Average house price rises in Saskatoon and Regina – Royal LePage House Price Survey

SASKATCHEWAN, December 14, 2006 – Strong in-migration from the Western provinces lead to tight inventory levels in the major markets in Saskatchewan, causing average house prices to rise, year-over-year, according to a year-end report released today by Royal LePage Real Estate Services.

Saskatoon

Low inventory levels continued to pressure prices upwards in Saskatoon, where buying activity remained brisk throughout the quarter. Accurately priced properties that showed well continued to attract multiple offers and often sold above list price, with the average time on the market falling to below 30 days.

Of the four markets examined in Saskatoon, the average price of a standard condominium experienced the greatest increase compared to other housing types surveyed, rising by 15.3 per cent to $124,000, year-over-year. Standard two-storey homes increased by 13.3 per cent, to $205,000, while the price of a detached bungalow rose by 14.2 per cent to $188,500, year-over-year.

Saskatoon has continued to experience an increase in in-migration – a population who is accounting for a large portion of the activity within the housing market. People have been moving to the city to take advantage of the affordable cost of living and excellent job opportunities, as many businesses in a variety of sectors are expanding.

“Saskatoon has experienced an increase in in-migration, and inventory has not been able to satisfy demand which has resulted in continued double-digit increases in average house prices,” said Norm Fisher, sales manager, Royal LePage Saskatoon Real Estate. “Moving into 2007 we should see some reprieve from the shortage of inventory as some current building projects are completed, helping to free up inventory for the resale market.”

Demand for condominiums has seen continued to grow in the fourth quarter, as an increasing number of entry-level purchasers have been turning to condominiums when they are unable to find a home that is affordable. Luxury homes priced above $300,000 have also seen an upswing in activity, largely attributable to out-of-province purchasers.

In Saskatoon North, the average price of a standard two-storey home rose by 14.0 per cent to $212,000, year-over-year. Detached bungalows rose by 13.4 per cent, to $195,000, while the price of a standard condominium rose by 14.3 per cent to $128,000 over the same period in 2005.

In Saskatoon West, the average price of a standard two-storey home rose by 13.4 per cent, to $178,000, while the average value of a detached bungalow also increased, rising by 13.5 per cent, year-over-year, to $164,000.

In the East End, the average price of a detached bungalow rose by 15.6 per cent, to $200,000, year-over-year. The average price for standard two-storey homes also increased, rising by 11.9 per cent from the same period last year to $225,000.

In East Central, the price of a standard two-storey home rose by 13.9 per cent to $205,000, while a detached bungalow rose by 14.0 per cent to $195,000, year-over-year. A standard condominium also appreciated by 16.5 per cent compared to the same period last year to $120,000

Regina

Of the markets examined in Regina, the average price of detached bungalows experienced the greatest increase compared to the other housing types surveyed, rising by 6.9 per cent to $150,375, year-over-year. Standard two-storey homes increased by 3.1 per cent, to $146,500, while the price of a standard condominium rose by 2.1 per cent to $96,500, year-over-year.

“Demand for all types of housing remained strong during the fourth quarter, as affordable interest rates and strong consumer confidence continued to drive buyers into the market, placing pressure on already tight inventory levels,” said Mike Duggleby, manager, Royal LePage Regina Realty, Regina. “In some cases, we have seen the lack of available inventory result in purchasers deciding to wait until the new year to make a purchase as they have become frustrated by the limited supply.”

Activity in the upper end of the market has seen an upswing of activity in the fourth quarter, driven by purchasers from the Western provinces, seeking out a lower cost of living and the excellent employment opportunities that the city offers. Windsor Park and Wascana are popular areas located in the southeast of the city, while the bedroom communities of Emerald Park and White City have seen strong activity in the fourth quarter.

Regina’s housing market is expected to maintain its strength throughout the upcoming year, with tight inventory levels limiting the number of units sold. For the year ahead, purchasers can expect average property prices to rise by 5.9 per cent to $144,000, according to the 2007 Royal LePage Market Survey Forecast, while the number of property transactions is expected to increase by 1.0 per cent to 2, 970 units sold.

In 2007, move-up buyers are expected to account for a larger portion of activity than they have in previous years. Out-of-province buyers are expected to remain active, sustaining strong activity within the upper end of the market.

Added Duggleby: “New developments in the southwest and the northwest of the city should help to relieve some of the pressure on inventory levels next year, however, seller’s market conditions are expected to persist for all of 2007.”

In Regina North, the average price of a standard two-storey home remained stable, year-over-year, at $132,000, while the average price of a detached bungalow increased by 6.8 per cent to $146,750, while standard condominiums remained steady at $85,000, year-over-year.

In Regina South, standard two-storey homes showed the largest gains, rising by 5.7 per cent, year-over-year, to $161,000. The average price of a detached bungalow rose by 3.2 per cent, to $154,000, year-over-year. The average price of standard condominiums in the area rose by 3.8 per cent to $108,000, compared to the same period last year.

Lack of residential lots pressures Saskatoon real estate market

The Saskatoon and Region Home Builders Association is arguing that the City of Saskatoon is not making enough new lots available for single family detached homes and that argument rings true to my ears.

Alan Thomarat, executive director of the association points out that while housing starts in 2006 are clearly ahead of last year (37%) they remain 15% lower than those achieved in 2004. The Canada Mortgage and Housing Corporation (CMHC) reports 1,384 housing starts including 886 single-family detached homes for the Saskatoon region over the first 11 months of the year. Thomarat says that the Saskatoon area should be able to build 2,000 homes a year and that the market could handle as many as 2,500 to 3,000 per year “within the decade” if the land is available.

City land branch manager Rick Howse expressed skepticism that Saskatoon could support 2,000 lots saying, “Any CMHC report I’ve seen doesn’t indicate that kind of growth.” However, he did explain that the city fell short of its lot servicing objective for 2006 due to wet weather in the spring and a lack of capacity for Saskatoon construction companies to meet objectives.

Thomarat points to the fact that 35% of new single family home starts are now happening outside of the city as an indication that the city is not making enough lots available. Significant residential developments are currently underway in Warman and Martensville; others are planned for Corman Park and Clavet. Are people actually turning to bedroom communities because of a scarcity of lots in Saskatoon? It is apparently so. November saw 91 new starts for each Saskatoon and Regina. In the Saskatoon area, only 52 of those starts were within city boundaries while Regina captured 76 of the 91 starts in that area.

Thomarat links the lack of city building lots to the increasing prices of existing residential real estate in Saskatoon. “These price increases will have the largest impact on entry level homes, reducing affordability for populations within Saskatoon that can least afford it.”

It’s hard to argue with his logic. Resale prices have risen as much as 15% in some neighbourhoods over the past year and resale inventory continues to shrink. As of today, there are 309 active residential listings available within the city limits. 265 of those are single family homes and 44 are condominiums. This is the lowest number of listings which I have seen in 14 years of business. At the same time, demand continues to remain strong and you don’t have to be an economist to understand that these factors together mean increasing prices for Saskatoon real estate. Without more development in new housing, resale inventories are likely to remain low, pushing prices higher. People are not going to sell their existing homes if they don’t have a place to go.

Meanwhile, the Saskatoon economy is strong with many small business owners indicating an appetite for expansion. The only real problem is finding people to help manage the growth. My colleagues and I have a sense that the people want to come home but we’ve really got no place to put them. I can’t help feeling that Saskatoon isn’t in an ideal position to fully capitalize on a growing interest in our fine city. Somebody, find us a way to build some houses or hang the no vacancy sign.

Norm Fisher
Royal LePage Vidorra

Saskatoon real estate market update for November, 2006: SRAR

The Saskatoon Real Estate Board released the MLS Listings and Sales statistics for November of 2006 yesterday.

Residential sales for the month totaled 230 units, down just one percent as compared to November of 2005. The average selling price for the month was $167,480 representing an increase of 10 percent for the same month last year.

The most notable numbers were the “active residential listings” which hit a new low of just 363 units across all Saskatoon areas and all price ranges. In my fourteen years in Saskatoon real estate, I can’t recall a time when active listings ever fell below 400 units.

Demand continues to be fairly high for this time of year. There are people out there who want to buy a home. If you’re considering offering your property for sale in the near future, now would be an excellent time to capitalize on the high demand and the unusually low supply of Saskatoon homes. I expect that we will see more units come available in the New Year as people building new houses begin to see the light at the end of the tunnel and start planning to sell their existing home. If you’re buying a home, waiting until January may be a good strategy.

Norm Fisher
Royal LePage Vidorra

Luxury home market sees huge growth in Saskatoon and across Canada

A new Carriage Trade Luxury Properties Report released today by Royal LePage Real Estate Services finds that sales of luxury homes far outpaced the general market across Canada. Year-over-year unit sales more than doubled in Calgary, Edmonton and Halifax.

While Saskatoon is not mentioned specifically in the report, I can confirm that a similar trend is occurring here. Of course, our “luxury market” still boasts a substantially lower price point than those used in this survey. For the most part, Royal LePage looked for properties which sold in excess of $500,000. So far this year, Saskatoon real estate agents have sold 152 homes priced over $300,000. That compares with just 73 homes sold for the same period last year. It’s also worth noting that one sale of a Riverside Estates property came it at the $1,000,000 mark, a new record for a residential home sale in this area. Read on for more of this report.


TORONTO, November 24, 2006 – Canadians are embracing luxury living more than ever before – and if they are not currently living in a luxury home, many aspire to someday live in the lap of luxury. As a result, the number of unit sales of luxury homes has skyrocketed in Canada’s major markets, according to the Carriage Trade Luxury Properties Report released today by Royal LePage Real Estate Services. The report found that there has been a surge of unit sales in all markets examined, with the greatest increases occurring in Calgary, Edmonton and Halifax, which all reported sales increases of more than 125 percent, year-over-year, in the first three-quarters of 2006.

If the aspirations of Canadians play a factor, sales of luxury homes will not diminish anytime soon. The report, which includes a market analysis of trends and activity in major markets across Canada, combined with a national omnibus poll (conducted by Maritz Research Canada), found that over one-third (37%) of Canadians aged eighteen and older, currently live in a luxury home, plan to buy a luxury home soon, or aspire to one day live in a luxury home.

“The pronounced increase in the number of luxury homes sold across the country is a strong reflection of Canadians’ confidence in the economy and the real estate market,” said Phil Soper, president, and CEO, Royal LePage Real Estate Services. “For the substantial sums that these homes command, buyers have come to expect distinctive properties outfitted with luxurious amenities, where it is clear that painstaking attention has been paid to every detail.”

When asked, “If you were purchasing a luxury home, what would be the most important criteria you would consider when choosing this type of home?” Canadians cited: investment potential (25%), proximity to excellent schools (19%), the prestige of the neighbourhood (17%), luxurious amenities throughout the house and the size of the house (11%) and the prominent neighbours (8%).

Added Soper: “House values have appreciated much more quickly than the underlying economy for much of this decade. The Carriage Trade brand is a unique way for Royal LePage Realtors to raise the profile of special homes which are not only priced in the upper end but also exhibit unique features and amenities that set them apart from other properties. Realtors using the Carriage Trade brand are experienced working with exceptional homes and have access to proprietary tools enabling them to succeed in this segment.”

In terms of the feature that would be the most important to Canadians if they were purchasing a luxury home, a commercial style kitchen assumed top rank (21%) in the poll. Interestingly, a gender divide was evident when it came to cooking as 26 percent of women cited the commercial style kitchen as the most important feature, compared to 15 percent of men. The men’s den prevails with 11 per cent of males citing the luxury in-home movie-viewing theatre as the feature that would be most important to them if they were purchasing a luxury home, compared to only five percent of females.

The poll also found additional features that would be of most importance to Canadians if purchasing a luxury home to include an indoor or outdoor pool (14%), smart wiring (12%), heated floors and driveway (11%) and a fitness centre/pilates/yoga studio and luxury in-home movie theatre (both at 8%).

Norm Fisher
Royal LePage Vidorra

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