Drop In Home Sales Early in 2015
As was widely expected, low world crude oil prices and a sagging Canadian dollar have had an effect on the housing market in Saskatoon. Inventory levels continue to build due to a 14% increase year over year in listings and a 21% reduction in home sales. "Although this will undoubtedly have a downward effect on home prices in Saskatoon, I'm not sure we are ready to follow Chicken Little around and take cover from a falling sky." comments Jason Yochim, CEO of the Saskatoon Region Association of REALTORS
®(SRAR). Listing activity was consistently trending upward for the past number of months and this past January is no exception to that trend. The 21% reduction in sales year to date actually represents only 40 fewer home sales when compared to last January. "Although we can't ignore the potential impact of market forces we need to keep things in perspective. When buyers and sellers hear bad news it affects their decisions but may not reflect the actual market." he adds.
At the end of January the number of homes available for sale in Saskatoon reached 1,453 units. Higher inventory levels and cautious buyers will generally lead to a downward pressure on pricing. The effect on pricing in some neighborhoods will be affected more than others depending on demand and price range. Since there are typically more buyers in the $250-450,000 range, the impact of reduced pricing will likely be less. Another side effect of higher inventories is an increase in the number of days to sell. Currently it takes 55 days in Saskatoon for the average home to sell compared to 51 a year ago. "If sellers are unable or unwilling to look at pricing to market they have to be prepared to receive an offer if at all" says Yochim "this is a simple fact of supply and demand in any market, higher supply and lower demand equals a decrease in the value of a product."
A key indicator of pricing trends in the Saskatoon real estate market is the SRAR Home Price Index (HPI). The HPI is the most accurate predictor available of where the market is trending and measures a change in value of home sales over time. Overall the composite index for Saskatoon has been trending slightly downward since the later part of 2014 with a 1.19% change since July. Even with the higher inventory levels and slower sales the index showed only a negative change of 0.09% in January. When comparing the five areas within Saskatoon, all continued to see a slight reduction with the exception of area 4 which continues to show a positive trend in pricing. Area 4 encompasses the neighborhoods located between Idylwyld Drive and Circle Drive west with a benchmark value of $222,500.