AVERAGE HOME PRICE MISLEADING
Saskatoon. Oct. 3rd, 2016.
For many the average sale price is used to benchmark where the market is at. Year to date statistics reinforce why that is not a sound practice. As of the end of September, a total of 2,936 unit sales were recorded, a 7% drop from the same period in 2015. By comparison, the average sale price of $351,835 remains virtually unchanged from one year ago.
Furthermore, the average sale price for September 2016 was 6% higher than last September. The reason, an increase in the number of properties selling at the higher end of the price range coupled with a decline in more affordable home sales. More specifically, year to date the number of units selling between $300,000 and $500,000 declined by 12% while the number of units selling above $750,000 increased by 20%.
The Home Price Index (HPI) tool was created by the Canadian Real Estate Association (CREA) as a way to more accurately reflect changes in home pricing and predict pricing trends. The HPI uses a starting point of January of 2002 and establishes a "benchmark" value for a typical property type. This value is then indexed over time to reflect changes in the market. The composite benchmark value for a home in Saskatoon in January of 2002 was $115,000. Currently the composite benchmark price is $308,600.
This index has changed very little since January when it was at $305,400. This would indicate little change in value over the first nine months of the year and has remained virtually unchanged since June.
New listings for September were down 20% compared to September of 2015.
"A reduction in new listings has a positive impact on the overall inventory levels in Saskatoon which have been elevated since the spring of 2015". comments Jason Yochim, CEO with the Saskatoon Region Association of REALTORS®.
"Ideally we would like to see the number of active listings around 1,500 units" he adds. At the end of September, the number of active listings was 1,841, the five-year average is 1,625 units. The high water mark for active listings was 2,081 in June of 2015.
The number of sales for September was 324 units which is a 9% reduction from last year. Year to date the total unit sales was down 7% compared to 3,167 units a year ago. The average time to sell a home in Saskatoon is currently 51 days, the five-year average is 41 days. These homes have been selling for 97.4% of the asking price.
"The key element in the sale of a property is proper pricing, buyers are more educated today than ever before," adds Yochim.
This is reflected in the close relation between asking and selling price. Homes that don't sell are likely listed further from the true market value