By Jonathan Charlton, The StarPhoenix December 12, 2014 - When George Brown went to sell his ninth floor condo in May, he expected to have a deal within 30 to 60 days.
He finally sold it earlier this month.
“I guess I’ve been in the business long enough to know sometimes things go and sometimes they don’t,” he said.
Four potential deals fell through after the buyers had second thoughts, Brown said. Some simply picked another building, and some acted on advice from family, but there was also an unusually high number of condos on the market, he said.
His case is an extreme example of the glut of homes on the market slowing sales, according to the ReMax Housing Market Outlook report.
It said inventory in Saskatoon was 15 to 18 per cent higher than normal in 2014, a trend that will continue through the coming year.
“In 2014, residential properties typically stayed on the market for 45 to 60 days, and this is projected to increase by 15 to 20 days in 2015,” the report said.
“An oversupply may put downward pressure on prices; however, with Saskatoon’s healthy economy, steady demand and an anticipated slowdown in new builds, any impact on price is expected to be minor.”
Larry Stewart, who is Brown’s agent and owner of the Saskatoon branch of ReMax, said the city “has serviced an amazing amount of land — almost too much, I think. There’s been a lot of profit in construction in the past five years.”
So much profit, in fact, that the roughly 200 small builders in the city have been putting up houses on spec, which has resulted in unsold stock.
Though the city hasn’t cut the number of lots it has sold, Stewart said he expects construction to slow down, “which will allow the inventory to slowly be absorbed.”
Few homes in the $200,000 range are available. The price of vacant lots near the Exhibition grounds, for example, has risen to $220,000 from $150,000, he said. The $300,000 range is popular, as buyers try to get as much as they can without crossing the $400,000 mark.
“They’re having to satisfy themselves with a little lesser house,” he said.
Part of the problem is the relatively small number of re-sale homes on his listings — perhaps 550 out of 1,500. The rest are new houses and condos, he said.
Meanwhile, the average residential sale price in Regina is expected to surpass Saskatoon next year, the report also predicts.
It says Regina will jump to $346,500 from $333,200 and Saskatoon will coast along at $333,900, unchanged from 2014. Both will be well below the national average price of $416,300.
Regina “is expected to shift from a buyer’s market to a balanced market by the end of next year,” the report said.
It will be the first time in the last five years that homes in Regina will be more expensive than those in Saskatoon.
People who grew up in Regina are moving back from Calgary or Edmonton, which “is encouraging the older generation to stay in the city after retirement in order to be near their children and grandchildren,” the report states.
At the same time, Regina’s economy is strong, stable and diversified, and the city will see new jobs through construction of the football stadium and a waste water treatment plant, the report said.
The Bank of Canada warned Wednesday that Canada’s housing market could be overvalued by as much as 30 per cent, but still predicted it was headed for a “soft landing.”
— With Financial Post files
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