I’m bullish on Saskatoon real estate for 2007

The Saskatoon Star Phoenix ran a story today on the front page of the Business section with the headline, “City house prices stable.” The story, written by Murray Lyons, Star Phoenix Business Editor references the National Century 21 fall house price survey and suggests that Saskatoon house prices will see substantially less appreciation in 2007.

Rob Friesen, broker for Century 21 Conexus Realty Ltd. in Saskatoon is quoted as saying, “I don’t think we’re going to see increases such as 13 or 15 percent as we’ve seen lately. I think we’re going to start seeing some more normal appreciation now, something more like three to six percent.”

Rob Friesen is a man I respect and his opinion on real estate matters carries some weight with me, but in this particular instance, I do think his prediction underestimates the factors which will affect our market in 2007. He’s not the only one in this camp. Remax recently released its “2007 Housing Market Outlook” for Canada. While they predicted Saskatoon will lead the country for growth in unit sales, they predicted price growth of only 4%.

Why am I feeling bullish, you ask?

First of all, several things are going on in mortgage financing which I believe will have a positive effect on the market.

  • Mortgage rates are expected to drop in the range of .5-1% over the next few quarters.
  • Many of the major lenders are now offering 40-year amortizations. That reduces the monthly carrying costs on a $160,000 at 5.5% from $956.79 to $801.79 and opens the market up to lots more buyers.
  • Mainstream lenders are breaking into the “b” lender market offering the opportunity for credit-worthy buyers to buy a home with no money down and they’re offering these kinds of arrangements at attractive and competitive mortgage rates. Again, more people will qualify to buy a home as a result.

 Add to those factors, the fact that Saskatchewan seems to be on a roll. Business owners are feeling good and employment is up. Earnings are up and taxes are down for both individuals and businesses. There’s a growing demand for skilled workers throughout the province. Affordability and quality of life issues will bring a continuing flow of people migrating to this province in 2007. Saskatoon will be the largest benefactor in the province.

Finally, active residential listings are at an all time low. Today, there are fewer than 400 active residential listings of all types (single-family, condos, etc) listed for sale on the Multiple Listing Service of the Saskatoon Real Estate Board. Last year, at this time we had closer to 650 homes in the market. Again, low supply and high demand create upward pressure.

In a nutshell, here’s what the various camps are saying will happen next year.

Century 21 sees prices increasing three to six percent.

Remax is predicting price increases of four percent.

CHMC is predicting prices will rise by seven percent.

Count me in for eight percent, or better!

I’ve played my cards and now, we’ll just have to wait and see what actually happens.

Norm Fisher
Royal LePage Vidorra

Sleepless in Briarwood

You might say that some residents of Briarwood in Saskatoon are getting a little “tired” of the racket that seems to be prevalent in this prestigious area at all hours of the night.

Topping the list of noisy culprits was the city of Saskatoon who thought it was okay to run bobcats around the clock at a snow dump located just outside of the area. The trains which run along the East side of the area aren’t exactly singing a sweet lullaby either as they rip along the area’s border three to four times a night, blowing their whistles at full blast.

One can hardly blame Darryl Gerwing, one of Briarwood’s newest residents for being a little testy. He’s been awoken by the incessant noise every night, several times a night since he moved to Briarwood about three months ago. “If you have your windows open, you can get the train whistle two, three times a night,” Gerwing recently told a Star Phoenix reporter. “All hours of the night. It’s really loud.”

Gerwing has been in touch with Canadian Pacific Railways and has requested a “whistle cessation” for the crossing located at Eight Street and Zimmerman Road. Apparently, the city of Regina has such a policy in place and Gerwing obviously feels that there’s no good reason Saskatoon shouldn’t do the same. He’s right!

Gerwing has also been in touch with and expressed his concern surrounding activity at the snow dump to his city Councillor, Tiffany Paulsen who confirmed that the city has ceased operating at night as a result of the complaints and will relocate the snow dump to an area outside of city limits soon.

Mr. Gerwing, thank you for your efforts to bring about some peace and quiet in your area. Train noises are not new to the area and I’m sure your willingness to take this issue on is appreciated by your neighbours.

Briarwood is located along the South East border of Saskatoon. Primarily developed after 1990, the area had the highest average selling price in Saskatoon through 2005.

Norm Fisher

Royal LePage Vidorra

Saskatoon MLS sales statistics make some waves nationally

The Canadian Real Estate Association (CREA) just released it’s findings on MLS® sales across Canada for the month of October and Saskatoon stands out as one of the “major markets” showing exceptional performance.

“Resale housing in Canada’s major markets remains on solid ground. With just two months to go in 2006, MLS® home sales for the year-to-date in October 2006 were higher than the same period for any other year on record.”

Some of Canada’s largest centres like Montreal, Calgary, Ottawa, and Vancouver saw some of “the steam” come out of their market as listing inventories “began to trend higher … giving buyers more negotiating power and time to make purchase decisions. That trend is forecast to continue and result in smaller price increases in 2007.”

The report notes that “Monthly sales reached their highest monthly level ever (for the month of October) in Edmonton and Saskatoon. Higher activity in Edmonton, Saskatoon, Toronto, Hamilton and Quebec City offset fewer sales in Vancouver, Calgary, Ottawa and Montreal.”

I expect that we will continue to see some softening in the country’s largest markets as affordability and cost of living begin to impact the numbers of people who can afford to participate in residential real estate markets. The kinds of increases that some of these markets have experienced is unsustainable. For instance, Calgary reported price increases of up to 50% in some areas over the last two quarters of 2005 and the first two quarters of 2006. The Globe and Mail ran a story yesterday with the headline “Housing Boom Fizzles in Calgary.”

Saskatoon is in an excellent position to attract those seeking a more affordable housing market and an overall lower cost of living. Businesses everywhere seem to be screaming for people and growth is predicted in several market sectors.

My colleagues and I have been talking about this trend for several months as we’ve all suddenly seen an increase in the numbers of out of province buyers seeking homes in Saskatoon. While it will take some time before we have statistical information to back this idea up, I’m confident that the numbers will deliver. Half of the transactions which I was involved in this year involve people who are relocating to Saskatoon. I was just reviewing the list of guests who are registered to my online client service centre. As of this morning, there are 255 guests and clients registered there. 91 of them have provided telephone numbers which ring somewhere outside of Saskatoon, as far away as the UK. As I write this post, I can hear a gentleman who just walked in the door telling our receptionist that he’s returning home from Kelowna.

Is Saskatoon in for a real estate boom?

Norm Fisher
Royal LePage Vidorra

Deceptive agent practice could cost Saskatoon home sellers money

There’s a disturbing practice occurring all too often, which is padding the pockets of some unethical agents at the cost of their sellers. If you’re considering selling a home you should know about it and make certain it doesn’t happen to you.

We are currently in a market of low supply and high demand. It doesn’t take an economist to understand that good homes that are well exposed to the market have the potential to draw multiple offers at or above the listed price. If agents and buyers are aware that your home is for sale there’s a pretty good chance that they’ll be lining up to view your property. Of course, that’s good for you! The problem, in my opinion, is that some agents may be making an effort to ensure that buyers working with other agents are unaware that a property has been offered for sale, hoping to get the jump and sell the home themselves. On the surface, they may come off looking like a real go-getter. In fact, such practices are only good for the agent and potentially they could cost you thousands of dollars.

In a recent post titled, “Can’t Find a House? It’s Time to Get Ugly,” I shared a story of an agent who listed a fine little property for $239,900 which sold very quickly for $260,010. I’m sure that this agent probably had a buyer which would have been happy to purchase this home quietly before it actually hit the market. Had she behaved in a sneaky and deceptive manner, she would have brought her own buyer before anyone else knew it was for sale and written an offer herself. In a case like that, the dynamics of the negotiation would have been far different than they actually were. In all likelihood, the buyer would have offered somewhere below the list price and the seller may have been prepared to accept that. It’s very doubtful that the seller would have held out for more than the listed price. However, this agent understood her duty to act in the best interest of her seller and placed the property on the open market as she had promised to do and as a result, the buyer who was prepared to pay the most for the home was made aware of its existence and bought it. Both buyer and seller are pleased with the deal that they struck.

All too often, new listings are appearing on the MLS® with a note which says, “Sorry, this one is conditionally SOLD!” Well, I say, “How proud you are for selling your client’s home before 99% of the market even knew it was for sale.” Not something I’d want to brag about.

There have been many instances lately where homes are sold before the close of business on the day that they’re listed. While I wouldn’t go so far as to call this unethical, I’m not sure that it’s sound strategy for the seller’s interests. The home is sold and most of the market is still stuck at work. It seems to me that we should at least allow some evening showings before we jump on an offer. Wouldn’t you think?

It’s time that agents came up with some kind of a pre-listing marketing strategy to expose upcoming listings to buyers so that more of them have an opportunity to see and consider the home. I plan to do that over the next couple of days and I will share the details with you when I do. Meantime, if you’re placing your home on the market, ask your agent to submit the listing to the Multiple Listing Service® immediately to ensure that as many buyers as possible know it’s for sale. Try not to be so eager to sell that you accept an offer before most buyers can even see it. Yes, you need to deal with offers in a timely manner, but late tonight is as timely as early today and if you give them a chance to see it, the best buyer for your home will step forward and put their money where their mouth is.

Norm Fisher
Royal LePage Vidorra

Can’t find a house? It’s time to get ugly!

An agent I know listed a charming little home, in a beautiful location. The house had seen numerous upgrades in recent years including new windows, heating system and a host of cosmetic upgrades. The kitchen and bathrooms were renovated, hardwood floors refinished, it had been painted not long ago and the house is generally neat as a pin. The exterior has that dollhouse appeal and just looking at it from the street; you knew it was going to attract offers, most likely right away. It did. Now, I think that a one and one-half storey home with just 1,030 square feet of living space on its two upper levels, priced at $239,900 is pushing the top end of the market, regardless of its condition, but the buyers poured in to see this hot new listing and almost everyone who viewed it thought they’d like to live there. It attracted multiple offers. An offer was accepted and later firmed up at $260,010. Wowza!

You can probably appreciate how much fun this kind of situation is for a home seller. You have a number of buyers drooling over your home, knocking themselves out to try to beat the next ones offer. How delightful. However, it’s not so much fun for the buyers, is it? Been there? Yuck!

If you’re having trouble finding a house and you’re tired of participating in these kinds of bidding wars, perhaps it’s time to set your sites a little lower, to see ugliness as the beautiful thing that it is, or at least can be. Homes which have been neglected still attract very little attention. Buyers view them with indifference at best and total disdain at worst. They tend to linger on the market and fail to attract offers. Why is that? Most buyers are really unable to visualize and imagine what an ugly house could become. The truth is, there’s really only one thing that can’t be fixed if it’s bad, and that’s the location. Poor floor plans, ugly decors, and even structural defects can all be addressed, at a price.

The same home which I discussed above may have lingered on the market at $165,000 if the seller had not been so diligent in keeping the place up. A couple of weeks into the listing period, a savvy buyer could likely have bought it for $160,000 leaving them with $100,000 in potential renovation room. The buyer would have actually had as much leverage as the seller in this negotiation because in all likelihood they would be the only interested party. In all likelihood, an awesome renovation on a house of this size would be far less than the difference which was saved by buying a home which was not attracting much interest. Most mortgage lenders will allow you to work these kinds of renovations into the mortgage amount provided that the “as improved” value of the property doesn’t exceed the total purchase price and the renovation cost. So, you get to pick the new kitchen, the bathroom, the paint and flooring colours. Sounds like a winning move to me.

Try it! Have your agent show you some of the ugly stuff. Look at some properties that have been on the market for a week or two. Start by using location and size as the primary criteria and really think about how some of those dogs could look with a little bit of attention. Have fun! I’d love to hear how your agent responds the first time you say, “We really have our sights set a little lower than this. Have you got anything ugly that you could show us?”

Norm Fisher
Royal LePage Vidorra