New listing activity in the Saskatoon real estate market remained soft for the second week in a row with just 95 residential properties being offered for sale including 68 single-family homes and 27 condominiums. A total of 78 properties were cancelled or withdrawn from the market over the course of the week, and 51 of those same homes made another appearance as a new listing. Still, the total inventory of active real estate listings advanced marginally from 1,673 last week to settle at 1,690 including 1,050 houses and 533 condos.
Unit sales of houses and condos also saw a decline falling to just 38 units, down from 45 the previous week. Only three weeks in 2008 saw weaker sales numbers, once in January, once in August and once in September. Changing mortgage rules are now in effect, and tougher credit criteria along with concerns about the global economy are undoubtedly side lining some prospective buyers. Given all that’s going on right now, and as close as we are to these changing conditions, 38 units will strike some as a fairly remarkable number. Total residential unit sales for the month of October are presently at 169. We should likely hit 200, but we’ll almost certainly fall short of my “just for fun” guess of 225 units that I threw out in last week’s review.
Click here for a larger version of the graph.
Over the course of the week 97 price changes were recorded on the local MLS system. The average sale price remained stable compared to last week at $280,071 but the six-week average took a dip towards $295K as one of two “plus one million dollar sales” fell out of the back end. The median price of a Saskatoon home also came in lower falling to $267,900 from $280,000 the previous week.
Click here for a larger version of the graph.
It’s no big surprise that all but one of this week’s sales were reported as having sold below the asking price. 37 or 38 buyers managed to negotiate a purchase at an average of $12,787 below list price, a number that is more or less typical of what we’ve been seeing over the past two months.
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
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{ 32 comments… read them below or add one }
38 sales, yeah I kinda expected that. Less demand as we get to Xmas, but I think also less new listings. One number I expect to see come down but really hasn’t is the average below list price buyers are getting. Only at 12k. I would expect to see a lower number going forward.
On another note expect chaos in the markets Monday morning. Nikkei( Japan) has not seen a drop like this for 20 years. And that was bad, very bad 20 years ago.
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%?
I think the Nikkei dive your talking about happening on Thursday night when we were headed to bed. It looks volatile today (oh, surprise) but it’s only down 39 points as I write.
http://www.nni.nikkei.co.jp/CF/FR/MKJ/
Well the Nikkei is now at -295.28, but the night is still young.
I think perhaps George may have been thinking of the 800+ point fall on Friday, but I can’t speak for him.
Hmm. I was thinking about giving a very long-winded attempt at an answer to your question, Norm, but let me turn this around instead. Why do you think that stocks are not going to fall a further substantial amount? I’m not necessarily talking 50%. Do you think another 20%-30% drop is pessimistic? Given all that you know about the current financial crisis and its now global effects, in your most optimistic predictions, how and when do you see this thing turning around? What conditions do you think need to be present? Do you think we are even close to there?
As a bit of historical trivia only- during the 1920s, stock prices had more than quadrupled. On Oct. 28, 1929, the Dow Jones average fell 13 percent in a single day, another 12 percent the next and 10 percent more a few days later. Stocks bottomed out in 1932 — down 80 percent from the peak.
In 1990 the Nikkei peaked at 38,900. It is sitting at 7,380 as I type. After 19 years of ups and downs including one big rally of 140%, the Nikkei is down a whopping 80%.
Crikey,
Yes, and down 486 at the close. I guess I was thinking that our markets would have absorbed the news about the 811 point loss on Monday.
“Why do you think that stocks are not going to fall a further substantial amount?”
I don’t necessarily think they won’t drop further. Just trying to make some sense of things.
I hear a lot of comparisons to 1929, but it seems to me that a much larger correction was in order then. For one thing, the TSX hasn’t quadrupled over the past decade. We are nearly back to 1997 levels right now. Secondly, there is the price to earnings thing. Is that not the foundation of a company’s true value?
Masayoshi Okamoto, head of dealing at Jujiya Securities in Tokyo, blamed the steep drop on a late sell-off by mutual and hedge funds and said the market is unlikely to stabilize as long as they continue offloading shares.
“I’ve never experienced anything like this,” Mr. Okamoto said. “The volatility in share prices that we’re seeing are just too wild. It’s gotten to a point where we can’t tell any more if shares are cheap or expensive.”
If Mr. Okamoto doesn’t know, how the hell am I supposed to know?
Its margin calls Norm and its destroying any chance for hedge funds or mutual funds to buy anything. Hence why im buying because alot of seniors and people close to retirement are cashing in their funds out of fear which is understandable. Unfortunately what they are all doing is causing them great losses as we watch and now im down 2k but im not worried for the simple fact you speak of p/e ratio. If you want a good book to read pick up peter lynch’s book “One up on Wall Street” its very informative and will give u perspective of the market today. The same things some people are posting now are oddly familiar of previous times like a broken record fear rules all and we will all be in the woods eating berries by next Tuesday lol. This I consider is the trimming of the fat and a few companies without free cash and alot of bank debt are gonna go under but stalwarts will thrive. Take for instance Royal Bank everyone is saying its going to falter yet they have 161 billion in cash and 81 billion in long term debt. Doesnt look like we are in any trouble at all =)
Armoth,
“Doesnt look like we are in any trouble at all =)”
No, no trouble at all!
Thanks for the book recommendation. I will pick that up.
Norm,
there are many companies who have P/E ratios at low ratios, but if that was the only factor of a stock market, I may even take out a HELOC for some stocks like Armoth did. And if P/E was the only factor, we would not have all this chaos in the markets.
But one has to look at the underlying fundamentals to understand where we are. And the biggest factor is credit. Our world, the companies and people revolves around credit. Credit is the biggest reason for growth the last 7 or 8 years. A false growth. We need credit, but there has been too much given out lately. Now, with credit being contracted throughout the world, many companies who are overleveraged are teetering on the verge of bankruptcy. I had a link last week of over 140 large US companies on the brink. And I bet some of them had great P/E.
Because of the fear and panic in the market, bad quarterly reports send the markets down. Imagine if there are some large companies go bankrupt. There are many great companies out there, but if the market goes down, they will get dragged down as well.
One other thing that bothers me is the USA debt. Borrowing 1.4 billion – 2 billion PER DAY to keep the lights on, this is not including the bailouts. It is at 11 Trillion for government debt, 53 Trillion for all debt. Once the reach the point they can’t even pay the interest, goodbye US currency. Are they close to that? I don’t know. USA GDP is 14 Trillion a year and the World GDP is 45 Trillion a year, but like I said alot of the growth is credit fueled.
I have not seen this movie, but heard it is great.
http://www.iousathemovie.com/
Here is a link about a book written in 1932 and how it pertains to our times. A great read.
The Bubble that Broke the World
http://www.generationaldynamics.com/cgi-bin/D.PL?s=qpQrMC&d=ww2010.i.garrett071009
One gauge to look at, that will determine how Saskatoon will weather this financial storm is River Landing. If it goes ahead, then we will do well. If it doesn’t, that is not good for the people here.
Financial crisis moves to Gulf Arab nations
http://www.globeinvestor.com/servlet/story/RTGAM.20081026.wgulf1026/GIStory/
Armoth,
I am not sure if you know but RBC has over 425 billion exposed to subprime mortgages. RBC will be licking their wounds for awhile.
Everybody in the world is affected by this financial crisis. This is “Globalization at its finest!”
I just love the “decoupling” and “peak oil” theories.
We’ve done fine at these oil prices before, but hovering around $60 a barrel means a lot less royalties, and maybe less jobs to boot, then hovering around $150.
And a while back there was talk that potash prices and profits “peaked” this year.
I’d rather be in Saskatchewan than Ontario, but if oil really falls below $50 a barrel, and potash demand falls on increased competition/production, not sure we’ll too well. Even if we beat slumping Ontario, kind of like beating a one legged man at a *** kicking contest.
http://www.msnbc.msn.com/id/12400801/
Economist who foresaw crisis warns of deflation
http://www.financialpost.com/news/story.html?id=911686
“Deflation, like runaway inflation, can be self-perpetuating insofar as consumers defer expenditures in expectation of further discounting and this delay itself reinforces the discounting trend by putting downward pressure on domestic demand,”
I think we will see sprinklings of 29, the 70’s and the 80’s asset inflation in Japan throughout the world. Canada will see a med recession, with Saskatchwan possibly having low growth or dip into mild recession in the next year. Saskatchewan’s growth will be determined by credit, everything else does not carry as much weight.
Deflation in everything from house prices, car prices, oil, commodities, food and retail sales.
During a time of economic prosperity, Saskatchewan people should have led the country in savings not spending. This will come back to bite some people. But it is part of the welath affect which leads people to do things backwards. I think our provincial government is doing the right thing by saving for the rainy days.
A picture of the crack cocaine of the world wide housing bubble
http://housingpanic.blogspot.com/2008/10/heres-picture-of-granite-countertop-you.html#links
We destroyed the world economy for these?
People NEEDED to have these items, but really could not afford them.
@Georce: Peak oil is not a ‘theory’ in either the scientific or layman’s definition of the term. It is a description of an extremely well-characterized physical process.
Oil is a finite resource. No more is being *made*, and world-wide demand continues to increase. Yes, we will discover more, but how MUCH more oil remains to be discovered *is* a ‘theory’ (in both the connotative and denotative sense). The process by which oil fields become depleted, however, is quite well understood… and it is this series of observations on which the concept of Peak Oil is based.
For anyone wanting a superb layman’s explanation of the ideas, I recommend this presentation:
http://www.chrismartenson.com/crash-course/chapter-17a-peak-oil
In fact, I strongly recommend that people familiarize themselves with Dr. Martenson’s “The Crash Course” as he does an amazing job at explaining in easily-understandable laymans terms many of the issues facing us as a society today. Its slight flaw is that it is very US-centric, but the fundamentals are the same for most nations, and the data he presents (and conclusions he draws from it) are eye-opening, to say the least.
George,
Thank for the reply.
Can you direct me to any evidence that suggests RBC is exposed to subprimes to the tune of $425 billion?
“Economist who foresaw crisis warns of deflation”
He should have passed some of his insights on to his other colleagues at Merrill Lynch.
Deflation – Another report from Merrill Lynch, the same reliable company that the Bank of America snatched up before it became another Lehman Brothers? There are enough articles out there to support any theory.
RBC is lending as usual. I think if they were in trouble they would be holding back.
$62 oil – Who will hurt more, big oil or the green shift?
Bookrat,
what I was getting at with peak oil is that people ( speculators) were saying that peak oil, demand from China, India, blah blah etc was the catalyst for the increase in oil the last couple of years. Now we see that was a bunch of crap. From a high of 147 to 60 in a few months. Opec controls 40% of worlds supply and they cut supply by 1.8 million barrels a day and the price is still sliding! There are trillions and trillions of barrels yet to be found. Just look at Saskatchewan with the Bakken and in the north.
You are right that oil is a finite resource but I don’t think we will ever see peak oil. Eventually other technologies will replace oil. But I am sure peak oil will used again before I leave this planet:)
After work, I will look at that link. Thanks, maybe it will even change my mind:)
Norm,
sometimes I am so disorganized, I have not a clue where I read that, but I do know that I linked it here someplace a while back. Personally, I don’t trust any of the Canadian banks.
Japan’s market at a 26 year low
http://latimesblogs.latimes.com/money_co/2008/10/there-are-bear.html
Tokyo’s Nikkei-225 share index today plunged 486.18 points, or 6.4%, to 7,162.90, its lowest close since October 1982.
That’s 26 years with no net gain in Japanese shares — a track record that mocks the standard investment advice to just “hold on for the long term.”
On the other hand, RBC is a stock to love
http://money.cnn.com/galleries/2008/pf/0805/gallery.financial_stocks_we_love/3.html
“Though Canada may not feel so foreign to those living in the United States, Royal Bank of Canada’s minimal exposure to subprime lending compared to most U.S. banks helped the company through the recent mortgage meltdown.”
George,
According to bankimplode.com RBC’s known subprime exposure is $1.4 billion.
Norm,
I know that people that read on here probably have RBC stock and I will say this. The P/E is attractive, the stock is the lowest it has been for a couple of years. It is well capitalized and also pays a good dividend right now ( I believe) Also the Canadian government said it won’t let any bank fail
http://finance.google.com/finance?q=NYSE:RY
If the link I posted about 425 billion exposure to RBC was true ( I am thinking now its false, 1.425 billion would be more accurate) there would be more crap hitting the fan for this bank. Even Citibank does not have exposures that high. So disregard that comment.
I do think there is some funny business between the Bank of Canada and all the banks. Whether that comes out to play remains to be seen
Thanks George,
I’m getting tired of looking at pictures of guys with their head in one hand a phone in the other.
Real estate slowdown causes jump in B.C. bankruptcies: experts
http://www.canada.com/victoriatimescolonist/news/story.html?id=4f45e020-e625-4740-b973-f23dd7795498
“Our professional community is seeing more and more individuals who can’t sell their property for what they thought it was worth and who can’t refinance or borrow more money against their property,” she said.
Looking at Saskatoon’s numbers from last week 38 sales and 1690 listings. 2.2% chance a given house would have sold last week. With prices dropping, we will see more bankruptcies moving forward as well.
Oh, Norm! Not that I’m a sadist or anything, but have you checked out this site?
Sad Guys on Trading Floors:
http://sadguysontradingfloors.tumblr.com/
Go ahead. You know you really want to.
Last night I said today would be chaos for the markets( I know that is not hard to predict)
TSX closed at its lowest in 4 years at 8537.
OK, I’m now in favour of a seperate thread for general economic discussion
Holy moly George! You do all this from work!?! Please, please, please don’t tell me you work for the taxpayer.
Here’s a RE question for Norm: Is the median price a better indicator of where the market is at(i.e what an ‘average’ or mid-level house is going for) than the average price? Is the average skewed higher by a small number of very high-dollar sales? If not, why such a difference between the two?
guy_in_regina,
I’ll be honest, I am 35 years old and still living in my parents basment. I hope to one day save enough from my pop can, worm and bubble gum card collection to buy a house. Hopefully housing comes down some more:)
All kidding aside, my job entails being at the computer some days which is pretty slow so I post here ( just don’t tell my old man who runs the show:)and then on days like tomorrow I’m out for a few days.
Crikey,
“Sad Guys on Trading Floors”
Lol. Love it!
Face palm, face palm, face paaaaaaalm!!
For anyone who might ever consider following my lead, you should know that I actually waited for today to sell 20% of my mutual fund portfolio. Yes, I’m quite the investor!
guy_in_regina,
I like the “average” over the long term for tracking trends, but yes, it is much more likely to be skewed by sales at the high or the low end. Those big spikes on the chart are weeks were really expensive homes sold.
George,
You are priceless! We love you no matter who you are.
Norm, thanks
here is another one! ha ha
http://www.reportonbusiness.com/
George,
This is actually the guy that broke the camels back. Couldn’t stand the sight of the poor sap.
I’ll tell you what really gets me. Headlines like, “TSX tumbles on fear of recession!” I mean, c’mon people! Where have you been for the past month. Did someone just hear that we are headed for tough times?
Attention!! We are in a recession. You are going to be disappointed in all of the profit reports because profits are going to suck for awhile, probably a fairly long while. Let’s all assume the worst and get all of the crap priced in so we can get excited about the good news and watch our investments go up here and there.
Well Norm, it took the largest single day drop in TSX history for the prime minister to realize (admit?) there was a problem, us lay folk can be forgiven for not possessing Harper’s excellent economic insight!
And the economic blog might be a nice link
Since we’re right off into economic discussion territory… here’s a neat little video.
The Credit Crisis as Antarctic Expedition
http://vimeo.com/1933993
Pretty good analogy, actually!
Merril Lynch fires another salvo…
http://www.reportonbusiness.com/servlet/story/RTGAM.20081028.whousingmerrill1028/BNStory/Business/home
Nick,
“And the economic blog might be a nice link”
It seems that the idea didn’t go over that well when I threw it out there last week. I liked it, and I do appreciate your suggestions.