By Norm Fisher January 18, 2014 - Sales activity remained rather subdued this week as Saskatoon real estate agents reported just 41 firm deals on houses and condominiums to the local MLS® system, a drop of three units compared to the previous week and an increase of five sales when compared against volume for the same week last year. While the number of trades are low compared to most months January is typically a slow slug. I expect that by the time the dust settles at month end we should be looking at numbers that are fairly typical for the month. Given the sales momentum of recent months and the very slow start that we had last year, we could quite likely see some good gains over the month, even though those gains are more likely to be a reflection of last January’s weakness than anything else. Last week’s strong new listing numbers appear to include some of the activity that should have happened this week. The total number of new Saskatoon house and condo listings slipped lower on both a weekly and an annual basis. Local REALTORS® processed 112 MLS® listings, down from 166 last week, 16 fewer than were listed during the same week a year ago.
The total number of active MLS® listings available to Saskatoon home buyers continued on its upward trajectory after hitting its lowest point in more than nine months at the start of the year. This week, inventory numbers closed at 1131 for a weekly gain of 40 homes. On an annual basis, we are ahead by about 150 homes. As you can see on our chart, inventory levels are higher than they have been in January in any of the previous five years. Where do you see it going by spring? Today, we have a total of 680 single-family homes and 351 condominiums showing an active status on the Saskatoon multiple listing service®. A year ago, those two categories of housing stood at 591 and 299 respectively.
I’ve said it before and I’ll say it again, there’s not a lot you can immediately draw from the weekly price numbers, especially when sales are as low as they are right now. They really deliver the greatest insight into the market over a longer period of time. That said, we’ll remain true to our mission and tell you what they looked like this week. The median sale price of a Saskatoon home took a jump of about twenty thousand dollars from last week to reach $345,000. That basically tells us that there was more activity in the upper end this week than there was last week. The average sale price spiked to $381,364 for a weekly increase of more than thirty thousand dollars. This jump can largely be attributed to one sale at $1.25 million dollars that skewed the numbers higher. That skewing is far less pronounced when we look at the six-week average price which gained five thousand on the week to reach $345,733 to show its first annual increase in five weeks, up about 10K compared to the same week last year. The four-week median price rose less gaining a little under two grand from last week to hit $325,000 and match the annual gain of the six-week average price.
The negotiating table was clearly favouring buyers as just one seller made off with an offer above asking price with a $2500 overbid. Just one more was able to produce an offer at their full asking price. The other 39 buyers that closed a deal this week did so at a price that was less than the seller was asking by an average of $9,941. I honestly can’t recall the last time we saw a week where such a high percentage of the closed transactions were under the asking price. I’m pretty sure that it would be a good year anyway.
Other notable MLS® activity this week included 26 cancelled and withdrawn listings, 17 expired listings and 29 price adjustments.
On the news: I find it remarkable how bullish the media wants to be on housing, even in the face of some pretty impressive strength. Nationally, sales are up 12.9% in December and the Financial Post would like to make a big deal of the fact that unit sales have declined for three straight months. “There is cause for concern in the market,” they say. “Seasonally adjusted December sales were down 1.8% from November and are now off 5.2% from the peak that was reached in September. Historically, price declines have followed sales declines.” Let me tell you something else that happens “historically.” Real estate sales decline for three consecutive months in the last quarter of the year. This is not “cause for concern.” It’s normal. In some markets that decline typically happens over many more months. Take Saskatoon for example. Our real estate market typically peaks in May or June to begin a slow but steady decline in monthly unit sales until they bottom out on December, and then begin to climb towards their peak again in January. Over the past five years, after June, there have only been two times at which unit sales have actually increased over the previous month. Most years, even our very best, close with six to seven months of declining sales. To be clear, this is not an argument for an ever advancing real estate market, or an argument against a correction, but rather, an observation that the news will often twist a story whichever way they want it to go. As we move into 2014 it’s beginning to look like those wishing for a housing crash have been disappointed yet again. Some aren’t quite ready to throw in the towel. Better luck next year.
Copyright Norm Fisher Royal LePage Saskatoon Real Estate