Saskatoon housing affordability deteriorated again in 2008: Demographia

Some call it a report on the obvious, while others see it as big news.

No matter how you view the Frontier Centre for Public Policy’s International Housing Affordability Survey, you’d be hard pressed to make a convincing argument that housing affordability hasn’t suffered a serious blow in Saskatoon over the past couple of years. In fact, you’d have to be a fool to even try. When the average selling price of a home nearly doubles in two years time you’re going to see some pretty serious deterioration in affordability. Most of us didn’t need an “international study” to tell us that the cost of home ownership has skyrocketed here but some might be a bit surprised to learn that no other city in Canada has seen affordability deteriorate to the same extent as Saskatoon. According to the study, Saskatoon is now among the ranks of the “seriously unaffordable.”

I suppose the greatest value of this kind of study, if you feel you can trust the methodology and actual statistics, is that it provides a bit of a benchmark as to how we’re doing locally compared to other markets around the world. The Demographia study looks at 265 housing markets and determines housing affordability for each assigning a “median multiplier” as its affordability measure. The “median multiplier” shows you how many years of median household income it takes to buy a home priced at the median in each market.  We’re not quite sure which median income measure was used, or how a “house” is actually defined, but let’s assume that these measures are consistent from one survey to the next and see how things have changed in relation to some other Canadian markets. Here’s a quick look at the changes over the last three survey periods.

Recent price declines would suggest that Saskatoon might have already bottomed out as far as affordability is concerned, at least for now. I haven’t been able to make sense of the “median price” that the Demographia study has used for Saskatoon, but I can say with certainty that the median price of a Saskatoon house has been $21,250 lower over the past 90 days compared to the third quarter of 2008, the period that is measured for the study. It’s down $38,000 from its peak in Q2 when the median price of a Saskatoon house hit $315,000. Things are starting to look up for affordability. With any luck, we’ll be back in the “moderately unaffordable” category soon, and even that has a nice ring to it right now.

See the latest Demographia Affordability Study here
A copy of the 2008 study is here (data from Q3/07)
A copy of the 2007 study is here (data from Q3/06)
See the Star Phoenix story on this study here
And another Star Phoenix story here

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.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatoon real estate: Week in review (January 19-23 2009)

Eighty-five Saskatoon houses and condominiums were offered for sale this week, down eight units from the previous week, and up five from the same week last year. An additional seven properties (duplexes, apartment building, etc.) brought total listings for the Saskatoon real estate market to ninety-five this week. Presently, there are a total of 710 single-family detached houses and 406 condominiums for sale on the local MLS system. Total active residential listings sit at 1,192 units, up just one from the week before.

Residential unit sales reached seventy-one units including sixty-nine houses and condos to claim the best sales week in terms of overall unit numbers since the week of September 22-26 of last year. I should point out that sales of houses and condos for the same week last year reached 91 units so while “units” are showing some signs of improving we have been down for three of four sales weeks that fall into this year. At this point there is little doubt in my mind that we will fall short of matching last January’s record breaking sales numbers of 300 units, but with a total of 166 properties already reported as firmly sold, and weekly sales showing some solid improvements it seems likely that we will be able to produce sales sufficient to claim a “second best January.” The previous best for a January prior to 2008 was just 219 residential properties. In spite of all of the doom and gloom surrounding the economy, and real estate in general, home sales in Saskatoon are better than average over the past two months. No doubt, some of you will find my optimism grossly offensive, but demand for Saskatoon homes is strong. Cuts to interest rates and price drops over the last quarter have improved conditions for buyers and they are clearly responding.  Naturally, inventory continues to be the wild card which will influence future prices as well as days to sell. Wise sellers will realize that they have their challenges ahead of them, likely for some time to come.

Click the image for a larger version of the graph.

Over the course of the week, a total of 45 price changes were recorded on the Saskatoon MLS. Additionally, 25 listings were canceled and re-listed, most of those offered at a new lower price. The average selling price of houses and condos dipped down $10,000 from the week before to finish at $268,072. The six-week average increased slightly to $274,026 claiming a gain of nearly $20,000 over the same week last year. The four-week median price slid $3,000 to $262,000, remaining up just $7,000 from the same week a year earlier. The median sale price for the week was just $247,000, down significantly from recent weeks when it topped $270K. Clearly, like the weekly average, this number is subject to wild swings on a weekly basis. We’ve seen it move from $195K to $285K from week to week over the last quarter.

Click the image for a larger version of the graph.

At first glance, the underbid activity looks very similar to the previous week. The average underbid saw little change and maintained some stickiness around the $13K mark. The percentage of sellers who struck a deal within $5,000 of their asking price held steady at 35%, while the $5,001-$10,000 range took a slide from 27% last week to 22% this week. The buyers lost from that category stepped up to the $10,001-$15,000 which gained five percentage points to finish at 20%. The higher discount categories showed little change over the previous week.

At second glance, and upon closer inspection you’ll see something occurring here that hasn’t happened in awhile; a full 10% of sales from this week traded at or above the seller’s asking price. Four above list price sales generated an average “overbid” of $11,550.

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.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatoon real estate: Week in review (January 12-16 2009)

The Saskatoon real estate market continued to show promising signs of life as the holiday season got further behind us and people continued to get back to the business of life. A total of 50 residential properties were reported as firmly sold this week including 48 single-family houses and condominiums, an increase of 7 homes from last week, and just 3 fewer than the same week last year. Just three weeks into the new year the sales line on our graph does seem to be mirroring last year’s sales activity.

A total of 93 Saskatoon houses and condos were added to the MLS system this week, up from 73 during the same week last year, but down significantly compared to last week when 134 new listings were offered for sale. Additionally, 17 of the 28 properties that were canceled or withdrawn from the system made another appearance, re-introduced as a new listing. Still, the total residential listing inventory managed to remain fairly flat finishing the week at 1,191 units, up just three from the week before. Of course, total active listings continue to be the “800-pound gorilla in the room” as the inventory hovers at levels approximately three times higher than it was at this time last year. While real estate sales activity looks promising in comparison to last year, listing numbers are definitely up (249 houses and condos listed year to date compared to 207 for the same period last year), and given the high inventory levels at the start of the year, this will continue be a concern for some, primarily sellers and seller’s agents.

Click the image for a larger version of the graph.

The average selling price of the Saskatoon homes that traded this week came in lower, falling from $284,563 last week to finish at $278,301. The six-week average increased slightly over the previous week moving from $268,110 to $270,116 and managed to maintain a gain of $14,500 compared to the same week last year when it reached nearly $255,600. The four-week median price took a larger jump to $265,000, up about $5,000 from the previous week and about $9,000 higher than the same week last year. The latter two measures appear to be headed for slightly higher ground as some of December’s lackluster sales weeks get shaken out of the equation.

Click the image for a larger version of the graph.

Just 46 price changes were recorded in the residential category this week, and of course, most of the 17 properties that were canceled and re-listed came back on the system at a lower price. Saskatoon home sellers met a more congenial home buyer over the past seven days as 6 sellers (12.5%) managed to get their full asking price and the average underbid came in lower at just $13,134 compared to $16,405 the week before. A full 62% of buyers signed a deal within $10K of the asking price, compared to just 37% the week before. Naturally, this affected all of the larger “discount” categories. The $10,001-$15,000 discount range fell to just 17% from 32%. The $15,001-$20,000 and the $20,001-$25,000 dropped by nearly half to 4% and 6% respectively while the percentage of sellers who gave up more than $25K fell from 14% to 11%.

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.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatoon real estate: Week in review (January 5-9 2009)

Following the two slowest weeks of 2008, the Saskatoon real estate market came out of the gate strong for the first full business week of the year as residential unit sales climbed to 45 units, up from just 16 the previous week. 34 single-family homes and 7 condominiums were reported as firm, topping sales for the same week last year by a total of three homes. That’s hardly a substantial difference, but just the same, it’s the first time we’ve seen an “up over last” year when it comes to units sales for quite some time.

Residential listings also came off the starting block at breakneck speeds as a total of 149 residential properties were offered for sale on the Saskatoon MLS including 100 single-family homes and 34 condominiums, 58% more than were listed during the same week last year. In 2008, we didn’t see these kinds of weekly listing numbers until March and given that our current active listing inventory is already at about 3 times what it was last January, I’m hoping this is one of those blips on the chart that sorts itself out next week, and not a sign of things to come. While I have no doubts that there are many more listings to come, I was hoping that it would follow the more traditional path showing its most aggressive growth closer to spring. Given the surge in residential listings this week, it’s no big surprise that total active listings increased. After falling to 1,121 at the close of December the active listing inventory reached 1,188 by the end of the week marking the first increase we’ve seen since they started to decline in September. There are currently 722 single-family homes and 395 condos displaying the “active” flag.

Click the image for a larger version of the graph.

Saskatoon home prices gained some traction and came in higher again for the second week in a row. The average selling price for the house/condo category was $284,563 for the week, up from $265,492 the week before. The six-week average fell marginally from $269,489 to $268,100 while the four-week median increased by more than $15,000, from $244,000 last week to $259,900, and settling roughly 13.5% lower than it’s peak of $299,900 in June of 2008. I’m not at all surprised to see this upward adjustment following this particular measure’s poor performance through December when it declined a whopping $26,000 over just a few weeks after sticking fairly close to the $270,000 mark thirteen weeks in a row.

Click the image for a larger version of the graph.

50 price changes were recorded over the course of the week, not including the 29 properties that were canceled and re-listed during the same week, most at a new price. The average underbid increased to $16,405, up close to $1,000 from the week before. The percentage of buyers who paid a price within $5,000 of the asking price saw a huge increase to 27%, up from just 7% the week before. The $5,001-$10,000 discount range shrunk just as hard falling from 31% last week to just 10% this week. The $15,001-$20,000 discount range also softened significantly, while the $10,001-$15,000 saw some huge growth, as did the largest discount categories.

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.

Norm Fisher
Royal LePage Saskatoon Real Estate

A closer look at the Saskatoon real estate statistics for December 2008

The Saskatoon Region Association of Realtors recently reported December sales and prices for the entire residential category including single-family homes (houses), condominiums, semi-detached properties, duplexes, mobile homes and vacant lots. Unit sales totaled 162 properties across all of these property types, and an average sale price of $266,411. Let’s have a look at how houses (single-family detached homes) and condominiums did in comparison to the entire residential category.

Month end expired contracts pushed total active residential listings down at the end of December settling at 1,127 properties, and reaching their lowest levels since April of 2008. Still, the total inventory of Saskatoon homes was sharply higher than last December when available properties fell to just 346. Single-family homes took a sharp dive falling from 882 units at the end of November to close the year at 684. Available Saskatoon condos followed a similar trend falling from 493 to 381 in one month’s time.

House sales slowed as they always do in December losing 23 units compared to November, and falling short of December 2007 sales which topped 140 mark. 109 Saskatoon houses changed hands last month. Condos bucked the typical trend and showed an increase of 6 units from November with a total of 44 reported sales through the month of December, off 12 units from the previous December. If you’re looking for the silver lining, December sales of condos and houses did manage to exceed numbers recorded in all previous years. All things considered, this strikes me as a fairly remarkable change from our more recent months. It will be interesting to see if lower interest rates, and softer prices motivate buyers to enter the market as we move towards spring.

Indeed prices were softer in December as Saskatoon houses took a significant beating and showed losses in all four of the value measures we’ve been tracking over the past two years. The average sale price took the biggest thump losing well over $25,000 as it fell from $302,508 to just $274,521 and reaching it’s lowest level since December 2007 when the average house price was recorded at $267,342. The median sale price dropped $21,000 to $264,000 on a month-over-month basis and was actually slightly lower than last year’s number of $264,900. The three-month average fell close to $14K compared to last month landing at $295,956, down about $35,000 from it’s peak of $331,630 in June, but remaining up by almost as much when compared with the same month last year.

Click the image for a larger view.

It’s certainly worth mentioning that the houses sold in November were larger than those sold in December. In November, Saskatoon home buyers purchased an average of 1,252 square feet, compared to 1,186 square feet in December. Using our average price per square foot number for the month, about half of the massive slide in the average selling price could be attributed to this factor.  Two of the five major trading areas managed an increase in the price per square foot on houses that traded. On the heels of an unusually large slide in November, area 4 rose from $162 per square foot last month to $173 in December while area 1 saw a marginal increase from $254 to $257. Area 3 took the largest slide, losing about $23 per square foot to finish at $221. Across all Saskatoon real estate trading areas, the average price per square foot for a Saskatoon house dipped $11 from $242 in November to $231 in December.

Click the image for a larger view.

Saskatoon condos produced surprises this month beyond stronger unit sales showing price gains in three of our four value measures. The average sale price increased $14,000 compared to the previous month and finished at $236,896, or about $2,600 higher than the same month last year. The median fell short of last year’s number finishing at $219,500, but was up about $5,500 from November. The three-month average slipped from $230,812 last month to settle at $229,082, or about $7,000 lower than it was in December of last year. A small handful of well appointed luxury type condos in areas 2 and 3 take at least some of the credit for the gains.

The price per square foot number for Saskatoon condominiums saw an overall increase of $2 over the previous month, rising to $219 in December. Still, it sits about $15 lower than it was in December 2007 and at its second lowest point since May of 2007.

The gap between the price of a Saskatoon house and a condo closed considerably through the month of December, at least on a price per square foot basis as house prices came down and condos edged slightly higher. Higher end sales pushed the average price per square foot in area 3 up by more than 25% to $259, and area 2 saw gains of about half as much rising from $217 last month to $243 in December. Area 1 continued to slide falling from $216 to $201. Area 4 remained stable as a result of no condo sales for the fifth consecutive month. Area 5 shows a large slide from a bizarre previous high of $255, falling through the floor to just $179. I should point out that area 5’s number is based on just two sales so a large change is not at all surprising.

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.

Norm Fisher
Royal LePage Saskatoon Real Estate