Residential unit sales soften as market continues to correct: SRAR
The Saskatoon Region Association of REALTORS® (SRAR) has released November’s statistics for the residential category along with the following media release.
The active residential listings number dropped slightly during the month of November. Buyers had 1495 properties to choose from at the end of November that number down from 1667 properties being available in October of this year.
Saskatoon REALTORS® listed 425 homes in November that number up 13% from November 2007 when 375 homes were placed on the market, Year to date 7,891 residential properties have been listed for sale.
The average selling price remained steady for November at $278,495.00 up 11% from November 2007 when the average selling price was $251,209.00. Year to date the average selling price stands at $288,807.00 up 25 % from 2007. These higher average sale price numbers indicate significant sales activity in the mid to upper price range.
181 residential properties sold in November that number down 43% from November 2007 when 316 units sold. The year 2007 was a unique year for sales activity. When measured against 2005 and 2006 the unit sales are down 22% when 230 units sold. Year to date 3,360 units have sold down 21% from 2007 having a total of 4,234 residential units sold. The 2008-year to date unit sales number is up 2% measured against 2006 when 3,276 residential units sold. When 2008 sales numbers are compared to 2005, unit sales are up 15% when year to date number stood at 2,861units sold.
Residential dollar volume year to date is on par with 2007 with REALTORS® having sold $970,392,000.00 of real estate. Year to date dollar volume in 2006 stood at $523,242,000.00.
The $300 to 400,000 price range has experienced the highest activity in 2008 followed by the $225 to 250,000.00 price range. Year to date 161 residential units have sold over $500,000.00.
The global economic slow down will in some way affect all areas of Canada. All indicators point to Saskatchewan being one of the best places to weather the storm. As indicated in the Canadian Real Estate Association news release, consumer confidence is being battered by downbeat headline news. Homebuyer sentiment has become very cautious, by contrast to the urgency to purchase in 2007.
There are fewer buyers and they are taking longer to shop, so the pricing environment is very competitive.
Unrealistically priced homes will sit on the market. Sellers are by and large under no distress to sell. Those who put their home on the market at an unrealistic price and are unwilling to cut it will likely take it off the market when the listing expires with a view to selling another day.
Canadians are definitely concerned by the economic news out of the U.S., and much of that news stems from distress in the U.S. housing market. Canadians should realize that Canada’s economy and housing market are both in better shape. This means the downturn in Canadian consumer confidence will pass and when it does, housing demand will rebound, especially when they realize the window of opportunity to buy at reduced prices and at low interest rates will begin to narrow once economic growth shows signs of rebounding next year.
My Closer Look at the Saskatoon Real Estate Statistics for November will follow in the next couple of days. That report examines sales and listing activity for condominiums and single-family detached homes.
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
There's 77 Comments So Far
April 24th, 2009 at 11:01 am
Can anyone explain the role of a mortage broker? A friend mentioned that they were denied the mortage they were asking for (this is very recently) and that they then contacted a mortage broker that worked this out for them… I’m really concerned for this family … if the bank you regularly deal with won’t finance a house… does this not mean that you are not financially capable of having that house? Was this not something that caused issues in the US?
April 24th, 2009 at 11:01 am
Mortgage brokers are paid a fee to bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as employees, but as freelance agents.
Think of mortgage brokers as scouts. The broker submits the home buyer’s application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes.
They say a good mortgage broker can find a lender for just about any type of credit. Does that mean it is the right financial advice or decision? Not necessarily so, just think… if someone was declined by 2-3 major banks but now have found some kind hearted lender through a broker that can make a proud owner, all you have to do is sign on the dotted line. You tell me where the motive is?
Being a home should not be for the wrong reasons and professional financial advice should always be obtained from credible sources you can trust. The mortgage broker working to secure your loan is earning a fee for the transaction and if it does not close, no commissions are received, thus no payday for the sales person.
My advice, if you can find a fair interest rate through a reputable local bank that is the way to go in my books. I personally would never deal with an unknown lending company just to save a few 1/10th’s of a percent if that is the deciding factor. When, not if you ever have questions or run into problems down the road, local customer service means allot. From past knowledge of myself and other friends/family, don’t expect the same level of service from all creditors brokers utilize. It may be a gamble.
A few things I have learned from my mistakes, if it seems to good to be true it usually is and cheap is not always quality.
More food for thought.
http://www.metacafe.com/watch/860193/approved_by_mortgage_brokers/
http://www.metacafe.com/watch/yt-DTi0xG1xs6Y/these_5_questions_can_reveal_a_lot_about_a_mortgage_broker/
http://www.metacafe.com/watch/yt-FXpZsI-O03E/mortgage_mess/
http://latimesblogs.latimes.com/laland/2007/05/borrower_beware.html
April 24th, 2009 at 11:02 am
Pam,
I cannot speak on all cases involving mortgage brokers but the one we worked with was very helpful. She found the best rate for us and informed us of all the “other” fees when purchasing a home such as land title registry, lawyer fees, so on. Her communication skills were great and she kept us in the loop as to what we had to sign and she got the documents where they needed to go. I would have no trouble using a mortgage broker again. That is not to say they all walk the moral high ground but I think the US situation goes a little bit beyond mortgage brokers.
On another note, good job Norm. Lots of sales beside the forum!
April 24th, 2009 at 11:02 am
Mortgage brokers are IMHO a very good idea. Ours saved us TONS of cash on our mortgages, and was very well educated on the types of products available to us. Everybody’s situation is unique, and when you’re looking for a mortgage, sometimes it’s not quite as simple as just any old mortgage will do. Personally, we wanted a lot of flexibility with prepayment privilidges and a very low rate on our principle residence, while keeping the cash available on our revenue property quite accessible in case that property needs it for any reason. We also wanted to be able to pay off the revenue property with very low penalties at any time in case we want to sell it. Our broker was able to get us great products for both houses, and met our needs on both mortgages nicely. Sometimes a broker can get you a better fit than a bank – they certainly did for us.
We’ve now had 3 mortgages as a result of brokers over the course of our home owning days, and we’ve had excellent service from all of the companies that we’ve dealt with. I see no reason to pay a premium for local service. We’ve tried to deal with local banks, and quite frankly their attitudes often sucked. Instead of earning our business they thought that we should be made to feel inferior to them somehow, never really being completely forthcoming, and making us wait for answers constantly, while offering completely pathetic rates in comparison to what the brokers can do.
If you’ve got great credit, you should never have to waste time running all over town for a mortgage – let your broker come to you, and let them bring their contact list and many options with them.
April 24th, 2009 at 11:03 am
Lee said: “Mortgage brokers … usually work with dozens or even hundreds of lenders….”
That’s what I thought too, and that was definitely true when I initially purchased my house ~7 years ago. At that time, I think my broker looked at > 50 lenders and I eventually went with some bank in New Mexico because they gave us the best rate. Their mortgages were later purchased by ING (the Dutch guy on TV), which is how I ended up with one of their ‘un-mortgage’ packages.
My anniversary date is in March, so out of curiosity, I contacted that same mortgage broker last week to see what sorts of rates other places were offering. VERY surprisingly to me, they couldn’t offer me a single rate better than what ING was offering on their website, and even more surprising their choice of lenders was down to the Big 5, plus a couple of B-rated places whose interest rates were even higher. When I commented on the difference in experience, I was just told that the world has changed, and the rules have changed from back then.
So… I was a huge believer in Mortgage Brokers seven years back, because I saw that they could really benefit people; for that reason, I have promoted them quite a bit to numerous people. Nowadays, though… I’m not so sure that they are adding anything that I need.
April 24th, 2009 at 11:03 am
“Nowadays, though… I’m not so sure that they are adding anything that I need.” I should clarify that statement in light of what others have written. If you insist on dealing with a Canadian, brick-and-mortar bank, then I would definitely say to use a broker. I have been very, *very* satisfied with the rates and services from ING, and have recommended them to several people. So far, they have been happy, and found the application process fairly painless. They even match the B&M practice of paying closing fees if you want to switch mortgages, which is one of the huge advantages that the Big 5 have.
(Not trying to be a shill, just sharing my experiences. If it sounds too much like a commercial and needs to be removed then I understand.)
So *for me*, a broker isn’t adding I can’t get over simply going to ingdirect.ca and checking things out for myself. But maybe I just don’t know the right broker. I remember someone pointing at a mortgage broker’s website during the transition from prime -.5 to prime +1 for variable rate mortgages, but I forgot to bookmark it and can’t find it again looking in the comments. Does anyone have it handy?
Captcha: “lacking worth” Heh.
April 24th, 2009 at 11:05 am
300-400k has seen the highest activity and it is not from first time buyers. It does seem like the average and median prices are being propped up by upgraders.
“Year to date 161 residential units have sold over $500,000.00.”
Looking at MLS, there are 204 properties over 499k. Just about a 15 month supply, maybe more with slowing demand yoy,economic and political uncertainty going forward.
The average price has also been pushed up by the higher priced houses (500k+) and these houses will all have to come down in price if sellers are serious about selling. Average price will come down going forward. Good news for buyers. They will just have to wait a bit more.
April 24th, 2009 at 11:05 am
“Average price will come down going forward. Good news for buyers. They will just have to wait a bit more.”
Prices may come down in the short term, but when things turn around (and they will) there will be another feeding frenzy. Those left on the sidelines waiting for prices to fall will once again be singing their hard luck story about missing out.
Even though supply is very high right now the quality is low, something that is being ignored by the many negative participants of this Blog. For real homebuyers looking simply for a place to live there are is not a great selection, especially in Saskatoon’s mature neighborhoods.
April 24th, 2009 at 11:07 am
“Prices may come down in the short term, but when things turn around (and they will) there will be another feeding frenzy.”
See ya in 2012, Tidbit.
Watch out for those sidelines!!! They’re killers!!!
ROTFLMAO
April 24th, 2009 at 11:09 am
Tidbit,
“For real homebuyers looking simply for a place to live there are is not a great selection, especially in Saskatoon’s mature neighborhoods.”
Ok, lets say 25% of the 1495 properties are of quality that YOU say would be “a great selection”. That is still about 2 months of inventory. No rush for prospective buyers to buy before they are priced out again.
Every neighborhood in Saskatoon has tonnes of selection that includes poor, fair and excellent properties.
April 24th, 2009 at 11:09 am
“Feeding Frenzy”? In what universe, Tidbit? Prices are going to fall until people can afford them again. The bubble isn’t going to re-inflate any time soon.
There are hundreds of properties for sale on the East side: I’m in Nutana, and there are at least 50 within a 5 block radius of me.
April 24th, 2009 at 11:11 am
Real estate prices are falling, and a U.S.-style collapse could cost taxpayers plenty
http://blog.macleans.ca/2008/11/27/could-it-happen-here/
Like Fannie Mae and Freddie Mac, the two failed mortgage finance giants that were seized by the U.S. government in September, CMHC’s primary job is to encourage home ownership by making it easier for people to obtain mortgages from banks.
Yet there’s growing evidence that CMHC’s lax policies in recent years ignited a housing bubble in this country in much the same way Fannie and Freddie did in the U.S. The Canadian mortgage industry may not have gone to the same extremes as in the States, and the subprime market was not as big, but experts say lending practices here were far more liberal than first thought.
When the full extent of America’s housing crisis became apparent this past summer, Ottawa slammed the door on extreme mortgages.The flip-flop, which CMHC said it supports, is aimed at preventing a real estate crisis here. But critics say the clampdown came too late. In October the average resale price of a home in Canada’s major markets fell 9.9 per cent to $281,133 from a year ago, the fifth straight month of falling prices.
Foreclosure lawyers in B.C. and Alberta have had to hire extra staff to keep up with the workload. Gloria Vinci, a Calgary real estate lawyer, says she’s been astonished to find a large number of cases where homeowners have taken out as many as four mortgages on a property in the span of three years as housing values soared.
According to the Canadian Bankers Association, the percentage of residential mortgages in arrears stands at just 0.28 per cent of the total market. But when the 1990 housing bubble burst, the national default rate was also 0.28 per cent, and it took two years before defaults peaked at 0.65 per cent.
Back in the early 1980s Ottawa had to bail out CMHC when thousands of homeowners defaulted on their mortgages and insurance claims skyrocketed. Much has changed since then, but it’s becoming clear that CMHC’s policies encouraged many homebuyers to jump into the market before they were ready. And the consequences of that could be far-reaching.
April 24th, 2009 at 11:14 am
Lol. I think history does suggest that there will be other “housing booms” across Canada and likely in Saskatchewan but I think there’s little danger of anyone being priced out over the next little while. Of course, Tidbit’s point is kind of interesting. Everyone, whether buying stocks or houses would like to buy at the bottom. Most people will miss out on that for sure.
jrochest,
There are a total of 13 houses for sale on the MLS in Nutana. I see 12 on SaskHouses. Is it possible you’re mistaken?
April 24th, 2009 at 11:14 am
I appreciate your feedback Norm.
I felt compelled to make a post because I feel that some of the contributors here are really missing the mark. I’m not disputing that prices have adjusted, however the price adjustment has been minimal given the amount of product out there. For buyers looking in mature neighborhoods, quality and choice locations are scarce.
Can anyone find me a home on a park in Lakeview, Erindale, Lakeridge . . . Nutana? – No
However, if you’re looking for a former revenue property on one of Saskatoon’s busier streets (Taylor, Cumberland, Main, Clarence) take your choice. Good product priced right will still move and no I’m not a realtor.
There are optimists, realists and complainers and I openly criticize Saskatchewan for having too may of the latter. People running around making outrageous claims (jrochest) or abusing their exclamation marks (R) only feed negativity. I suspect, some of the naysayer’s here missed opportunities in the past and are now grasping at strings and spreading fear in hopes that they will get a second chance.
April 24th, 2009 at 11:15 am
Tidbit,
There are definitely some agendas being worked. Thanks for the comments. It takes a lot of courage to express optimism here.
April 24th, 2009 at 11:15 am
George,
“300-400k has seen the highest activity and it is not from first time buyers. It does seem like the average and median prices are being propped up by upgraders.”
I have to say that I have absolutely no idea what the thinking was behind that analysis. Comparing $300K-$400K to $225-$250 seems odd to me (a $100,000 range vs. a $25,000 range). Here’s how Novembers sales break down in $100K increments.
Up to $100,000 – 3
$100,001-$200,000 – 32
$200,001-$300,000 – 87
$300,001-$400,000 – 38
$400,001-$500,000 – 14
$500,001-$600,000 – 4
$600,001-$700,000 – 3
Total sales for Nov. – 181
Clearly the $200-$300K range is the “most active” and the $100-200K range produced nearly as many sales as the $300-400K range.
April 24th, 2009 at 11:16 am
Jinx,
Thanks for the comment.
I represent people, not property.
To avoid further disappointments, please be advised that I am prepared to offer real estate services to any fair and reasonable person. People hire me to assist them in solving their problems, not to cast judgments on them based the quality of their home or the decisions they’ve made.
April 24th, 2009 at 11:16 am
The real estate numbers coming out of Vancouver, Edmonton and Calgary are terrible. Vancouver is now down 18.5% from the peak. What about the Olympics? What about foreigners buying? Ect. Ect. It is only a matter of time before the houses in Saskatchewan see the same size losses and larger. Ponzi schemes have a way of crumbling down, down, and down.
Anyone that is hoping for a rebound is most certainly delusional.
I am not a bitter renter I don’t want to own a house. I like the freedom of renting, not having to fix anything, no yard work, no shoveling, no watering, no unexpected bills. Someday I will buy, but not for investment purposes it will be a home a place to live exactly what a house was and is supposed to be.
I just find it fascinating that people can tell themselves over and over that these price declines are only temporary.
Wake-up!
People all over the United States thought the same thing, what happened? People thought the same thing in Spain, Australia, and Great Britain. Such is the psychology of a BUBBLE. And yet people get sucked in over and over. Tulips to Tech stocks. It is amazing. This one is particularly is hard for people to swallow. Houses are the largest purchase most individuals will ever make, and are very illiquid by there nature. Too bad ego’s have to get in the way, and too bad dollar cost averaging is not possible.:) I for one will sit back and in the future watch my taxes increase to help out all the people that decided to live beyond their means. Too bad that I live within my means and save.
April 24th, 2009 at 11:16 am
Nix,
Check this “buy now or forever regret not doing it” ad.
http://reno.craigslist.org/reo/903337672.html
April 24th, 2009 at 11:18 am
Wait a minute Tidbit . . . you’re name isn’t John Gormley, is it?
I agree with your point that prices have not moved as much as expected. It is rather surprising. I would not agree, however, that the same is a sign of a stable market, or one that is dormant waiting for another boom. Instead, my opinion is that sellers are simply looking at re-purchase values and trying to maximize the cash they get from their sale.
For example, sure, the guy that bought a house 4 years ago at $120K could reduce his $250,000.00 asking price. But, if he plans to repurchase a home of comparable quality in Saskatoon, he may want to get the maximum cash from the sale so as to be able to afford a replacement. I’m not saying that this is the case with every home for sale, but certainly may be for the people selling who aren’t moving to another city.
You’re going to see way more resistance on the way down, than on the way up. In the past, a 5-10% reduction in real estate values YOY would’ve been huge news. The same as a 5-10% increase in RE value YOY would’ve been huge news. Given the 150% increase in value over the past 2 years, we’ve become pretty de-sensitized to the subtle moves it seems.
I appreciate your opinion, at bravery for posting it here, but I simply cannot agree that there will be a rebound – all the cards are in place for a major devaluation in housing, whether that be over-supply, lack of credit etc..
April 24th, 2009 at 11:18 am
James P.
Good points. If the current trends continue we will start hearing about major year-over-year drops by March of next year. By that time, we’ll be up against a $290K average that went as high as $310K before they started to decline.
April 24th, 2009 at 11:19 am
I seem to remember Norm pointing out the average sale price for condos was down 5% year over year to the end of October 2008.
You think that would be huge news, year over year prices down, but of course the main stream media chose to ignore it.
Bigger news still, that while down 5% condos still look quite weak, and in my opinion, with 9 sales a week and a year and a half of inventory, with more on the way, Saskatoon condos will correct the most.
No big deal for developers, they made a profit at $100,000 for a 2 bedroom condo in the burbs, sure they’ll do just fine if $250,000 falls to $200,000.
Not sure I can say the same for the poor shmuck who bought at $250,000!
(enjoying rental life in Regina)
April 24th, 2009 at 11:23 am
Nix (cool name) it seems even more surprising that with Alberta wages up 5.9% to our 4.1% that some how their housing values are falling more than ours.
Think there’s something we haven’t caught onto yet?
April 24th, 2009 at 11:25 am
Nick, Nix
I’m not sure what percentage Calgary or Edmonton are off their peak, is it 12 or 13 percent, but it’s pretty clear from the numbers Norm posts here that Saskatoon is close to 10 percent off its peak too. A correction here is already well underway and has been for a few months. I know here in Regina, realtor’s have been speaking about a similar correction, with our average now being 230,000 as opposed to 250,000 four months back. Also close to 10 percent. Is your point that the media hasn’t reported these corrections yet? Give it time. Calgary started to correct 12 months ago. Saskatoon only started to correct in the past few months. But both are a similar percentage off their highs, give or take.
April 24th, 2009 at 11:26 am
This is the first I’ve seen this sprout regarding a Canadian bank:
Scotiabank set to rein in lending
Earnings To Soften
Eoin Callan, Financial Post
Published: Wednesday, December 03, 2008
http://www.financialpost.com/story.html?id=1024080
“Bank of Nova Scotia is pulling back on lending to consumers and warning investors to brace for softer earnings next year as the economy slides into recession.
The third-largest bank in the country provided the clearest signal yet of any major Canadian financial institution that it is reining in offers of loans to customers for big-ticket items like homes.
Rick Waugh, chief executive, said the bank was becoming increasingly cautious amid profound economic uncertainty and worsening credit conditions.”
April 24th, 2009 at 11:27 am
Mark, agreed our prices are down at least that much, more taking into account median and price per square foot etc.
Alberta’s declines are year over year (largely because they started earlier) and you’d think Saskatoon finally starting to get into year over year decline territory for condos, with 5% not insignificant, would be top news story.
The radio’s top story today was a “predicted” 2 or 3% increase in Saskatoon house prices (by Remax) for 2009. You’d think actual results would be more important?
Crikey, except for CIBC of course, they’ve been pooched for at least a year and are probably in the worst shape of any Canadian bank.
Too bad Harper’s $75 Billion bail out isn’t working, maybe he should throw more money at it, while he still can.
April 24th, 2009 at 11:31 am
Some good news in a sea of bad news? From the Globe:
“North American stocks rebounded from earlier lows on Wednesday at midday, after investors put aside another gloomy employment report and instead focused on two reports that suggest economic activity could be stabilizing.
The Mortgage Bankers Association said that its index of applications to purchase or refinance a home jumped 112 per cent last week, suggesting that buyers could be returning to the decimated housing market. At the same time, the U.S. energy department reported that oil inventories fell last week for the first time in 10 weeks, by nearly half a million barrels. Observers had expected inventories to rise by about 1 million barrels, thanks to slowing demand.”
April 24th, 2009 at 11:31 am
Completely long and off topic, but since we’re talking about it, here’s Harper doing exactly what he’s complaining about
\
Stephen Harper’s 2004 alliance with the Bloc:
September 9, 2004
Her Excellency the Right Honourable Adrienne Clarkson, C.C., C.M.M., C.O.M., C.D.
Governor General
Rideau Hall
1 Sussex Drive
Ottawa, Ontario
K1A 0A1
Excellency,
As leaders of the opposition parties, we are well aware that, given the Liberal minority government, you could be asked by the Prime Minister to dissolve the 38th Parliament at any time should the House of Commons fail to support some part of the government’s program.
We respectfully point out that the opposition parties, who together constitute a majority in the House, have been in close consultation. We believe that, should a request for dissolution arise this should give you cause, as constitutional practice has determined, to consult the opposition leaders and consider all of your options before exercising your constitutional authority.
Your attention to this matter is appreciated.
Sincerely, Hon. Stephen Harper, P.C., M.P. Leader of the Opposition Leader of the Conservative Party of Canada
Gilles Duceppe, M.P. Leader of the Bloc Quebecois
Jack Layton, M.P. Leader of the New Democratic Party
http://www.liberal.ca/story_15511_e.aspx
April 24th, 2009 at 11:32 am
The three stooges are talking bailout > Inflation > higher home prices to come!
How’s that for optimism!
April 24th, 2009 at 11:34 am
“The Mortgage Bankers Association said that its index of applications to purchase or refinance a home jumped 112 per cent last week, suggesting that buyers could be returning to the decimated housing market.”
Mark, that is interesting news. After the Fed announced they would be buying GSE debt and mortgages last week, US mortgage rates fell pretty dramatically. It had the intended effect, it seems! Please rememer that these are “applications”. Here’s a little more information:
-Applications to refinance an existing loan rose 203.3% last week, compared with the week before.
Mortgage applications to purchase a home rose a seasonally adjusted 38.0%.
-The four-week moving average for all loans was up 29.7%. Still, application volume last week was down 21.9% compared with the same week in 2007.
-Refinance applications made up 69.1% of all activity, up from a 49.3% share the previous week.
A little more than 2/3 of that activity was refi’s, which doesn’t surprise me. How many of these applications will qualify for the posted rates is another matter entirely.
April 24th, 2009 at 11:35 am
Sorry for the radio silence — I’m marking.
To defend my ‘outrageous claim?”
I said 50 properties within a 5 block radius of my house, and I don’t think I’m that far off: properties includes condos, of course, and there are many and a-many of those.
I’m at 10th and Lansdowne. When I set the MLS map to show an area from 7th to 15th and from Monroe to Eastlake, I get 67 properties listed. Not including the ones on Saskhouses.
Of course they’re not all houses, on a park…but properties I said, and properties they are.
April 24th, 2009 at 11:36 am
Recession threat slows home sales, ReMax says
http://news.sympatico.msn.ctv.ca/abc/home/contentposting.aspx?isfa=1&feedname=CTV-TOPSTORIES_V3&showbyline=True&date=true&newsitemid=CTVNews%2f20081203%2fhousing_market_081203
Saskatoon should experience the highest increase in home sales, perhaps a three-per-cent hike, according to the report.
Housing values should also remain steady, while St. John’s, Montreal, Kingston, Ont., London, Ont., Winnipeg, Saskatoon and Regina should experience price gains.
In 2008, housing prices in Regina were up by 39 per cent, in Saskatoon by 24 per cent, in Winnipeg by 22 per cent and in St. John’s by 21 per cent.
Not sure if this has been posted.
April 24th, 2009 at 11:38 am
Bank of Nova Scotia pulls back on lending
http://www.financialpost.com/news/story.html?id=1021599
Canadian banks have been given billions and billions to free up money for lending and then 1 on the big 5 pulls back lending?
Scotiabank takes Q4 hit of $890M
http://www.financialpost.com/news/story.html?id=970770
Add to that what is going on with CIBC, does not look like the banks are doing as well as we are being told. Lotsa funny business.
April 24th, 2009 at 11:39 am
Charles, Harper already bailed out the banks
$75, 000,000,000 AFTER setting a spending record far past inflation!
And to think, 4 years ago Harper was asking the GC to defeat a Liberal government with the help of these same “seperatists” he now decries in the middle of an economic boom they fostered over the previous decade!
April 24th, 2009 at 11:39 am
No, Norm — I got that. Just thought I’d correct the misconception.
I think it was Tidbit who said that I was making ‘outrageous claims’. But I’m simply stating facts.
‘course, it helps that I could literally sling a baseball and hit four condo conversion/construction sites within two blocks in either direction.
April 24th, 2009 at 11:41 am
30 Reasons Why Next Great Depression Is On Its Way
http://www.marketwatch.com/news/story/well-great-depession-2-2011/story.aspx?guid=%7BB28B49B5-EFD1-4941-B57E-A2BA1545BA09%7D&siteid=yahoomy
It won’t be as bad here in Saskatoon if it happens, but food for thought.
April 24th, 2009 at 11:42 am
It may not be as bad here in Saskatoon, but I still think spending 3 times more than the average wage increase is not a good idea.
With oil and uranium way down, and forestry in the crapper, my prediction is for an average year, while most of Canada does poorly. Good. But not any reason to go out and spend 13% more. Time to pay off debts, I blame negligent borrowers and government policy, as much as banks, for any crisis.
Let’s not be negligent borrowers. Personally, I paid off about half of my line of credit already this year, realizing that the US crisis, and Canada’s evolving down turn probably was a good hint that paying off debt makes sense, and betting on future earnings to buy a LCD or a summer sports car, not a great idea. 5 more months, and no more line of credit, and I no longer care about the market – save for my RRSP’s which have a couple decades to rebound.
April 24th, 2009 at 11:45 am
Nick,
Are you sure people are spending more than three times their wage gains? As I noted, those same charts show more people are employed in the province than last year. Isn’t that propelling the rise in retail sales at restaurants etc? More people making more money. Not just the same number of people spending far more. Maybe I’ve misinterpreted the numbers, but I feel you may be reading what you want to read there.
April 24th, 2009 at 11:45 am
Mark,
I think that you’re correct in that there are an additional 13,300 people earning the “average income” in Saskatchewan this year compared to last. As near as I can figure Saskatchewan workers generated income of $1,452,633,000 in September 08, compared to $1,353,306,500 in September 07. That’s a 7% difference, but still less than the 13% increase in retails sales. Any doubt that people are having a good time with their “home equity?”
April 24th, 2009 at 11:45 am
Don’t forget the extra disposable income they had after all the tax cuts they received effective January 1st, 2008. There’s another few percent for you.:) Also, weren’t a lot of those retail sales gains partly due to inflation too. I might be wrong on this point, but prices for goods were rising quickly through the year, so people weren’t neccessarily buying that much more, just spending higher numbers for the same groceries and gas. And sure, credit lines too, if you like.
April 24th, 2009 at 11:49 am
13% – 1% population gain = 12% which is 3 X the 4% average wage gain
And a 13% increase in spending is on the conservative end…
April 24th, 2009 at 11:49 am
Nick, not sure you can compare population numbers like that to retail sales. Norm’s use of worker generated income above seems the best guide as it accounts for more people in the work force buying more stuff, not just the same number of people buying stuff.
April 24th, 2009 at 11:49 am
Norm,
I think you have it right. But I think we jumped on the credit train at the end of 06 as we were late to the party the whole world was enjoying. 2007 saw impressive growth in retail sales yoy from 2006.
Saskatchewan’s booming resource economy helped push retail sales in the province up by 13 per cent in 2007
http://www.cbc.ca/money/story/2008/05/26/retailprovinces.html
I think coming to the credit party late could be a saving grace for us though. Many other places in the world and in Canada have been part of the credit bubble for 3,4 or more years. And we are seeing the effects of that everyday. In Saskatoon, credit expansion has only accelerated for 2 years when looking at house prices and retail sales. The province and the people are better shape than most others.
April 24th, 2009 at 11:50 am
House prices in the States might be getting close to the bottom. Maybe Q3 2009.
House Price-to-Income Ratio
http://calculatedrisk.blogspot.com/2008/11/house-price-to-income-ratio.html
Real House Prices
http://calculatedrisk.blogspot.com/2008/11/real-house-prices.html
April 24th, 2009 at 11:51 am
George,
“House prices in the States might be getting close to the bottom.”
Almost seems to good to be true.
April 24th, 2009 at 11:51 am
Toronto home sales, prices sink.
http://tinyurl.com/5g3zdx
World’s cenral banks march towards zero rates.
http://tinyurl.com/6m34c8
April 24th, 2009 at 11:51 am
Wow, it’s quiet here today.
Perhaps others were like me, and weren’t sure which bit of news to post first.
Here goes:
Oil Falls Below $44, Lowest Since January 2005, as Demand Drops
http://tinyurl.com/6evkfy
“Dec. 4 (Bloomberg) — Crude oil fell below $44 a barrel to the lowest since January 2005 and gasoline dropped below $1 a gallon as the deepening recession in the U.S., Europe and Japan cuts fuel consumption.
Prices may dip below $25 a barrel next year if the recession spreads to China, Merrill Lynch & Co. said in a report today. U.S. fuel consumption during the four weeks ended Nov. 21 was down 6.2 percent from a year earlier, an Energy Department report showed yesterday.”
April 24th, 2009 at 11:55 am
Crikey,
Gulf Oil CEO says gas could hit $1 next year. $20 a barrelhttp://www.patriotledger.com/business/x1881115149/Gulf-Oil-CEO-says-lower-gas-prices-ahead
Looks like I am wrong again by calling $35 a barrel a few months ago
Now, if gasoline prices would come down like this as well.
Dubai Speculators Quit as Lending Drought Bursts Desert Bubble
http://www.bloomberg.com/apps/news?pid=20601109&sid=a2jrSPqYhVzY&refer=home
April 24th, 2009 at 11:56 am
Chairman Ben S. Bernanke December 4, 2008
Housing, Mortgage Markets, and Foreclosures
http://www.federalreserve.gov/newsevents/speech/bernanke20081204a.htm
A long read
April 24th, 2009 at 11:56 am
George,
“Looks like I am wrong again by calling $35 a barrel a few months ago”
Yeah. You optimist, you.
In retrospect, it looks like I was optimistic about the my market calls, too. Nasty.
April 24th, 2009 at 11:56 am
The Worst Predictions of 2006 http://www.businessweek.com/bwdaily/dnflash/content/dec2006/db20061229_154029.htm?campaign_id=rss_topStories_msnbc
PREDICTION: “It’s very clear to us that oil prices have peaked for this cycle.” — Bill Miller of Legg Mason (LM), Dec. 8, 2005
THE REALITY: Miller, the firm’s leading investor, said oil prices would reach $40 to $55 a barrel during the year. Instead, they hit $78 in 2006.
PREDICTION: The national median home price will rise about 6.1% in 2006. Over a full year, it “has never declined since good record-keeping began in 1968.” — National Association of Realtors, Dec. 12, 2005
THE REALITY: Through October 2006, the median price of residential properties was down 3.5% from a year earlier.
I think Remax will be eating their words shortly.
April 24th, 2009 at 11:57 am
But Crikey, George, you’re both missing how low oil is really good news for Saskatchewan because now we can pursue other interests for cheaper…
Like how falling uranium prices are good because more people will buy it…
And how a tanking forestry sector means more eco tourism…
(yes potash prices are still up, but the tanking stock of Potash Corp has to mean something…)
April 24th, 2009 at 11:57 am
Mark, whether spending is only double or actually triple wage increases, neither seems like a positive. You’d think the 4% wage increases should be going into paying off those mortgags, instead of truck and SUV sales rebounding in Regina the minute oil dropped(bit short sighted??)
Kind of thinking a bigger gas tax wouldn’t be so bad if Suburbans and Hummers are still flying off the lot
April 24th, 2009 at 11:57 am
Funny the most democratic solution Harper could find was to suspend an elected parliament to protect his 1/3 minority from a 2/3 majority of elected MPs.
After being outraged the Liberals made the same deal with the Bloc that he did in 2004
http://www.liberal.ca/story_15511_e.aspx
He’s like our own mini dictator.
Final comment of the day, promise
April 24th, 2009 at 11:58 am
Norm,
re: Greater Toronto sales. Holy crap! %50 drop yoy. 3640 sales with 27,037 listings!
The median price fell from $325,000 last year to $312,250 last month, a decline of 4 per cent. The average price fell by 6 per cent to $368,582 from $393,747 in the same month last year.
And the “experts” say that Toronto will see a very small decline if any, while they say that Saskatoon will see drops of up to %50. If the economy does not come crashing down here, we will see drops here but I am going to say they won’t be as bad as Ontario.
Toronto had 259 condo projects in the last couple of years that actually made them the condo capital of North America. We know how overbuilding and speculation has treated condo buyers in Florida.
April 24th, 2009 at 11:58 am
Among the various economic predictions, I have heard people talk of a potential crisis in currencies. Usually people are talking about the US when they talk currency weakness but I am not sure that Canada is immune either. If this were to happen, there would likely be high inflation. Would high inflation and debased currency not lead to higher housing prices at least in nominal terms as the prices adjust to the new value of the dollar?
April 24th, 2009 at 11:58 am
Funny headline today:
Oil: $25 Is The New $200
It is quite funny how all these predictions, on the way up, and on the way down, simply appear to be nothing more than a pencil and ruler applied to a piece of graph paper and a line drawn continuing whatever trend is current. I remember asking someone from Calgary last summer if there was one analyst out there in the world predicting oil would ever go below 80 dollars again. He said no. Remember, when it hit 100, people said 125. When it hit that, people said 150. Then they drew a line to 200. Although we don’t have much lower to go, it’s funny why we should put any credence into any projections. Even I can draw a line showing we’re heading to 25, then 10, then 5. Does anyone really, despite their credentials, have anything better than a wild guess?
April 24th, 2009 at 11:58 am
Matt,
“Would high inflation and debased currency not lead to higher housing prices at least in nominal terms as the prices adjust to the new value of the dollar?”
Technically yes, the prices of everthing would rise nominally. There has been alot of talk about potential currency debasement, but I can’t say I’ve come across any information about that as it relates to Canada. Wiki has a prety good explanation of what a (hyper)inlationary scenario is and what might cause it to occur. If incomes don’t rise at the rate of inflation, this can quickly become a real problem.
http://tinyurl.com/dtwx8
I find it most helpful to think about inflation as a “tax”. Right now, IMHO, inflation is the least our economic worries for some time to come. If such a scenario were to happen, however, people who have the cash on hand to buy things that will retain their store of value even as the currency devalues will do best.
April 24th, 2009 at 11:59 am
Crikey,
I agree, deflation will be the problem for the next while. Houses, cars, electronics, fuel etc, will all come down in prices. I think we will see ZIRP or close to it within a year. A couple of years down the road could see the a swing the other way.
Mark,
Very true, I try to give an educated guess, but it is the same as a wild ass guess!
April 24th, 2009 at 12:04 pm
House price drops, unemployment and 0 down are forcing people to walk away in Vancouver
Video here
2007 price 700k
2008 price 499k
That is some haircut
April 24th, 2009 at 12:04 pm
Canada loses most jobs in 26 years
http://business.theglobeandmail.com/servlet/story/RTGAM.20081205.wjobs1205/BNStory/Business/home
Saskatoon’s rate stayed unchanged
Labour force: stats can
http://www.statcan.gc.ca/daily-quotidien/081205/t081205a4-eng.htm
‘Challenge’ to balance Sask. budget: Gantefoer
http://www.thestarphoenix.com/Business/Challenge+balance+Sask+budget+Gantefoer/1035600/story.html
“We’re certainly not going to have a $3-billion surplus next year going forward. In fact, it’s going to be a challenge to make sure we’re in balance and we may have to draw on the Growth and Financial Security Fund to do that. So it’s a different world,”
I think our prov government is smarter than they were letting on. They know this downturn will be long and deep. Good for them to save the money for a rainy day.
April 24th, 2009 at 12:05 pm
Washington Post
The head of the government’s financial system rescue effort said Thursday the Treasury Department is considering a program to encourage banks to make mortgage loans at low rates to help revive the battered housing market.
Under the proposal being pushed by the financial industry, Treasury would seek to lower the rate on a 30-year mortgage to 4.5 percent by purchasing mortgage-backed securities from Fannie Mae and Freddie Mac. It’s unclear exactly how much the plan would cost.
http://tinyurl.com/5efeu9
April 24th, 2009 at 12:05 pm
George,
“Saskatoon’s rate stayed unchanged”
What am I missing here George. The chart you posted seems to indicate a 3.6% year-over-year increase, and a .4% month-over-month increase in full time jobs for Saskatchewan.
April 24th, 2009 at 12:05 pm
Norm,
“Saskatoon’s rate stayed unchanged” was from newstalk 650. I don’t have a link for cities just provinces. Saskatoon possibly has gone up
April 24th, 2009 at 12:05 pm
Oh, I’m sorry George. Not sure how I overlooked that. I do actually realize that Saskatoon and Saskatchewan are not the same.
April 24th, 2009 at 12:06 pm
Totally off-topic from this post – but, something I have been very curious about.
I have freinds that purchased brand new homes in 2007 – January in Stonebridge. They were sticker shocked at that time to pay $220 for a 3 br bungalow. Not the two story ugly skinny house either.
So, how is it that builders – and I am in no way being critical, are claiming that they will be loosing big money if they have to drop their prices much further? I am curious as I know that cost to build could not have rissen in dirrect correlation to the cost of housing. The same house now would be $399 in stonebridge.
So, even if costs to build rose 50%, they in no way are representative of a major loss to homebuilders.
I agree with others that people have lost complete sight of the fact that houses in Saskatoon only 2 years ago were about half of what they are now. So, maybe there are lots of jobs, maybe there are lots of people moving to Saskatoon. My opinion is that the ‘investor’ group initiated a frenzy in Saskatoon. And, it coincided with great things happening for the province. Lots of positive news. Overbids were the killer to this situation. People got overinflated egos as well for the price of their home.
For simple calculations – assume that a purchase of 300,000.00 declines 10% in the next year. That’s $30,000.00. If you rent – a really nice spot for $1500.00 – that only costs you $18,000.00. And, if you buy a house at that price you arent going to touch the principal of that mortgage for at least 3 years. So waiting, although there is a percieved loss and possibly attributed to home ownership in themselves that are quite valueable, will not really cost you anything.
Based on some of the research I have done, a drop of 10 percent is modest. Many are predicting drops of 30-40 percent as the baby boomers retire and sell off their big homes for retirement pads.
So, then, my question is back to the beginning. How will homebuilders adjust to this? Has cost of building really increased to the current level? I have looked at building, and buying new. It will cost more to hire a builder. I just don’t understand why.
April 24th, 2009 at 12:06 pm
Cindy – I think the baby boomers selling off their homes is assuming a lot. I know my parents (and a lot of their friends from that generation) took their whole lives to pay off their house. The day they were mortgage free was one of the most memorable days of their lives. They will never EVER leave that house walking on their own two feet. I will have to watch them leave on a stretcher. Their friends all worked very hard through the 80’s to keep their homes too, and I believe few would want to leave their houses. I understand that some older folks like the idea of condo living, but some simply don’t want to take on the monthly fees and moving costs (financial, physical, or emotional)involved. I believe these are some of the people best set to get through financial turmoil – they have no house paument, and absolutely no reason to take one on. My folks have already calculated that hiring out some of their cleaning and yard work duties in order to make staying in their home possible is far cheaper than paying condo fees (and a possible mortgage) on a senior’s building. It’s just my two cents – but I feel that people of a certain mindset who have lived through harder times than we can remember would be very likely to stay financially safe in their paid off homes.
April 24th, 2009 at 12:06 pm
Norm, I wonder where your terrific community profiles disappeared to? Can’t seem to find them anywhere, and I’d like to share them with my stepson who’s interested in buying a home. Thanks for all your hard work!
April 24th, 2009 at 12:07 pm
Julie,
Thanks very much. Those profiles reside at http://www.teamfisher.com/Neighbourhoods/page_1719893.html
April 24th, 2009 at 12:07 pm
Ringo,
You are assuming that baby boomers own their houses. Baby boomers were some of the biggest users of home equity lines of credit, second mortgages ect. This sounds horrible, but the idea of baby boomers leaving in stretchers will someday be a reality. They will not live forever! Millions and Millions of boomers will die over the next 20 years. Leaving how many homes empty?
The second point I want to make it that how many boomers were banking on selling there house downsizing and living off of the profits? Far too many boomers have saved nothing and when the realization that there pensions will be reduced and there own investments are worthless it can only end badly.
Something to think about.
Nix
April 24th, 2009 at 12:09 pm
Nix – I suppose I was only looking through the eyes of a select few. You’re absolutely right, there are a lot of boomers who were definitely focused on other things throughout their lives (like how often they could refinance lol) aside from paying down their mortgages. It was always my dad’s view that in order to be secure , you needed to own your house. Period. He would rather see us all eat liver than miss his mortgage payment. We do, however, have extended family who are building new houses in their late 50’s (which I know is a litle young for boomers, but close enough to me) and taking out 25 year mortgages on those houses. I often wonder what they’ll do when they’re no longer able to work, yet still have years and years of mortgage payments ahead of them? Perhaps those are the ones who will also think it’s wise to buy a condo in their late 60’s and heck – why not sign another 20 year mortgage for that?! I gotta say – I may have eaten more liver than I’ll ever admit, but I think my pop was onto something lol . . .
April 24th, 2009 at 12:09 pm
Oil patch may cut output if price hits US$38
http://www.edmontonjournal.com/business/fp/patch+output+price+hits/1033887/story.html
In a report to clients yesterday, Merrill Lynch & Co. estimated almost 800,000 barrels a day of crude — almost 30% of Canadian total output — could go “off line” if oil prices dip below US$38 a barrel, the break-even price for some projects. Another 800,000 b/d could be shut in if oil falls below US$30.
Unfortunately jobs will be lost in the west.
Inflation adjusted oil prices
http://www.inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm
But historically, oil should or could be around 40 a barrel if not for the credit bubble and speculation.
April 24th, 2009 at 2:24 pm
Norm et al,
this bit is courtesy of Lani over at Agent Genius
http://tinyurl.com/6xut2k
This is Guaranteed to make you shake your head and wonder at how stupid things get in the world of Real Estate.
Anybody got some tylenol?
April 24th, 2009 at 2:25 pm
Larry,
I’ll agree that it does sound like a wacky idea. Imagine, the American tax payer taking some of the bank’s money and putting it in their pocket. Hmmm.
April 24th, 2009 at 2:25 pm
Inman News Report: US home prices to fall below the fundamentals.
Apparently homes are once again “affordable” in the vast majority of U.S. markets where steep declines over the last few years have brought homes within reach of the average American. With a few exceptions, most markets are “fairly valued” and many are “undervalued.” Unfortunately, recent economic trends seem to indicate that prices are likely to fall even further before the U.S. housing market turns around.
http://tinyurl.com/6n7tbb
April 24th, 2009 at 2:26 pm
“As resource prices fall, deficit possible for Saskatchewan”
http://www.cbc.ca/canada/saskatchewan/story/2008/12/05/deficit.html
haven’t posted in a while, think this means the boom is over and house prices are in for another 20 years of stagnation?
April 24th, 2009 at 2:37 pm
Cindy you’re completely on topic once everyone realizes demand is way down, builders can sell for way less and still do really well, price gouging?