels he needs to tell me that Calgary is in Alberta I’ll flip!
May 27th, 2009 at 1:54 pm
Norm,
Interesting about the investor inquiries. What is your definition of way up? Like instead of getting 3, you’re getting 6; or instead of getting 3, you’re getting 20. If it’s going to be investors pushing this market again in the spring, this may go on longer than I originally thought. I figured it would be more families and people for jobs this spring.
How many “investor calls” were you getting last year at this time? Also, what questions are the ones calling now asking and what feedback are you giving them?
May 27th, 2009 at 2:09 pm
Northstar,
Those calls and emails had tapered off to just a few each week. I’d be surprised if I didn’t get 20 this week. Honestly, I spend as little time as possible with them. As I’ve implied before, my satisfaction for my work comes from the personal connections that I make with people. I am far more about families and homes than I am about investments and numbers. It just doesn’t do anything for me.
I should also mention that there have been some nervous callers who are already heavily invested here. It’s not all excited people looking for a place to spend money.
Jason,
I have not heard this story and see nothing in recent sales that would support it. I will let you know if I catch wind of anything solid on that. If one agent reports 50 sales, I doubt it will get by me.
May 27th, 2009 at 2:15 pm
I don’t know too much about where the price of homes are going but what I do know is economics very well.
If you take a look at the stock market you would know that grain prices/potash are through the roof. Also take a look at uranium prices they are starting to increase again bigtime. Saskatchewan being the largest producers of these commodities on the planet. Throw in $90 a barrel of oil and in my opinion the boom should continue. I’m heavy in the stock market and bullish on uranium in particular. Analysts are talking about $200/lb uranium in the future from the current $80. All I’m hearing right now in this blog is about Alberta. Take look at these Saskatchewan companies ticker companies symbols POT, CCO, AGU, CPG.UN.,BQI etc. I don’t know about you guys but people are making money and lots of it in Saskatchewan in general. Wait till bonus time. It takes months to a few years for the the trickle effect to happen it doesn’t happen overnight. The oilsands project didn’t start 2 o 3 years ago in Alberta when home prices more than doubled there. You guys haven’t seen nothing yet.
May 27th, 2009 at 2:16 pm
You are absolutely correct that Saskatchewan’s economy should continue to boom. However, that was the whole impetus behind the recent price increases. You had a bunch of Albertan investors purchasing, very much aware of the economics.
If you are knowledgable about the stock market, then you understand the concept of future performance. Investors purchase based more on what they think is going to happen that what is currently happening. This leads to such anomalies as a companies stock price going down after they report record earnings, because the market figures the stock has now peaked and results will start to trend down.
In the same manner, I would say that much of the future performance of the province has already been priced into the housing market. The province HAS TO boom just for current prices to be reasonable. Otherwise prices will have to drop. For housing prices to increase, the boom has to be even stronger.
Also, as far as commodity prices, there is a reason most seasoned investors invest lightly in them. They are unpredictably and subject to large price swings. If you’re following uranium then you’ve seen prices shoot up 8-10 fold, correct? I’m not saying prices will go back to their ridiculous levels earlier in the decade but should demand start to dry, they could hit the wall and plummet. I read an article about an alternative metal to uranium they are developing in Ontario which is much more readily available. Sorry I don’t have the link. The point is, all it takes is new technology or a policy change in China and prices will get hit hard. Similar concepts apply to grain, oil and fertilizer prices. They are high right now but who knows where they are going.
May 27th, 2009 at 2:17 pm
I’m glad I found this blog. It’s keeping me connected to what the “ground level” thoughts are around S’toon. As I have said previously I want to relocate there once my house here in Calgary sells.
I am seeing some very sophisticated analysis of varying financial concepts here that have given
me a lot of perspective regarding my relocation plans.
Thanks for that.
I agree with Something Doesn’t Add Up’s comments. I’ve learned that it’s difficult to time or predict the “next big thing “good or bad. The events that cause wild swings in sectors of the economy are generally something no one saw coming. Generally i think most things stay pretty even.
I don’t think Alberta’s economy is going to crash and I do think Sask. will experience some nice growth leading to a very good steady economy in a few years where all the economic sectors support each other. But there will be bumps along the way just to keep life interesting.
May 27th, 2009 at 2:17 pm
I’ve been following those “Saskatchewan” commodities such as Uranium and Potash and their related stocks. Last year’s uranium price was actually fairly flat but it is now on the move again. Potash and other fertilizers are in enormous demand right now and the stocks keep hitting new highs. In fact, fertilizer stocks have done much better than oil stocks which have been pretty flat over the last year. My thought is that the trends supporting commodity prices are going to continue – and I dare say it – for the next 10-20 years at least. Why? The world population is growing and getting wealthier but commodity production is constrained by factors including peak oil and government policies around the world (oil production in many places like Venezuala due to govt. policies). As such, I think there are solid economic fundamentals supporting the Saskatchewan economy and RE market.
May 27th, 2009 at 2:18 pm
Commodities were the source of initial speculation. You’d be a fool to fall for it again.
Saskatoon and Saskatchewan need growth in areas other than these volatile and over theorized markets. Permanent jobs that pay well, involve long careers and honest citizens.
Saskatchewan is landing itself a lot of rental space and temporary positions. It will be the term work hub of Canada. Chockablock with single mothers and overworked manual labour.
Another obvious indicator of the widening gap between poor and rich.