Rising inventory levels bring Sask housing market back to earth: Royal LePage

SASKATCHEWAN, October 6, 2008 – The red-hot house prices and wild activity of Saskatchewan’s recently explosive real estate market have both tempered during the third quarter. The combination of rising inventory levels and a decrease in buyer demand in both Saskatoon and Regina have positioned the real estate markets in both cities in the buyers’ favour, according to a House Price Survey report released today by Royal LePage Real Estate Services.   However, despite the tempering activity over the past few months, year-over-year house price gains in both cities are ranked as the highest in the country.

The local economies in Saskatoon and Regina both continue to prosper as a result of the booming agricultural and resource sectors, and an abundance of employment opportunities continue to attract new workers to the province.  However, the rising house prices appear to have reached a cap; after lagging behind much of the country, house prices in Saskatchewan have caught up and are now on par with other comparable cities.

In Saskatoon, the recent run-up of house prices has finally come to a tipping point, where buyers have become reticent to enter the market.  During the third quarter, Saskatoon’s housing market returned back to earth, with rates of house price appreciation that are more sustainable in the long term.

In Saskatoon, the average price of standard condominiums rose by 1.8 per cent to $211,250, year-over-year. Standard two-storey homes climbed by 10.7 per cent to $358,250, while the price of detached bungalows appreciated by 9.4 per cent to $321,500, year-over-year.

“House prices in Saskatoon are still up year-over-year, but the frenzy has definitely worn off compared to what the city experienced in previous quarters,” explained Norm Fisher, sales manager, Royal LePage Saskatoon Real Estate, Saskatoon “The combination of cautious buyers, and the recent activity of many speculative sellers has led to a surplus of inventory and a decline in prices during the third quarter.  The housing market is now tipping towards the buyers’ favour – for the first time in several months.”

The condominium market is mostly affected by the surge in inventory as this property type received the most attention from speculative and out-of-town buyers who were hoping to cash in on the city’s booming market.  Many would-be buyers are now taking a wait-and-see approach before jumping into the market.

Average listing periods have more than tripled over the past year; since the third quarter 2007, current figures for days on market has increased to approximately 55, up from 13.

Added Fisher: “Buyers and sellers both need to understand the current market conditions before taking any action; sellers need to be aware that the market has changed significantly and must list their homes accordingly.”

In Saskatoon North, the average price of a standard two-storey home rose by 6.1 per cent to $350,000, year-over-year.  Detached bungalows rose by 7.5 per cent to $322,500, while the price of a standard condominium dipped by 2.1 per cent to $210,500, year-over-year.

In Saskatoon West, the average price of a standard two-storey home soared by 22.9 per cent to $338,000, while the average value of a detached bungalow also increased, rising by 14.0 per cent to $285,000, year-over-year.

In the East End, the average price of a detached bungalow rose by 12.2 per cent to $364,000, year-over-year.  The average price for standard two-storey homes increased by 12.9 per cent to $412,000, from the same period last year.

In East Central, the price of a standard two-storey home rose by 10.8 per cent to $360,000, while a detached bungalow rose by 10.7 per cent to $332,000 year-over-year.  Standard condominiums also appreciated, rising by 6.0 per cent to $212,000, year-over-year.

Market activity in Regina paralleled that of Saskatoon, as buyer demand was doused with a surplus of listing inventory.  The increase in available listings has tempered activity and sales prices from the frenetic pace that characterized the market in recent months; however, when surveying prices compared to last year, Regina’s housing market demonstrates substantial gains.

Of the three property types surveyed, standard condominiums showed the greatest year-over-year appreciation, rising by 49 per cent to 196,000, standard two-storey house prices also showed strong gains, jumping 39.6 per cent to $259,000.  Detached bungalow properties rose, increasing by 34.1 per cent to $278,850, year-over-year.

The dynamics of the city’s real estate market has put the breaks on some would-be buyers’ activities, as many are taking time now to see how the market plays out.

“Many buyers are sitting on the sidelines right now, waiting for prices to drop; however, this is likely not going to happen,” said Mike Duggleby, manager, Royal LePage Regina Realty, Regina.  “Our economy is the best it’s ever been, and I anticipate that it’s only going to get better.  The city’s anticipated inter-modal facility will no doubt boost our economy even further, and draw more people to Regina.”

Added Duggleby:  “Six months from now, Regina’s potash, oil and uranium industries will still be flourishing, and we’ll be heading into the busy spring market.  Now is a very good time to invest in Regina’s real estate.”

In Regina North, standard condominiums experienced the largest appreciation, with average prices rising by 50.0 per cent to $180,000, year-over-year.  The average price of a standard two-storey property, followed second, rising by 34.9 per cent to $228,000, while detached bungalows rose by 31.4 per cent to $262,700, year-over-year.

In Regina South, standard condominiums showed the largest gains, rising by 48.3 per cent to $212,000, year-over-year.  The average price of a standard two-storey home increased by 43.6 per cent to $290,000, while the average price of a detached bungalow in the area increased by 36.6 per cent to $295,000, compared to the same period last year.

Click here to view Royal LePage House Price Survey chart for Canadian survey markets.

Click here to view the national release for the Royal LePage House Price Survey.

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

Merrill Lynch says Saskatoon real estate overvalued “as much as 50%”

In a report titled, “Peaked: Canada’s housing market in depth,” economist David Wolf of investment-banker Merrill Lynch says that “Canada’s housing market is entering a sustained downturn amid excess supply and as higher prices deter new buyers.”

According to a story in today’s Globe and Mail, Mr. Wolf is most concerned about Saskatchewan, where the doubling of house prices in Regina and Saskatoon over the past two years “has led us to estimate that these markets are now close to 50 per cent overvalued.”

David Wolf is not the first economist to make the claim that Saskatoon is overvalued. Scotiabank economist Adrienne Warren said it first in September of 2007. RBC’s Amy Goldbloom said it again in October. Both of these stories were covered on this blog and in the Star Phoenix. Seems nobody was really listening then.

The Saskatoon Region Association of Realtors responded with this.

Read the Star Phoenix story here.

Peaked: Canada’s housing market in depth

I have argued that prices in the Saskatoon real estate market have been out of whack with fundamentals so I won’t go out of my way to take issue with Merrill Lynch. I would suggest that it’s appropriate to keep in mind that this report is written by an investment-banking firm who makes the bulk of its money selling investments, and they don’t sell real estate.

This post is dedicated to Doug who would like you to know that unemployment is up, crime is obscenely high, incomes have not risen in Saskatchewan as much as they have in Alberta, Saskatoon’s population may be down by 2000 people, Westfair Foods is moving to Regina, SaskHouses now has 420 properties advertised, MLS listings are well above 1500 and growing weekly, MLS sales suck compared to last year, the average price of a Saskatoon home is falling, the price of oil is dropping, GDP was lower then expected last year, and “breaking your hip” is a real threat when living in Saskatoon. 🙂

Now that we’ve got that out of the way, let’s talk Saskatoon real estate.

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

Canadians bullish on Phoenix real estate

Jason Warick wrote a story in the June 26 edition of the Saskatoon Star Phoenix titled, ”Sask. residents find Arizona opportunity.”

“The strong Canadian dollar, combined with rock-bottom prices for real estate in many cities such as Phoenix, means Canadians can snap up vacation homes or investment properties for less than half of the price of just one year ago. That’s attracted Saskatchewan buyers in droves.”

Two of my favourite Phoenix Realtors were quoted in the story.

Jay Thompson, also known as the Phoenix Real Estate guy writes about the article here.

Jonathon Dalton, the only “guest blogger” I’ve ever hosted here had this to say about his contribution to the story.

If you were considering a real estate purchase in the Phoenix area I would gladly vouch for either of these guys to treat you right and look after your interests.

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

No major strains in Canadian housing markets: Scotiabank

According to a recent Real Estate Trends report issued by Scotiabank, Canada’s housing market is “moving towards more balance, but there won’t be a bust like we’ve seen in the U.S. housing markets.” Yet, there’s little question that the heat has come off in a fairly significant way. Resale activity across Canada has “fallen for four consecutive months and is running about 15% below last summer’s historic peaks,” the report’s author, economist Adrienne Warren said. The average resale price of a Canadian home registered its first “inflation adjusted” quarterly decline in seven years.

New home construction is also experiencing change as residential building permits saw “sharp declines” and inventories of unsold new homes are trending higher.

Warren goes on to say, “Canada’s recent record of price appreciation, averaging an annualized 10% from 2002 to 2007, was unsustainable, and a return to more historical norms is a welcome development.” In explaining her confidence that the market is unlikely to see major declines like it did following the last two Canadian housing booms, Warren makes the following points.

  • Home prices in Canada are not substantially overvalued
  • There is little evidence of widespread speculative home buying that often accompanies the later stages of a housing boom
  • Canada’s real estate market is not overbuilt
  • Canadian households are not overleveraged
  • Overall mortgage quality is still sound.

“From a regional perspective, the cooling in overall activity is most notable in many of Canada’s hottest urban housing markets in recent years, including Calgary and Edmonton. Both centres have officially moved into buyers’ territory as soaring prices weaken demand and fuel new listings. More generally, however, economic conditions continue to favour the resource-rich markets in the West over manufacturing-dominated centres in Central Canada hampered by a strong Canadian dollar and softening U.S. import demand. Regina and Saskatoon are currently in the strongest sellers’ position nationally, supported by good affordability, rising population inflows and tight supply.”

Read the Scotiabank Real Estate Trends Report 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.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatoon housing options still exist for first-timers: Remax

Remax Press Release – Kelowna, BC (April 22, 2008)

“While higher housing values and tight inventory levels have hampered home-buying activity so far this year, longer amortization periods and alternative housing types have offset the impact on most major markets across the country, according to a report released today by RE/MAX.”

“Despite a higher degree of frustration in the marketplace than in previous years, the RE/MAX Affordability Report found that first-time buyers, in particular, remain steadfast in their determination to purchase a home. In fact, entry-level purchasers are adjusting their expectations by sacrificing size, location, and even long-term financial freedom, to overcome challenges such as rising prices and serious supply issues. Innovative financing has become key to homeownership in today’s environment – with longer amortization periods gaining favour in 62 per cent of the major centres surveyed. Low or no down payments were popular with first-time buyers in 38 per cent of markets.”

In Saskatoon, the report indicates “A two-bedroom, 900 square foot bungalow in good condition can be purchased from $200,000 in areas such as Confederation Park, Fairhaven, Meadowgreen, Mayfair and Westmount. The least expensive home sold in the city to date was a 535 square foot bungalow which traded hands for $80,000.”

Remax Saskatoon agent, Ivan Toledo told Star Phoenix Business Editor Murray Lyons that “people looking for affordability are discovering neighbourhoods such as King George and Westmount, where some existing houses are for sale and Toledo is working with two different builders on in-fill projects, building semi-detached, two-storey houses.”

“They will buy a little drug house or whatever on a 50-foot lot, knock it down, subdivide it and put up new construction,” Toledo said. “We have the lowest cost new construction in Saskatoon.

“It’s basically a Stonebridge (style) house and if Stonebridge is selling for $360,000, we’re selling ours at $270,000.”

Read to Remax Affordabilty Study 2008 here.

Read the 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.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate