The Saskatoon real estate market saw another home sell above the $1-million mark this week. It’s kind of a big deal because it doesn’t happen very often though it’s certainly becoming more common. This particular sale brings the total number of Saskatoon homes that have sold this year, above the $1-million mark, to seven. That’s pretty impressive. In fact, it’s a new record number for this city. There hasn’t been another year during which seven Saskatoon homes have sold for more than $1-million and we’re not quite two-thirds of the way through the year.
It got me thinking about Saskatoon home price trends in recent years. Each year, at some point, a real estate agent or some other industry insider mentions to the media that sales of homes priced above $500,000 have skyrocketed. I’ve been one to point that out from time to time. On the surface, the trend does appear to be quite significant. Even as early a 2010 home sales priced at or above $500,000 had a total share of the market of just 4.8 percent. This year, it’s up to 8.1 percent, year-to-date. Wow!
So, I got to asking myself some questions on the topic. How much of that change can be accounted for by simple appreciation in the market? Are people actually buying more house or are they simply paying more for houses? I created a chart that contains info on three sets of Saskatoon housing data over the better part of the last five years. Here it is.
Click for a larger version of the chart.
The blue line represents the growing share of Saskatoon home sales, priced at or above the $500,000 mark. Ba-zing!
The red line represents the rather stable share of sales of homes that are 2,000 square feet or more in size and perhaps provides the most objective benchmark of change. It’s actually at its lowest point in five years at only 4.3 percent of the market, but it fluctuates between that and its high point of 4.7 percent. Meh!
Finally, data in the green line recognizes and accounts for increases to the price of a Saskatoon home over the past few years. A $500,000 home in 2012 is not the same home as it was in 2008. In fact, using the compounding effect of the increase in the median sale price of a Saskatoon home between 2008 and now, 2008’s half million dollar home may now cost as much as $590,000. Using that number, we see a pretty sharp decline in the share of the market that this particular home is claiming. Yikes!
In reality, higher-end homes haven’t appreciated completely in step with the market, so the true picture of the Saskatoon luxury homes market is likely better than the green line suggests. If the appreciation in this range is two-thirds of that seen in lower priced homes it would put the green line at 4.7 percent in 2012, about where it was in 2008. Yawn!
Not that much has changed in Saskatoon’s luxury housing market other than the price of those homes.
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Royal LePage Saskatoon Real Estate