Saskatoon real estate: Week in review (September 15-19 2008)
The pace of new Saskatoon real estate listings slowed some from previous weeks as just 130 residential listings made their way to the multiple listing service including 117 single-family homes and condominiums, the smallest number we’ve seen for any week since the week of March 17-21. Total residential listing inventories showed little change from last week, moving up just one unit to 1,738 properties. Single-family and condo inventories showed equally modest drops from the previous week to settle at 1,083 and 538 respectively. Historically, this is the time of year when active listing inventories begin to slide some. It will be interesting to see if that trend occurs this year.
Residential units sales also softened sliding from 58 units last week to 50 units this week but sales in the single-family and condo categories were down further falling to 42 properties compared to 57 the week before. It was reasonably good week for those looking to unload “revenue property” as close to half of the month’s sales were completed over the past seven days.
A total of 75 residential properties were either cancelled or withdrawn from the MLS and 50 of those units found their way back to the system as “new listings,” most with a new price. An additional 136 price adjustments were processed over the course of the week. Still, the average asking price in the single-family home and condo categories is $336,898, significantly higher than the average selling price of $282,470 recorded in August.
The average selling price of a Saskatoon home was up again at $316,380 largely due to one sale in area 1 which broke the million-dollar mark and pushed the overall average about $18,000 higher. This was the third residential sale to crack the one million dollar mark since May of this year. Before that, the entire MLS history shows just one sale in this price category within the city limits.
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
130 comments so far. We'd love to hear your thoughts.
April 27th, 2009 at 11:51 AM
Norm,
It is quite difficult to accurately track RE markets and see trends without graphical techniques. Average and median prices are only a rough proxy for a Housing Price Index (HPI) which you don’t have in Saskatoon. Average prices can vary considerably due to high end sales. The median price is a much better proxy for HPI. One also needs to have separate stats for condos and houses.
Here in Victoria we don’t have an HPI either so I track the market using median prices and in areas with low sales volume I use 3 month “rolling” averages. If you click on my name you will go to my site ( http://photoshare.shaw.ca/gallery/needinbox/ ). Watching trends one can often see if a downtrend is clearly evident. Here is a link to a report (pdf) I did on Victoria’s falling prices. Your readers might find it interesting:
http://tinyurl.com/vic-falling
I often lurk here on your site. I have family in Saskatoon and if they ever need an agent your phone will be ringing.
April 27th, 2009 at 11:52 AM
Hi Roger,
Thank you for the input. I appreciate it.
When I initially started doing the “week in review,” the objective was really to track the difference between average list and average sell because the market was on fire and people really had no idea how to “bid” on a house.
Lately I’m becoming aware that I need to make some changes to make the information more relevant. I’ve just been too busy to spend much time on it but I agree that adding graphs would be very helpful. My readers appreciate having the data broken down by our five major trading areas so the numbers can get a little skinny when we’re talking about weekly reports, and even more so if I go to condos and single-family separately.
You report is impressive. Thanks for sharing. I look forward to having a look around your website.
April 27th, 2009 at 11:52 AM
Cross Country Checkup on CBC radio had an excellent and intelligent discussion about the financial crisis in the US and its impact on the Canadian economy. You are able to download a podcast at:
http://www.cbc.ca/checkup/this-week.html
“On Cross Country Checkup …financial jitters
The spectacle of some of America’s biggest financial institutions going down has shaken many people. The uncertainty has injected fear into financial markets around the world …but what is it doing to you?
Do you worry about the economy? What effect does the news have on you?”
April 27th, 2009 at 11:52 AM
Interesting read
http://www.mortgagenewsdaily.com/09222008_harvard_study_home_building_and_remodeling.asp
April 27th, 2009 at 11:53 AM
People here seem to have strong opinions, so maybe you can help me out… here’s a poll; what colour kitchen cabinets would you get if you could choose anything you’d like (I’m torn between wood v.s painted white). My kitchen NEEDS new cabinets desperately (50+ years old, and rotten under the sink), but I know I’ll be moving in a few years, so I want to choose something with general market appeal for resale. What are your thoughts?
April 27th, 2009 at 11:55 AM
Can’t decide,
Hmmm. Without seeing them, that would be a tough call.
I’d just be thankful you don’t have more on your mind at the moment.
April 27th, 2009 at 11:55 AM
Pam,
Thanks for the link. I’ll check it out this evening.
can’t decide,
I think you’d have to look for a long time to find white cabinets in any house built in the past few years. I would definitely go with wood. Have fun.
April 27th, 2009 at 11:55 AM
Madam if you are debating the colour of your new cupboards my advice is to pick up a decent newspaper such as the Globe & Mail and begin reading. If you are a troll, as I suspect, please continue watching FOX news, investing in tar sands, and voting for Harper/ McCain.
Not to crow (too much)but where on earth are those scribblers who were accusing me of fear mongering such short weeks ago?
Anyone who buys a house, let alone a million dollar home in this economic climate is far beyond vapid. House sale statistics are currently meaningless except as an indicator that there are 50 dribbling idiots who have bought a house on October 28, 1929.
April 27th, 2009 at 11:57 AM
Average listing price is $336k right now?
Wow! One of the reasons why there are so few sales.
can’t decide, I’d go with wood.
Pam, thanks for the link,
I hope the USSA can prevent financial armageddon for the world markets with this bailout. If it does not work, all I know it will not be good.
April 27th, 2009 at 11:57 AM
Oh, Sam, don’t forget Goldman Sachs being the epitome of investment banking (ROFLMAO) and the wonderful investment opportunities in US financials!!
I heard Jim Cramer was encouraging investment in gold today.
God help us all!!!
April 27th, 2009 at 11:58 AM
Wow Sam,
Firstly, you assume “can’t decide” is a woman. Then, you assume ‘she’ has just bought (seemingly a million dollar home).
If ‘she’ is a troll, it’s about the most benign trolling I’ve ever seen. I hardly think asking for a simple home decor opinion, with resale in mind, is “fear mongering.” But, maybe ‘she’ has posted before and I’m missing something.
can’t decide,
I also recommend wood over “painted white.”
Pam and others,
I only caught the tail end of the program; but, what I heard seemed to be very good discussion.
Crikey,
I see oil and gold have jumped on speculated depreciation of the greenback. What I want to know is: isn’t that jump just another speculative bubble that really has nothing to do with the underlying economic fundamentals? I mean, it’s being caused by capital flight away from the US dollar, but, shouldn’t we expect demand for oil, gold, and other commodities to soften if/when the US officially enters a recession? I can’t quite get my head around it.
April 27th, 2009 at 11:59 AM
Sam,
Just occured to me that you’re probably saying your alleged “fear mongering” was warranted given the economic turmoil in the States. If so, my apologies.
You seemed to indicate you thought ‘can’t decided’ was a ‘pumper’ – I don’t know how I connected that with fear mongering…. it’s been a long day.
April 27th, 2009 at 12:00 PM
Sad Sam,
Quite a chip on that shoulder buddy.
Quite a few people, most i’m guessing, buy houses to live in and create a desirable home for their family, not to time an investment. I’m guessing many of your dribbling idiots are people who are financially stable and leading a life far richer than being focused on the up and down market value of their home.
April 27th, 2009 at 12:01 PM
guy_in_regina,
That’s an excellent question around commodities. I think you’re right about the fact that it’s a capital flight away from the US dollar, but I also think that much of the rise in oil that we saw today was hedge funds and the like covering their shorts. As I’m sure you’re aware, they can’t currently short, so they have to pay up when the stocks they are holding are called in. I’m expecting a souffle-like deflation of commodities after the short ban ends, which I believe is October 2. I don’t think it will be immediate. If, however, instability continues to reign (and I think it will), commodities (PM, oil) may be one of the only perceived safe havens, other than short-term government debt.
Alternatively, if the price of oil goes too high, you get demand destruction. We’ve certainly seen the effects of this on the automobile industry- if the price of fuel is so high that marginal consumers cannot afford to do the same mileage without switching to a more efficient car, then they are forced to sell the less efficient one. A glut of such vehicles causes the used market value to fall, which then increases the depreciation expected of a new less efficient vehicle. This increases the total cost of ownership of such vehicles, making them less popular.
I’m currently in a connundrum about where to park cash, as are many others, I’m sure. Anything exposed to ABCP (Money market funds, etc.) is looking mighty risky. Crazy times.
April 27th, 2009 at 12:02 PM
sam,
get out.
thanks
April 27th, 2009 at 12:02 PM
Now that I re-read my last post, the section about oil and the shorting ban is not very well-worded. The short ban has affected 800 or so financials, not other stocks. Yet?
I do expect a deflation of most stocks after the short ban ends, but who knows what will happen with commodities. It’s anyone’s guess.
The contract for October delivery of light, sweet crude expired at the end of trading today. The October price began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board and people have to cover their shorts. I think there is much anxiety over the US government’s $700 billion (at any one time) bailout plan, and a resulting flight from the US dollar.
The intensity of emotion in the market is amazing, but not unexpected. The Nymex actually temporarily halted electronic crude oil trading after prices breached the $10 daily trading limit. Trading resumed a few seconds later after the daily limit was increased.
Ask anyone, I’m pretty bearish- but the pace of this unwinding is amazing even me.
April 27th, 2009 at 12:03 PM
@Crikey,
“I also think that much of the rise in oil that we saw today was hedge funds and the like covering their shorts. As I’m sure you’re aware, they can’t currently short, so they have to pay up when the stocks they are holding are called in.”
You give me too much credit. I don’t even really know what “shorting” is; much less that there’s a ban on it. I don’t have any investments in the market.
April 27th, 2009 at 12:58 PM
“I don’t have any investments in the market”
Lucky you!
You hang onto that cash, now.
April 27th, 2009 at 1:03 PM
can’t decide -
kitchen remodels can be pricey, but might as well go with what will sell – maple over painted white anyday (although not sure what the difference in cost would be).
Sam Johnson – man lighten up! We bought our house to live in, raise our family in, yeh things are horrible in the market – but, my husband and I have stable jobs, little debt and some savings – if we want to redo our kitchen, paint our bathroom, or change some flooring, we (like others) decide if we can pay for it today. If not we save until we can. If a counter or cupboard is rotting – and needs to be changed – change it.
And sometimes people need to buy houses – there probably is never a “perfect” time to buy a house – but sometimes you just gotta do it!
April 27th, 2009 at 1:04 PM
Options for extra income
1. Invest in Saskatoon real estate, not me, not until the inventory is way down and prices are back to slow gradual gains
2. Invest in TSX/Dow, maybe buy low, but not me, don’t have the kahonas
3. Pay down debt. Now isn’t that a novel idea! Use the extra cash flow to pay off any lingering student loans or personal lines of credit, car loans etc. The gift that keeps on giving!
April 27th, 2009 at 1:05 PM
“You hang onto that cash, now.”
What makes you think I have any cash?
April 27th, 2009 at 1:08 PM
Put your money into a GIC. It won’t beat inflation, but it is the safest vehicle for your money. They are insured up to 100,000, unless the government goes bankrupt, you will have your money at the end of the day.
April 27th, 2009 at 1:09 PM
Can’t decide,
If you have the time you may want to check out some showhomes to see what the current “in” colors are. You can also go to a cabinet store. They have designers there to help you match if you bring in samples of paint , flooring, countertop, so on.
Biggest thing- what is the rest of your color scheme? That may determine what you want to go with or you may consider changing countertops, paint, so on.
Anyone know anything about direct buy? I think there is a steep joining fee, but if you are redoing cabinets it may be worth looking into. I know nothing about it, good or bad, nor anyone with a membership.
Good luck!
PS. Check out undercabinet lighting. Not sure what your budget is, but it can add a nice touch to the kitchen
April 27th, 2009 at 1:12 PM
can’t decide,
I would say wood, but not the old ‘oaky’ look wood, with rounded corner doors…ugly ugly ugly. To me an attractive cupboard would be a modern wood type, very clean, either with frosted glazing in them, or solid wood, with simple brushed chrome pulls. Clean, modern, attractive. AND USE European hinges.
My 2 cents.
April 27th, 2009 at 1:12 PM
I heard someone call directbuy, a pyramid scheme…not sure whom but i did hear that. I think direct buy is different in the States than it is up here. In the states it sounds reputable…
Look into it man.
April 27th, 2009 at 1:13 PM
Gentle Readers,
Every day we must make certain decisions, from turning left or right, purchasing tuna in oil or in water, opening that piece of mail from the Solicitor General or discarding it, to listening to John Gormley’s/Gormless (http://en.wiktionary.org/wiki/gormless) program or four hours of recorded barnyard noises (a more difficult decision but I would opt for the latter as more educational). I assumed that the colour to paint the cabinets could not possibly be one that an adult of voting age could not decide for themselves. However madam, I was wrong and I apologize.
Point number two: (directed to “dribbling idiots”): Is there a better description of a person that purchases an asset at $250,000 or more at the precipice of a potential financial armageddon, which is front page news even in the most sycophantic of newspapers, like our own beloved Star Phoenix?
April 27th, 2009 at 1:13 PM
Sam,
Truth be told, I find you quite hilarious on occasion, and I have to say I agree with you in principle on many points. If I may, however, I’d like to suggest a few things:
Whatever happens with the financial issues in the US, and whether/when they spill over into Canada, people still need to get on with the matter of living their lives. No, I don’t think the average person has REALLY thought about how these issues will affect them, never mind doing something about it, but getting them all defensive by calling them names will do nothing but ensure a vitriolic backlash. Buying sprees and unrealistic purchasing decisions will be punished, but they will be punished by the economic environment, not by you or me. I understand that you’re trying to warn people, but if I’ve learned anything by posting here, it’s that most people won’t get it until it hits them in the wallet.
April 27th, 2009 at 1:15 PM
Sam – go away – we all know what you think – world is ending – buy water and canned food and get into the bomb shelter. Other people want to live their lives. “can’t decide’s” question is legitimate and she/he does not deserve to be attacked.
GO AWAY
April 27th, 2009 at 1:16 PM
Direct buy is BS. A family member has a membership – and checked out some prices for some recent purchases I’ve made (after the fact – they’re not allowed to buy for other people in the shopping cult as I like to call it) just to compare for me as we’re fixing up our new home and thought it may be a good idea. The stove I just purchased at christmas time is $200 more at direct buy (plus shipping). Our new kitchen tap? No matches (they don’t have a lot of brands) – but the closest CHEAPER brand match they had was double the price I paid at home depot. Our identical bathroom tap was 15% more at direct buy (again plus shipping). A lot of things you have to buy from the website or book, and can’t even see before you buy them. If you don’t like what you get after not being able to see it before you buy it, you pay a huge restocking fee. It’s not something I’d get involved with. They’re also not allowed to tell us what their membership cost them (if you break their ‘rules’ they kick you out), but it’s quite significant. Just my partially informed opinion – others may have more informed info on it lol.
April 27th, 2009 at 1:17 PM
I don’t blame Sam for being a bit harsh. A lot of people are on edge these days. Some have seen their retirements pushed back by years. Expectations for some investments have been / are being re-aligned rather drastically; I imagine it’s pretty unpleasant.
Not unlike the re-alignment of expectations facing first time buyers.
OK, here goes
…. Quit whining you Saskatchewhiners! Everything is perfect! You expect way too much! My parents got measly returns for decades and smiled about it! You should be happy you can get a job at the fast-food restaurant of your choice! Besides, whatever you lose in the markets will be made up by *explosive* wage growth! Downgrade to a 1 bedroom apartment – that’s what they do in London and Tokyo! (*ahhhh* sorry, couldn’t help myself. I’m not serious).
April 27th, 2009 at 1:18 PM
guy_in_regina
Thanks for the perspective taking. But, I don’t think attacking someone for asking a simple question is acceptable. (I guess I should take my own advice
) no matter what is happening with the markets or with real estate. For the most part this is a respectful discussion with people having differing opinions – lets try and keep it that way!
April 27th, 2009 at 1:20 PM
Hi everyone, question:
What do your friends and families think their homes are worth now? Not a philosophical ‘my home is a place for family so it is priceless’ kind of thing, but what do people on the street value their home at in dollars? Have you heard numbers thrown around by people not really in the market to buy or sell? “If I was to sell, I think I could get…”
Just curious, cause I had somebody tell me she thinks she could get close to $400,000 for her fixer upper in a bedroom community. This is not someone who’s following the real estate or economic news. I suspect she’s still holding on to the stories of last year and what not. When I looked up that price range in her area, I was surprised at just how out of touch she must be. Houses far nicer than hers asking 25 to 50 thousand below her perceived value.
Same thing from another couple I know. Claims that their house is worth more than identical ones sitting unsold on the mls. Across the street!
I’m just looking for stories related to perceptions of your average homeowner as to what they’re thinking. So much of markets is driven by perceptions, what perceptions are you hearing from people who aren’t spending hours a day reading about the economy and real estate. Y’know, the general public.
Those homeowners who didn’t buy, sell or upgrade during the price increases still saw their own home value increase. They added to the discussion and helped fuel the fervor with talk about how much their home value went up. Will they keep quiet is (or as) the decline occurs? Or will they proudly tell everyone how smart they were to not get caught up in the crazy market, and are so happy to not be saddled with a huge mortgage for and upgrade.
I don’t know. Just rambling. Thanks.
April 27th, 2009 at 1:20 PM
Thanks for all the input! We’ll focus our search on wood finishes, then, by overwhelming popularity. Hey, I just figured the best way to see what the local market would like would be to ask the local market. Not to mention, with all the serious talk about markets and buying and selling houses (or not), I thought it would be nice to insert a little levity with a topic about actually living in one, or what your preferences would be one day when you do. Turned out to be a more ‘interesting’ topic than I’d anticipated
And Sam got at least one thing right, I am a woman… this particular decision rests on my shoulders!
And Neon, most talk I’ve heard lately is definitely pretty realistic; even people who aren’t glued to a real estate blog (unlike me, I’ll admit) seem to sense that the days of prices rocketing upwards are over, at least for now. Of course, I think individuals always tend to overvalue their own home at least a little… are we born optimists, or do we just like our own home so much (because they are to our own taste), that we think everyone else will love them too, and see other homes for sale as flawed in some way (because they are to some other owner’s taste)? Well, I guess as long as the cabinets are wood finish, it’s all good. Thanks again everyone!
April 27th, 2009 at 1:24 PM
Neon,
I know my friends who bought their 1970′s bungalow over in Greystone recently had their home appraised at a little under $400,000. They paid around a $140,000 for it back in 2005. Despite what the papers are saying, the realtor they spoke to said that they should hang on to the property till next summer as they estimate prices going up a considerable amount between now and then. They say they are now hanging on to the property until it hits $450,000 and then are looking to sell and move to a smaller town.
A three fold increase in value is nothing to sneeze at for sure! Good on them for buying they did, I guess.
April 27th, 2009 at 1:29 PM
Neon,
EVERY, and I mean EVERY HOUSE listed right now is way overpriced.
Joe Public does not realise this. Most read or hear about our booming economy and that our resources will keep house prices high. They think if they put their house up for sale, they will get a price they are happy with. The trouble with that is they will be lucky to sell. Going forward if the average is 60 sales a week and 1700 listings, that is over 7 MONTHS OF INVENTORY! Slowing demand is in the cards for the future.
Ask a spec seller who has had their property for sale for months with no offers what they think of this housing market I am sure there are a few hundred specs since spring!
And this is not taking into consideration the category 10 financial hurricane making landfall in the states. It will hit us as well. Just a matter of when.
April 27th, 2009 at 1:29 PM
absolutely every house listed right now is over priced. How do people figure that their house is going to be worth more in the spring? look at all the people who pulled their houses, only to re-list in the spring of 2009. My personal guess is that 2009 will bring tons more inventory and less buyers, so sellers are going to compete even more to sell their home. People will be exited just to get rid of their unsold property, as the burden of carrying two mortgages will take its toll on many throughout the winter. just wait, as these people with their sold signs up are going to need to start liquidating, so it will be reduction after reduction.
April 27th, 2009 at 1:30 PM
Joe,
Dont see the point of buying a GIC when you can buy a trust like RIOCAN and get 6% plus stock appreciation. Even buying a bank stock like BMO can grab you 6%.
Crikey,
I dont think the increasing price of commodities is a bubble at all not for oil at least. Reasons being OPEC cut their production as well as when the hurricane ripped through it shut down many refineries which we have not felt the brunt of yet mark my words. Anyways invested in oil again j0j0
You ever read the book “Stop working here’s how you can!” ? pretty clever read
Can’t Decide,
When me and my wife did our kitchen we painted our cabinets white and put stainless hardware on everything with a mocha brown background it looked very pleasant.
April 27th, 2009 at 1:30 PM
To Sam,
Your eloquence and bite are most appreciated. If I was awarding wins in debates around here, I’d say you’ve won since the most coherent arguments folks can throw at you is “Go Away!” However, I don’t think we’re at ‘financial Armageddon’, since that indicates a potential disaster from which we will never recover…..unless you’re Jehovah’s Witness, in which case this my well be the beginning of the end… so who cares how much you owe the bank!
If by ‘Armageddon’ you mean economic recession or ‘gasp’ depression, we recovered from the Great depression, and grew since, I might add.
Investing is all about risk. If you don’t have time for risk, put you money in a safe place. Like a savings bond or under your matress.
Look at it this way, there’s two ways it can go in the market now:
Financial crisis looks rife with opportunity, and risk takers invest money in stock market, housing et cetera. These people will either make loads of money or loose their shirts. That’s how people get rich…Not by investing in GIC’s. Only time will tell which one they’ll be. Risk takers don’t mind being called ‘drooling idiots’, since they are sure you’ll eat those words later.
I sure as heck won’t be rich because I’m chicken! With my luck inflation will cause interest rates to double by the time I refinance my mortgage. The only reason I can sleep at night is that we have one paycheck that’s entirely disposable income. I laugh at you “East-side” silly people with your $300,000 mortgages. My dog can scare away thieves, can you scare bankers?
On a different note,
Why are people buying two storey houses? That’s what I’d like to know. So many of the people buying new houses are baby boomers. How long do they expect their knees to hold out? In my crystal ball I see a great market for those chair escalator dealies that lift Granny up the stairs. (My mother-in-law wants one) Its already expensive to find seniors complexes, can you imagine what it will be like in 10 years? If I was one of those dudes doing Condo conversions, I’d seriously think about adding an elevator!
April 27th, 2009 at 1:31 PM
Armoth,
I happen to think that OPEC cut production precisely because of “demand destruction”, but you’re certainly free to disagree. Oil just went up too far, too fast, IMO:
http://tinyurl.com/4m3sks
If the USD continues to tank, commodities may very well go up. Good luck to you.
How’s the new job going?
Laura,
You sound like a very sensible sort. Welcome!
April 27th, 2009 at 1:31 PM
Crikey,
Its going great its not the mine part they are advertising for its the distribution terminal with a small workforce. It is sometimes hard work but it will keep me in shape which I cant say for my old desk job =o) Im gonna try doing the dividend investment like that gentleman did in that book i mentioned instead of get rich quick spec stocks lol because one day im gonna get burned and get burned hard! muhahaha j/k
Edited by moderator
April 27th, 2009 at 1:36 PM
sam, you are making this board a lot less enjoyable to read, at least for myself.
now put away your thesaurus and go start burying all your money in deep deep holes in the ground… keep digging….
April 27th, 2009 at 1:38 PM
To Laura,
“If I was awarding wins in debates around here, I’d say you’ve won since the most coherent arguments folks can throw at you is ‘Go Away!’”
To this I respond: Go away! You and sam can read your thesaurus together.
“I laugh at you “East-side” silly people with your $300,000 mortgages. My dog can scare away thieves, can you scare bankers?”
Why would you laugh at my with my $300,000 mortgage? Does the idea that I can’t afford my mortage make you happy? What if I CAN afford it? Why would the banker be after me? And the BIG question, what if I’m allergic to dogs, and I stuck with only housing choices on the east side?
“Why are people buying two storey houses? That’s what I’d like to know. So many of the people buying new houses are baby boomers. How long do they expect their knees to hold out?”
I think people are buying 2 storey houses because they want a 2 storey house… just a guess though.
April 27th, 2009 at 1:39 PM
Laura,
I don’t know how Regina Guy has not come out attacking you in full force:) I would hope that we would all want our neighbours to be able to afford the mortgages that they took out, and not “laugh” at any of those who might be struggling to do so.
I happen to know many people who can afford a 300,000 dollar mortgage, have pensions, retirement savings, and a good disposable income…. and will weather any storms because they bought for the long, long, haul anyways…
April 27th, 2009 at 1:39 PM
k, I dislike Sam, & ids2,
You’re quite obviously the same person. If you want people to take you seriously, have a little integrity, and post under one name, please.
April 27th, 2009 at 1:39 PM
I really am not the same person, honestly….I only post occasionally but read daily.
April 27th, 2009 at 1:40 PM
I’m sorry if I’ve accused you unfairly, k.
By historical norms, you’d have to have around a $100K income to afford that $300K house, by the way. Unfortunately, folks in many countries are learning this the hard way.
Peace out.
April 27th, 2009 at 1:41 PM
Crikey,
Thanks for replying. Because I don’t have the Big words down like Sam…And I agree, two incomes totally required..two teachers for example, committed to living in Saskatchewan:) ….that’s all I was saying…
April 27th, 2009 at 1:41 PM
Laura,
“I laugh at you “East-side” silly people with your $300,000 mortgages. My dog can scare away thieves, can you scare bankers?”
I’m not sure why where people choose to live should matter. I’m glad your dog can scare away thieves, but I’m not sure why we would need to scare away bankers? Many, many people take great time and consideration to decide how much house they can afford. Many families save up for a down payment and then budget to pay off a mortage whether it is $100,000 or $300,000 what matters is does it work in your budget?
Why does there seem to be joy in others misfortune?
April 27th, 2009 at 1:46 PM
I think I’m a sympathetic guy, but by now, the real estate market downturn, and even Saskatoon’s situation has received so much press, it’s tough to feel bad for anyone who loses 10% of their July or August purchase price, or more. They made a choice, now with sufficient information available, and I won’t criticize that choice. But when Merrill Lynch, Scotia Bank and letters to the editor
all told them about this in advance, misinformation from one sided “boosters” can’t be used as an excuse. Good luck to new home owners though in weathering Saskatoon’s real estate market, hopefully they bought after informing themselves of the current climate and aren’t relying on a profit anytime soon.
I agree with Sam on this one point.
I do feel for those who bought earlier in the spring, when anything seriously critical of Saskatoon’s economy (or the price of oil) was relegated to the back pages, or did not make the news at all.
April 27th, 2009 at 1:47 PM
Ah the good old east side west side fighting. I grew up on the east side and perhaps enjoy the east side. I’m not sure how much of it is a ‘snobbery’ to want to live on the east side, in or close to neibourhoods we grew up in, though I can only speak for myself.
Another thing to me is not everyone wants to have a dog, especially a big dog. Tremendous amount of love, work and time is needed for a larger dog. Some people want thier places to not have dog smell, and want to be able to leave without worrying who can look after thier dog.
Now before i’m called a pet hater or a dog-gist, i have a little puppy in my life (my gf’s) who is virtually harmless becuase he’s so small. I just can’t justify buying a house on the west side (or anywhere in the city mind you lol) when I have to get a big dog to ‘scare away burglers or bad people’.
April 27th, 2009 at 1:48 PM
Crikey,
While I do agree that historically 3x annual income for a house worked it does not anymore.
Inflation has eaten into net income bigtime. Forget the CPI, which is garbage. The TDS will need to worked out after the housing correction in Canada.
After all bills, groceries, fuel, mortgage payments,taxes, people are left with less money than years past.
I know from my own experience, Wife and I make 115k a year, mortgage of 150k, student car loan 400/month after all bills there is not much left over.
I have done the numbers and someone making 100k with some debt cannot afford a 300k house. People who have done this, I feel sorry for, because they will be house poor for many years.
April 27th, 2009 at 1:48 PM
Pam said:
Many, many people take great time and consideration to decide how much house they can afford.
Why does there seem to be joy in others misfortune?
————–
Hi Pam. This is my first time posting on this board and I have to say that I really appreciate the information that Norm has been sharing with everyone.
I’m not sure if “Many, many people take great time and consideration to decide how much house they can afford”.
When people had to compete in bidding wars last year here in Saskatoon and pay tens of thousands more than asking price they likely felt rushed and ended up financing themselves to the limit.
Another example of people not carefully considering how much they can afford is the thousands of people filing for bankruptcy protection in the U.S. as they walk away from their sub-prime mortgages. They didn’t read the fine print of the mortgage contract and take the time to understand that their interest rates would be increasing within a few years.
There is no joy in the misfortunes of others. But when people take the risk of buying property and expect to make tens of thousands in profit over the course of a year or two after performing no work there is no sympathy. This is exacerbated by the fact that these “unfortunate” people who contributed to bidding wars and the escalation of housing prices here in the city effectively pushed affordable housing out of the reach of others.
April 27th, 2009 at 1:52 PM
Pam,
From most posters there is truly no joy in the misfortunes of others. Nick and Glen make a great points- people try to make the best decision they can with the information they have at the time, but up until the last month or so realistic economic news rarely made the front page. Many people saw this economic/financial/debt crisis happening some time ago, and were blasted for being “doomers” or “Saskatchewhiners” or “bitter renters” or some other such nonsense. I rent a great house in a fantastic neighborhood, and I’m paying about 1/2 per month (perhaps less) of what I would pay to “own” the place. Nor do I have to worry about repairs, maintainance, property taxes, depreciation of principal, or many other things owners need to fork over. I’m pocketing what’s left over to save for a downpayment later. *Could* I afford to buy a house now? Yes. I’m just choosing not to, just yet. I consider myself lucky- many people can’t even afford to think about it.
I realise that for many people, part of the goal of being an “adult” is to own their own home, but they shouldn’t have to commit financial suicide or rely on fancy loan products to do it. Nor should they expect that they will be able to retire on the proceeds of their house, or use their house as an ATM machine. I also think that part of the problem is that many people are investing everything they have in RE, and investing EVERYTHING in one domain is very often a recipe for disaster. If you knew someone who invested every cent they had in, say, US financials stocks and then lost everything, you’d say, “Wow, that really wasn’t very smart”, right? I’m not sure how investing every spare cent you have in RE is any different. I’ll certainly agree that everyone needs a roof over their heads, but there are other options.
George,
You’re right, household debt is much higher and household savings is much lower now than it’s ever been. Sounds precarious to me.
Jesse G.,
A “dog-gist”?! Hilarious!!
April 27th, 2009 at 1:53 PM
One thing about the financial markets in the states is that it is not only subprime that has caused this crisis.
This has been something that has been rolling for over 10 years. In the States savings has been virtually non-existent while debt has climbed and climbed. Think of it as a boxer wobbling against the ropes and then subprime was the final death blow.
In Canada we did not have the subprime problem like the States but other than that Canada we are not much different. Don’t get me wrong, subprime is huge in the States and may lead to a collapse in their financial system
For every 1 dollar we make we spend $1.30. Saskatchewan leading the country in retail sales growth? The smart thing through an economic boom would be leading the country in savings growth! We have used leverage just as the States have.
Our banks are sound? Really? Then why are they looking at possibly get some help from that bailout?
CIBC has over 10 billion in writedowns.
Royal Bank is exposed to over 400 billion of bad loans in the States. More than enough to put them under if the bailout does not work.
And this is all before we experience our own housing downturn in which prices and sales will plummet. People will not be able to use their house as a ATM anymore with falling prices, some will be house poor others will foreclose.
I don’t believe that Canadian Banks will fold like we have seen in the US but they are not as healthy as we are led to believe.
April 27th, 2009 at 1:53 PM
While there are certainly many people who live within their means; I think, for many others, financial prudence has gone the way of the doe-doe in this day and age.
I think some people got sucked into leveraging themselves to the max during the boom because “RE always goes up” and “don’t worry, it’ll be worth twice that in a few years” and “your wages will skyrocket.”
Others will always have to have dual incomes to afford the homes they purchased. I guess they can adopt school-aged children.
Anecdotally,
I heard a story from a friend (who has a cop friend) about the cops getting a domestic disturbance call in a fancy new subdivision. When they got there, the people inside were sitting on milk cartons – they had virtually no furniture… couldn’t afford it. And all they did was fight about money.
If that’s true, it’s really sad
April 27th, 2009 at 1:56 PM
I swear, I watched this after my previous post!
Tipping point from everybodies favorite economist
David Wolf from Merril Lynch
http://watch.bnn.ca/clip95466#clip95466
Housing and credit markets in Canada starting to crack
April 27th, 2009 at 1:58 PM
Pam asked: “Why does there seem to be joy in others misfortune?”
I assume you are familiar with the story of The Grasshopper And The Ant … but since classical education and literacy is not a priority for a lot of folks these days, one can never be certain.
Short version: Ants work hard all summer to store up goods for the winter. Grasshopper plays and cavorts and parties it up, and mocks the ants for working so hard. Of course, the summer does end, and the grasshopper starts to get cold and scared. He begs the ants (who are prepared, and hunkered down) for assistance, but is turned away. When winter hits in reality, the ants are warm and dry, and the grasshopper is SOL… and dies.
(Unless you see the Disney cartoon version, in which the ants take pity on him and bring him into the ant colony, where he reforms completely, repents his ways, and is turned into a productive member of society.)
There’s a lot of ants in the world, but they are seen as drudges. For the last number of years, these people have not had the latest, the best, the biggest, the shiniest, the trips, the vacations, etc. These people were, *as a group*, scorned, disdained, mocked, looked down on by those who were in the grasshopper camp. Now the tide is shifting, and the grasshoppers are feeling that first cold breeze of winter on their backs, and realizing that things are going to get worse before they get better.
As an ant, I take no personal pleasure in any one individual’s suffering. I don’t hate any individual or wish any sole person ill-will… but at the same time I do not take responsibility for their choices. The grasshoppers *as a whole* will reap what they have sown… and so will I.
And I *do* take pleasure from knowing that there is some justice in the world.
April 27th, 2009 at 1:59 PM
guy_in_regina,
I have heard similiar stories of that here in Saskatoon as well, and I am not surprised.
Being house poor and too many spec homes are what are going to make these places like Stonebridge and the newer part of Willowgrove suffer.
People think I am crazy and maybe I am, but most new neighborhoods built during the peak of the boom in the States are now suffering. People buy at close to the peak and they are stretched to the max. Too many spec homes sitting empty and also with falling values, people can not use their house as an ATM anymore.
If you need or want to buy in a new area. This is what I suggest. House MUST have:
New Home Warranty- Duh
Driveway, Sidewalk, grass (sprinklers?), deck, fence, (appliances-maybe) why? cause with falling values the housing ATM will be closed for some time.
Also make sure you have a good mower and whipper snipper so you can cut the specs property that has not sold and has no landscaping done.
When you are buying a house to live in, you are investing your time, money, family and you are investing in your neighborhood as well.
Nobody told the specs this.
April 27th, 2009 at 2:00 PM
What if the bailout plan doesn’t work?
http://www.politico.com/news/stories/0908/13769.html
April 27th, 2009 at 2:01 PM
More from Merrill Lynch, maybe instead of criticizing the big investment types that got burned we should learn from their experience
http://www.cbc.ca/canada/story/2008/09/24/canada-housing.html
Bookrat/Nick all about paying down debts.
Saskatoonians obviously aren’t, with new spending record growth far in excess of wage growth.
April 27th, 2009 at 2:01 PM
Thanks for that video link George.
David Wolf’s comments make pretty good sense to me.
I know he’s a Merill Lynch guy, but listen to what he has to say before passing judgement.
With all the questions, concerns, reservations, implications, anger and differing opinions about this ‘bail-out’ plan, they might not even get the thing together!
April 27th, 2009 at 2:03 PM
I just think this…imagine a market failing, the dollar failing and so on…those of us who didn’t buy now or be priced out forever, may have a few bucks to buy a months or more food supply IN CASE..never hurts to prepare things. I got into that mentality when I was on strike for a few months…so much more comforting.
What do those people do that bought a house that stretched themselves farrrr too thin…they can’t eat the laminate…
Interesting things coming up I think.
April 27th, 2009 at 2:04 PM
Bookrat,
Thanks for the ant and grasshopper story. I have read the original, but my kids have seen the Disney version. So maybe that is part of the problem with the housing/economy; we have all seen the Disney version and want that for our lives, to make mistakes and have someone rescue us.
I do realize that many, many people have chosen to buy during the height of the bidding wars. Our family was considering moving to a larger home then, but we did not feel comfortable buying a house without a home inspection ect.
I would have to say that most of my family and friends would be considered “frugal” or even “cheap” by the standards that seem to be evident in our society. So, perhaps my comment about people NOT buying beyond their means is based on a smaller segment of our society.
I don’t usually watch Oprah, but it was on late last night and Suze Oreman was the guest. There was a couple on the show who owed $90,000 in consumer debt (on top of their mortage) and couldn’t afford health insurance for their children and were struggling to buy groceries. They didn’t want to sell their house and rent because they could “still afford their house.” How did we get so delude and out-of touch with financial matters as a society?
More importantly how do we help our children realize the difference between “having something” and being able to pay for something? Everytime we turn around there are advertisements for buy now pay later, no money down (and not just houses).
The main difference I see in my generation from my parents is that my parents would save for something and THEN buy it – our generation seems to fall for the advertising and “have it” now (we are not buying it now – because we are not paying for it) and “pay for it later.”
There seems to have been a paradigm shift in the way we view finances (as a society). How do we shift back and reject the credit trap?
April 27th, 2009 at 2:05 PM
I don’t think it’s so much about ‘society’ changing views as much as it is these places being ALLOWED to operate the way they do. Why can people I know with no income and no work history, get loans, while those that can work and is a smart way to open a business or consolodate that can CLEARLY pay it back, get denied.
IF these places (even the pay nothing now pay later ones) weren’t allowed to DO that, prices would fall. But becuase millions are being made (and billions) it’s alllllll good. People are going to try to get what they can, just like people will speed a bit when no police are around.
I don’t think society is to blame, but i think the greedy uppers (including government) is.
April 27th, 2009 at 2:05 PM
I don’t have a thesaurus, I’m British and suffered through a public school education!
I concur with the skeptics that the bailout plan is a headlong rush to disaster. American corporations, for all their alleged love of free markets, seem to be rather quick to beg for a government hand out.
April 27th, 2009 at 2:06 PM
Sam,
If you’re in need of some levity about the situation, watch this clip from The Daily Show:
http://tinyurl.com/3uzbsf
Enjoy!
April 27th, 2009 at 2:06 PM
Sam — which one?
April 27th, 2009 at 2:07 PM
Team Fisher blog is officially dead.
Let’s start a new one where pseudo-economists are not welcome.
Who will join me?
April 27th, 2009 at 3:19 PM
Callum,
If you think that economic issues have no effect on RE, then you really do need to start a new blog, where you and your ilk can hang out and deny reality together.
Good luck!
It will be sad to see you go.
April 27th, 2009 at 3:20 PM
What I don’t understand, and maybe this is beucase i’m not an economist, but…when GDP and Economic Growth are causing house prices to rise exponentially, everything’s fine! Rents rise uncontrollably that’s fine too I guess. Soon as there is news of a hic-cup, or something that could effect things the other way…all of a sudden the taste changes?
April 27th, 2009 at 3:20 PM
I will Callum, I will!
April 27th, 2009 at 3:21 PM
Callum and ids2,
use this for your first blog title
Housing market may tank: economist
http://www.canada.com/saskatoonstarphoenix/news/business/story.html?id=2690bbbd-de09-4b65-b5e4-5f29649e168f
Where have all the bulls gone from last year?
April 27th, 2009 at 3:26 PM
It’s just a matter of time
http://crebb.blogspot.com/2008/09/its-just-matter-of-time.html
“Those who were overextended once the teaser rates adjusted to higher rates could easily escape by either selling their property or refinancing their mortgage. When house prices fell in the US, those home buyers with subprime mortgages were trapped. They couldn’t sell because there were no buyers. And they could no longer refinance their mortgages because their property was losing significant value. The only option was to default.
The same scenario is occurring in Calgary and other cities across Canada. Houses aren’t selling under similar principles. I fear that sellers are unwilling to lower their prices because they will take a big loss.”
April 27th, 2009 at 3:27 PM
What the?!
Times like this are great for Norm’s blog because consistency and honesty are tangible, but priceless assets.
I don’t think we’ve ever been able to rely on Callum to do anything but regurgitate the decisively unobservant persuasions for free market idealism. If it suited the wealthy or anyone in a position to leverage their wealth over others, he is conspicuously there to egg it on. These are ideals would take us to a kleptocracy, which I think we’re more than half way to.
Let’s keep callum’s blithe attitude of days past in mind as the US moves to “socialize” the mistakes of all his vaunted economists and leaders.
Sounds like a contradiction of values to me! Where’s that bull attitude that you use to taunt people now, callum? The jabs have been few and far between!
In the states, demand drops while supply is high – funny that. I just can’t help but remember things I’ve said in the past about free market theories. Perhaps it’s because these reductionist brain-farts are finally being debunked as the load of hock they really are: A strategic distraction.
It’s sad that people were dumb enough to buy it, but most everybody loves to be told they’ll be rich.
Here’s hoping society is smart enough to hold people like callum and his lords accountable for the damage caused.
callum captcha: human consequence
There’s something doubly poetic about the irony in that.
April 27th, 2009 at 3:27 PM
Jesse G.,
No, only positive economic news is allowed to influence people’s purchasing decisions. No other viewpoints are allowed.
Thank you for your cooperation.
April 27th, 2009 at 3:28 PM
I wonder what the sales numbers will be like this week with all the crazy economic stuff going on.
captcha = “Mullin urcs” – Need I say more?
April 27th, 2009 at 3:29 PM
Good news all! I just landed myself a job in Edmonton doing CAD work for the city. I went down about a month ago to scout out the city and was quite impressed with cleanliness and overall friendliness of the place. Timing seems to have worked in my favor as Realstar properties had just recently lowered their rental rates and I scooped a really nice spacious suite for almost $300 dollar less than what I am currently paying here in Saskatoon. This, combined with the healthy salary boost should make making ends meet much easier, and should put an end to having to working regular ten hour work days to keep afloat here in Saskatoon. Despite my past complaints about the Saskatoon, I really was and still am attached to the city, but the short and simple was I just couldn’t afford to live here anymore. I was also just starting to feel mentally and physically exhausted, finding myself working longer and longer days, and feeling like my efforts were for naught and I was falling further and further behind. I also just couldn’t shrug off the feeling that as a renter I just wasn’t wanted here anymore. The straw that broke the camels back for me is that despite a string of substantial rent increases, my building has been falling into a deeper and deeper state of disrepair. Lately, I have found myself fighting with my building managers over a number of leaks in my building, which were turning my carpets into a moldy mes and rendering my suite into a very unpleasant place to live in. Despite my pleas to address the problem, I was told that if I had a problem with the current state of the buildig that I was free to leave, and that they have a waiting list of tenants willing to pay hundreds more for my unit than the bargain I was supposedly getting on the unit. I’m sure I could have taken them to the rentalsman or fought back in some form, but I thought I would just take it as opportunity to take my leave from the greed that is running rampant in the community. No sense staying when one is unwelcome.
SO far, the the only downside to the job in Edmonton is that I guess will have to keep my jabs about unions in check, as apparently I have now made the move over to the darkside myself.
Best of luck to all the rest of you on the forum, and I hope things turn out for the good for others like myself waiting patiently on the sidelines! Who knows, if things turn out for the best maybe one day I can take my retirement money and move back home.
April 27th, 2009 at 3:29 PM
It’s sure nice having all you bears on here! It was a lot tougher being the outsider a year back. I think this is probably how the bulls are feeling right about now.
Another blurp on the news mentioned how Calgary’s housing market continues to suffer the most in Canada. When will Calgary and Saskatoon switch places I wonder? We took a larger hike, it only makes sense.
April 27th, 2009 at 3:29 PM
Frustratedrenter,
CONGRATS!!!! If you need any more CAD people out there let me know. lol.
Sounds like a good move. Now I’m sure you’ll be labelled as ‘hating’ saskatoon, and ‘falling for the alberta mentality’ and others will say ‘oh you’ll be back soon’….
This kicks butt. It’s like a brother has finally gotten out to see that life IS possible elsewhere…and for cheaper appaerntely lol.
April 27th, 2009 at 3:30 PM
FrustratedRenter,
good luck to you, glad that you will be a better financial situation, but Saskatoon loses another person because of greed. I read in the Edmonton sun that rents have been going down. I don’t have the link, but same will be happening here.
Heather D.,
soon, I see Saskatoon leading the nation in biggest percentage loss yoy with average house price. Saskatoon went up around %100 in less than 2 years. It will come down. Not a matter of if, but when.
April 27th, 2009 at 3:30 PM
Some prices from 05 and 06 before the bubble.
then now
Silverspring 4 level split in 06 260k 450k+
Hampton Village skinny house 05 165k 300k+
Wildwood Bi-level 06 180k 330k+
E College Park Bungalow 05 mine 160k 280k+
Mansion in Briarwood 05 450k 750k+
2-storey in Willowgrove 06 325k 525k+
Some of these are not exact, but you get the idea.
I know of one house in Stonebridge that was sold to a couple by a builder for 375k in Jan 07 before things went stupid. This same floor plan was used by the builder for another house and this new house is listed for over 560k right now.
If the builder made money on the 375k house, guess how much they are making on the same house ( if it sells) for 560k?
Heather, don’t worry prices will go down to levels in line with historic growth from 06.ie. That Silverspring house should be around 300k not 450k right now.
April 27th, 2009 at 3:31 PM
TD raises residential mortgage rates by more than a third on longer-term loans
http://www.cbc.ca/cp/business/080925/b092590A.html
Just great! I have to renew my rate in a couple of years. I hope I don’t see too many more increases in mortgage rates but with inflationary pressures it is inevitable.
April 27th, 2009 at 3:31 PM
Bentley’s second Law of Economics: The only thing more dangerous than an economist is an amateur economist!
Berta’s Fundamental Law of Economic Rents.. “The only thing more dangerous than an amateur economist is a professional economist.”
—
Q. What do economists and computers have in common?
A. You need to punch information into both of them.
—
Alex! My old buddy hi!
Anyway, I’ve heard the bears growl for over 10 years online about real estate sucking, meanwhile my real estate does fine and brings me a great income every month. I can only conclude that they are wrong and I am right. Ah, it’s good to be right. And right wing.
April 27th, 2009 at 3:31 PM
Callum,
I know you bought a few years, a condo that you rent out, right? I have no doubt that you can cash flow the property.
Property in Saskatoon has appreciated over the last 10 years from an average price of 104k in 98 to around 300k now. Any property before 06 would give one some cash back each month
But the next few years property will be depreciating so won’t make sense to buy an investment property until 2010/11 or until Saskatoon RE hits bottom and then property starts appreciating again.
You are only right because you bought pre-bubble. The rest of us have seen the writing on the wall for quite some time and RE will be tanking here.
April 27th, 2009 at 3:32 PM
There is a condo on Saskhouses that is selling for
$580/sq ft.
Not unless they find a greater fool!
April 27th, 2009 at 3:32 PM
Why the housing market is not set to melt down
http://www.reportonbusiness.com/servlet/story/RTGAM.20080925.wmortgage0925/BNStory/Business/home
who do you believe?
April 27th, 2009 at 3:33 PM
Call me a bear but I don’t care what anyone says…the prices in Saskatoon and Regina are MUCH too high. If they stay, young people WILL leave. If they return to previous levels, I think people will have more of a reason to stay here. We are still in a small community here in Saskatoon or in Regina in my opinion. No burbs, no tasteful urbanistic centres as of yet and so on. Just because poor urban planning has made circle drive way too busy makes everyone think ‘oh saskatoon is a big city! look at the traffic!’ doesn’t mean we are one.
April 27th, 2009 at 3:33 PM
Wow !!! 72 % increase – Just another way for the Star Phoney to make the market sound great – 11 to 19, stop the presses !
MVA TRAIL
Show me the money; luxury home sales rise in Saskatoon
Cassandra Kyle, TheStarPhoenix.com
Published: Thursday, September 25, 2008
Sales in Saskatoon’s luxury home market increased by 72 per cent in the first seven months of the year, a new report shows.
The Re/Max Upper-End Report, which was released nation-wide Thursday, indicates 19 homes listed at $500,000 and higher were purchased in the city between January and July, up over the 11 such homes that were sold during the same period last year. Saskatoon’s luxury market had the fourth highest sales growth in the country behind Regina (306 per cent), Winnipeg (89 per cent) and St. John’s (78 per cent).
April 27th, 2009 at 3:34 PM
MVATRAIL,
19 sales of 500k + in 7 months.
Good thing that there are only 186 properties listed over 500k in the city. They should all sell by 2020.
I have said all along these higher priced homes over 500k are at least 125k overvalued. And we will see this be played out in the near future.
Game over for the specs.
April 27th, 2009 at 3:34 PM
Bailout Accord Up In Air; Some Claim Deal Is Dead
http://www.cnbc.com/id/26885273
Washington Mutual is finished
http://www.cnbc.com/id/15840232?video=868038699&play=1
This is absolutely crazy!
April 27th, 2009 at 3:35 PM
Oh no it’s not George… Callum will prove as much with a low-brow joke
Seriously though, it’s interesting to note the varying degrees of severity implied by different news organizations – Fox and CNN are by far the starkest. (yes, I’m a news junkie).
CNN,
“One day after President Bush said the nation’s economy is at grave risk, the high-stakes negotiations over the proposed $700 billion bailout of the financial system ended in chaos on Thursday. Lawmakers bickered over competing counterproposals and hours of meetings between key lawmakers broke down without any progress late into the evening.”
http://money.cnn.com/2008/09/25/news/economy/deal_reached/index.htm?postversion=2008092513
Fox,
“The fate of the Bush administration’s $700 billon bailout package was thrown into doubt Thursday evening, after congressional leaders left a landmark White House summit on the economy hurling accusations at each other and declaring there was no deal.
“This meeting ended bad — real bad,” one source told FOX News. Others described the tone as “angry” and “heated,”… “We may have gone backward,” another source said.”
http://www.foxnews.com/story/0,2933,428165,00.html
BBC,
“US political leaders are continuing talks on a $700bn (£380bn) bail-out plan to revive the finance sector. After several hours of talks with President George W Bush, members of congress said more work was needed.”
http://news.bbc.co.uk/2/hi/business/7636943.stm
CBC,
“Bipartisan efforts to agree on a solution to the U.S. financial sector crisis appeared stalled Thursday night, just hours after members of Congress said they had reached a deal on a $700-billion US rescue plan.”
http://www.cbc.ca/money/story/2008/09/25/bailout.html
Al Jazeera,
“US leaders locked in discussions at the White House and on Capitol Hill have failed to produce an agreement on a proposed $700bn plan to bail out the country’s troubled financial sector.
http://english.aljazeera.net/news/americas/2008/09/2008925225322766958.html
One can only ponder how, and the degree to which, this will affect our overall economy and the RE market in particular.
Best of luck FrustratedRenter. I hope you’ll post from time to time and let us know how it’s going.
April 27th, 2009 at 3:36 PM
Funny quote from an MLS Listing (agent: Edward Ramsey)
“Buy and hold is now the best strategy that I can suggest. Saskatoon prices have leveled, and now is the time to buy. CMHC is predicting a 9% increase for 2009, so buy now and reap the benefits in the future.”
Is it ethical for realtors to bend the truth like this to sell houses? He can’t seriously believe this to be true? Can he?
Someone should inform Mr. Ramsey that he’s opening himself up to potential litigation over making statements like that. If his statement induces someone to buy, and they lose money, he might want to think about retaining counsel.
April 27th, 2009 at 3:36 PM
guy said:
“One can only ponder how, and the degree to which, this will affect our overall economy and the RE market in particular.”
Yes, there’s the crux of the problem on this blog, you guys ponder too much. None of this wall street news means anything to me. I have my deals I’m looking at, my bank lets me know if it will lend me the money to buy, if it doesn’t fly I move on to the next one. I live in the real world, I don’t watch 17 channels at once to see all the nuances of the coverage. Seriously guy in regina, drop your remote, pick up an investment book.
April 27th, 2009 at 3:36 PM
Callum,
I thought you were starting your own blog. I assume there’ll be no pondering allowed. John Gormley has a blog that might be right up your alley.
Pick up an investment book? Like, one written by a big-time Wall Street investor who is losing his shirt? Thanks for the tip; I’ll do that.
The “real world” is just that – the world. It doesn’t end at your bank’s front door, Saskatoon city limits, or Saskatchewan’s boundaries.
Seems to me one of the keys of good investing is sound forecasting. Tough to do that without keeping informed.
Callum, you don’t like the arguments posted here? Then come up with some better ones! You just complain about bears and make wise-cracks. Doesn’t give you much credibility. Please explain to everyone why we shouldn’t care about the situation in the States.
btw, I don’t watch tv.
April 27th, 2009 at 3:37 PM
James P.,
I’m no lawyer, but I’ve checked the CMHC website, and they actually do make that prediction for 2009. Well, they did in February of this year, anyway. It sounds laughable now, but he’s not pulling that number out of his patootie, so to speak.
Needless to say, much has happened since then.
Buyer beware.
April 27th, 2009 at 3:37 PM
good rant regina guy
might move to BC if oil keeps going down
April 27th, 2009 at 3:39 PM
Regina guy, no where already higher wages went up more? and housing prices dropped?
Pretty much anywhere in Alberta
Touche in the no real gain in wages in Saskatchewan after inflation. What was the average YOY rent increase?
I think housing and rent costs are one of the big reasons we’re going to see another exodus to Alberta. Is a real estate issue, as directly related to over priced housing.
April 27th, 2009 at 3:40 PM
guy_in_regina,
You mean that a 0.4% average increase in income YOY isn’t enough for you? Wow, you’re hard to please.
I’m not sure what the average increase in income was from August 2006-2007, but I’ll bet if you added it to the 0.4% YOY average increase in income from August 2007-2008, it would be a whole lot less than the nearly 60% increase in the average residential selling price in Saskatoon from August 2006-2008.
I’m using a back-of-the-envelope calculation (and it’s Friday night, ergo stark frontal lobe fatigue), but you can check for yourself:
http://tinyurl.com/42vnfu
Inflation may be an indirect tax, but it is very real- the individuals who suffer most from cost of living increases certainly pay a “tax.”
April 27th, 2009 at 3:40 PM
The way they measure inflation is a farce. The purchasing power of our dollar has been going down for years. I’d bet that inflation is running around %8 here not %3.4 as is reported.
Everything we buy is rising at a faster pace than the rise in wages.
April 27th, 2009 at 3:42 PM
Who’s next?
http://bankimplode.com/
Things are so bad in the States that the biggest bank in the history of the States goes belly up and it is not even front page news.
I predict Wachovia is next.
Notice some Canadian banks on that list?
April 27th, 2009 at 3:42 PM
Regina guy, know where already higher wages went up more? and housing prices dropped?
Pretty much anywhere in Alberta
Where pretty much everything, except booze in a bar, is cheaper, especially gas, cars, now housing
Touche in the no real gain in wages in Saskatchewan after inflation. What was the average YOY rent increase?
I think housing and rent costs are one of the big reasons we’re going to see another exodus to Alberta. Is a real estate issue, as directly related to over priced housing.
April 27th, 2009 at 3:42 PM
Guy in regina,
Well my housing costs have only went up 60.3% Since last july. So I’m sure wages have caught up…..
*falls of chair laughing hysterically*
April 27th, 2009 at 3:43 PM
That is july 2007.
April 27th, 2009 at 3:44 PM
Just wanted to clarify that 3.9% wage growth is a provincial number, while 3.5% inflation is a national number. I think it’s safe to say that inflation in SK has been above the national average.
Wow, 60.3% seems a little high? Here’s how I got my percentage increase: (Rent July 07/Rent July 08 = 0.xyz… 1 – 0.xyz = 0.abc… 0.abc x 100 = ab.c%).
However, if Jesse G’s number is correct; assuming wages continue to grow at 3.9%, and assuming that rents remain static, it will take 15.46 years for wage growth to catch up to increases in rental costs.
My suspicion is that, perhaps, Jesse’s rent went up 39.7% (1 – .603 = 39.7%). If wages continue to grow at 3.9% and rents remain static, it will take 10.18 years for wage growth to catch up to increases in rental costs (39.7%/3.9 = 10.18).
My rent has gone up 28% YOY ($670/$925 = .72; 1 – .72 = 28%) If wages continue to grow at 3.9% and rents remain static, it will take 7.2 years for wage growth to catch up to increases in rental costs (28%/3.9% = 7.2).
Remember, this is if rents remain *static.* I know mine is due to go up another $75 in 3 months.
So, in conclusion, quality of life is *clearly* increasing for all – especially young people trying to get established, low income people, and other renters
Also, it’s somewhat interesting to note that our wage growth was *third* highest among provinces – I wonder where it’s growing faster?
I think the real story is wage growth over the last 2 years compared to increases in housing costs (not to mention energy costs) over the same period.
With all the boom coverage, you’d think this blog (and other forums) would be full of enthusiastic young people moving here from Alberta (and elsewhere) and professing what a great deal SK is. Anecdotally, it seems to be the opposite.
I know, I know… John Gormley is going to have another fit. I wonder what clever insult he’ll come up with this time to discount my argument?
April 27th, 2009 at 3:44 PM
It seems to me as though the cost of a single detatched house has more than doubled in the past 2 years. But let’s say it has gone up by 100%. Wages grew by 3.9% this year – so let’s say they went up by the same the year before (although they probably grew less).
So, increase in the cost of a house up 100% over 2 years. Wages up 7.8% over same period. Assuming housing prices remain static and wages continue to grow at 7.8% every 2 years; it will take 25.64 years for wages to catch up to increases in house prices (100%/7.8% = 12.82 x 2 = 25.64)!!!
I rest my case.
Your turn Callum.
April 27th, 2009 at 3:44 PM
Norm,
Do you know what the average selling price of a “single family home and condo” in Saskatoon was in July 2006?
Thanks,
April 27th, 2009 at 3:47 PM
OH! Using your formula, from July07 to july 08 mine ends up being 29.3% year over year. it’s only raising to 850 now this month. July 07-530, july 08-750, oct 08-850. and so on.
It’s so funny how they come up with the stats…just like when wages increase say 3.9% they don’t…they increase maybe 2.9% beucase of taxes on that money…
Either way what a joke.
“With all the boom coverage, you’d think this blog (and other forums) would be full of enthusiastic young people moving here from Alberta (and elsewhere) and professing what a great deal SK is. Anecdotally, it seems to be the opposite.”
I LOVE that comment…so true. Where is everyone? Sure the bulls will come on and say, they are probably out having a life instead of sitting on a blog…good assumption with no data to back it up.
April 27th, 2009 at 3:47 PM
STOP USING MATH!!!! You are supposed to just take what they say and be all happy about it! Wages are up! Growth is up! we have bazillions in GDP, and everything is just looking up! May i mention short commute times?! (only when every road isn’t detoured for construction).
Funny thing, yesterday on my way home from work, Preston ave here in saskatoon which is usually backed up from Taylor St to 108th street, was backed up to Wal mart at preston crossing…so much for 10 minute commute times..
April 27th, 2009 at 3:48 PM
Jesse,
$530 July 07/ $850 Oct. 08 = 0.6235
1 – 0.6235 = 0.3765 X 100 = 37.65% increase in rent over 15 months.
Lets assume wage growth spiked in the last 3 months enough to push the 15 month average up to 4.0%.
In this case, if rent remains static, and wages continue to grow at 4.0% every 15 months, it will take 11.76 years for wage growth to catch your current increases in rent (37.65/4.0 = 9.41 X 15 = 141.15/12 = 11.76).
These calculations do not include wage erosion from other inflationary pressures such as energy and food (and probably soon credit as well). So, in reality it would take much longer to catch up. Not sure if it’s worth waiting around; especially if you aspire to own a home, which I do.
Sorry Norm, hope I’m not hurting your business – just simple math.
OK,I need to get outside and live like a bull
April 27th, 2009 at 3:48 PM
Great calculations.
April 27th, 2009 at 3:48 PM
wow, only on this blog could people take such great economic news about wage growth in this province and portray it as a joke.
guy in regina, also keep in mind that the noted inflation of 3.5 percent is total inflation, not core inflation, so it takes into account the massive run-up in energy and food prices in recent months, which economists often deem short term variables. core inflation was much lower. it’s unlikely that gas and food prices are going to rise as fast in the months ahead, they may well drop. wage gains won’t. either way, 3.9 percent wage growth in one year is huge. no too ways about it. and 4.5 percent so far in the first eight months of this year is even better. not to mention, leading the nation in percentage increase of employees on payroll. very promising i would say; let’s hope for more of the same.
April 27th, 2009 at 3:49 PM
All I’m saying is that wage growth hasn’t made a dent in the increase in cost of living – especially housing – and so, quality of life has deteriorated for many.
3.9% wage growth is paltry when you compare it to a 28% increase in rent. That means real income fell significantly, no?
Only on this blog could someone so consistently look at only one side of the equation.
April 27th, 2009 at 3:50 PM
If I were to be given only a 3.9% raise at my current place of work I would seek new employment.
And a move.
To Atlantis.
Who’s coming with me?
April 27th, 2009 at 3:50 PM
that’s a tough increase, guy in regina, but i don’t think that reflects the whole rental market. you can’t use the 3.9 percent on one hand of your equation, which is a wide provincial average, and compare it to your own personal data for rent on the other. not exactly a broad sample.
I’m not saying wage gains have been rising as fast as rent, far from it, but I believe rents for two bedrooms are only up about 10 – 12 percent in Regina over the past year. Saskatoon may be different.
If you look back over the past three or four years, rents in Regina are probably only up about 20 – 25 percent since 2005. Maybe somebody has some data on average rents in Saskatchewan going back over time.
All told though, rent for a two bedroom place in Regina is pretty much as low as rent gets west of Quebec isn’t it? Thunder Bay, Brantford as possible exceptions. Tight vacancy rates mean some people get hit with big increases, but that should ease up as more units come on the market. Provided, of course, they outpace people coming to our city. Quite a few do seem headed this way over the next couple years, given the projects planned or underway. Not sure how Saskatoon is fairing that way.
April 27th, 2009 at 3:50 PM
Here goes again…saying it has to ONLY be one person’s data…
How about seeing what a 2 bedroom apartment rent is listed on CMHC for Saskatoon for 2006… $608.
Regina would most likely have been comparable.
I know in 2005, I rented a 1 bedroom comparable to what I rent now down on Spence St. for $515 a month. I rented there for over 2 years, there wasn’t ONE increase in rent. Before that was a Bachelor pad for $495 a month 2 blocks away fromt hat.
I moved here in 2007 and found this place for $530 a month for my current 1 bedroom which is now 850 and I’m guessing will go up again in January.
April 27th, 2009 at 3:51 PM
Here are some numbers on the Rents in Regina
http://dsp-psd.pwgsc.gc.ca/Collection-R/CMHC/RM/NH12-79E/NH12-79-2002E.pdf
Page 8.
April 27th, 2009 at 3:51 PM
I think rent, like housing prices, are kind of playing catch-up for many years of stagnant growth. Dramatic short term increases, sure, and varying from building to building, but looked at over a longer term, not that outlandish perhaps. It looks like average rent in Regina for a two bedroom in 2001 was 570. This summer it was 720. What kind of rise is that per year over seven years? Not much. 4 percent a year perhaps. And I’m guessing rent hardly climbed at all in the 1990s. I think I paid 350 or 375 for a one bedroom in Saskatoon in 1994. Rent was much cheaper here compared to other Canadian cities prior to our current run of decent economic growth. Now it’s more in line with most of Canada. Wages are catching up.
April 27th, 2009 at 3:53 PM
guy_in_regina said i was out of touch.
Made my investment decisions during a time (2000-2001) when no one would touch real estate in BC. Am now reaping the benefits and have investments all over western Canada. I don’t care about Wall St. because I acted with foresight many years ago. How are your stocks doing?
April 27th, 2009 at 3:53 PM
Think this crisis is only in the States?
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3094103/Financial-crisis-Bradford-and-Bingley-likely-to-be-nationalised-by-Treasury.html
This whole financial crisis in the States is not just subprime. It is because of low interest rates and cheap credit in the world the last 10 years. Every country has been infected including Canada.
Think of it as a drinking binge for many years and now the tap(credit) has closed. There is now going to be one nasty hangover throughout the world.
April 27th, 2009 at 3:53 PM
Callum,
No I didn’t, I said: “Seems to me one of the keys of good investing is sound forecasting. Tough to do that without keeping informed.”
Do you disagree?
I’m happy for you that your investments turned out so well. You don’t have to worry too much because you’re well established. But, consider someone who is looking at making their first investments right now or in the near future – to them it DOES matter what’s happening on Wall Street! Maybe you can rest on your laurels; but that’s not the case with everyone – I can assure you.
btw, I don’t have investments. I’m a recent graduate. I have student loans
Mark,
Fair enough, 3.9% is a provincial number. I wish I had better data to work with. The point I’m trying to get across is that wages have a *very long* way to go to catch up with housing, fuel, food, utilities, etc. None of this really matters to people like you who bought pre-boom, I know… because your housing costs are largely fixed – but it’s a big deal for people like me and many others.
The ‘we’re just catching up’ argument is misplaced because I’m talking about quality of life here in Saskatchewan; and how it has eroded for a lot of people.
btw, I rent from boardwalk, they’ve got rows of cubicles full of egg-heads (2 per cubicle) with their fingers on the rental market’s pulse. So, 10-12% increase in rent over the last year you say??? Let me guess, you’re not renting.
I stand by this (posted before, but modified slightly here):
It seems to me as though the cost of a starter home has more than doubled in Saskatchewan over the past 2 years. But let’s say it has gone up by 100%. Wages grew by 3.9% this year – so let’s say they went up by the same the year before (although they probably grew less).
So, the cost of a house increased 100% over 2 years. Wages up 7.8% over same period. Assuming housing prices remain static and wages continue to grow at 7.8% every 2 years; it will take 25.64 years for wages to catch up to increases in house prices (100%/7.8% = 12.82 x 2 = 25.64)!!!
So, sure wages are catching up Mark! At this rate they’ll be on par in 25.64 years!!
btw, where’d you get this 4.5% growth figure? That rate would knock the time back to 22.22 years; assuming housing prices remain at current levels for the entire period, and that there are no other inflationary pressures, of course
Hey, but don’t take my word that housing is overvalued (or wages undervalued), just take a look at the supply and demand!
boo-ya!
April 27th, 2009 at 3:54 PM
So Norm, what were the numbers like this week? Anything interesting in the data?
April 27th, 2009 at 3:54 PM
Norm,
I got my rants in at the tail end of this week so that they wouldn’t taint a whole week of the blog. I know you’ve got houses to sell
April 27th, 2009 at 3:54 PM
Hey guy_in_regina,
I hear how frustrated you are about the lack of affordability, and believe me, there are many people in the same boat. I think this is testament the the large glut of supply coupled with the decrease in demand. The cost of housing cannot continue to outstrip incomes over the long term, and perhaps we’re just starting to see signs that affordability may be improving. Slowly. We’ll see what tighter lending practices and higher mortgage interest rates throw into the mix.
For the time being, though, it’s probably much cheaper to rent than to own the same thing. If you can, use this to your advantage. Where I’m renting, the yearly rents is 3% of purchase price and mortgage rates are 6.5%(or more), so it costs more than twice as much to borrow money to buy this house than it does to rent the same thing. Worse, total owner costs including taxes, maintenance, and insurance hover around about 9%, which is three times the cost of renting.
And don’t fall for the renter=loser argument, either, or let people say as a renter, you have no opportunity to build equity:
-Equity is just money. Renters are actually in a better position to build equity through investing. Renters can get rich much faster than owners, just by investing conservatively. You must be diligent about this, though. If you’re just going to buy more “toys” with the money you would have paid on a mortgage, this won’t work.
-Owners are losing every month by paying much more for interest than they would pay for rent.
-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 a certain %.
-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.
-Owners must insure a house, but not most other investments.
-Owners must pay to repair a house, but not a stock or a bond or any other type of investment.
No one can tell you when the right time to buy is, as that’s obviously a very personal decision and will depend on many of factors. But please realize that the place that you find yourself in now may not be so bad. If you can, keep saving for that down-payment, and when affordabilty improves (and it has to), you’ll be sitting pretty. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying slows or stops, like it has slowed now.
Hang in there….
April 27th, 2009 at 3:55 PM
Also keep in mind that in Saskatchewan, we traditionally have only spent 30 some percent of our yearly disposable income on housing. That’s quite low. For decades I think. We’re now spending more, 40 some percent. But in other places, long term, people have spent that kind of percentage for ages. Vancouver residents, for example, have been willing to sock massive amounts of their disposable income into housing for years. Sure, wages here in Sask. would have to rise a lot for a long time for us to get back to the ‘norm’ of spending 30 some percent on housing. But if we’re now willing to spend 40 some percent, for whatever reason, jobs, etc, to be here, than maybe it doesn’t have to correct so much. We cut corners elsewhere. I’m not saying things aren’t correcting price wise, but affordabilitiy based on income isn’t neccessarily going back to where it was.
By the way, if you really want to buy a house, though I’m not sure you’re in a position to do so, I know of what I think is a very good option in Regina. I think it’s a great deal actually. And it isn’t a house I own, I promise. It’s priced at 154,000 on MLS on a very cute ‘all home owner’ crescent. It’s been up for a few days, a good buy at that price, but if it sits there a week or two, it’s a great buy at 140,000. Seriously. Three bedrooms, solid re-finished war-time house with what is likely a very good basement. Haven’t been to see it yet.
April 27th, 2009 at 3:55 PM
I love the arguments on how we just needed to catch up, and comparing with Vancouver with regards to housing. I was told that the wages out in vancouver aren’t any different than here in the ‘average weekly earnings’ catagory. So then how is it even possible that these people buy a $600,000 home on thier $800 a week salaries. Even as a couple there is NO WAY any bank would loan that out.
Someone is clearly out of touch with the rental market as many people I’ve known have been. I have older folks saying that I’m making by far a good enough wage, that I should be in a house, that they were when they were my age, and they made a fraction of what i make. When you come at them with numbers they look at you like you’re some welfare case that just ‘doesn’t work hard enough’.
What i say is this…if you truly think the rental market needs to play catch up, and that it’s fair, then why not have the housing do the same thing. Up it to 600g’s for a house. The one you bought earlier for cheaper…if it’s not still paid off how about upping that loan to cover that…that’s fair right? It’s only catching up to Vancouver…
April 27th, 2009 at 3:55 PM
People can buy only what they can afford.
This has changed over the years. Before it used to how much you saved before you went and bought something.
Now affordability means how much credit your wage will you to get. The bigger the wage, the more credit you can get.
We are now seeing how too much credit is troubling the States.
April 27th, 2009 at 3:56 PM
One more thing… just beaucse you’re WILLING to spend 40% or more of your income on housing, doesn’t mean the banks will give you that…the one I went to wouldn’t go over 32 or 34 %.
April 27th, 2009 at 3:56 PM
Just to remind people about Saskatoon being undervalued.
Phoenix and many other cities were undervalued in 03. When they shot up in price they called it the “catch up effect”.
Ask those Phoenix buyers who bought at the peak how the “catch up effect” is working for them now.
April 27th, 2009 at 3:57 PM
Callum,
Do you have any real estate investments on Vancouver Island or in the Okanagan?
April 27th, 2009 at 3:57 PM
Yes, one in the Okanagan. Why?