Derrick Penner, Vancouver SunPublished: Wednesday, April 22, 2009 Consumers in a position to spend should get a quick boost from the Bank of Canada's record-setting interest-rate cut Tuesday as commercial banks respond with corresponding reductions in some of their important rates. Canada's major banks answered the central bank's 0.25-percentage-point cut in its key overnight lending rate with a similar reduction in the prime interest rate they charge their best customers, lowering it to 2.25 per cent. That brought the banks' variable mortgage rates, which are tied to movements in the prime rate, down as well, giving existing mortgage holders a break and potentially more cash in their pockets. The move also helps qualify more first-time buyers as the lower rates put mortgages into closer reach of lower incomes. "This is a good thing for the home-buying market," John Turner, director of mortgages for BMO Financial Group, said in a conference call. For example, Turner said, the prime-rate cut brought the rate on BMO's five-year variable-rate mortgage to 3.05 per cent from 3.3 per cent, which would reduce payments on a $200,000 mortgage by $26 a month. While it doesn't sound like a lot, Turner said the reduction of rates "brings more consumers into the market who likely may not have qualified before." Banks have flipped the relationship between their variable-rate mortgages and the prime lending rate as the Bank of Canada has slowly brought down its key overnight rate, the rate that it charges banks for short terms. Where banks used to offer discounts to the rate, which were in the range of 0.75--0.85 of a percentage point a year ago, they now charge a premium of a similar amount on new mortgages. Consumers who hold those existing, prime-discounted mortgage rates are seeing a boost to their spending power, Karl Madsen, B.C. regional manager for the mortgage broker Invis, said in an interview. "If you [hold a mortgage] at prime minus [0.75 of a percentage point], your rate is at 1.5 per cent," Madsen said. "Think of that in terms of how that affects the economy." Borrowers who opt to keep their payments at the same level will pay down their mortgages more quickly. Those who opt to adjust their payments to account for their loans' lower interest have more money to spend, "which is good. We're trying to spur the economy, and that extra spending money available will do that." Derek Holt, vice-president at Scotia Economics, said the Bank of Canada's statement that it expects to keep its overnight rate at its current low until at least the middle of next year was just as important a step for consumer spending. "Saying that rates will be low for a long time, that impacts the whole short end of the bond-yield curve," Holt said, "and that should lead [to lower rates] even for two to three-year revolving and non-revolving consumer loans." On the savings side, however, the cut in rates will likely also mean lower interest rates paid on savings accounts. Scotiabank on Tuesday reduced the interest rate on its high-interest Power Savings account to 1.25 per cent from 1.5 per cent, and the rate on its Money Master to 0.5 per cent from 0.6 per cent. "There are a bunch of offsetting influences on savings rates," Holt said. Consumers worried about their jobs, or who have lost money on investments, might want to save more money, Holt said. The low interest rates, however, don't give much incentive to save a lot of money. "In terms of the short-term cycle, rates are designed to discourage too much of a personal savings rate and ensuring you get enough spending [throughout the economy]," Holt said. depenner@vancouversun.com House prices decline in city But values rebounded from last quarter of 2008, Royal LePage survey says By Joanne Paulson, The StarPhoenix Saskatoon house prices have declined 11 per cent year-over-year, although the early spring market seems to have brought a little rebound, Royal LePage reported Wednesday. In its quarterly housing survey, Royal LePage said values have rebounded about 3.5 per cent from the last quarter of 2008. That's not to say house prices are necessarily back on the upswing, said Norm Fisher, sales manager for Royal LePage in Saskatoon. "We hit the low for the year last year in December and we sort of bounced out of that in January and February. Most of that was lost again in March," said Fisher. "That's sort of a premature spring bounce, for January and February. "That doesn't mean it's a dark and bleak future. It's a correction that was overdue," said Fisher, noting Saskatoon had the worst decline in affordability nationally in 2007-08. There are too many wild cards to predict the future of the Saskatoon housing market, said Fisher. However, there are certain kinds of houses that are seeing substantial demand at the moment. "There's probably a different story, depending on what segment of the market you're in. We have enough condos to last us a long time, for supply. We have a relatively short supply of $300,000 east-side bungalows. There are 146 of those for sale today, and were 60-some sales in the last 30 days. That's basically a 21/2-month supply, which is not a lot." Most of the product at the lower end of the market is seeing decent demand, he added. "There's definitely some signs that first timers, entry-level buyers, are showing some interest again, with the adjustments that we've seen in price and the lower interest rates that are available right now." The average first-quarter house price was $282,700, down from a peak of $318,300 at one point last year. Detached bungalows in Saskatoon fell eight per cent to an average of $312,500 in the first quarter, compared to the same quarter of 2008, said the real estate firm in its survey. Standard two-storeys were down 11.8 per cent to $348,500 and condos dropped 15 per cent to $187,000. A high number of listings have brought downward price pressure to the Saskatoon market. However, the number of homes for sale on the MLS system has dropped to 1,400 from a peak of 1,800 at one point last year. Still, 1,400 is well above average for the Saskatoon market, even at this time of year. "We still have a huge amount of inventory to overcome, on the whole, and a housing market right across North America that is bombarded by bad news on a daily basis. Those are the tougher things that will take a while to sort through," said Fisher. However, he added, "the inventory absorption rate is just over five months right now. Recently it's been as high as seven, eight months. It looks better to me than it did in December and January." The big advantage in this market is low mortgage rates, which Fisher has seen as low as four per cent for five years. "Buyers should definitely be thinking about interest rates and whether to make a buy while they're low," he said. "I don't think there's any danger they will go up a lot in the immediate future." jpaulson@sp.canwest.com © Copyright (c) The StarPhoenix Saskatchewan a jobs 'hot spot' in Canada (CNN) -- Normally, "hot spot" isn't the first phrase that comes to mind when talking about Saskatchewan, Canada. But with most of Canada suffering from devastating job losses, this cold province is becoming exactly that. It's an asterisk to the entire country when it comes to the economic climate, and Premier Brad Wall is shouting it as loud as he can. "It's a great time to come to Saskatchewan," said Wall, who even called the Toronto Star newspaper to tout his province's economic success and let Ontarians know there were jobs for the taking. "For those who are losing their jobs, we need them to know we have thousands of jobs open right now in both the private and public sector," Wall said. "We have a powerful story to tell, a story of success and that's something we want to share with those who are struggling." Wall's province is one of the exceptions to the unemployment increases battering provinces across Canada. Saskatchewan's unemployment rate fell to 4.1 percent in January from 4.2 percent in December, making it the only province recording a decline. In Ontario and the city of Toronto, unemployment rates rose to 7.2 percent and 8.5 percent respectively. To the west, British Columbia shed 68,000 full-time jobs in January. More Saskatchewan jobs should be on the way. To stave off any possible recession, Wall announced a $500 million infrastructure "booster shot" to help keep the economy strong. "All across the country, industries are getting quite ill," Wall said. "We aren't immune to it. We see some impacts in terms of layoffs and new vehicle purchases slowing off, and so we want to be proactive in staying ahead of the curve." On Tuesday, the Conference Board of Canada released a report that said Saskatchewan will likely continue to lead the nation in economic growth in 2009 because of the infrastructure investment and tax reductions. The province has also been reaping the benefits of an influx from nearby Alberta. When the government in Alberta decided to raise the oil royalty rates, oil exploration and expedition companies decided to move their operations to Saskatchewan in hopes of making more money. With the province's growing opportunities, David Montgomery, president of Calgary's Qwest Haven Relocation Services, said he is moving more people to Saskatchewan each day. "Alberta has always been the gravy train of oil," said Montgomery, who is also a former resident of Regina, the capitol and second-largest city in Saskatchewan. "But with the new royalties, oil companies are saying 'Why stay here and make less when the opportunities right next door are even better?' Many other companies may start to follow suit." Montgomery said people looking to move have said that cheaper land and insurance prices are among the other reasons they are headed to Saskatchewan. "There, government insurance is cheaper than anywhere else in the country and it comes with your license plates," he said. "With the amount of jobs, cheaper opportunities and great way of life, the government there has made it very attractive to move there." That means more business for Wall's province and more jobs coming to the area. Not that there's a shortage of jobs. On Tuesday night there were nearly 6,000 private- and public-sector jobs on the Web site Saskjobs.com. A constant stream of revenue from oil production and exports also buoys the economy in the province. Saskatchewan is the largest producer of oil in Canada and exports more oil to the United States than Kuwait. It is the leader in uranium production and produces a third of the world's potash. The province continues to keep ahead of the curve, Wall said, finding ways to diversify its resources and embark on ambitious green projects and new oil projects. The province is working with Montana on a $212 million climate change initiative that would create the first major greenhouse gas storage project in North America. The carbon dioxide from coal-fueled power plants would be stored in the ground in Montana and later be withdrawn for use in oil production. Wall also said what may be the largest discovery of sweet, light crude oil in the southeast part of the province means it could have even more oil to work with. The Bakken Formation could potentially have 413 billion barrels of oil, according to the U.S. Geological Survey. That would be another huge untapped revenue gold mine. Despite the growth of nearly all sectors across the board, Wall cautioned that it is possible his province may see economic stress, just later in the game than other places. "We need to be circumspect and prudent about promoting our province," he said. "We are not immune; we do see the impacts. It isn't some sort of panacea or answer to economic questions that don't exist elsewhere. We are a bit of an asterisk that says there is some stress, but it's relatively calm here." Wall encouraged people not to count out a move to the province based on stereotypes that it is "only winter here," and "all of the land is just rolling hills." "'It's a beautiful, big place where life is great and right now there's also opportunity," he said. "I'm very, very biased, but I can't imagine a place I'd rather be, especially with what's going on economically around the world Residential Home Sale Market Continued to Stabilize in February When measured against the last two years which were an anomaly, the market has softened. When measured against activity over the last five years, market activity is on par and ahead of sales figures from 2004, 2005 and 2006. Home prices have increased considerably during this time. As a result of the significant swings in price, demand and in many cases speculation the greatest challenge facing sellers currently is to adjust their expectations in this changed market place. The February residential home sale market performed as forecasted. Unit sales are expected to soften during the first half of 2009. Demand for property in the month of February remained steady. REALTORS® sold 211 residential unit sales in February that number down 42% from February 2008 when 365 properties were sold. Year to date unit sale numbers are ahead of 2005 and 2006 sale figures. Year to date REALTORS® have sold $118,569,000.00 of real estate, that number down 32% from 2008 when REALTORS® had sold $173,957,000.00. The average selling price remained steady for the month of February at $281,681.00 up 7% from 2008 when the average was $263,444.00. The average selling price was influenced by 25 sales in the over $400,000.00 price range. The average price indicates that sales activity focused on the mid to higher price ranges. The average residential price is derived by taking the month’s dollar volume of homes sold and dividing that number by the unit sales number. The percentage of change should not be used unilaterally as prices vary from area to area. Consumers wishing an accurate estimate of value for their home should contact a REALTOR® member for a comparative market analysis. Residential inventories remained above average for the month of February with home buyers having 1313 properties to select from at the end of the month. Inventory numbers are up 256 % from 2008 when 369 homes were available for purchase. Expectations are that it will take the better part of the year for this inventory to move through the market. Residential sale trends in areas surrounding Saskatoon were on par with in city activity. Unit sales softened with 44 units selling in February, down 56% from the 100 unit sales figure from February 2008. The average selling price remained steady at $257,465.00 up 19% from 2008 when the average price was $217,012.00. Home buyers had 837 homes to select from at the end of the month. Consumer confidence in the Saskatoon economy remains steady. REALTORS® are receiving numerous inquires of buyers from other provinces looking to move to our province. Markets are cyclical and the market in Saskatoon is at a low point and should begin to return to normal in the next few months. As a result, now is a good time to purchase a home or investment property. Harry H. Janzen, CAE Executive Officer Saskatoon Region Association of REALTORS® Saskatoon Real Estate Market Continues to Stabilize in JanuarySaskatoon REALTORS® assisted 213 buyers to fulfill their home ownership dream. This represents an increase in unit sales over the last three months. Compared to last years very active January market unit sales were down 29% when 300 residential units sold. Unit sales are on par with 2007 and ahead of 2005 and2006. The average selling price remained steady at $278,545.00 an increase of 7% from January 2008 when the average selling price was $259,334.00. This increase indicates continued demand for mid to upper price range homes. The average residential price is derived by taking the month’s dollar volume of homes sold and dividing that number by the unit sales number. The percentage of change should not be used unilaterally as prices vary from area to area. Consumers wishing an accurate estimate of value for their home should contact a REALTOR® member to do a comparative market analysis. Listing inventory remained steady with home buyers having 1156 homes to select from at the end of January. This number is down substantially from September 2008 when inventory levels peaked at 1,748. January inventory levels were higher than in January 2008 when 324 homes were available for purchase. REALTORS® sold $59,330,000.00 of real estate in the month of January that number down 24% from January 2008 when $77,800,000.00 of real estate was sold. The $300,000 to $350,000.00 price range continues to see the greatest sales activity followed closely by the $250,000 to $300,000 price range. In the month of January eight homes sold for more than $500,000.00. Consumer confidence in the Saskatoon economy remains steady. REALTORS® are receiving numerous inquires of buyers from other provinces and the USA looking to move to our province. Markets are cyclical and the market in Saskatoon is at a low point and should begin to return to normal in the next few months. As a result, now is a good time to purchase a home or investment. The Saskatoon market is not exempt from global economic pressures but well positioned to weather these economic times. The most recent announcements by the provincial government to support municipalities with infrastructure support is great news for Saskatoon, as infrastructure spending assists in stimulating the economy. The federal government’s increase in the amount buyers may use in the Home Buyers Plan will also encourage many first time buyers to enter the market place. REALTORS® across Canada have lobbied the government for more than eight years to see this increase to be approved by government. REALTORS® continue to lobby the federal government for the Home Buyers Plan to extend to all buyers not just first time buyers. Harry H. Janzen, CAE Executive Officer Saskatoon Region Association of REALTORS® Growing population in Saskatoon a reason 2008 was strong year By Cassandra Kyle, The Star Phoenix January 20, 2009 Call it a hat trick for Saskatoon. For the third year in a row, the city is expected to lead the nation in GDP growth, a new report says. The Conference Board of Canada predicted Monday in its metropolitan outlook that Saskatoon will see a 3.3 per cent growth in its GDP in 2009. The city ended 2008 with an estimated GDP growth of 5.4 per cent, the highest rate in the country. "I think it's a story that keeps on repeating itself," said Mario Lefebvre, director of the centre of municipal studies for the conference board. "It's almost sounding like same old, same old now where this economy has managed to find an incredible amount of dynamism over the years." Apart from demand for agricultural and mining exports and positive consumer spending, Lefebvre said the reason 2008 was strong -- and 2009 will be -- is because of Saskatoon's growing population. The Conference Board of Canada expects the Saskatoon census metropolitan area's (CMA) population to rise to 252,000 by the end of the year, up from 248,000 in 2008 and 241,000 in 2007. "I think this has been a very important result and one to add to the long series of nice results (Saskatoon) has been having, and ultimately it's taking (Saskatoon) right to the top. It seems almost never-ending," he said. The conference board predicts the CMA will have a population of 264,000 by 2013. Although the future looks rosy for the city, Lefebvre warns there will be challenges along the way. Hand-in-hand with a growing population comes managing and providing for an influx of people. The economic downturn will also affect exporters. The Conference Board of Canada warns in its report if the global economic downturn is longer and deeper than expected, regional exporters will suffer. "This is still a very tough economic period -- one that most economists have not seen in a while, one that we were hoping we would never see again," he said. "Saskatoon is still doing well and managing its own, but it's not as if it's completely immune from what's going on in the outside world." However, the city is poised to continue to withstand the bulk of the downturn, said Alan Migneault, CEO of the Saskatoon Regional Economic Development Authority (SREDA). Although a long-term economic slowdown may eventually hurt exporters, Migneault says for now, Saskatoon's economy will grow because of them. "When you think about the region of Saskatoon and what the companies in the region provide to the world, we are providing a lot of food and fuel and this is what people will need in the long run. And we expect that the Saskatoon region will continue to be growing as a result of that," he said. The Conference Board of Canada report says Saskatoon's GDP rate will moderate to an average of 2.7 per cent for the years 2010 to 2013. It expects the provincial economy to grow 3.6 per cent this year on demand for natural resources and agricultural commodities. Saskatoon housing market to lead country: forecast By Joanne Paulson December 3, 2008 1:01 PM Saskatoon’s housing market is expected to be one of few bright spots in Canada next year, with the average price rising by two per cent and sales going up by three per cent, Re/Max forecasted Wednesday. In fact, Re/Max predicts that Saskatoon will see the highest increase in unit sales for 2009, out of 22 major markets. Regina is expected to hold the line, matching this year’s sales. Re/Max says 11 of the markets surveyed will match or exceed 2008 sales levels, while the remainder will slide back. Canada’s housing market performance will be contingent on economic performance, says Michael Polzler, executive vice-president with Re/Max in Ontario and Atlantic Canada. “Issues affecting the overall economy are impacting housing markets across the country and the situation is not expected to be remedied until consumer confidence is restored,” said Polzler in a release. “That said, we could see a bounce back as early as spring — if inventory levels remain stable, pent-up demand kicks into gear, and lower interest rates stimulate home-buying activity.” The average price of a Saskatoon home is expected to end 2008 at $289,000, up 24 per cent from 2007. Re/Max expects it to creep up to $296,000 next year. Unit sales should end the year in the 3,600 range, down 19 per cent from 2007, but rise slightly to 3,700 in 2009. In Regina, home sales will number 3,450 in both 2008 and 2009, while the average price of a home will jump to $250,000 next year from $230,000 this year, an increase of nine per cent. Re/Max says global demand for Saskatchewan’s resources led the boost to the Saskatoon residential real estate market in recent years, but diminishing demand has dampened sales activity in the second part of 2008. High inventory levels played a role in the local housing market. New home construction contributed to a 40 per cent increase in the number of homes listed for sale, and speculation was also a factor in the market. Re/Max sees a more balanced market for 2009. First-time home buyers will play less of a role in the market, in part because financing options have become tighter, including the elimination of the zero-down payment option. However, “more job opportunities at higher income levels are predicted to attract out of town purchasers to the city,” says the Re/Max report. “Former residents are also expected to return to Saskatoon, thanks to vastly improved economic conditions.” © Copyright (c) The StarPhoenix As your Real Estate professionals, understanding the Real Estate market and keeping you informed is part of our ongoing dedication. Whenever you, your friends, co-workers, or family require the services of a Real Estate professional please contact us. We appreciate the opportunity and look forward to being of service. Mark Wouters Realty Inc Re/Max Saskatoon Phone 306-933-0000 E-Mail: wouters@woutersrealty.com THANK YOU We thank you for taking the time to read our newsletter. Mark and Barb Wouters Mark Wouters Realty Inc is under contract to RE/MAX Saskatoon. Each office is independently owned and operated. |