Saskatoon homes sales to decline while prices increase: CMHC

Canada Mortgage and Housing Corporation (CMHC) released their fall outlook for the Saskatoon real estate market today, predicting a decline in unit sales and an increase in house prices through 2009.

“Saskatoon resales will decline almost 20 per cent by the end of 2008 with a further 11 per cent reduction occurring in 2009. Notwithstanding 2008’s forecast decline, resales will still be in excess of the ten-year average of 3,170 sales.”

“Our forecast calls for the average price to reach $287,000 in 2008 and approach the $300,000 mark in 2009 as price gains cool from the 2007 pace. Higher listings and buyer resistance to higher prices will result in relatively weaker price gains compared to 2007 for the balance of 2008 and 2009.”

Hmmm.

Read CMHC’s Fall Housing Outlook for Saskatoon 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

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

Canadian house prices see first quarterly drop in nine years: CREA

Media release from the Canadian Real Estate Association yesterday.

“Over the past six months, easing sales activity and a surge in new listings caused the resale housing market to become considerably more balanced in many major housing markets. Vancouver, Regina, and Saskatoon were the most balanced major markets in June.”

Read CREA’s release 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

Canada’s housing boom ends…again

Canada’s housing boom has ended for the second time since Douglas Porter; deputy chief economist at BMO Nesbitt Burns officially declared it “over” in mid-April. Stay tuned for further endings as we move through summer and into the fall. 🙂


In a report released this week by TD Economics, economists Craig Alexander and Pascal Gauthier said, “The long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale.”


In May, year-over-year price gains for existing home sales in Canada’s major markets fell to 1.1%, down from 8.6% just four months ago.


The report says that the cooling market is “nowhere as evident as in Alberta, with prices continuing to fall this year by eight to ten per cent from their peak.”


“The combination of significantly higher listings, reflecting the desire of homeowners to take advantage of the past increase in prices, and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the west.”


“…Saskatchewan’s major markets offer an exception to the cooling trend on an annual basis, but this is mostly a question of timing. The price surge above 30% growth came late last year and much of the momentum is being carried into this year. But, if Regina and Saskatoon follow the path just recently threaded by Calgary and later Edmonton – and we think they will – Saskatchewan’s price growth will have come back down to earth by early next year. We are looking for 2-3% price growth in 2009, with a risk of a mild price correction.”


Not to be outdone, BMO economist Douglas Porter was quoted as saying, “Hey, I called it first!”


Well, not really, but he did throw this little gem forward in an interview with the Globe and Mail on June 27.


“It’s a bit unnerving to see how Canadian performance is beginning to look like that of the U.S. two years down the line.”


As disturbing as it is to see a “deputy chief economist” write reports in Comic Sans font, you have to admit that his graph is rather compelling.


“There is a litany of reasons why the Canadian market is different, but even a pale version of what we saw in the U.S. would not be good news,” said Porter.


The First “End” of Canada’s Housing Boom

TD Economics – Canada’s Housing Boom Comes to an End

Star Phoenix – Canada’s housing boom ends

Star Phoenix – National housing boom has come to an end

Globe and Mail – Housing Drop Looming in Canada?

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