Saskatoon real estate: Week in review (June 9-13 2008)
New listing activity remained strong this past week as 221 properties were introduced to the Saskatoon real estate market, including 62 condominiums and 142 single-family homes (houses), pushing active listing inventories beyond record highs and settling at 1,326 units by the close of business Friday. Currently, there are 836 houses and 388 condominiums showing an “active” status on the Saskatoon Multiple Listing Service.
Sales in the single-family and condo categories took a big upward bounce, increasing from 67 homes last week, to 93 this week. Total residential sales came in at 99 units, showing their best performance since the last week of April. On the other hand, conditional sales were fairly low as of Friday with just 48 properties displaying the status.
Overbids were nearly non-existent in all of the major real estate areas, except area 3, where 25% of successful sellers bagged a sale at a price which was greater than their asking price. The average overbid ($6,438) reached its lowest level since the last week of January.
68 of 93 home buyers managed to negotiate a below list price purchase and the average underbid held steady, above the $10,000 mark, for the second week in a row.
The average selling price fell back to $303,453, a number that is likely more representative of our market than the figure of nearly $330K that we hit last week.
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
172 comments so far. We'd love to hear your thoughts.
May 7th, 2009 at 3:07 PM
So 99 sales is the best week of sales since the end of April? When 221 properties were introduced? Bringing total inventory up to 1,326?
Seems like inventory is still growing, as increased demand is still less than new listings. Looked at houses today. My individual agent had to turn away sellers who wanted to list because he had so many new listings to add. There are so many similar houses out there, all about the same price, there is really little to distinguish one from the other. A 1940′s era war home is still $270,000, of course having difficulty selling, but yet to realize because just stupid over priced.
With this many places still being added and prices just softening, I think I’m joining the band wagon and sitting out the market until the fall. I anticipate continued increases in listings and minor but cumulative drops in prices over the summer, ammounting to a decent savings by the end of August. Just my plan, but with inventory increasing every single week, and Norm saying there’s enough new stuff under construction that some one added up to be more than 3,000 available units now (if all done construction) it’s not like prices are going to rise on weak sales/excess listings.
May 7th, 2009 at 3:09 PM
Dan,
“but with inventory increasing every single week, and Norm saying there’s enough new stuff under construction that some one added up to be more than 3,000 available units now.”
I also said that on 18% of the “under construction” product is “unabsorbed.”
May 7th, 2009 at 3:09 PM
Norm, not sure that ONLY adding 18% of the well over 1,500 new places under construction ADDED to the now 1,326 existing listings, a number that is growing, another 300 listings on the way, is anything to sneeze at. Sounds like a lot of places. And I’m seeing more for sale signs on the way to work almost every day. Guess we’ll be approaching 2,000 available places in the coming months. By then sellers will be reducing prices so much, maybe we’ll call it a crash. OR do you mean that 18% of new construction does not end up as a new listing, and 82% will reach the market? This would still but total listings at over 3,000 when new places come on line. At, about a 100 place net increase per week, 3,000 listings won’t be too far away anyway.
May 7th, 2009 at 3:09 PM
Doug,
I’m not sure it’s anything to sneeze at either, but I do know that 18% of 1,500 is a helluva lot less than 1,500. That’s all I’m saying.
I think we can all see that inventory is growing rapidly. I’m talking about it every week. Do you have some objection to me correcting misinformation?
May 7th, 2009 at 3:10 PM
Something else that will affect Saskatoon’s real estate market – builders who are currently building spec houses and/or have bought lots to build on. They need to find people who will buy their spec houses and build on their lots. This will aid with oversupply throughout the rest of the year as these spec houses keep reaching the market.
Next week sales will be back in the 70′s, these little blips happen.
May 7th, 2009 at 3:11 PM
Jim,
I just want to look at the facts as they come out and I’m quite willing to accept whatever they happen to show. If I have not made myself clear that I think Saskatoon real estate is overvalued and bound for a correction, then I don’t know what I have to do to make myself clearer, but I have no intention of riding some fantasy train that pretends and when anyone attempts to credit me with comments I never made you can count on my to speak up.
Heather,
You’re a real trooper.
Yes, with only 48 conditional sales on the board, I’d have to say that this week probably stole a bit from next week and that the unit sales will take a hit in the next report.
Armoth,
They probably won’t be disappointed for very long.
May 7th, 2009 at 3:12 PM
Dan/Doug,
Anecdotally, I have been hearing repeatedly of potential sellers pulling or just not listing their properties due to the slowdown. Rather than try to sell into the storm, these people are becoming landlords, hoping for further appreciation or at least stabilization in inventory. This is a good strategy as long as prices seem to be increasing (and they are, for now), but I suspect a number of these people will hit the exits if prices ever start to drop. So in essence, I think there are even more than 1326 properties that would ‘like’ to be listed but aren’t due to current market conditions.
This leads into the unfortunate and opposite next point though, the rental market is still very, very tight. Much as I would like to predict doom and gloom, I don’t see prices dropping too much until vacancy rates start to drop.
I realize I am putting out two contradictory arguments here but these are just the facts as I see them.
May 7th, 2009 at 3:13 PM
I am looking to buy a home and have been for about 2 years. In 2006 I was a bit picky, not “seeing” what was happening. I would see a decent home in the $150k range (now worth $300k+) and not bid on it because I found things wrong with it, such as a floor plan or whatever. I remember seeing homes that were awesome and priced at $170k or so and totally refusing to look at them because they were “too expensive”.
I figured I had time to find something I wanted, totally oblivious about what was about to happen to the market place.
By the end of 2006, I had been outbid on homes three times, but I had increased my price to $170k from the $150k I was initially refusing to go over. I then got angry with the market place and decided to live at home another 6 months while things “leveled out”.
Well, things didn’t level out. In 2007 I started looking again in the summer time and this time I had increased my budget to $225k. However, I was still routinely being outbid on homes, sometimes by as much as $50k. I remeber one home that was posted for $200k going for $250k. I nearly crapped myself.
Of course, the “decent” homes I wanted were now priced at $250k. The crap homes were now in the $175-$225k range.
The most surprising thing for me is that while my wages increased about $10-15k since 2006 (I went from about $50k a year to 63k a year), I found that I COULD afford more than I originally expected I could and yes, I’ve done the math.
Today, I have raised my overall budget of what I will pay for a house to $275k, having saved up to $40k for a down payment. This is almost double what I was willing to pay in 2006.
Unfortunately, while I increased my limit, decent homes are just out of my budget now.
I make about $65k a year and have managed to save up about $40k for a down payment over the last few years and I have another $15-20k of RRSP’s I can use as well. I figure I can afford to borrow up to $220k on a 30 year mortgage, fixed between 5.5 to 6.5% over 5 years and still only pay about $550-$600 every two weeks, which is doable for me and my wages are going to go up over time as well, so the “pain” I have this year will go away in a couple years time as my wages increase.
The problem I am having now is that all the homes in my price range ($250k-$275k) are utter and complete crap, tiny, in run down areas and need literally $30-50k in renovations to make them “decent”. Hell, even the $300-400k stuff generally needs $30-50k in renovations as everything in those homes are dated to 30 or 40 years ago, but they are MUCH better homes than what is available under $300k.
I have no issue paying $275k for a GOOD/DECENT home.
I have HUGE issues paying $275k for a run down piece of *** that was worth $50k 3 years ago.
Do I expect prices to fall? Yep, but I am a realist. Things are not going to drop to where they were, they will simply drop to where all of us thousands screwed out of the market place, will be able to “get in”.
I am not in a position to “wait” for ever as some of you on this blog suggest, because I am pissing away $800 a month on rent and years of my life, when $1150 would get me that $225k mortgage.
The minute I can find something “good” in that price range I said above ($250-270), I plan on buying.
What is “good” for me?
A bungalow at about 1100 square feet with a 1 or 2 car garage that is in a “decent” area of town and isn’t about to cave in on me. I have no issues renovating it over the next 4 or 5 years as money and time permit.
As I said though, those homes are not available in that price range quite yet… but I bet by the end of the year they will be. Ya, I CAN find a 1100 sq foot bungalow for $250 or $275k, but it is a piece of garbage right now and I want something a little better.
The good news for me is that the homes I want are JUST a touch out of my price range (only $30-50k) and if the market corrects over the next 12 months, they will drop enough that I can finally able to buy them. That is all I need… a $30k-50k drop in prices and I am off to the races in a great home.
There are thousands of people out there who are like me and waiting to buy a home. I have lots of friends in my age group (late 20′s, early 30′s) who have quietly been saving up thousands of dollars for down payments and waiting to buy. If things come down even a bit, we will buy. We’ve been screwed out of the marketplace now for 2+ years, but we are also totally sick of being screwed by renters or its just time to move out. I am 31 and cant live at home forever right?
As I said above,I am paying $800 a month on rent on a 1 bedroom Boardwalk Apartment and I am sick of pissing that money away monthly.
May 7th, 2009 at 3:13 PM
Norm, ignore the “tough comments” through the anonymity of the internet. You do an awesome job on this site and the time you put in posting this info and answering poster’s questions should be commended. You definitely go above and beyond.
May 7th, 2009 at 3:14 PM
PS:
I made a wording mistake.
I was orignially living at home in 2006 but have moved out for the last 18 months and living in an apartment and paying through the nose for it.
Pissing $10k away a year on rent isn’t my idea of value. Especially since I have been trying to save at least another $1200 a month to have for a down payment and living “apartment poor” because of it.
Some will no doubt argue that I should stay in a rental and force the market to crash, but that is stupid thinking.
2 years ago I was saying “oh it will all stop going up and we have nothing here to offer people and bla bla bla” and I was wrong. I am not going to make the same mistake and think that if I wait long enough, things will crash down to the ground. That isn’t going to happen either.
Sigh. I think people like me always get screwed.
May 7th, 2009 at 3:15 PM
Craig,
I feel your frustration. It is very tough to decide on such a big purchase. We are on the same boat. Maybe buy something smaller for now and upgrade later? Even if prices do drop say by 10%, in comparison to a 400K house, a 220K condo will drop by 22K. Just my opinion…
Good luck,
May 7th, 2009 at 3:15 PM
Something,
Thanks! It’s certainly not that difficult to find renters at a decent rate but I think we’ll find that there are some investors who are “upside down.” I know that there’s one company who bought several hundred condos at over $100K a door. They’re leveraged all the way, have many vacant units which they intended to “condo-ize” and, well, let’s just say that things aren’t going pretty good.
They may not be able to get the kinds of rents that they need to keep their lenders happy.
I see some of these “investors” just walking away.
There are probably a handful of others who bought three or four new houses at $300K plus. Those will be hard to rent for enough to cover costs and if you’re running $500 negative on three properties that gets pretty tough to take.
Craig,
Ouch!
Thanks for sharing your story.
Over the past couple of weeks, I think we’ve entered “buyer’s market” territory and you will start to see conditions improve in the months ahead. I don’t know about $50K, but a $30K correction is not out of the question. That would take us back to the point where unit sales began to drop due to lack of affordability. My guess is if we get back to averages in the $270-$280 range that we’ll start to see more of your “friends” become active participants again. I would suggest that you might want to be just a bit ahead of them. Don’t be afraid to buy something that looks a little ugly either. Some of those really “dated” properties are solid and well maintained. There are lots of area 2 properties that come and go, that have had the same old guy looking after it for years. Good shingles, upgraded furnace, newer windows, but original kitchen, gross decor, etc. These ones are going to be a bit tougher to sell because nobody but the entry level buyer wants them and they’re largely unaffordable, not just for you, but for almost everyone at that end of the market. An offer at 10% below list just might fly, and even though home improvement goods are through the roof, $25K can still go a fairly long way, especially if you’re willing to do some of the work yourself.
Best wishes.
Chris,
Thanks for the props.
I suspect that many of the more frustrated people on this blog have a story that’s somewhat similar to Craig’s. They’ll not only feel like they’ve missed the boat, but they’ve also been kicked around a lot by the landlord over the past year.
May 7th, 2009 at 3:15 PM
Norm, would that leveraged company happen to be Prudential. Every second condo listing that comes out has Gary Emde’s picture on it. They must own have the condo conversions in the city.
May 7th, 2009 at 3:16 PM
Mike,
I don’t believe that Gary or his company has an interest in any of the condos he’s marketing. He did sell a whack of apartment buildings through 2007 and some of those clients are now coming on the market with him as their representative.
I’m not aware of any real estate brokerage that is directly involved in conversions as an interested stake holder.
May 7th, 2009 at 3:16 PM
Craig,
I can really sense the frustration at renting in your post, but please take the following myths about renting into account:
# As a renter, you have no opportunity to build equity.
FALSE. Equity is just money. Renters are actually in a better position to build equity through investing in anything other than housing. Renters can get rich much faster than home owners, in general, just by investing in conservative stocks. The stock market has always been much better than the housing market in the long run.
* Owners are losing principal in a leveraged way as prices decline. A 14% decline completely wipes out all the equity of “owners” who actually own only 20% of their house. Remember that the agents will take 6%. (Sorry, but I must state the obvious, Norm).
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
# Renting is just throwing money away.
FALSE, renting is now much cheaper per month than owning. Yearly rents are less than 3% of purchase price. Mortgage rates are 6.5%, so it costs more than twice as much to borrow money to buy a house than it does to rent the same kind of house. Worse, total owner costs including taxes, maintenance, and insurance are about 9%, which is three times the cost of renting. If you don’t rent, you either:
* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for less money. This extra income could be 50% to 200% beyond rent costs.
In spite of all this, people who post on this blog, (myself included!), would like to own a home. Home ownership involves much more than just the investment or monetary aspects of the equation. You sound like you are saving diligently for a down payment, and you’re not considering the 40yr “rent” mortgage (which insures you will pay nearly 900K on a 300K house, on average). Try to make the down payment as high as possible, keep the amortization as short as possible, and make your mortgage as often as possible (weekly or biweekly, if you can) to keep the interest you pay to the bank to a minimum.
I understand that continuing to wait is frustrating (particularly considering your feeling of “missing the boat” a couple of years ago).
The market is correcting.
Hang in there, and keep saving. You’re doing what it takes… you just may have to wait a bit longer.
May 7th, 2009 at 3:17 PM
Crikey,
I do appreciate your thoughtful comment. “Hang in there, and keep saving” is excellent advice for Craig. Most home buyers would be wise to come in with more cash and less mortgage and renting for a time is one way of accomplishing that. I know I’m impressed that Craig is “saving at least $1,200 per month.”
While I believe that anyone who wants to enjoy the benefits of home ownership should have that opportunity, I can agree that there may be times when renting is a smart alternative.
That said, I’ll maintain that all grown-ups pay mortgages, taxes, insurance and property repairs. Further, landlords don’t work or invest money for free. If there wasn’t a fair return on purchasing and then renting to someone else, nobody would do it.
By the way, real estate fees, at the upper end of the competitive spectrum are not likely to amount to more than 4% on an average priced home in Saskatoon.
May 7th, 2009 at 3:17 PM
Craig,
There is nice neighbourhoods in area 5 on Whelan, Carter and in that area. And I think even tho the houses here are around 300k and I think they will come down abit to 250-280k. Thats about 4 times the Sask salary which is a good benchmark for affordability.
May 7th, 2009 at 3:18 PM
hey Norm
I noticed that you posted that there are 1300 hundred homes for sale on the MLS system. Any idea how many homes are actually for sale in saskatoon including Kiji, classifieds, saskhouses, bulliten boards etc?
May 7th, 2009 at 3:19 PM
Hi Yvonne,
I know that there are 341 Saskatoon properties advertised on saskhouses today, but no, I don’t have a reliable handle on how many others may be available privately outside of that.
May 7th, 2009 at 3:19 PM
Craig — what Norm & Crikey said. Renting isn’t ‘throwing your money away”. It gets you a place to live; you’re actually much further ahead than you would be with a zero-down 40 year mortgage: a very small fraction of your payment goes to the principal, much less than the 1200 a month you’re saving! It usually takes people a couple of years just to pay off the CMHC premium.
May 7th, 2009 at 3:20 PM
jrochest,
Thanks. Again, I appreciate the support, but Jim was right. I was in a “pissy” mood and he called me on it. No big deal. Thanks again.
May 7th, 2009 at 3:20 PM
“real estate fees, at the upper end of the competitive spectrum are not likely to amount to more than 4% on an average priced home in Saskatoon”
I was not at all aware of that. I stand corrected- thanks!
May 7th, 2009 at 3:21 PM
Crikey,
No worries. It’s kind of an unpleasant topic that nobody really enjoys talking about.
May 7th, 2009 at 3:21 PM
Out killing some time on a nice Sunday, thought I’d see some open houses in my area. I am amazed how many places are for sale. And all the open houses commented on how this had been the first good day in 2 weeks (granted rain).
Still, to say 99 sales is a strong week, when 221 new places were put up for sale, and listings increased to 1,326 with new stuff and whole apartment to condo conversions on the way (even the small ones add like 30 units at a time) shows how weak the preceeding few weeks have been. And a lot of reductions. Granted some for stuff like a $350,000 Buena Vista attrocity split to $300,000 with some fly by night realtor (signs looked like made by his 4 year old daughter), but in general, a lot of $10,000 to $20,000 reductions and a lot of very similar property with no real distinguishing factor.
New listings just barely exceeding sales by a 2 to 1 margin does not seem like a rebound in sales.
Lots of stuff available, definitely a buyers’ market.
The two above have to drop price averages for months to come.
An additional comment, it seems a lot of these scuzzy low $300′s places have an impromptu 1 bedroom non compliant suite added, often separate locked entrance. All these suites coming on line has to weaken the rental market for condos and make them a little worse investement as well. These non compliant suites are basically adding more units to the market than is reflected in the 1,300 units available, if there are a couple hundred bedrooms/basements to rent that weren’t there last year.
Still seems like prices are coming down.
To all the “bulls” when was the last week when there was actually a “decrease” in available listings?
Might as well wait till that happens before buying, no urgency at all for buyers. Sucks for motivated sellers. Maybe some incentive to actually list house for fair rate, instead of telling every open house buyer in the door you’re “motivated” and “very flexible” with price. Wonder how many open house shoppers are just cruising on a nice day, with no intent of actually buying until prices “correct/soften/etc” at least back to January levels?
I’m actually thinking some of the 10% estimates for drop from peak April prices may actually be too conservative. If places are already being reduced nearly 10%, aren’t selling and are still “flexible”, but with lots of “flexible” competition down the street.
May 7th, 2009 at 3:22 PM
99 sales this week, is not bad, is it a blip on the market, only time will tell.
Jim, although you tell people to hold off, 99 people disagree with you, do you think 99 suckers bought houses last week? only time will tell whether they a smarter then everybody else, or wahether you are correct. I don’t think 99 suckers bought properties last week.
May 7th, 2009 at 3:23 PM
Yeah, 99 people thought it was a good time to buy in, likely with some of those reductions out there on previously more expensive places that weren’t selling, and 221 people think that it’s a good time to sell. Seems like a recent record number of people trying to get out now, and a lot of rental properties being cleaned up and placed for sale despite increasing rents, means they suspect current prices are as good as it gets for a while, and don’t want to watch prices fall and have to wait a few years for them to catch up. Probably selling, investing the money short term and then buying more after the prices drop. I don’t think we can say it’s a strong market until sales outnumber new listings but at the moment the number of places for sale just keeps climbing.
May 7th, 2009 at 3:24 PM
Armoth, Saskatchewan had prices less than half of the national average pretty much my whole life, if you bought 40 years ago with the same argument your relatives from BC would all have laughed at you. Something being cheap is not enough of a reason to buy it.
May 7th, 2009 at 3:25 PM
Norm —> damn tootin I’m a trooper! ;’)
Don’t fear first time home buyers, our time has arrived!!!
Craig I feel for yah. For the past 5(?) years Saskatoon’s real estate market has been on an upswing. Now that it is on buyer’s territory there are a lot of bulls getting “nervous”. *cough* It is slowly but surely becoming an opportune time to buy in. It should be easier making your decision to buy while values are slipping rather than skyrocketing. I realize you’re not interested in waiting another year – this upcoming winter should have some pretty sweet deals.
May 7th, 2009 at 3:25 PM
Andre,
Yes, I know the one. What happened to it? I took it down from there.
Armoth,
Current inventory has 836 single-family homes and 386 condos.
May 7th, 2009 at 3:26 PM
Hi Norm,
I see the listing below has a non-legal basement suite and 2 garages. I’m thinking of buying my first home, and like the idea of extra income from the house to help make payments. 2 questions: What does a ‘non-legal’ suite mean? And can people rent out garages separately from their homes. If so, does anyone know how much the generally get rented out for? Thanks.
May 7th, 2009 at 3:26 PM
Non-legal means that if the City of Saskatoon gets a call from anyone, and they get to remain anonymous, they will come to your house with an order to inspect, and you have to let them in. If your house doesn’t meet City codes, and there are alot of them, you have to vacate the suite, and do the repairs within a required time period. If you do not do them, you are not allowed to have renters there anymore. I had a psycho neighbor who took it upon herself to report my non-legal suite because she figures she’s the law. I had to remove my tenants (lost income), then proceed to do $50,000 worth of renovations. The inspector came back to check and gave me an occupancy permit.
My advice, stay away from non-legal suite, unless you’re willing to gamble. Look for legal suites and ask to see their permit, it may cost you a extra money, but the peace of mind and future resale value will pay for itself!
May 7th, 2009 at 3:27 PM
Thinking,
“Non-legal” implies that the suite is operating without a permit from the city, and in most cases, it will fall short of meeting the zoning bylaw requirements which govern suites.
There are many “non-legal” suites through out the city and some of them operate for years without incident. However, the City of Saskatoon will come after you if someone reports that you have one. Generally, if that happens, the property owner receives a notice of zoning bylaw violation informing them that the city is aware of the existence of the suite. They will invite you to entertain a city inspector at the home who will provide you with a list of stuff that needs to be done to bring the suite up to code and successfully obtain a permit, if in fact the property qualifies to have a second living unit. Zoning and lot size are primary concerns and not an issue with this particular. Alternatively, you would be given the option to convert the home back to a one-unit dwelling.
More details on the City’s website at http://www.city.saskatoon.sk.ca/org/development/services/procedures/legalizing_existing_suites.asp
May 7th, 2009 at 3:27 PM
Thinking,
Also note the the guidelines for suites that existed before 1999 are quite relaxed in comparison to suites developed after that time. In order to take advantage of the relaxed codes you have to be able to prove that the suite existed prior to that time (signed letter from previous owner). I’ve seen many of those which could be brought to code fairly inexpensively.
May 7th, 2009 at 3:27 PM
The garage thing . . . likely $100 – $150 if you’re renting it as unheated storage space exclusively. You may be able to tack on another 50 to 100 bucks if you’ll let them use it as a work shop or do repairs or whatever in it. I’d reccomond simple storage though – you don’t want them in your yard and on your property too often.
May 7th, 2009 at 3:28 PM
I’m noticing ‘covering rentals’ showing up on Kijiji — that is, houses and condos that have both ‘for sale’ ads and ‘for rent’ ads.
In most cases, the rent is substantially less than the carrying costs on the asking price — by about 400 bucks if you assume a 40 year mortgage at a rate of less than 5%, and by much more if you assume a more realistic 6% rate and a 25 year mortgage.
Of course these places are renting, but they aren’t going to sell! I’m sure the current owners paid less, but I also doubt they intended to become landlords.
May 7th, 2009 at 3:29 PM
Well, you can expect the average income to be bumped up over the next couple of years as I was just told that the Saskatchewan teachers will be soon be threatening strike action unless they are offered the same 35% pay raise the nurses we’re offered. If they are given this, and they no doubt will, this will open the doors for every other unionized public servant recieving a 35% increase as well. When this happens, one would think this would boost the overall average family income for Saskatonians, albeit at the loss of the non-unionized private sector employees that will have to cover the bill for these pay increases through increased taxation.
Hmm… I wonder if Canada post is hiring? Maybe it’s time to join the pigs at the trough
May 7th, 2009 at 3:29 PM
I though I’d just put a positive note after hearing all the negativity on here. I personally moved here from Calgary and am in my early 30′s and am virtually mortgage free living in a huge house which I bought January 2007 so I personally love the boom that happened. Another person I know bought late 2006 , sold mid 2007 , made a lot of money , paid off her student loan and put a big deposit on a house in Langham and she’s now in the best financial shape of her life thanks to the boom.There will be a correction , but no crash. I hope it takes off again, the boom has benefitted a lot of people.
May 7th, 2009 at 3:29 PM
Jason: you can ALWAYS expect the average income to rise. You can also always expect heating costs, taxes, insurance rates and other maintenance costs to rise as well.
The stuff that isn’t selling isn’t going to be any cheaper to maintain in 5 years.
May 7th, 2009 at 3:30 PM
Saskaboom,
How about instead of wishing for another real estate boom you hope for a REAL boom for our province? That would help everyone, not just those who bought property prior to 2007. The real estate boom has shut out a lot more people than it has benefited IMO. Those who have not VS those who already have but want bigger and better. To me it’s clear cut.
May 7th, 2009 at 3:31 PM
Interesting point Saskaboom, I am guessing you will take a lot of flack on this blog. But what you have done is exactly the opposite of what others want to do. They all want prices to drop so they can buy a way cheaper house, and they don’t care if sellers lose money or not. I have brought up the point before that if the prices drop by a large margin that seller may be selling at a loss. There is no compassion for these sellers, I keep hearing that sellers that have purchased their house prior to 2006 will not be affected, and if there are sellers that do take a loss they are just collateral damage. Translation, if a seller loses money—too bad.
For some reason people don’t feel that sounds selfish. That said, do I think a buyer should spend more then market value, no way. For weeks now I have been reading how many buyers are going to use the volume of listed properties to their advantage, and leverage one property against another to get a better deal. Why is it when we have a seller discuss the money he has made in real-estate he/she is seen as a bad person that should wish for a “REAL boom for our province” , funny…. It’s wrong for a seller to make money off of rising prices, but it’s alright for buyers to save money off of declining prices.. Sounds like a Double standard
May 7th, 2009 at 3:32 PM
Carl,
See I can see your point somewhat…BUT…when it’s a nessessity of sorts it’s a bit of a difference.
I mean for those of you that don’t understand where we ‘deboomers’ are coming from, why don’t you move to a city that you can’t afford to buy into and then see how it feels to probably never get into the market.
People always root against those that ‘have’ most of the time because those that ‘have’ simply lose touch with those that ‘can’t or don’t have’.
If there were a boom that actually brought anything decent to the city…you know, amenity wise, retail wise (no not more of the same stores in different locations), person wise, sportswise, and activity wise more than a small centre…maybe people like me would feel more understanding why there have been these crazy real estate increases.
To hope that it crashes or cools down is only natural when you are at the outside looking in. Not everyone ‘had the choice’ to buy in, the few that did are lucky i’ll give you that, but the rest that could not? Just call them dumb, unfortunate, unbuzzers, etc.
One extreme example is in countries where it’s militarily run, by a dictator, the rich, the few, the powerful, they get to do what they want, buy what they want, while the rest of the people can’t now or probably ever if they stay there, get a similar opportunity…i mean the only difference out here is that we CAN speak out and speak up without prosecution. We may be called crazy, or just not financially smart, but that’s nothing but a quick cop out instead of actually thinking about the issues.
It’s not a pick at you Carl but I just hope people that did get into the market, can take 2 seconds and ‘think’ where others possibly are on this topic.
May 7th, 2009 at 3:33 PM
Saskaboom,
Real estate is never supposed to go up 45% in one year, and because the wages now can’t support the “value” of these properties a correction is imminent. Just as Norm has stated, we’ve reached our limit of affordability. No double standard here, and unless people bought with intentions of flipping nobody will lose any money from this. It’s all positive unlike what “some” people will have you believe. When I buy a house I intend to live in it for 10+ years, I’m not one who needs fancy things. Also, just to have a place to call my own is reward enough. It’s a home, it’s value is everything to me, and has nothing to do with the market. It’s a roof over my family’s head. Isn’t that what really matters?
May 7th, 2009 at 3:34 PM
Jesse G, you make some good points. I appreciate what you have to say.
Heather, i dont’t think you are catching what i am saying, you need to reread my post. sellers can lose money if the market decline… reread the point about collateral damage. yes double standard. get it right.
May 7th, 2009 at 3:35 PM
Carl, I tend to agree with the “boomers” on much of what’s being talked about here. But when you say there’s real difference between sellers selling high and buyers buying low (to paraphrase), you’re missing the point completely.
The error is that you’re saying because in both scenarios the “money” balances out, they’re two sides of the same coin.
Real estate isn’t just about money; if prices go down after a buyer buys in, they lose some equity. But if prices rise to the point where people are completely excluded from the housing market, they also lose their ability to “own” a home- to have a place where they can live out their retirement,their family can grow up, etc.
While the money may be the same in either scenario, when people can’t own the place they call home, they lose something else, too.
For this reason, housing isn’t like any other commodity- and treating it as such is to ignore human nature.
May 7th, 2009 at 3:35 PM
my above comments should say “when you say there’s NO real difference…”
May 7th, 2009 at 3:37 PM
Norm, you also forgot to mention the other points when it comes to making a suite legal in a house that was built prior to 1999.
Separate hard-wired alarms must be placed strategically throughout the house. (upstairs and down)
The furnace room has to have fireguard drywall inside and outside.
The entrance way must be fireguard drywall throughout its entire length from the entrance to the suite.
All the doors in the suite entranceway and including the suite door must be solid core doors with automatic closers on all doors.
The windows in the bedrooms of the suite must have an unobstructed open portion of 3.8 meters with no dimension less than 15 inches. This measurement is taken when the window is open. The awning type window must meet this requirement.
Access to each dwelling unit must be gained without passage through a furnace room
Dwelling units must also have fireguard drywall on the ceilings separating the basement and the main floor.
Rise and run, width and headroom of stairs must reasonably conform to National Building Code and stairs must be provided with a handrail.
Ceiling height in exit corridor cannot be less than 1.95 meters. Projections or obstructions cannot reduce the headroom clearance beyond 1.80 meters.
Ceiling height in all rooms of secondary suite cannot be less than 1.95m over 75% of the area, and cannot at any place be less than 1.80m.
Hardwired smoke detector in the furnace room connected to rest of detectors.
Bathroom must have mechanical or natural ventilation.
Combustion air is required in the furnace room.
Proof of age of the suite.
Two sets of drawings of the suite, before and after.
Separate permits are required for existing plumbing work that was done without a permit or for new plumbing work.
Secondary suites shall occupy no more than 40% of the gross floor area of the dwelling, including the area of the basement.
In order to accomodate a secondary suite, the building must be larger than 100m squared, including the basement area.
The maximum size of the secondary suite shall be 65 meters square (700 sq ft).
No more than one secondary suite may be located in any one unit dwelling.
A secondary suite shall contain no more than 2 bedrooms.
No more than 3 persons may occupy a secondary suite (children included)
One off street parking space is required for the tenant. The parking space cannot be in the front yard unless there is no alley, and shall be paved, sited, and screened to the satisfaction of the development officer.
Where a secondary suite has an entrance which is separate from that of the principal dwelling, the entrance may only be located on a side or rear wall.
I had to conform to all these rules, guess how much it cost me? $50,000!
All I have to say is, buyer beware, buy an illegal or non-conforming suite at your own risk. If I was ever to buy another house with a suite in it, I would buy one with a legal, permitted suite. It may be a few dollars more, but it will save you a lot of grief and money.
Remember all it takes is one disgruntled tenant or neighbor to call the City of Saskatoon, and your goose is cooked!
May 7th, 2009 at 3:38 PM
Has anybody noticed? Listings on Saskhouses.com are really starting to slow down in the last week, only 4-5 per day, whereas last couple of months it was averaging 15-20 per day, sounds like we’re starting to run out of houses to sell!
May 7th, 2009 at 3:39 PM
Ex-Landlord,
Thanks. It was not my intention to minimize the risk of buying a non-legal suite. I did not have time today to type all of those out so I referred him to the city’s website. I do thank you though for taking the time.
May 7th, 2009 at 3:39 PM
If you only count Saskatoon listings on Saskhouses, there are only 2-3 per day for the last week, sounds like inventory is going to start going down.
May 7th, 2009 at 3:39 PM
Ex-landlord,
Lol.
There was no gain in inventory on the MLS today for the first time in a long time.
Might be a little soon to call it a trend.
May 7th, 2009 at 3:41 PM
Lawtalkingguy,
Well said! Some people don’t get that owning a home is about more than it’s face value.
When there is a correction in the market a property will lose some of it’s value, but in that same market other properties will also errode. So unless one plans on moving to a completely different market, or plans on selling their property and renting, the equity or LOSS of equity won’t be realized anyway.
Ex-landlord,
It might have something to do with sellers considering renting out their flipped properties because now they can’t get the price they wanted for it. This is good because it will help to increase the vacancy rate which is in dire need of improvement! There will also be those who hold off until fall to see if they can get a better price. Good luck to them. Also, think of all the spec homes being built right now to be completed by the end of summer/fall. Shouldn’t have a problem with inventory levels for awhile.
May 7th, 2009 at 3:42 PM
wow why did i click on their name why the hell would I buy a property in Budapest…..
May 7th, 2009 at 3:43 PM
Armoth,
Blog spam.
You have to wonder how much someone has read when they describe the “week in review” as a “great” real estate story.
May 7th, 2009 at 3:44 PM
Heather D,
wow, read Jesse G, I agree with what he says. I do not agree with you. You can’t say that some sellers won’t lose money is the market takes a hit, it’s referred to as collateral damage on this blog, and I think it’s rude to cheer for such a thing. Again, do I think that a buyer should pay more then market value so that a seller doesn’t take a loss– no.
Buyers are talking about the emotional part of buying a house, did you for once think that sellers have the same emotion, probably not. You seem to be offended when a seller makes money on the housing market, but if a buyer saves money at the Sellers Expense you applaud it, encourage it, and paint the picture that nothing bad will occur from it. Maybe it’s mr. collateral damage that will never own a house again. tough for him, but good for you eh.
Again, read the comments from Jesse G he talks about the emotion on both sides.
May 7th, 2009 at 3:45 PM
Lol buyers will become sellers and sellers will buy again. Im not sure why people are complaining about the house prices if you could not afford a house a year year and a half ago what makes you think youll ever be able to afford one.
May 7th, 2009 at 3:45 PM
I could afford to buy a house a year ago but I couldn’t justify spending that kind of money. I don’t even have to talk about this year.
Some of us are looking for a home to start a life and raise a family. I’m not interested in a house as an investment. I put my money into other things.
If the rental situation wasn’t such a mess right now, I would feel better about continuing to rent. Hopefully things will improve in the near future.
Is it so hard to be respectful and see things from someone else’s point of view?
May 7th, 2009 at 3:46 PM
Come on, let stop talking about how lower housing prices are going to cause “collateral damage” or are somehow unpatriotic. Lower prices are better for almost everone, unless you are a “specuflipper” who bought near the peak and are now desperately trying to sell.
Aren’t lower food and energy prices better? Housing prices are the same: lower is better. Most people directly benefit by a decrease in house prices, particularly new families. IMHO Heather is right- nothing justifies an icrease of house prices of 45% in one year. Too many people who shouldn’t have got into the market with ridiculously long amortiation terms, which certainly helped drive up prices (I’m not saying that’s the only reason, however). Only the banks benefit from increased mortgage debt.
If you own a house, lower prices have very little effect. If you want to sell and buy another house, higher prices mean you’ll just have to pay more for the next house, while lower prices mean you will get a discount when you buy. If you want to buy a bigger house, you come out ahead with lower prices.
Most people on this blog seem like they just want to own their own house. That’s fine. House ownership is great – unless you ruin your life paying for it. If you can save even just 10% on the price of a house, you can retire several years earlier than you would otherwise. High housing costs take away from families’ ability to save for retirement, fund their children’s education, travel and lead a quality life.
If you need to sell and you can’t sell without a loss, you were overleveraged anyway. Ther’s nothing more to it than that. I can honestly say that this is a terrrible situation to be in, but no one ever forced someone to buy an overleveraged house. Those who did will have to learn a lesson the hard way and take some personal responsibility from their decisions.
If you want to buy, look around and see that house prices seem to be falling, at least temporarily. Why hurry to buy into a falling market? Time is on your side. Save your cash and buy for much less in the future. The way to win the game is to have cash on hand when others cannot get a loan. You do not want to be bidding your hard-earned savings against people who are bankrupting themselves with debt.
May 7th, 2009 at 3:46 PM
Ex-Landlord:
Man, thats one big list! I now understand why so many people I know don’t rent out their basements, even though they have a suite in them.
I’d say, though, that I’ll be looking for a live/rent when I do buy: I spend enough time out of town that I’d want another person living on the property.
May 7th, 2009 at 3:47 PM
Thanks for everyone’s advice about the basement suite and garage rental. Very useful information! I’ll keep those points in mind when I go look at the house.
May 7th, 2009 at 3:47 PM
Well Jeff if you would of bought last year you would now have been doing good. Your proving my point. I guarantee, if you did buy then you would not be on here complaining about high house prices. Same goes for heather and anyone else they would all be happy Im sure.
May 7th, 2009 at 3:48 PM
I will try one more time, no one really knows what the market will do. We are looking at the fundamentals of supply, demand, income, and others… Perhaps we are missing fundamentals that are needed to give us a more complete picture. I have heard many claims based on fundamentals for the last 3 years that have been incorrect. There were claims 3 years ago that the market cannot go any higher, and buyers should hold off. People that followed that advice, and I know people that have, and are regretting the decision. Truth is Crikey you really don’t know what the future holds, you have a guess, and so do I.
Here is the point, you and Heather want to purchase a property at the lowest price you can, let me ask how can you are at the lowest price???
Let say 6 months after you purchase the property the value of your property drops by 15%. For some reason outside of your control you have to sell your property. You will have to sell your property at a loss, and that point in time I someone posts your comments
“If you need to sell and you can’t sell without a loss, you were overleveraged anyway. Ther’s nothing more to it than that. I can honestly say that this is a terrrible situation to be in, but no one ever forced someone to buy an overleveraged house. Those who did will have to learn a lesson the hard way and take some personal responsibility from their decisions. ”
The words will seem rude and hurtful, and perhaps at that point you will understand the other side of the story. At the same time I am sure you would find it pleasant to read blog posts that cheer on your demise, and cheer on the person that perpetuates your demise. Nice work Ladies
Jen,
I agree, I have said it enough
May 7th, 2009 at 3:50 PM
ryan,
Did you ever stop to think you might know people that are affected by this? Everyone on here probably knows someone who is experiencing rent increases/low vacancy issues, or can’t afford to buy into the market. You’re simply ignoring them, friends, family, coworkers. They would be hurt to hear what you’re saying about their situation. ie. Should have bought in a year and a half ago, or if they didn’t they’re stupid to think they could ever afford a house. What kind of crap is that? SURE I’d be happy if I’d bought in a year and a half ago! But I SURE wouldn’t be on here telling those shut out of the market that it’s their own fault, or tough luck. I
May 7th, 2009 at 3:51 PM
You know its funny that you mentioned the sask houses being more expensive. I remember when selling privately used to mean that the buyer would get some kind of deal. Otherwise why would the buyer not use a realtor. but now it seems that the people who list privately are way out to lunch on what they are asking for their home.
May 7th, 2009 at 3:52 PM
Doug,
Not to worry, I’m not buying into the resale market (yet anyway). I should have more information by tomorrow with any luck! I agree with you 100% on waiting right now! Things are looking better and better. ;’)
ben,
Very good point, right now most private sellers are shooting themselves in the foot. The minority might be selling at a reasonable asking price (for the current market) and are able to make a quick clean break.
May 7th, 2009 at 3:52 PM
Carl,
The point of that particular paragraph was (highlighted):
“no one ever forced someone to buy an overleveraged house…”
Did someone hold a gun to your head and say, “You must buy this house and go into way too much debt to do it”?
No, I didn’t think so. If you go into way too much debt and the market makes a correction, you lose, you’re right. Sorry. Life, and any investment, comes with risk. Some win, some don’t.
My advice, and take it or leave it at will, is: DON’T EXPECT YOUR HOUSE TO MAKE YOU RICH. Don’t even expect it to make you much of anything, except being a great roof over your head that you can do what you want to.
Many people, I hope, will consider all of the consequences — financial, emotional, etc. — and conclude that buying a home is the best decision for them. Just don’t trick yourself into thinking it’s a good financial decision if it’s not.
I myself intend to buy a house some day. However when that day comes, I will be buying a house because I want a nice, “permanent” place to live where I’m the boss, not because I think it will help me get me rich.
May 7th, 2009 at 3:52 PM
Should rename this blog “Renters giving home buying advice”.
I know this blog has high traffic, so let me just tell all the prospective buyers out there: get buying and selling advice from people who actually own real estate. Get buying and selling advice from people who have done it before, get buying and selling advice from professionals, ie Realtors, mortgage brokers, lawyers, etc. I cast a doubtful eye on all those renters who seem to carry on as experts now, for the simple fact that spend all their free time posting on blogs and reading the news.
May 7th, 2009 at 3:54 PM
Callum,
So….if renters now are paying what people who bought 2 years ago, were paying on their mortgage…we have no financial credibility? What makes the difference!? Or is it simply a sliding bar that keeps moving whenever investors see fit? Go ahead and generalize all you want, if a person truly goes through the blog entries, they will all see how there are 2 sides to the coin and that someone is excessively more negative than he thinks he is and may take that into consideration as well for making an investment.
May 7th, 2009 at 3:56 PM
Reading this forum in the last few weeks has become humorous.
We have the people who want a house “predicting” everything will drop to 1/3 its current value, as that is the price they need to get in.
Everybody who owns a home is predicting it will stay where it is at or rise further.
The few people in the “know” (Norm) are pretty confident of a minor correction and a total leveling off.
No offense, but about all the arguing here that happens now is basically self centered.
May 7th, 2009 at 3:56 PM
Well, if as you say, I can generalize all I want, how’s this: A renter will always have a good reason to tell another renter not to buy. It’s in their interest. No one wants to be shown up.
In blatantly, over-simplified terms which I will probably regret on here: If I wanted to be a better golfer, I wouldn’t ask a tennis player how to do it. Same thing with real estate.
May 7th, 2009 at 3:57 PM
callum,
If first time home buyers who wait until fall, or even winter can save $20-$30K on their mortgage, why would you encourage them to buy in now? The market right now is flooded, prices in May already slid 5%. So what’s the point of buying in until one sees if the market is going to level off?
Renters are just as valuable as homeowners, and neither should be considered market analysts unless that’s their actual job. I think people realize everything said on this blog is opinion only, and if they want professional real estate advice they ask Norm.
May 7th, 2009 at 3:57 PM
Let’s say the housing market corrects by 10% (~$30k) over the next few months. Great… except this will be offset by mortgage rates increasing by about 1% when the Bank of Canada starts hiking interest rates next quarter, so the buyer is going to essentially end up with the same mortgage payment on a (slightly) cheaper house, for effectively a net gain of zero. If mortgage rates go up more than 1% all bets are off…
And this assumes there is any correction. I’ve spoken with a half dozen sellers on MLS who are going to be pulling their listings because they’re fed up with buyers nitpicking over *every* little detail and starting to demand unrealistic conditions. There are a lot of people who *don’t* need to sell, and only listed because the market was at its highest point, so I suspect you’re going to see a lot of *great* properties pulled in the near future.
May 7th, 2009 at 3:58 PM
The same people who are pedicting a crash are the same people who didn’t buy a house when prices were reasonable and now are scrambling to try to get into the overpriced real estate market . The same all knowing people who no matter what happens to the market are paying a lot more now because they keep on waiting for the price to go lower.
May 7th, 2009 at 3:58 PM
Crikey,
“no one ever forced someone to buy an overleveraged house…”
True, but I’ll bet we could turn up at least 1,000 buyers who felt as though they had little choice last year. The people who moved here (and I’ll agree that they can only blame themselves for that) most often felt desperate and without options. Nothing to rent, and 15 other buyers wanted every property that they tried to buy from 500-1000 km way.
I totally agree that a person’s home should not be an item in their “investment portfolio.”
Callum,
“Should rename this blog “Renters giving home buying advice”.”
I don’t think it would work.
It is somewhat reassuring to know that “interest” does remain high.
Joe_blow.
“The few people in the “know” (Norm) are pretty confident of a minor correction and a total leveling off.”
My predictions should be seen as nothing more than guesses. I suppose you could throw me a bone and say “educated guesses” but that might even be a stretch. I just see far fewer relocations into Saskatoon and a bit of a bottle-neck at the entry level. Affordability is definitely an issue.
Heather,
“prices in May already slid 5%”
? The “average” overall dropped 1.7%. A single-family home was $1000 less in May than it was in April. Not really a measurable difference. Further, there was 25% less dollar volume in the $500K+ range during May so it doesn’t appear that we can look to bigger homes propping up the average. Perhaps June will bring you some pleasure, but the average month to date is still above $306,000.
Armoth,
Just can’t let it go, hey?
Drake,
“half dozen sellers on MLS who are going to be pulling their listings because they’re fed up with buyers nitpicking over *every* little detail”
Shame on those buyers! After being so damned agreeable for two years, writing offers 5 figures above list on houses that are ready to fall down, with absolutely no conditions! How can they treat a poor seller that way?
Almost every “good” deal concludes with a seller who feels they’ve taken a bit less than they wanted to, and a buyer who feels that they’ve paid a bit more. Otherwise, someone tends to feel like they’ve been ripped off. Sellers who can just pull their houses off the market because of “nit-picking” buyers are not serious selling candidates. They’re speculators who are messing up the market for sellers, just as they did for buyers when prices were surging forward. I say, “please, pull it off the market today.” Let’s get back to the business of a serious buyer and a serious seller who are both serious about making a deal.
May 7th, 2009 at 3:59 PM
Oh those poor sellers on MLS who have buyers actually putting conditions on a sale. Oh those poor sellers who only have their house for sale because their prices are unrealistically inflated. I hope they do pull their listing and quit whining to Drake because they can’t sell their house at a stupid price, they’re so hard done by, give me a BREAK Drake.
May 7th, 2009 at 4:01 PM
Norm, note emphasis on *every* detail, implying excessive agonizing over minor details, such as the odd paint chip or ding in the wall of an older house (I’m not suggesting that if the roof needs repairing that would be excessive). And by unrealistic conditions, I’m talking about things like long lists of subject-to’s and other unreasonable demands (such as incredibly short possession dates, etc.) These kind of (again, excessive) demands are likely to cause sellers to reject the more complicated and challenging offers and accept something much simpler instead (for possibly less money because they’re less of a hassle).
I think you entirely missed my point which was that if buyers tend to come across as too demanding they’re potentially going to lose out on those deals where they may have been able to obtain a property for a price they’re comfortable with, simply because they’re deemed by the seller as “high maintenance”. Not every home owner (selling) will have the same set of circumstances, reasons or motivations for selling, and to treat all sellers as ‘speculators’ and paint them with the same brush is simply going to ensure lots of potential missed opportunities.
Wesco, please re-read my original email and clarification above. There’s a difference between standard conditions and excessive conditions, and if you think asking for a long laundry-list of non-standard items is going to endear you to a seller and help negotiate a better deal, you’re going to be in for a rude awakening. As for unrealistically-inflated prices, the fact of the matter is that Saskatoon was undervalued to begin with, and houses are still selling for rates close to what they were at the peak.
The attitude that comes across in your email is exactly the attitude I was trying to suggest is not going to help the first-time home buyer.
May 7th, 2009 at 4:02 PM
Drake I got you, point well taken.
May 7th, 2009 at 4:03 PM
Drake,
Sorry, I guess I did miss your point.
I have never heard of a buyer making a big deal of a paint chip and I’m not seeing “unreasonable” conditions as a matter of course.
I realize that all sellers are not speculators, only those who have the luxury of withdrawing from the market because they can’t have everything their way. A simpler solution for anyone serious about selling would be to fix that which is a problem. If it’s not a big deal, address it, instead of running away from the market. That shows no motivation whatsoever and what buyer wants to deal with an unmotivated seller?
Every property is marketable and there are good opportunities for sellers in this market.
Here’s an excellent post from one of my favorite industry blogs. Anyone selling a home should give it a quick read.
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=3232
May 7th, 2009 at 4:03 PM
Norm, neither had I up until a week ago. I suspect this is a sign of the times, though. Arguably there are more than a few MLS listings that do fall into the “older, run-down and overpriced” category, and these have a tendency to have a negative influence on listings as a whole.
You bring up some excellent points about fixing any glaring problems/oversights, and thanks for the article (appreciated). I think this quote sums it up best: “Price matters – but so does everything else: When buyers come to see your home, they’re looking for reasons to reject it, not to buy it.”
May 7th, 2009 at 4:05 PM
“The one they buy will be the one that raises the fewest objections, for the money. If you want that money, you have to do everything you can to take away your buyers’ objections — before they think to raise them.”
Most of these fussy buyers will buy a home and there’s no reason to expect that they’ll settle for less if they can get more.
This post was written for home sellers in Phoenix. Of course, it applies to any market but ours is a walk in the park compared to theirs.
May 8th, 2009 at 10:08 AM
Why complain or nit-pick about the house your looking to buy. Offer what you think its worth the seller will either accept it or reject it or counter. Most sellers in saskatoon dont have to sell probably have low to no mortgages and are not going to put up with whiners. Ive walk through shacks never said anything and offered what I thought it was worth to me. Thats all, take the emotion out of buying a house and you will do good.
May 8th, 2009 at 10:08 AM
And one more thing I love the houses that have imperfections and are dated get the house way cheaper and then can remodel it the way I want it for a hell of alot less.
May 8th, 2009 at 10:09 AM
Ah, so now we get the complaints about ‘whiney buyers’ who won’t buy your house at the price you think they should be able to afford?
I see why Drake’s annoyed, but I think that annoyance is just one more piece of evidence of the market shift. A good house at a good price will sell, but people have some choice now, so they’re choosy.
May 8th, 2009 at 10:10 AM
Prices are going down from here. Even Norm thinks prices are in for some level of correction over the next few months.
May 8th, 2009 at 10:14 AM
For the last time there are no high or low prices if someone asks 1,000,000 for a small house offer him 250,000 if he takes it fine if he doesnt fine. Whats the matter with you complainers go bid on 50 houses you like lowball whatever price you think its worth Im sure with that number you will get one you want for the price you can be happy with. Why wait for prices to come down make your own.
May 8th, 2009 at 10:15 AM
Attention spec home sellers in the new areas:
If you are wondering why your property is not selling
take a look at the property on saskhouses in Arbor Creek listed at 499,900. House and yard is completely finished inside and outside,top to bottom.
If someone is looking to upgrade and looking to be spending 499k for a house plus interest in the next 25 years,they don’t want to be spending another 50-80 on top of that in the next few years to finish it.
If they are going to be house poor, at least put in a stove so they can cook macroni.
May 8th, 2009 at 10:16 AM
George I was thinking the exact same thing, that house is a steal of a deal in comparison to stuff in Stonebridge and willowgrove. It’s not even close in comparison, if I was in the market to spend that kind of cash, that house would be sold already!!!
May 8th, 2009 at 10:17 AM
George,
Good luck with your home sale.
May 8th, 2009 at 10:17 AM
I agree with ryan that buyers need to refuse to pay anywhere near asking (yes Norm some houses are priced reasonably but…) because the inventory is increasing steadily, unless it’s actually unique, there will be another dozen houses like it on the market, and another dozen new ones next week.
That said, if sellers aren’t willing to accept your substantially lower offer, wait. Something similar will be on the market tomorrow, and the day after that, and the day after… you get the point.
A 10% drop in prices for a $300,000 home IS a big deal, and we can’t say prices won’t drop MORE than 10% with the increase in inventory and a week with increased demand to 99 places still way below the 200+ new listings. With reductions all around us, stagnant sales and record huge inventory bid low. Real low. If you don’t get it. Just wait a while. No point in losing $30,000 in equity by paying sticker now instead of waiting a few months. Then again, doesn’t hurt to bid 10% under and test the seller’s motivation out!
May 8th, 2009 at 10:18 AM
I saw that arbor creek property on overholt too. It sure looks like a big step up from any of the new construction I’ve seen. It looks like a gorgeous house, and no work once you’re in. I know what I’d choose lol.
May 8th, 2009 at 10:18 AM
Sounds like what your saying Jim is early next year I will be the only one on my block cause every1 moved away and cant sell. I would like that…maybe the whole city will be empty and I can be like will smith in that movie shooting deer to survive.
May 8th, 2009 at 10:19 AM
Now armoth how many For Sale signs are on your block? There are 4 on one corner by me, 5 by a set of town houses, 2 beside the apartments across the street. In some areas, there are a LOT of places for sale! I definitely wouldn’t pay full price when you know there are 5 places for sale in the same 3 year old town house complex. Especially because when one For Sale sign comes down (probably just relisted) another always takes its place, or 2 more where one was before! Armoth, if you’re so confident in real estate fundamentals, buy a condo now. I bet you’ll be kicking yourself when you see them going for 10% less, or even lower, by the end of the year! If you don’t believe me, just drive down any major street in Saskatoon on a Saturday and look at all the open houses lining the side streets!
May 8th, 2009 at 10:19 AM
Hey did anyone see a letter by me in the Star Phoenix recently? I thought they were going to publish it. I thought it was a pretty well thought out commentary on the ongoing increases in listings. I’ve missed a few editions, and it is hard to search anything with their sight. I still think those on here who feel strongly about the housing issue should be writing letters to the editor, a broader audience at very least, who often seem to know little other than TV told them their house should be worth more. I don’t think Joe Public knows that inventory is way up, demand down, and fundamentals suggesting a drop in sales prices, to go along with all the reductions and re listed and stagnant properties out there.
I know I find this blog an invaluable source of actual information from all sides. Thanks Norm.
May 8th, 2009 at 10:19 AM
Hi Doug,
There was 7 sales signs on the way home and on my block in zone 5 where the new houses are. Out of the 7 that were listed 5 of them are sold except for the main drive on 33rd house and the house near us that has no upgrades and looks pretty crappy inside. If you u want you can check the past listings in Whelan, Carter, and that area people have no problem selling their houses unless they look like a crapheap. And I never said condo’s are a good investment they are overpriced and pretty much useless to a large family. I think the condo market needs a correction not the single family homes tho i do admit some of the listings are pretty out of wack. So I’ll say it again condos are gonna take a huge dive and single family homes will only see a slight correction. But what do i know im just a peasant =’(
May 8th, 2009 at 10:20 AM
Yeah…
Tried the writing the “letter to the Editor” thing about how housing prices were out of whack with fundementals (and no, not just in Saskatoon. I moved here from Vancouver, which is an infinitely “bubblier” market than this one). They called called and said they were “considering” it.
Nothing happened. I’m not really surprised. This is likely due to the fact that every major media outlet (magazines/tv/newspaper/internet”news”sites/radio)across Canada is run/owned by two media conglomerates. They decide what is given as “news”. A good percentage of the papers’ revenues come from RE/bank ads. They’re not about to shoot themselves in the foot.
May 8th, 2009 at 10:21 AM
Nick,
Your letter was published in yesterday’s letters.
May 8th, 2009 at 10:21 AM
Norm,
I was just taking the word from other blogger’s posts on here, wherever that 5% came from maybe had something to do with houses only?
May 8th, 2009 at 10:22 AM
Norm,
you caught me! lol
Unfortunately for me that is not my house. My house is about 2/3 worth that and not in Arbor Creek. I wish. Try south of the tracks from Arbor Creek. And it ain’t Briarwood!
May 8th, 2009 at 10:25 AM
Not to discredit anyones property, especially one as nice as this, but the housein Arbor Creek that was mentioned here a couple posts ago could be a sign of things to come. I remember it being listed on MLS at the beginning of May for $579.900 (not sure if this is what it started at), and sometime a few weeks ago was reduced to $549,900 (nearly 14% reduction). It now sits on Saskhouses for $499,900 – not bad (for these times) for a house over 2200 sq.ft and on a 1/4 acre lot.
May 8th, 2009 at 10:25 AM
Nick,
Interesting letter!
I haven’t followed reports on oil and where prices may be headed. I would be very surprised if oil went back down to $75 a barrel and actually stayed there for a extended period of time. However, there is a LOT of changes happening right now around the world, so maybe anything is possible.
May 8th, 2009 at 10:26 AM
Any one able to hook me up with a link?
thx
Nick
May 8th, 2009 at 10:27 AM
Nick,
I actually saw it in the paper. I find the SP website difficult. Once the current day passes it’s often hard to find older stuff. I’d be happy to mail you the clip if you want it. Just hit the “email” button below the banner image and send me an address and I’ll pop it in the mail tomorrow.
May 8th, 2009 at 10:27 AM
Here’s the link to Nick’s letter:
http://www.canada.com/saskatoonstarphoenix/news/letters/story.html?id=f7976def-afe6-48bc-8a60-d13fe3cbbcac
Enjoy reading your blog Norm, thanks for doing it.
May 8th, 2009 at 10:29 AM
I thought I would post a question here for those in the know. My wife and I are planning to cash in our equity gains to build a custom home in Saskatoon. I am testing the waters about being my own general contractor on this project. But, I am having a hard time judging the true costs of building here. For example, if a 500K home in Warman is selling for 700K or 800K in Willowgrove, is this difference all profit to the general contractor? Building costs can’t be so different for labour and materials, can they? The lot a few thousand more perhaps, but not by more than 50K.
If the savings to the bottom line really are 150-300K, I would happily take a year’s leave of absence (or half-time) to contract my own home. I would be working at my regular job at a major loss to not contract the home myself (remember the contractor’s take would be included in a mortgage over 25 years). I appreciate that general contracting is not easy, but I am sure that if someone is focused and relieved of other work responsibilities, any organized person can coordinate this over a year. I can’t be the only one with this view…I imagine homeowner contracting must become more common as prices become too obscene to justify when faced with known labour and materials costs?
May 8th, 2009 at 10:32 AM
Thx for the link Thomas,
I’m always amazed at how editorial cropping changes these things, I guess they have their word limit but always seems tougher to get the point across when they slim it down. And Crikey, keep trying with the letter to the editor thing, I find they only publish about half of mine, but usually are upfront when they say they have too many and don’t consider mine to be worthy…
What ever happened to Planet S? Is it still around? Do they publish letters?
In case any one calls me on the oil thing, I really just wanted to get across that there do exist differing opinions on our economy and play a bit of devils advocate some time when I feel coverage is one sided. Still, I remember a couple years ago when oil was only $30 a barrel, so prices can go up and down without fundamentals mattering much (ie Saskatoon housing market!!)
May 8th, 2009 at 10:32 AM
Looking to build,
I am in the same boat as you. I have a couple teacher buddies who built in Briarwood a few years back. It cost one of them 200k to build and to buy pretty much the same house it was 250k. This was about 6 years ago. I thought 250k was crazy money! How times change.
Materials priced out to build a bungalow, no lot, no basement,no labor, about 60k. nothing fancy,
You can expect to save 15 to 25 percent of construction costs by GCing the project yourself, but this will mean locating, qualifying, supervising, and scheduling subcontractors. A general contractor has his own list of reliable plumbers, electricians and dry wall contractors and knows the timelines involved in bringing them in. If you lack the expertise, delays and mistakes will quickly eat up any savings from not hiring a professional GC.
Right now is not the time to be doing this, wait for things to slow down. Probably like 2010 or so.
May 8th, 2009 at 10:39 AM
Looking To Build,
I would suggest also hiring a good lawyer if you plan on general contracting yourself. With the current state of limited qualified/quality workers out there, extras will become a big issue and you need to have everything ironed out in terms of legality/liability prior to allowing anyone to work on your project. Otherwise it may turn out to be substantially more costly and timely than you initially planned and budgeted for.
May 8th, 2009 at 10:40 AM
Crikey:
I have been on Norm’s blog since it’s inception and have never interpreted an oposing opinion as being a result of my gender. I am confident you will not find that here either.
May 8th, 2009 at 10:42 AM
Looking to build,
I know this may sound funny, but i have a background drawing up architectural drawings, so have knowledge of how buildings are put together… The HUGE cost is labour and mark up on a lot of these items by the contractors and companies. My mom wanted to put in a garage door in the back of their garage, estimate to rip off some wood, put in a beam, put in framing, was something like $3000. Being appauled, I went over there, spent maybe 3 hours, bought 2 2×10′s and some 2×4′s and did it for about $35 bucks.
MARK UP MARK UP MARK UP.
May 8th, 2009 at 10:43 AM
Thanks for the comments. Waiting might be a good idea to save on labour costs. Lots of time for us.
May 8th, 2009 at 10:45 AM
Nick
Letters to the editor editing is hilariously bad for editing that sometimes knocks out the punchline/take home point, cuts out stuff in the middle, and often trims down when already under the limit. Back when I got the paper, I always enjoyed the letters section, not sure why the Star Phoenix is always so constraining size wise. Often more interesting than half the stuff they stick in!
George/Looking
Waiting to 2010 might be required, but I’m hopeful with ramped up building and sales now, everything will be cooled down by 2009. Cross your fingers though. People are going to be resistant to the idea of taking pay/selling price cuts after a year and a half of charging whatever they want.
May 8th, 2009 at 10:46 AM
Wait, to correct my last post, I meant ramped up building and available listings for sale. Actual sales activity is down, and less than listings. Hence the inevitable correction.
May 8th, 2009 at 10:47 AM
Norm, I know your June 16-20 numbers won’t be out until next week, but it actually looks like we’re seeing a housing price *increase* so far in June.
Jan 2008 ….. $259,444
Feb 2008 ….. $264,269 (+1.8%)
Mar 2008 ….. $289,440 (+9.5%)
April 2008 ….. $306,268 (+5.8%)
May 2008 ….. $301,527 (-1.6%)
June 2008* ….. $313,354 (+3.9%)
*Norm’s stats (first 2 weeks of June)
http://www.sreb.com/Srarstats.php3#Month
The increased numbers of MLS (and private) listings doesn’t necessarily seem to be driving the average price down like a lot of people are theorizing… So yes, there are definitely more listings, and yes, there are obviously fewer houses selling, but all average sales for the month of June have in fact been higher than May (very interesting) Also, three questions for you (or anyone knowledgeable on #2/#3):
1. There seem to be a lot of duplicate listings, ie: houses listed on both MLS and private. Any idea how many of these listings are actually in both? (whenever the total number of listings is posted it’s always MLS + private)
2. What’s the average new lot going for these days? (I know this really depends on the area, but in general, say in Willowgrove, Stonebridge or Hampton Village).
3. Do you know what the average cost of construction per square foot is running these days? I heard anything under $200 is “questionable”. For your average well-built home/renovation, is the $200 figure realistic, or is the number closer to $225 or even $250 per square foot?
May 8th, 2009 at 10:52 AM
Regarding price reductions;
Sure a correction is in order. But it really depends on how badly sellers are exposed to risk. Calgary’s listing frenzy may be peaking and your market seems to follow this one with some kind of time delay. Your in migration may suck up the surplus as good economic news gets out and things evolve. Beware though; if things look good the specuvestors will pounce again.
May 8th, 2009 at 10:55 AM
looking to build
I’d definitely hire a right hand if you’re looking to sub out your own build. Not necessarily someone to work beside you, but at least someone who knows the ins and outs and has done it before. The tradespeople are not as flexible to work with any more, and are quite used to calling their own shots these days (can you blame them??). I would suggest that this is NOT a good time to take on a build on your own with no experience. There are lots of people out there that would fit the profile of a mentor sort of role for you – I can think of 3 off the top of my head right now. It’s not something you can afford to risk going wrong. You don’t want severe delays or trades walking off the job, or arguements about extra costs when the job is complete.
That being said, I would also suggest you secure a lot before you get too involved. There are several posters on here that can attest to the almost impossibility of finding land in or around saskatoon right now. You may find that you’ll be stuck working with a builder in the end because they have all the land spoken for already.
I wish you the best of luck in your build. You can save a lot of cash being your own general contractor. You might even get hooked and start a business doing it in the end. There’s lots of demand for GC’s right now lol.
May 8th, 2009 at 10:55 AM
Hey Drake –
Norm’s numbers are the number of listings on the MLS: that doesn’t include the private listings on Saskhouses, which are frequently duplicates.
According to everything I’ve seen in the last three years or so, the usual pattern for a falling market is:
a) an increase in inventory
b) a dramatic drop in number of units sold
c) a steady or rising average sales price — although often not in the median price.
It takes about 9 months of high inventory for average & median prices to drop consistently. People pull their listings and try again in another three months.
A few high-priced houses can schew the sales figures, and sales of higher priced units are supposedly the last to slow down: Supposedly, people who are buying these units are less dependent on financing, and the highest-priced areas tend to keep their value longest.
Again, supposedly, it takes about 6 to 9 months after an inventory increase for the average prices to begin to fall: they’re sticky on the way down. The truly noxious guys on the Alberta Bubble blog have been jumping up and down about the ‘rising average prices’ in the teeth of astronomical inventory, buy-a-condo and get a car givaways, and judicial sales listings.
May 8th, 2009 at 10:56 AM
Drake,
I notice that condo sales, as a percentage of sales seems to be dropping some (29% April, 23% May, 21% to date in June). Naturally, that means that a higher percentage of the sales are single-family homes, which have a higher average selling price. That appears to be propping the numbers up some.
1.) No way to know except to compare and count. I know I don’t want to do it.
2) The lot sale map on the city’s webpage shows Willowgrove lots from mid-90′s to the high 130′s depending on size and location.
3) I’m hearing $225ish.
May 8th, 2009 at 10:56 AM
Norm, interesting about the increased condo sales. Actually surprising with a drop in cheaper condo sales, relative to actual homes, that the price dropped at all. It does explain why the average price hasn’t dropped more with the big spike in demand.
Norm, Is there anyway to compare apples to apples, that is average house price to average house price to see what the drop would be then? Would be interesting to see if say an actual house sold for $30,000 less than an actual house a month before. The drop must be relatively big, if the average price went down at all, when most sales were more valuable properties.
May 8th, 2009 at 11:00 AM
Sorry Norm, didn’t thoroughly read your post, I now notice #1, I guess it would be a lot of work to actually add up houses for 2 months to determine how much more the average price fell.
May 8th, 2009 at 11:00 AM
Jim,
read the month report that Norm put out.
http://www.teamfisher.com/blogs/norm_fisher/archive/2008/06/14/a-closer-look-at-the-saskatoon-real-estate-stats-for-may-2008.aspx
“In fact, Saskatoon home buyers paid $276 per square foot for their homes in May, compared to $272 per square foot, the month before. Basically, they settled for a little less home, for a little less money.”
No drop yet.
May 8th, 2009 at 11:02 AM
Interesting about the more houses selling hiding a drop in prices…
George, houses are more expensive than condos, a 1000 sq ft bungalow (often with 1000 sq ft developed bsmt +/- suite) will sell for more than a condo, with no yard, no basement etc… So a drop in condo sales explains away the apparent similar price per sq ft, as more expensive houses are being sold in cheap condos’ place.
May 8th, 2009 at 11:02 AM
Doug,
The cost per square foot of a house was up in May by about $4.00.
It appears to be down as much in June so far, but the average selling price is a whopping $340,726 (houses only).
May 8th, 2009 at 11:03 AM
ooking to build / Drake,
The average lot in Willowgrove is really around $100,000. The ones higher priced than that are larger and usually in culdesacs. (some with walk out basements) For the next lot draw the city shouldn’t raise lot prices more than $10K. That’s been the usual “inflation” from draw to draw. Maybe with the slowdown they won’t raise prices at all the next time around. (there is supposed to be another 500 lots up for grabs by fall)
I know not all contractors that build for less than $200/sq ft are questionable. I’ve met a couple who do very good work, and I’ve seen proof. I think the real estate boom led the way for larger companies to milk the demand for all it’s worth. I’ve even heard a few stories of larger (well known) building companies producing shotty houses because they’re trying to get them up quickly, and not supervising the work being done. (One acquaintance, her house rooms were actually built crooked!) There are phone numbers of many private contractors around the newer neighbourhoods. You can ask to view the houses they’ve built, get references, many are under the new home warranty program. Naturally, you do have to protect yourself by doing your homework.
May 8th, 2009 at 11:03 AM
Doug,
I dont understand why houses selling would hide a drop in prices the house still sells for the same price it is listed at.
May 8th, 2009 at 11:05 AM
Wow! I’m really disgusted with some of the personal attacks on this thread.
People making inflammatory personal attacks ought to be ashamed of themselves – you know who you are. Fine neighbours you’d make….
May 8th, 2009 at 11:08 AM
guy_in_regina,
I completely agree that the personal attacks have gotten well out of hand and you’re not the first one to raise the issue.
I guess I need to think about doing something to bring back a little civility.
I am loathe to “moderate” comments (as in, must be approved by Norm before being published). My days are almost always wild and it would really slow the discussion if every comment had to be “approved” by me.
Does anyone have any suggestions?
May 8th, 2009 at 11:08 AM
Anonymous postings will do that to a blog.
But for all the vitriol at times expressed, this is a pretty good community of commentators. There’s no real trolls, in the sense of someone who does nothing but hurl personal abuse. We *disagree*, and often virulently, but the level of dripping ooze is low.
You could have people register, I suppose.
Callum Captcha “Began casualties”
May 8th, 2009 at 11:09 AM
Hey Norm (or anyone else in the know):
Could you tell me how many “months of inventory” there are currently on the market? I know there are various online calculators, but they all seem to be American, (which now that I think about it shouldn’t make any difference!).
From what I’ve been able to find out about “months of inventory” or (absorption rate), it’s an approximations of the number of months it would take to sell the entire inventory of homes in an area (if the pace were to stay constant).
From what I can glean:
Normal Market – Between 5 and 6 months of inventory.
Seller’s Market – Between 1 and 4 months of inventory.
Buyer’s Market – 7 months and higher
Thanks!
May 8th, 2009 at 11:11 AM
I agree that things are getting out of hand, from my perspective it is isolated to only a few people. I think perhaps a code of should be posted, stating what behavior will not be tolerated. I am not sure how to state it, but i can give it some thought.
May 8th, 2009 at 11:12 AM
Norm, thanks for listing the average housing stats for May ($340,726 is a *huge* increase)! I think that’s what some of us were trying to gleam from the average/overall numbers.
Any way you slice it the average selling price in June is up, and the average cost per square footage is also up. The correction seems to be happening elsewhere ( duplex, semi-detached, mobiles and vacant lots). Here’s my question for you: did prices actually drop $45,000 from April to May for these types of listings or were we perhaps seeing a liquidation of the remaining (cheaper) inventory?
George, thanks for the link (appreciated).
$340,726 sure seems like a big increase over May to me!
Heather, thanks for the info. I’ve heard that comment a few times (in various forms) from a few tradespeople, and just wanted to see how it applied in general terms. I think you’re fairly accurate with your assessment on some of the “reputable” builders vs. some private independent contractors (basically that you can’t judge the quality of work by the size of a company necessarily).
May 8th, 2009 at 11:14 AM
My suggestion, Norm, is that as you read through the posts, whenever you happen to be doing it, you simply delete any that contain overt personal attacks, hate-speech, sexism, etc. You can probably set it up so that a place-holder will remain where the deleted post was and you can leave a message like “post removed by moderator.” That’s what CBC does.
I agree that overall the exchanges on this blog are civilized and constructive, and that it’s a few people who get out of hand.
Kudos to Norm for the great blog! Nothing like this in Regina – is there?
May 8th, 2009 at 11:15 AM
In my opinion,
I understand the frustration of personal attacks as I have recieved a fair share myself. However I like this blog exactly how it is. Don’t change a thing!!
May 8th, 2009 at 11:16 AM
Norm,
I’ve noticed that area 4 seems to have a low amount of inventory compaed to everywhere else. As what I can see there’s only 150 properties. If memory serves me wasn’t there around this many listings in area 4 when inventory was at 500 and less? I would expect with nearly 1400 listings that there should be well over 300 active there. What’s your guess why it’s so low there (comparitively speaking)
May 8th, 2009 at 11:17 AM
Crikey,
I’d have to do some research on the whole “absorption rate” thing. I’m not sure exactly how one estimates the demand. Over the past three years, unit sales have averaged about 3,700 per year, or 308 per month. Using that figure, we would have about a 4.2 month supply.
Drake,
These shorter term averages are always subject to some bouncing around. Remember, on 300 sales, a couple of 800-900,000 sales can impact the average by $5-6K. When you’re looking at these other categories, the numbers are slimmer yet. they can be as low as 25-40 units in a month, so they are subject to even larger swings. I really think that we have to look at it over a longer period of time (a few months) to see what kind of trends are developing.
The June numbers could look different by the end of the month.
May 8th, 2009 at 11:17 AM
Northstar,
Interesting observation, and I’m not sure why. For such a large area, the listings do seem rather low. Area 1 is at nearly 500 and 2 is closing in on 400.
May 8th, 2009 at 11:19 AM
Northstar,
Just a thought. Is it because investors are actually seeing a return on these? Seems to me that area 4 was one of the few places where you could buy last year and see a positive cash flow. Maybe they’re easier to hold right now?
May 8th, 2009 at 11:21 AM
Drake said:
“Norm, thanks for listing the average housing stats for May ($340,726 is a *huge* increase)! I think that’s what some of us were trying to gleam from the average/overall numbers.
Any way you slice it the average selling price in June is up”.
Norm,
You alluded to this in your response (thank you!), but I think this is a concept that is too easily leapt on as an indicator of something significant, when it may not be. For example, unless I’m missing something, weekly changes in house prices HAVE to be highly skewed.
In this admittedly highly simplified example, say in week 1 you sell 20 houses for 306K- the average is obviously 306K. But in week 2, you sell 9 houses for 275K and one property for 750K. The average is now 322,000. Does this mean that the price of all homes listed has gone up in one week by $47,500? No!
Am I missing something about how you’re calculating the stats?
May 8th, 2009 at 11:21 AM
As to the absorption rate thing, I think you’d calculate demand as the number of sales in a given month relative to listings, no?
I’m not used to using these “absorbtion rate” calculators, but with sales over the last week at 93 (and yes, weekly stats are admittedly highly skewed, as I pointed out earlier;)), I’m getting a much higher number in terms of months of inventory.
Then again, it’s entirely likely I may have inputted the numbers incorrectly… it’s late, and I need to get to bed. :0
May 8th, 2009 at 11:22 AM
Crikey,
The threads I’ve been following for the past few weeks jumped all over the “average” house price declining in May, with some predicting a decline in prices back to 2006-era levels. Now that the average housing price in June is going to be substantially up over May, somehow the numbers aren’t indicative of a trend…? Either we’re all using the same numbers as a base point of reference or there really isn’t any consistency.
I agree that we should be comparing apples-to-apples here, ie: single-family to single-family, condo-to-condo, lot-to-lot, etc. — and looking at the specific areas for each (area 1 will be quite different than area 3 or 4). And yes, while a few $600k or $800k+ sales can skew the prices, so can a few “fire sales” of mobile homes or trailers for below $100k. It all kind of equals out in the end, does it not?
The only thing everyone does agree on is that there’s abundantly more inventory, which could easily be consumed with the residence needs to build a $100M new police station, $300M south bridge…
May 8th, 2009 at 11:24 AM
Hi Crikey,
On the averages thing, you’re absolutely correct, and the $340,000 average for June shouldn’t be taken as a sign that prices are rising. If anything, it suggests that there is little real evidence that they’re falling.
My original intention in publishing the weekly average list and sell was to demonstrate what’s happening in terms of negotiations and not so much to peg current values. Over a longer terms, these numbers can begin to indicate trends but they’re not reliable to peg moving values from one week to the next. Even the monthly numbers are subject to some fluctuation from month to month. In the last half of 2007, these numbers bounced $15K from one month to the next. Up, down, up, down, up again. These are the monthly averages which include all residential sales since 01/01/07.
01/07 – $190,037
02/07 – $187,594
03/07 – $200,938
04/07 – $220,862
05/07 – $233,917
06/07 – $252,443
07/07 – $245,151
08/07 – $253,240
09/07 – $242,091
10/07 – $255,613
11/07 – $252,202
12/07 – $255,271
01/08 – $259,444
02/08 – $264,269
03/08 – $289,440
04/08 – $306,268
05/08 – $301,527
You can see that between June and October of last year, it was a little tricky to tell where we were really at. Prices were not rising and falling on a monthly basis, but the average was, and it was more indicative of what people were buying at the time. The following few months start to make it a little more clear about where prices were headed.
I’ve incorporated the cost per square foot into my monthly reports as another indicator which can provide some clues, but even that is not perfect. Generally, two storey homes are more expensive than bungalows (average sale price) but they’re less expensive when compared by cost per square foot, so a larger number of sales in a particular style can skew those numbers somewhat.
“Absorption rates” have never been much of a factor here as long as I’ve been in the business because inventory has almost always been low. I do have to do a little research on that and learn a little more.
Drake,
“The threads I’ve been following for the past few weeks jumped all over the “average” house price declining in May…It all kind of equals out in the end, does it not?”
See above.
Sometimes, just a little evidence appears to be very convincing if it supports one’s assertions or beliefs about where things are headed. Of course, there are a ton of reductions happening which also give an impression. So far, it looks like that’s where most of the adjusting is happening. Of course, the inventory trend is undeniable and if you believe in “supply and demand,” then you have another clue about where things could be headed.
I believe that all will become clearer over the next few months, but for now, prices appear hanging in there, but there’s almost certainly some volatility.
May 8th, 2009 at 11:25 AM
Link Re: months of inventory:
http://mainlinepatoday.com/2008/06/13/absorption-ratemonths-supply-of-inventory-tools/
Absorption Rate Calculations – Macro Focus:
*Determine the number of Sold Properties in the last 12 months
*Number of Sold Properties divided by 12 = Absorption Rate Per Month
*Divide number of Active Listings by the ARPM = Months Supply of Inventory
Now here’s where it gets fun and interesting ~
Absorption Rate Calculations – Micro Focus:
*calculate for a specific property area.
*make sure that you’re using “comparable” data when you go micro
*forecast “trends” by watching a neighborhood or period such as three months
It would be interesting to see both the macro and micro focus, no?
May 8th, 2009 at 11:27 AM
Thanks Crikey,
I’ll take a good look at this info over the weekend.
The problem I see with using “the last 12 months” is that the next 12 months aren’t likely to come close to them for unit sales. Wouldn’t it really need to be based on projected units to be useful?
I agree the “micro” would be interesting as well, though going right down to neigbourhoods would probably be a bit more than I’d be prepared to undertake with any regularity. Perhaps a look at the the five major areas would be manageable.
May 8th, 2009 at 11:28 AM
Norm,
You’re completely right, this is retrospective, not prospective (I wish!), but interesting nontheless. I’ve run the data myself with the info available on the SREB website, and what I’m fiddling with is both May YOY data and the data of units sold over the last 3 months. I’ve just run the macro data (total units sold divided by 12 (or 3, depending on the time unit you’re measuring), and then taking the total # of available units and dividing it by this number. What I appear to be getting, however, is a larger “months of inventory” than you previously stated, but again, I’ve certainly been wrong before.
May 8th, 2009 at 11:30 AM
Crikey,
just curious what numbers you are getting?
I have looked at creb and I see an average of 538/month home sales the last 3 months.
If inventory is at about 1500, we get 2.78 months of inventory. Kinda a sellers market. Maybe I am totally out to lunch on these numbers.
Norms number show 4.2 months of inventory using the last 3 years as a basis.
I guess with numbers and stats a person can make them say whatever they want.
May 8th, 2009 at 11:30 AM
Norm,
I LOVE the SWAG method!! Hehehe. Could you tell me first what you’ve got for total # of current listings (not inclusing FSBO)? I’m getting different numbers form different websites.
http://www.century21conexus.ca/ is listing 3210 properties in total within Saskatoon proper. Why the difference in numbers?
George,
Totally true. Remember that old saying: “There are lies, damned lies, and statistics”.
May 8th, 2009 at 11:32 AM
Crikey,
Today’s new listings are mostly up, but sales aren’t processed until the end of the day. For this purpose, 1360 residential units should be very close by the end of the day. Now, I am talking Saskatoon only (areas 1 -5).
Can’t say why the numbers are as they are on C21′s website. There are nowhere near that many MLS listings, even including the rural areas.
May 8th, 2009 at 11:33 AM
Yeah,
C21′s website reportedly includes properties in Saskatoon only (areas 1 -5). I thought they may be including commercial listings, but no, it doesn’t look like it. Perhaps I need more coffee.
Weird. I can’t figure out why there would be such a disparity in the total numbers of residential listings. I guess all our calculations depend on that.
May 8th, 2009 at 11:34 AM
Apparently I really DO need more coffee. I neglected to press the button stating “select all Saskatoon”.
Sorry.
It’s still giving me 1445 listings, but his certainly lowers the “months of inventory”!
May YOY (not including FSBO): 3.02 months of inventory
Last 3 months where data is available (Mar, Apr, May): 2.7 months of inventory
Still a “seller’s market”… sorry about the temporary brain cell seize.
May 8th, 2009 at 11:36 AM
I think the key here is whether 1445 or 1360, listings are up, AGAIN, for the nth consecutive week.
I’d call that a buyers’ market, with a minimum of 3 months supply on the market and growing. Inventory that just keeps climbing and months to sell a property, in what is typically one of the hottest times to sell.
If during peak sales time, new listings still out number sales, just imagine what will happen once we get into the dog days of summer?
And 538 sales per month? Maybe in the past, the past few weeks sales haven’t even cracked 100 per week. 400 sales per month means listings are closing in on a 4 month supply!
May 8th, 2009 at 11:39 AM
Jim,
I agree we are in a buyers market right now. The average of 538 is from sreb which is higher than what Norm reports because Norm just reports condos and houses. No duplexs, mobile or semi detached are reported on Norms reports. I would expect an average of about 500 sales the next 3 months on sreb. I think this is realistic.
Crikey,
On saskhouses the last 20 days are 40 sales of Saskatoon properties with 353 listings as of today. There are almost 6 months of Saskatoon inventory.
May 8th, 2009 at 11:40 AM
Touche George, but if we look at all that other stuff, then inventory is also higher than what Norm lists it at. And I think last week’s 99 was with other stuff.
May 8th, 2009 at 11:40 AM
Getting to 1360 listings from last weeks 1326 is, yes an increase, but a pretty low increase of only 34.
There will be more listings than sales this summer but I am curious to what will happen to the ones that are spec homes and do not sell. If prices drop a bit by the fall will they rent these out for the winter hoping prices bounce up next spring? Or will they relist for a reduced price?
A lot of these spec home sellers will list their own residence as well hoping to sell one property which will inflate listings a bit. So 1 sale will take out 2 listings, this will only be a few though.
I foresee some of these spec homes becoming rentals. I have followed Edmonton and Calgary almost more than Saskatoon and what has happened there eventually comes here. If one has enough time just look at kijji and other classifieds in Calgary for new home rentals. There are tonnes. Most of these homes were for sale at one time. But prices dropped and they could not sell so now they are landlords.
May 8th, 2009 at 11:41 AM
I think the thing to take home here is not to get too much weight to the numbers. Trends are what to look for, and right now we have no trends for “months of inventory”, we just have one snapshot. I would, however, like to see how the inventory has changed over several years relative to sales. We have to remember that Spring is peak buying season, so the YOY numbers will always make more sense.
I’d like to include the FSBO numbers, but the ones NOT listed on SaskHouses are the tricky ones. Maybe I’ll see what the numbers look like with and without.
In any case, there’s no denying inventory is at an all time high. By Fall we should have a far more accurate picture of where things are heading, but there’s no getting away from that “supply and demand” thing.
May 8th, 2009 at 11:41 AM
Crikey,
So what are you using for unit sale numbers? 538 a month is higher than last year and I think it’s fair to say we can expect unit sales to be off from last year.
Including fsbo numbers will be nearly impossible. You’ve pointed out the primary weakness, but there are others. Many units are advertised on saskhouses but are also listed mls. Some will show as sold on both venues. There’s no way to accurately track sales of fsbos. Better to conclude x number of months of inventory on MLS, plus everything fsbo.
George and Jim,
The graphic included in the “week in review” post is always houses and condos only. The text usually includes some discussion on “total residential units” which would include all of the other stuff. The total listing numbers which are oft repeated here include everything in the residential categories.
May 8th, 2009 at 11:44 AM
Norm,
I got the stats from here:
http://www.sreb.com/Srarstats.php3
538 sales is the average of the 3 months of March, April, and May 2008. This average in itself is misleading, since the “total” sales for April are 574 and the “total” sales for May is 502, which is quite a drop.
Anyway, the May 2007 to May 2008 YOY unit sale averages is 479, which is actually quite a bit closer to May’s average.
Do you have different numbers for monthly unit sales?
May 8th, 2009 at 11:44 AM
Norm,
I was so tired today I read both your posts which are the same and it didnt click till now I read the same thing twice =’(
May 8th, 2009 at 11:45 AM
Crikey,
I see what’s going on. You’re looking at “total MLS sales” which includes all types of real estate including commercial.
The residential numbers are different. Find those by clicking the “Total MLS Res Statistics” link on the same page, or, I have them separated from the other stats here. http://www.teamfisher.com/MLS__Stats/page_1723681.html
I think these numbers will produce a far different number. Your average monthly unit sales should actually be 392. I’m sorry I didn’t catch that sooner.
Armoth,
Get to bed early, hey?
May 8th, 2009 at 11:46 AM
Thanks Norm!
Okay, this does change the numbers, but as before, this is rough and is a mere snapshot in time. As numbers of residential listings differed (1360 vs. 1445), I’m taking a lesson in SWAG methodology and choosing 1400 active res listings.
If you’re wondering why I’m doing this, it because I’m a complete masochist.
Not including FSBO:
May YOY: 3.95 months of inventory
Last 3 months where data is available (Mar, Apr, May): 3.57 months of inventory
Assuming about 300 FSBO properties: Saskhouses are listing 354, but some are likely duplicates, etc.
May YOY: 4.8 months of inventory
Last 3 months where data is available (Mar, Apr, May): 4.34 months of inventory
What really struck me from the data Norm provided is May 2008 sales are down 37% from April- is this right?
Please feel free to rip this apart or ignore at your leisure…
May 8th, 2009 at 11:46 AM
SO, if 1360 houses and condos, then only 93 sales last week (which was a big sales week) and previous wasn’t it like 70 a week?
We have a minimum of 4 months inventory.
Even if some week sales finally outnumber new listings, the inventory has grown a lot the last couple months. A lot of places are being reduced. And it seems to be at least an old wives tale that spring is peak sales season. So really inventory should fall this time of year. That it is actually growing, means that we’re in for a big rise in inventory when sales dip later this year.
Any supposed “increase” in prices can be accounted for by a decrease in condo sales. Reductions and throwing in furniture seems to be common now. How can a market that is reducing list price in the face of surplus inventory be increasing in sales price?
May 8th, 2009 at 11:47 AM
Crikey,
Thanks for doing this. Looks about right to me.
Sales in May were off 37% from May of 2007 and about 12% from April 2008.
Doug,
I agree that sale prices are not rising, but so far, there’s no good evidence that they’re falling. No question that the fat is being trimmed off of the list prices in a pretty big way though. Too much reduction activity to believe otherwise. There have been just over 300 price changes recorded in June (a handful of those were increases but mostly decreases) and 189 cancellations. I’m thinking most of those found their way back on the system as new listings at lower prices.
May 8th, 2009 at 11:47 AM
FYI,
Total active residential listings closed at 1385 this week, so I was off in my earlier guess of 1360.
May 8th, 2009 at 11:48 AM
Has anyone looked through Edmonton MLS? I can definitely say that Saskatoon is more expensive now , from what I’ve seen. I was just looking at condos in the downtown area and it is easy to see that you get a nice place with an excellent view for much cheaper than you can dream to get in Saskatoon. Some of the condos in the downtown area in the 250K range would go for 350K or higher in downtown Saskatoon.How does that make any sense……..
May 8th, 2009 at 11:49 AM
Wesco,
The average selling price of a 970′ condo in the Hallmark over the last quarter is $245,560 and there hasn’t been a single unit sold above $290,000. The average selling price of a downtown condo over the past quarter is $273,733. There have only been three sales recorded above the $300,000 mark, all luxury type condos from 1,350 to 1,750 square feet.
May 8th, 2009 at 11:53 AM
Compare these two place;
Edmonton
Saskatoon
I think they are very comparable in all aspects, except the one in edmonton is right on Jasper ave and is 150k cheaper
May 8th, 2009 at 11:53 AM
Slight differences being a low rise in Edmonton, ground floor and the one in Saskatoon is in a a mid rise (wouldn’t call it a high rise) and on the sixth floor, still no reason to be 150K more
May 8th, 2009 at 11:54 AM
Heres one for the same price, tell me which one is of greater value?
Another Edmonton Condo
May 8th, 2009 at 11:54 AM
I would say that you’re far closer to comparing apples to apples now.
May 8th, 2009 at 11:55 AM
There do seem to be a lot better condo deals in Edmonton, cheaper and/or newer buildings, and a lot better supply.
Norm, there was a place listed in the Radisson’s other half for $899,000 in Feb or March!!! Not sure if it sold, and now a very similar looking place is $699,000, likely same one for a lot less. Guess I can’t fault them for testing the waters, before getting a bit more realistic.
There are a lot of $299,000 ish condos downtown, 1000 to 1100 sq ft. Some with parking extra! So I’d definitely say Saskatoon’s down town condos are overpriced! Guess partially because Edmonton has a much better supply of newish condos and condos in general. Still, a bit of a reason to suggest Saskatoon condos are way over priced. Edmonton has a nice river view from near University or Down town too!
May 8th, 2009 at 11:55 AM
True enough, the one for 250K i realize is kind of a little dumpy, but it shouldn’t cost much to bring that piece of real estate to the same condition as in the one in Saskatoon.
May 8th, 2009 at 11:55 AM
Wesco,
Not to put too fine a point on it, but there’s little that can be done to turn a ground floor wood-frame apartment into a 6th floor masonry construction apartment. The view alone is worth 50-75K to the right buyer.
All that said, I agree that your second example is much closer to being comparable, and is probably better than the Saskatoon unit given the fact that it’s nearly ten years newer. Assuming that one gets as good a view as you would with from the 6th floor of the Saskatoon apartment, it appears to be better value overall.
Jim,
There’s one listed there now for $695,000 which is down from $799,000. The highest sale price on record for that building is is $565,000, earlier this year, for what appears to be the same floor plan. Al I can say is “good luck!” They may need to get more “realistic” if they want to get it sold.
In fairness though, I’d love to live in that building. I think it’s exceptionally well done and if you get on the right side of the building you can see down the river in both directions. Sadly though, $695K is a touch on the high side for me.
May 8th, 2009 at 11:56 AM
Wesco,
I could be wrong but the Edmonton Condo is 200 ft smaller than the Saskatoon condo?
I see the average condo price in Edmonton is hovering around the 260k for about the last year.
Edmonton has about 3500 condos on the market right now. They average about 400 sales a month. I could see their prices coming down.
I think Saskatoon is at 250k for condos about 400 supply, is that about correct Norm?
I do see condos coming down with more supply on the market. To me, condos are just a shoebox in a bigger box. The apartment conversions, I mean.
May 8th, 2009 at 11:56 AM
The apartment conversions don’t fall in the same category as the Waterford or the buildings on the river by the Broadway Bridge. They’re not built to the same quality, the units are much smaller, the layouts aren’t as nice, they’re not soundproof and they don’t have the same amenities. They’re fine as rentals, but that’s what they’re meant for.
Apples and oranges, no matter how much granite there is in the kitchen.
Wesco’s point still stands, though: Edmonton should be a good bit higher than Saskatoon.
May 8th, 2009 at 11:56 AM
Hello Saskatoon, to the person a few weeks ago who wrote of missing the market in 2006, well here’s my story. I am born and raised in Vancouver, 34 with two children. Ten years ago when I had my first son my husband who is ten years my senior said we must buckle down ( read live like slaves) and buy a home in our native North Van. Well a decent 2 or 3 bedroom 10 years ago was selling for around 320,000.00.I said to him are you crazy? We can’t afford it as we were making 50,000 between the two of us as I wanted to raise my kids. After paying 1400 a month in rent for 6 years for a 800 square foot house that is now renting for 2200 a month we moved to the Sunshine Coast. No work here and thought to see what our home town was doing. We actually looked at a 780 square foot home in North Van 2 months ago for 700,000.00. It is enough to make you want to cry which I am embarrased to say I have done numerous times.I can’t live in my city anymore and we are moving to Saskatoon this summer (the birth place of my dad and my husbands parents).I feel stupid and run out of my home but am very excited to be in Saskatchewan in 4 DAYS!! Some say Vancouver will crash but unless it crashes at least 50% expect to see alot of Vancouverites in your city (actual people born in Vancouver). Yeah Saskatoon!I love your city and Alberta was never even a consideration. Thanks.