New listings of Saskatoon houses and condominiums remained soft for the third consecutive week. A total of 94 homes were added to the MLS including 62 single-family homes and 32 condominiums. Additionally, 41 of 69 homes that were cancelled or withdrawn over the past week made a return entry to the system disguised as a new listing. Month end expired listings pushed the active inventory of Saskatoon homes for sale to its lowest point since the week of August 4-8, down nearly 9% from its peak during the week of September 22-26 to settle at 1,604 units including 979 single-family homes and 523 condos.
Following one of the softest sales weeks this year, residential unit sales rebounded to 48 units including 34 houses, 13 condos and one duplex. The gap between new listings and weekly sales was as small as it’s been since the week of March 10-14. As the week drew to a close, so did the month of October which recorded a total of 215 residential sales, well below the 280 units sold last October, but close enough to pre-boom Octobers to give us some hope that things have not completely collapsed in the Saskatoon real estate market.
Click the image for a larger version of the graph.
The average price of the homes that sold this week bounced back to $290,541, up from $280,071 the week before, while the median sale price moved up about $7,000 to $275,000. The six-week rolling average slid down about $5K and the four-week median sale price remained fairly stable compared to the previous seven weeks. Note that both of those value measures are sitting at late March and early April levels, suggesting that any gains experienced since that time have been lost, or gained, depending on whether you’re selling or buying. The six-week rolling average is about $20,000 lower than its peak in June, and the four-week median price is about $25,000 lower than it was when it reached its highest level in late June.
Click the image for a larger version of the graph.
The largest majority of this week’s buying activity occurred somewhere below the asking price with 45 of 47 buyers managing a discount. The average underbid shot higher to $16,501 largely driven by a few sellers that made some serious moves off of their asking price including one sale of $225,000 on a listing priced of $349,900. The buyer describes the property as an “absolute mess” which requires a total gutting so it would seem that it was significantly overpriced. It’s the largest list price to sale price gap, on a percentage basis that I’ve seen so far.
I thought it might be a good time to have a look at a few of the more notable sales that provide some insight into how things have changed.
• Lakewood townhome, 1,176 square feet with a single attached garage sells for $210,000. Nine of these units have traded this year at an average price of $243,500, and with the highest sale hitting $265,000 in March.
• Wildwood bungalow, 1,414 square feet plus a developed basement. Upgraded high-efficient furnace, central air, windows, flooring and paint on the main level sells for $240,000.
• West College Park bungalow, 1,150 square feet plus a developed basement. Hardwood floors, upgraded kitchen, some newer windows, covered back yard deck at $275,000.
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
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{ 26 comments… read them below or add one }
My goodness! That’s one crazy looking price climb during the month of March, and just ahead of the massive surge of inventory that followed through the second quarter.
Thanks Norm,
Using averages and median prices gives people an idea of what is going on in a market, but I have always liked the Case Shiller index.
A 55,000 drop in only a few months on a similiar unit!
One with a 124,000 drop!. I am guessing a estate sale or a rental they bought years ago, so if they wanted to just get rid of it, they had the room to lower the price.
The W College Park house is probably close to something I bought 3 years ago for 160k, this spring a couple on my street went for over 320k. Now 275k. Kinda like a yoyo.
16,000 average haircut. I think buyers are getting the idea to offer a bigger amount lower below asking. But it depends on the property. I think the smart sellers are the ones pricing ahead of the curve trending down. There tonnes of selection out there and each property has to stand out someway and right now it has to be a lower price than comparables.
I don’t expect you to be doing a Case Shiller index for Saskatoon, then you would be spending more time on the computer than me
George,
To be clear, the $125,000 drop should not be seen as a value drop. It’s an example of unrealistic expectations not being met. $349,900 was probably too much money for that place even if it wasn’t a mess.
Just to revisit the average underbid. It’s terribly skewed this week by just a few sales. $349,900 for $225,000, $543,900 for $475,000 and $579,900 for $522,500. Without those three sales, the average underbid is under $12K for the first time in awhile.
Norm,
What effect is the weather having on the market in general? I don’t remeber it being this nice into late October and early November for a while.
Jedi,
I’m sure that the weather is not hurting.
A Seller’s Tale
We recently sold our home (Area 2) in mid-October, and thought we’d pass along a few tips about our experience. Our home was purchased new in 1999 with numerous upgrades made over the years (mainly landscaping and minor enhancements), so when we initially listed in May we had a fairly good idea of the value of our home and priced it slightly higher in anticipation of receiving underbids.
We received an excellent response with about a half-dozen showings in the first week followed by two offers; we were on holidays during the first and accepted a verbal offer (which was then subsequently withdrawn – we later learned – due to an impending marital collapse). The second offer fell through when we weren’t prepared to essentially gut our landscaping prior to closing.
Both were either cash or pre-approved financing (no conditional sales).
Over the summer we reduced our price several times and again received a lot of interest. This resulted in a third offer (where we were approached privately) and whereby we provided several followup showings in-person and outlined our flexibility (price, possession, etc.) We were set to have the buyers meet with our agent to write-up their offer when they decided to obtain an independent agent, who subsequently insisted on an additional showing, disregarded any and all previous discussions between us and the buyers, and then essentially submitted a low-ball offer with a conditional sale provision. A lot of grandstanding (on the part of their agent) then resulted, with various threats and ultimatums, apologies (again, on the part of their agent) which more or less killed the deal entirely (to her credit, our agent handled this all extremely tactfully).
The fourth offer we received was a conditional sale, but they were unable to complete the sale of their home and backed out within about 2 weeks (they overpriced their home *way* in excess of fair market value, and despite a significant reduction – which came to late – it failed to sell).
We received our fifth offer as a cash offer (no conditional sale) at about 15% below fair market value, and with no subsequent attempts made to better the offer, we passed. At about this time we decided to pull our listing until next Spring, and the day our listing was slated to come off of MLS our agent contacted us to request one last showing for an out-of-town buyer. This resulted in an reasonable offer (the first since late Summer, in fact), one counter and an acceptance. We’ve since subsequently close (post home inspection), met the new owners, and were very pleased with the way everything worked out (to their credit, both real estate agents were very professional).
Tips We Can Pass Along (sellers)
* Feedback can sometimes be misleading. Of the viewers who ‘didn’t care for our home’ (as was relayed to our agent), all subsequently went on to make offers. Bizarre! (go figure)
* Determining what the single most important aspect of the sale to you is crucial; focus on that. For us it was a flexible possession, and in the end, we were prepared to move more on the price as a result of this consideration.
* There aren’t a lot of cash or pre-approved (financing) buyers out there, so expect that when you receive these kind of offers they’re generally looking for a deal (or steal). The old adage of “there’s never any harm in asking” really applies here, and sometimes buyers are just gauging how flexible you are. Always try to be courteous when countering (even in an outright rejection).
* If you have to sell (for financial or whatever reason), then be prepared to drop the price and take the deal (or hit). The market is not going to be any better in Spring; if you think inventory is high now wait until everyone else lists (or re-lists)… a $20k+ hit next year is entirely realistic.
* We definitely encourage passing along any specific instructions to your agent to relay to any prospective buyers (via their agents). It makes it much easier to avoid misinterpretations and in most cases will work to both the advantage of the buyer and seller.
Tips We Can Pass Along (buyers)
* Everyone is aware things have shifted to a “buyer’s market”. The fact that Saskatoon has a substantial inventory is stating the obvious (to anyone but an idiot), so the point doesn’t need to be driven home with an anvil. Let the offer stand on its merits without the posturing.
* If you’re going to low-ball an offer, make sure you (and your agent) has done their research first. Anyone who has a clear title on their home and has been in a position to reject several offers (for various reasons over a period of 6 months) is not desperate, and is most likely going to just reject your initial offer. If the sellers are not in a position where they have to sell, you should be prepared to either blink or look elsewhere. That being said, don’t be dissuaded by an initial rejection: persistence pays off.
* If you want a good buy and the best price, it’s cash or pre-approved financing only. Sellers will avoid conditional offers like the plague, so expect to pay close to asking for that consideration (there are exceptions to the rule – even in this market – but not commonly so).
* In this kind of construction market (and time of year), it’s unreasonable to expect sellers to be able to complete any kind of minor (or even major) repairs. In most instances we can’t even get contractors to return our calls (let alone show up), so look for an adjustment to the price instead.
Tips We Can Pass Along (agents)
* If there’s something that’s specifically excluded in the listing, assume there’s a good reason (on the seller’s part) for it. And when in-doubt, ask the listing agent. Don’t simply ignore it and include it in the initial offer as it tends to come across as lazy, belligerent and tends to detract from the price and conditions you’re proposing.
* Never, ever get into a pissing contest with another agent (even if your client’s put you up to it!) In addition to being completely and totally unprofessional, you’re doing your client a disservice and potentially screwing up the deal for them by pissing off the sellers (the vast majority of real estate agents do *not* fall into this category).
* We know there are other houses on the market and that there’s a lot in your client’s range. That being said, they’re obviously looking at our home for a reason, so they’re either interested or on a fishing expedition — which is it?
* Give the sellers more than the standard 12 to 24-hour timeframe to respond, and don’t time it to fall when they’re going to be at work, very late in the evening or early in the morning. Assume they have a life (outside of selling their home), jobs, kids, pets, etc. as well. A 48-hour flexible timeframe to respond will be *MORE THAN APPRECIATED*, and will warrant a lot of consideration on the offer (and in many instance, will in fact generate a response much earlier).
Jason,
Wow!
First of all, congratulations on the successful sale of your home.
Thanks so much for taking the time to share those things that you learned through this experience. It’s all excellent advice.
Norm wrote:
“Just to revisit the average underbid. It’s terribly skewed this week by just a few sales. $349,900 for $225,000, $543,900 for $475,000 and $579,900 for $522,500. Without those three sales, the average underbid is under $12K for the first time in awhile.”
I remember hearing the same thing over the past few years ago with only one word changed – ‘underbid’ to ‘overbid’
Is this an indicator of the thought that the faster a market goes up, the faster it comes down????
Kevin,
That’s true. Last year we were all hearing the stories about how “everything” was selling $50K over list. In fact, the average overbid for any given week was below $20K 32 weeks last year and never broke $30K once. I thought it was important that buyer’s understood that “everything” wasn’t selling $50K over list. Same concept here really. We’re all best served when we understand the truth about what’s going on out there. Averages are almost always subject to skew, some weeks more than others and that’s why I’m inclined to point those things out when they’re present. In fact, nearly half of all homes sold last week went within $10K of the list price. A full 25% sold within $5K of asking price.
Young Canadians taking on record levels of personal debt
http://straight.com/article-167960/financing-their-futures?rotator=1
But the sheer volume of consumer debt Canadians carry—$320 billion, not including mortgages, according to the Bank of Canada, an amount that’s more than tripled since 1990—is making them vulnerable to any hiccup. In an era of stagnant incomes, young Canadians such as Knight depend on credit to pursue a bare-bones, middle-class life.
So are Canada’s young borrowers headed for a crisis? Absolutely, according to Douglas Welbanks, the former director of debtor assistance and debt collection for the B.C. government. On the phone from his home in Richmond, Welbanks told the Straight that he was disappointed Canada’s biggest financial issue—consumer debt—didn’t make it into any of the federal campaign platforms and that federal issues such as bankruptcy and student loans didn’t get traction.
“We’ve been living in a dream world for many years,” he said. “It’s allowed the middle class to have all these things—houses, cars, camper-vans, and all the toys—without any fear of debt.…Governments are, by and large, in denial. They ignore the escalation of dependency on credit. They don’t talk about it. They talk about how great everything is. But the debt levels have been troublesome for those of us who work in the area where we see the effect on the fabric of family life and how it destroys people.”
It looks like this automaker bailout may not be happening after all:
U.S. Rejects G.M.’s Call for Help in a Merger
http://tinyurl.com/5j4ah6
“DETROIT — The Treasury Department has turned down a request by General Motors for up to $10 billion to help finance the automaker’s possible merger with Chrysler, according to people close to the discussions.”
A possible GM-Chrysler merger probably only makes sense to GM with government help. It sounds very tenuous for Chrysler. I have to admit, someone saying, “please give us billions of dollars so we can afford to shut down factories lay off hundreds of thousands of people” is not something I’d be happy about hearing.
I suppose how the story will move forward will become clearer after the US election on Tues.
Should be blast.
Norm, I really appreciate the median stats and 6 week rolling averages – it calms my nerves!
You are right that ‘rumor’ often drives things more than truth. Hence the senseless overbids of the past few years. I know several people who got caught up in the overbids who now are trying to sell a 1st house and will get less than what they expected leaving them with hefty payments.
My point is exactly yours; we all would be better served if we had less reporting of peaks and valleys and more reporting of trends over longer periods.
Kevin,
Thanks. I’m hoping that this additional data provides a more complete picture. I wonder if I should consider an “underbid” graphic that shows some kind of a break down?
“As the week drew to a close, so did the month of October which recorded a total of 219 residential sales, well below the 280 units sold last October, but close enough to pre-boom Octobers to give us some hope that things have not completely collapsed in the Saskatoon real estate market.”
Norm, I’m still trying to figure this — give me a hand? As I understand your earlier explanation, transactions are ‘counted’ only on business days… meaning that if someone buys a house on Saturday the 30th, or Sunday the 31st, they won’t get entered until Monday the 1st, and will count against the next month’s sales?
I’m just trying to compare apples to apples: sure, 219 is higher than the 200 in Oct 2004, and comparable to the 241 in Oct 2005 … but both of those years, October had only 21 business days, whereas this year it had 23. If you count ’sales per business day’ we come out dead even with 2004’s awful 200.
The fact that actual number for the month was closer to your prediction of 225 than mine of 200 has absolutely nothing to do with my question. No really. Honest ***.
I posted this on the other thread.
Norm,
I don’t buy the notion that we were undervalued in 05-06. Builders were making money then and housing was still affordable for renters and buyers. It was a sellers and buyers market. Every housing bubble in the last few years whether local,national or international had fundamentals that justified increases at the beginning from job and wage growth but then things went crazy and many are paying for it now.
I have said it before that if we did not have the bidding wars, the looser lending in 06,07,08, fear, panic, and greed among other things, average prices would be around 180- 200k with historic growth. Not only do we have a real estate market in not too great of shape, there are hundreds if not thousands of buyers and renters that are in financial dire straits. Many are house poor and with house prices depreciating, it is over for the housing ATM. This is why Edmonton and Calgary do not have the retail sales growth they once had. People are feeling less weathly because their biggest asset is losing money.
The quicker that prices drop to historic levels, the better it is for the majority. Here is why:
Better affordability – not only for buyers, but renters as well.
This will also lead to more immigration which will help the labor shortage which leads to a bigger tax base,more house sales and more retail sales etc. Many people will move here if they can get a good job and an affordable place to live.
More house sales- This will clear inventory. This helps the real estate industry get more sales and it also help builders to keep building so they don’t have to lay off tonnes of staff like in Alberta. The construction industry is a big part of our economy. On average if it takes 4 man years to build a house, if we go back to building 500-600 houses a year, many jobs are gone.
Money left over each month- so they can go out and spend it on the economy or gosh, even save some of it!. The problem we have right now is that people have 0 savings and are resorting to using credit to finance their lifestyles. They are hoping for wage increases in the next few years to reverse that trend but I would not count on that with the world credit crisis.
The quicker the market goes 525k to 400k in the new areas and a average house goes 270k to 190k the
better for the majority of the real estate industry and the city economy as a whole.
For people to say 3x income for owning a home, make sure that includes debt. Rarely are there people with no debt buying a house these days. Student, car and credit loans are through the roof. Buying a 240k house with 80k income and a bunch of debt in the world credit crisis is crazy to say the least.
Owning a home has many hidden costs that most first time buyers are not told and or do not realise. It seems the real estate industry just wants to get people into homes no matter what the cost and once they are in, the home owners are left to fend for themselves. This is what happened in the states and it has crepted up into Canada. Not everybody in the real estate industry is bad. There are many great people there but they have been covered up by the
greed fear and panic that has swept this market place throughout the world.
The consumer is the biggest part of the economy.
The biggest financial purchase a consumer can make is a house and most people have to make this purchase with credit. Throughout the world at different times houses have been unaffordable big time. The consumer has no money and can’t get much credit.
Now prices throughout the world are declining, some are downright crashing. But it is too late, the biggest worldwide financial crisis since the Great Depression is upon us.
Affordable housing where builders still make money is great for everyone.This is my reasoning for prices to be at historic levels. Will they go there? Who knows where the bottom is. The market will do what it will do.
“Additionally, 41 of 69 homes that were cancelled or withdrawn over the past week made a return entry to the system disguised as a new listing”
Good call Norm, you are a rare breed, an upfront, honest realtor! (I’m sure there are a lot of honest realtors, but the ones in the paper are still claiming “growth will moderate” for remainder of year)
And $210,000 for Lakewood? Not surprising, there were sooo many there for sale earlier this year – I’ve since moved from Saskatoon, apparently like all the bloggers (me included) keep pointing out, the average wage is a lot higher in Regina and houses are a lot cheaper (now rent for me). With a few dozen more cookie cutter condos in Lakewood for re-sale, I am sure sellers will need to go even lower if they want to divest themselves of their Specubust town houses. Regina also has an even shorter commute.
I think renting out would be a preferable option to this, as sale prices continue to fall, sort of, and rent remains stubbornly high (as stubbornly high as previous renters who are now waiting for Prince Charming to offer the extra $50,000 they could have gotten if they had sold 6 months ago!!)
Bookrat,
Lol.
Sales occur every day, regardless of the number of days in a month. They can only be reported Monday through Friday. The real estate board’s office hours don’t affect sales, only the number of days on which a sale can be reported. As it only takes about 6 seconds to report a sale, I’m sure that the extra reporting days probably don’t make a big difference to the overall numbers.
George,
Thank you. I always appreciate hearing your arguments. I agree with the whole idea of cheaper is better and I’m clear on how the real estate industry, and everybody else would benefit from that.
I can’t say with much certainty that Saskatoon was “undervalued” before things took off in ‘07. I can say that the Demographia Housing Affordability Survey for 2007 (based on Q3/06 data) surveyed 159 “major markets” and placed Saskatoon as the 14th or 15th “most affordable” with a median income multiplier of 2.6. I know that over the years many have felt that Saskatoon needed to be cheap in order for people to want to live here. Is that what you’re suggesting?
Jesse,
Why do you seem to resent people for not believing the floor will fall out?
You keep bringing up the challenges in saving for a down payment. Given all that you’ve said, how will lower house prices help you save a down payment?
Nick,
Thank you. So, now you are the Leader Post’s problem?
Best wishes with your new gig.
I am wondering if the housing market does cool down in town if this will have any effect on the rental prices. Right now rents are simply killing me, jumping from $720 back at the beginning of 2007 to just under $1200 now. My whole plan to take the monthly savings from my student loans that I had recently paid off and put them towards saving for a down payment have now been sucked up by the rapidly rising rents. I have looked around online and rents for comparable places are quite a bit lower in Calgary and Edmonton in particular, but I would prefer to stay here in Saskatoon. Many people here say this is justified as over the next year our economy is going to surpass theirs so the high rents are justfied. Unfortunately, as with many others on the forum, my annual salary increases haven’t come close to covering even a fraction of these costs so depite moving ahead with my career it seems I become poorer as time goes on. Is there any light at the end of the tunnel for us renters, or will similar rent hikes be the norm for 2009 as well if our economy continues to remain strong?
Bookrat,
Numbers just revised to 215. Not sure what happened but four of the sales which showed up on the weekend are gone today.
Jason,
There are literally hundreds of vacant apartments and houses. I have to think that many of these will come back to the rental pool if they can’t be sold. Yes, technically lower prices should mean lower rents. When you can buy that condo for the cost of a rent payment the landlord will have trouble keeping tenants.
An underbid graphic of sorts would be useful.
If you plotted the average list price on your existing sale price graph a person could ’see’ the underbid trends maybe?
I was thinking more of a graphic that displayed different ranges of underbids (less than 5K, 5K to 10K, etc.) and showing the number of units that sold in each range.
Norm,
What is the rough percentage of homes for sale through realators that are not listed on MLS. Maybe it is because of the new web page for MLS, but there are quite a few homes for sale that don’t show up on the MLS search.
Mike,
Frankly, I’d be surprised if these missing listings weren’t the result of glitches and mapping errors with the new site as opposed to exclusive listings. To the best of my knowledge, Royal LePage has no exclusive listings right now. I’d be surprised if anyone is doing that much. Listings are enough of a challenge to sell right now, even with the assistance of the entire real estate community.
Norm, that graphic would be useful as well.
Jason,
I hear ya man. My building is mostly empty, and has been for at least 6 months yet the rent keeps going up up up…even if you could find a place that is a bit lower in the city, you have to still come up with an extra month of rent, PLUS moving costs….not that easy when going paycheque to paycheque…plus since there are no rental controls in place at all besides the 3 month item, I can see, heck, almost predict that soon, when prices for renting seems to go down, they can just up the price again in 3 months beucase they know that you can’t just save up another damage deposit month of rent for the next place yer going to move…
It’s all nuts….
The expectations that Saskatoonians now have for prices are unrealistic. Much harder to bring down than to go up!
Just a few short years ago, one could easily find SFH in the 120-170 range on the east side. Safe neighborhoods, nice home. And I literally mean 2-3 years ago. The overbids were ridiculous, and set up a false market. When I was looking in Saskatoon, last fall, I kept hearing “we are the new Calgary”, “Prices will stabilize, but they won’t come down”.
It was a frenzy. When that happens, it is time to take a step back and look at the big picture. Saskatoon was not only in the midst of creating a *HUGE* housing bubble, but also the mindset of the locals took on this dreamy “we are an island of wealth” type of mentality.
No offense meant, but there was no arguing with anyone about it. Lynching comes to mind when I think back on some of the comments that came up on this blog when anyone was a neigh-sayer.
Jason – I viewed your comments from your perspective with some interest. Someone should have done the same from a “buyers” perspective last year.
Things I would have brought up -
1. We are not made of money – we are real people with limits on our wages and a cap for what we can get a mortgage approval for.
2. Offers to be viewed at…..such and such. Were a huge blow to the prospective buyer. I percieved it to be – “COme in with your best offer, way over our asking price, and you MAY get our house” (Which probably needs 50 to 60 grand worth of upgrades/repairs)
3. We had nowhere to live. Rents were skyrocketing, real estate prices way over our limit. Stress does not even begin to describe the panic we felt. So we turned around with our tails between our legs and left.
From my viewpoint – I have lived in many cities. I liked Saskatoon very much. But, I don’t believe that there was value in the price of real estate. Which means, I could get more house for less money in other markets, with a better income to boot. Saskatoon historically attracted people to the university despite lower wages paid because of the attractive affordability of housing. At the end of the day, a market is a market, and due to globalization, we are all part of a bigger picture. I do believe that Saskatoon prices will come down some more. Not so sure about a “soft landing”