Understanding the Saskatoon house price puzzle

If you read the story in today’s Star Phoenix titled, “City housing price surges: Average sale price of Saskatoon house tops $160,000,” you might be a little confused, especially if you’ve been reading my blog or reviewing my statistics. I’d like to make a small contribution to this discussion and add just a couple of the missing pieces.

The “year-end average figure of $160,577” which is related to “houses” in this story, actually represents the average sale price of Saskatoon homes across all of 2006.

Included in that average are condominiums and mobile homes. The average selling price of a Saskatoon house actually came in at approximately $171,000 for all of 2006.

Of course, the other potential problem with one-year averages is that they are often skewed by some old data, particularly in markets where prices are changing rapidly. Those houses which sold at a lower price at the start of 2006 tend to skew the average down and give a slightly distorted picture of what one might expect to pay for an average house in today’s market. This was one of the primary reasons that I added six-month averages to myAverage Sale Price of Saskatoon Houses page and my Saskatoon Neighbourhood – Profiles and Price Trends page. In a market which is changing rapidly, the six-month average represents a more realistic reflection of current market prices.

Having said all of that, I’ll note that the average selling price of a house in Saskatoon over the last six months is $176,153, substantially higher than you might have guessed from reading this story. Given the fact that current listing inventories are extremely low, it’s reasonable to assume that the average is closer to $180,000 at this time.

Unfortunately, I cannot provide you with a link to this story as it didn’t make the Star Phoenix website today. Instead, they feature the article, “Edward Jones at home in Sask,” which discusses the investment brokerages plan to open offices “in our community” so that new sales people can go “door knocking in neighbourhoods.” I’d like to thank the Star Phoenix for the warning.

Norm Fisher
Royal LePage Vidorra

So you want to invest in Saskatoon real estate

Saskatoon is obviously gaining a national reputation as a hot spot. There is little doubt that our city is doing well and the Saskatoon real estate market is healthy and strong showing several years of decent appreciation. At the same time, many of Canada’s major markets have been showing signs of cooling off, so of course, Saskatoon is standing out amongst them all.

Lately, there has been a dramatic increase in the number of investors who are expressing interest in adding some Saskatoon real estate to their portfolios. My strong Internet presence and high search engine visibility brings me lots of inquiries from serious, and sometimes, not so serious buyers. I’ve dealt with many email inquiries from prospective investors over the last two weeks.

I have a few tips for out of province investors which I sincerely hope will be helpful.

All successful investors which I’ve met have a preference for certain types of properties and specific goals they wish to achieve. Some of the investors I’ve encountered lately seem to be lacking that focus and express interest in everything from $50,000 condos to $50,000,000 shopping malls. It’s difficult for an agent to be effective for you when you don’t know what you want. Be open to discussing your objectives with your agent. It helps us to help you effectively.Talk to some agents on the phone. Your real estate investment is very serious business and email communications often lead to confusion. For something this important, we should be talking. If we can’t do it face to face, let’s speak on the phone. You can reach me toll-free at 1-888-978-6676.

Some of those I’ve corresponded with by email seem to have a need to impress with tales of great wealth. This kind of talk, coming from someone I’ve never met makes me want to proceed very cautiously and sometimes not at all. There are so many scams out there today that we have to be careful. Promises of big business possibilities during an initial email contact are going to be viewed with suspicion.

I’m most impressed by a few thoughtful questions. Even if you already know the answers, doing so tells me that you know what you need to know, and it gives you an opportunity to find out if I know anything. If you don’t care whether I know the market or not, it causes me to question how serious you are.

Be prepared to forward a deposit. As I said earlier, there are buyers all over the place here and most of them are ready to act when the right property comes up. If you and your chequebook are 500 miles away, we really don’t stand a chance. Having an adequate deposit in trust, in Saskatoon is the only way that you can be ready. Real estate trust funds of up to $5,000 are insured by the Real Estate Assurance Fund in Saskatchewan. If you’re dealing with a licensed broker your money is placed in trust where it’s safe and ready to work for you when the time is right.

Be prepared to conduct your transactions in accordance with local customs. Real estate is done in many ways, in many different places. Your offers will be taken most seriously if you seek advice from your agent on how things work in the Saskatoon market.

Do a little bit of research on our real estate market. Lately, I’ve been asked for things which no longer exist in this market, and people have actually been put off when I told them so. 

  • Eastside luxury homes with good rental potential priced between $150,000 and $175,000.
  • Motivated sellers who are anxious to sell at a bargain price.
  • Quality residential revenue homes which will deliver positive cash flow with a 15% down payment.

Unfortunately, none of these things exist in the current Saskatoon real estate market. If that’s what you need to meet your goals, we may as well discuss it now.

Good luck.

Norm Fisher

Royal LePage Vidorra

Saskatoon MLS listings hit record low

I just ran a search of active listings on the Saskatoon Real Estate Board’s MLS ® service. This morning, there is a total of 256 active listings including single-family homes and condominiums within the Saskatoon city limits.

Area 1 – East of Circle Drive East – 57 listings.

Area 2 – West of Circle Drive East to the river’s edge – 52 listings.

Area 3 – Downtown Saskatoon to the far North end – 28 listings.

Area 4 – Idylwyld Drive to Circle Drive West – 103 listings.

Area 5 – Circle Drive West to the West edge of Saskatoon – 16 listings.

I’m going to guess that some 40% of these listings are under contract, leaving approximately 150 homes available to be purchased. I have never seen such low levels of inventory in the 14 years I’ve been in the real estate business. Last year, at this time we had around 500 properties for sale.

This is bad news for buyers and much better news for sellers. If you’re planning on offering your Saskatoon home for sale, don’t waste a minute getting it to the market. You have a golden opportunity to break some price records, I would think.

Norm Fisher
Royal LePage Vidorra 

Saskatoon “rollin’ right along”

Murray Lyons, business editor of the Saskatoon Star Phoenix wrote an excellent story in today’s edition titled, “Rollin right along: Saskatoon’s economy poised for further growth in ’07. (No longer available online)” Lyons points to several indicators that Saskatoon is truly on a roll with tremendous momentum behind us as we move into the New Year.

Potash Corporation of Saskatchewan and Cameco Corp. are booming, GDP growth is predicted at 2.9 percent which should be easily accomplished, the Saskatoon labour force grows from 126,000 to 131,600 in the last year and big growth is experienced in natural resources and science sectors.

Location still key to real estate, even in a virtual world

You’ve heard the old adage, “The three most important things in real estate are location, location, and location.” A location is of utmost importance because it’s essentially the only thing about real property which can’t be changed. You can buy new carpets, add a coat of paint and even improve a floor plan but you’re definitely limited when it comes to improving the location of your property. You can’t take a home which is in a poor location and move it closer to schools, or further away from negative influences. It is where it is, and it always will be.

Location is of equal importance in the world of “virtual real estate” and the criteria that we use to judge the quality of a “location” is very different. When purchasing residential real property, we tend to associate quiet, low traffic locations with quality. When you market real estate online, you look for locations which boast high levels of traffic. You want your home to be situated in a busy place to maximize the level of exposure to active home buyers and having your home marketed “on the internet” doesn’t necessarily mean that it is being seen.

Every real estate agent will market your home on the most predictable online real estate websites. The real value that an agent brings to the process is found in what they do differently. The real question is; what will you do to make my home stand apart from all others which are for sale.

Unfortunately, many real estate websites exist is a baron wasteland. They attract few visitors, and those that do come, never return. They are little more than an electronic brochure promoting the services of an agent. They can be boring and irrelevant at best; definitely not the kind of location that brings you much value as a home seller.

Anyone who knows me will tell you that my passion is online marketing. I’ve worked hard to build a website with quality content, which is well positioned in the major search engines. Each month, thousands of people visit the Saskatoon Real Estate Resource Centre. We recently joined the Point2 Network, the largest real estate network in the world. For the fourth week in a row, our website has ranked in the top 100 of over 100,000 real estate websites in the network. Our association with Point2 also provides us with the opportunity to syndicate your listing and send it to some of the highest traffic locations available to web marketers.

If you’re looking for a quality location to market your Saskatoon home, our website is hard to beat. I’d love to show you how we can expose your home to thousands of potential buyers.

Norm Fisher
Royal LePage Vidorra