Canada’s resale housing market recovered lost ground in the second quarter and is poised to stabilize for the remainder of 2009, after a very slow start to the year, according to the Royal LePage Market Survey Forecast and House Price Survey released today. As the economy begins to stabilize and consumer confidence improves, house prices are expected to appreciate slightly in much of eastern and central Canada. Greater than national average price declines are predicted for the western cities that saw the greatest price inflation earlier in the decade, including Edmonton, Calgary and Vancouver.

“Given the grim shape that Canada’s real estate market was in this past winter, the turnaround we have witnessed in the second quarter is really quite remarkable. We believe this improvement represents a sustainable change across the country. While seasonally weaker conditions are to be expected in the fall, the plucky Canadian real estate market is stabilizing and a healthy level of activity is forecast for the second half of 2009,” said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services.

During the second quarter, average house prices across most Canadian markets began to appreciate, recovering from the lows experienced during the winter months. Average national prices remain slightly behind those posted during the same period in 2008. Of the housing types surveyed, the price of detached bungalows declined to $327,964 (-3.5 per cent), two storey property prices decreased to $392,378 (-3.7 per cent), and standard condominiums price points fell slightly to $237,112 (-3.8 per cent), year-over-year.

Soper observed, “With our industry’s busiest quarter behind us, we feel comfortable revising our 2009 forecast to the positive. When the anticipated market decline struck last winter, it was with greater speed and intensity than predicted, but the strength of the rebound was equally surprising. If general economic conditions continue to improve, as we expect they will, 2009 will be characterized as a period of moderate housing market correction after several years of above average price growth.”

The 2009 national average house price is forecast to decline marginally by 2.0 percent, to $297,500 by end of year and unit sales are projected to fall slightly by 1.0 percent to 430,000.

“Improved affordability, driven by flat or lower home prices and inexpensive mortgage financing, has been the principle catalyst in this recovery. Pent up demand is also a factor in the lift we see in the second quarter numbers. For six months straddling the year’s beginning, buyers stayed away from the market in an understandable, emotional reaction to very unsettled global economic conditions. Canadians appear to be stepping beyond these fears and are once again moving onto and up the home ownership ladder,” stated Soper.

In early 2009, the precipitous drop in unit sales remains the most dramatic indicator of the recession’s impact on Canada’s real estate market. With spring, consumers appeared ready to believe the worst was behind them and returned to the market in force, driving increased activity across each housing type. Couple this with historically low interest rates and leveling unemployment, Canada’s residential real estate market got back on track during the quarter.

Undergoing an inevitable cyclical correction, price adjustments can be seen with marked variances across Canada’s provinces. As expected, British Columbia and Alberta posted the most significant price modifications, as home values in those markets retreated in the wake of several mid-decade years of unsustainable price inflation, and have now evolved to a more balanced state. Prices appear to have stabilized and it is expected that these regions will continue to see improvements into 2010. In particular, the impact of lower home prices has improved affordability to the point that people are buying homes again on the West Coast, where sales activity has increased substantially.

Alternatively in Atlantic Canada, homes continue to appreciate due to strong local economies, which have helped to shelter the region somewhat from the turbulence witnessed in other provinces.

As well, the region’s generally moderate home prices have helped keep demand strong. Newfoundland, in particular, stands out as a region that continues to see significant home price appreciation, as supply cannot keep up with the demand driven by vibrant and growing industries such as those in the province’s oil and gas sector.

Meanwhile, home prices in Toronto declined slightly in the second quarter, reflecting the national average trend. In the early spring, it was first-time buyers who triggered the increased activity levels, now those looking to move up are also active in the market. Similar to the situation in other large cities in central Canada, the most desirable neighbourhoods experienced supply shortages, which put upward pressure on prices.

“Looking ahead to the second half of 2009, year-over-year price comparisons will likely appear increasingly more favourable. It is important to remember that the baseline for the latter half of 2008 was unusually low, particularly in the fourth quarter when the full impact of the global financial crisis was felt. Our expectation is that most Canadian regions will experience stable housing prices through into the spring of 2010,” concluded Soper.

REGIONAL MARKET SUMMARIES

Halifax

In Halifax, a stable economy has contributed to a healthy real estate market where average house prices increased modestly despite a slight dip in sales activity. The market is beginning to pick up following a slow first quarter. Pent up demand will see a return to a more active market in the last half of the 2009 with the anticipation of a slight boost in sales activity and average house prices growing at a leisurely pace.

Montreal

The housing market in Montreal experienced a solid second quarter, with average house prices for most property types expected to increase for the remainder of 2009. Higher inventory levels resulted in balanced market conditions seeing the number of new listings equal to the number of sales. Low interest and unemployment rates will help maintain the strength of the real estate market through to the end of the year.

Ottawa

Ottawa continues to remain a steady market for residential real estate, with sales activity in the second quarter coming out strong from a slow first quarter. Ranked number two among Canada’s large cities for affordable real estate and coupled with low interest rates, all types of buyers were drawn to the market. House prices are expected to remain stable throughout the remainder of year with numbers slightly higher than anticipated.

Toronto

In Toronto, the real estate market witnessed significant second quarter gains. The return of consumer confidence and an upswing in spring market activity brought house prices and unit sales down as buyers emerged to take advantage of affordable properties and low lending rates.

As the market begins its transition from a buyer’s market to a balanced market, with indications of a seller’s market arising, it’s anticipated that the market will stabilize by the end of year.

Winnipeg

Winnipeg’s real estate market has remained relatively resilient in the second quarter with average house prices in key housing segments increasing from the first quarter of 2009. Real estate in

Winnipeg is modestly priced when compared to other cities in Canada, creating ideal conditions for buyers in the province. Looking ahead, average house prices are anticipated to stabilize for the remainder of the year.

Regina

Regina’s real estate market started on the road to recovery in the second quarter of 2009 and is expected to further improve through the remainder of the year. An increase in unit sales helped diminish the city’s high inventory levels as buyers are beginning to initiate deals. Recovering manufacturing and resource sectors, new construction activity in Regina, and low interest rates have also helped to improve buyer confidence.

Calgary

With the economic downturn and the oil and gas industry struggling, the housing market in Calgary has been on the decline since 2008, after many years of price inflation at the beginning of the decade. Quarter one of 2009 revealed some signs of price increases and stabilization in certain areas in Calgary, but the second quarter reveals fluctuations in the market. These price fluctuations are occurring across Calgary in all housing types with the market forecast predicting price reductions for the remainder of 2009.

Edmonton

Housing market conditions in Edmonton were characterized by lower inventory levels and moderate house price increases. Buyer demand was strong during the second quarter as most buyers felt a sense of urgency to capitalize on the recent market conditions. This has led to a slight tightening in Edmonton’s housing market with appreciation in average house prices expected for the last half of

2009.

Vancouver

Vancouver’s real estate market stabilized in the second quarter of 2009 following a price correction that started last fall moving towards a balance between supply and demand. Properties priced at, or below, market value are generating multiple offers from buyers. Average house prices throughout the last half of the year are expected to inch upwards, but increases will likely be in the low single digits.

Royal LePage’s quarterly House Price Survey shows the following annual change of prices for key housing segments in select national markets:

The Royal LePage Survey of Canadian House Prices is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country.

A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the second quarter. A printable version of the second quarter 2009 survey will be available online on August 7, 2009.

Housing values in the Royal LePage Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts. Historical data is available for some areas back to the early 1970s.

A quarter section of land in the RM of Aberdeen recently sold for more than $2 million, or $13,000 per acre.

Jed Kadoura, president of Blue Unicorn Investments Ltd. Sask., sold the quarter section in April to a businessperson from Edmonton, who subsequently turned it over in a share purchase.

Kadoura, a Calgary-based land developer, still owns about 4,000 acres in the Aberdeen area, having purchased the land in early 2007. He has subdivided some of the land into 40-acre parcels, which will soon be served by a new water line and a new road.

Near Calgary, developers are looking at spending $30,000 an acre; Kadoura paid $5.3 million for one quarter section near the Alberta city. Compared to those numbers, Saskatchewan land is still inexpensive, he says.

“That’s the place to be,” said Kadoura. “People go where they can make money. Saskatchewan has the cheapest land across Canada. Where can you buy beautiful land for $3,000, $4,000, $5,000 per acre? Nowhere.

“It’s still dirt cheap and it’s going to go up.”

Farmland values in general have increased about 24 per cent in the last 18 months, the fastest-rising rate in Canada. Still, land remains less expensive than in the neighbouring provinces.

“We are way underpriced compared to Alberta,” says Bill Brown, agricultural economist at the University of Saskatchewan and a land expert.

Before prices started to rise, land was an average of $340 an acre compared to Alberta’s $800. Even Manitoba’s average value, at $600, beats today’s Saskatchewan average of $400 to $500.

But land values within a 30- to 40-kilometre radius of Saskatoon or Regina are a different story. The three most influential factors affecting real estate are location, location, location — and farmland is no different, noted Brown.

“Around the bigger cities there is land speculation going on,” said Brown.

“Any direction you go from Saskatoon there are acreage developments. It’s still cheaper than outside Calgary or Edmonton.”

Amber Ray, administrator with Farm Credit Canada, has also noticed a lot of speculators around city centres. In many cases, she said, they hope the city will grow out to their land.

In general, farmland varies in price depending on soil type and crop return; but that changes closer to a city, particularly since Saskatchewan hit a couple of boom years.

“If you’re five minutes away from Saskatoon it’s not going to be the same value,” said Ray.

The RM of Aberdeen just east of Saskatoon is one area seeing quite a lot of development. Rosetta Developments is building a $1.8-million mall in the town of Aberdeen, as well as homes. A subdivision, Cherry Hills, has almost sold out its first phase.

Don Fry, a real estate agent and property developer, says the new acreage-estate phenomenon is about 21/2 to three years old. He became involved in the Bergheim Estates project, about 5.5 kilometres past the drive-in on Highway 41, at about that time.

“At that time, we paid more for that land than what was the norm. From there, it’s just mushroomed.”

Phase 1 is well into development and he hopes to bring on Phase 2 in the not-too-distant future.

The RM of Aberdeen is hot right now, but there is also a lot of development going on in Blucher and around Dundurn, says Fry.

“The big push seems to be into that east quadrant (at Aberdeen). My belief is that people buying the upper-end stuff are working at Innovation Place or the University of Saskatchewan.

“That’s what’s fuelling it. They want to be as close to work as possible without going across our terrible system of bridges.”

As to the developers, there is, in general, “tonnes of Alberta money,” says Fry. “A lot of people in Saskatchewan are not speculators . . . they want a sure thing.”

Fry says some of the properties are not as expensive as people might expect. His company is targeting an all-in price of $350,000 to $450,000. For example, on a 21/2- to six-acre lot with a 1,369-square-foot bungalow, a buyer may expect to pay $399,000 to $409,000.

“We have a builder, we have everything in place. We can target that number.”

The RM, meanwhile, is trying to control the rapid pace of growth. Garbage management, road building and maintenance, firefighting and other services — including an incoming new waterline — must be planned for and provided, says administrator Gary Dziadyk.

“We only allow 160 acres at a time (under) development, and there are 23 lots on that 160 acres,” he said. These properties are referred to as “country residentials.”

“Anything more than that, we won’t allow it, because it doesn’t fit with our zoning bylaw.”

For now, “the market is probably saturated,” he added. “We have probably have, right now, 200 parcels that haven’t been built on yet. They’re averaging anything from $140,000 to $180,000 per (five-acre) parcel; some have sold for $220,000.”

Some farmers are unhappy about the development. The land is too expensive to farm and farmers cannot go into small parcels because of the size of their machinery, said Dziadyk. On the other hand, retiring farmers can sell their land for much more than they likely expected a few years ago.

There is still a lot of interest, said Dziadyk. People from Calgary and British Columbia have come in to buy land, but he has also had calls from Ireland and India. He has been wearing a lot of different hats lately — including host to buyer delegations.

“Last year was an interesting year, I’ll tell you.”

http://www.thestarphoenix.com/Business/Farmland+values+soar/1661083/story.html

That’s for sure, Moishe Alexander (CFC CEO) says.

Normally, “hot spot” isn’t the first phrase that comes to mind when talking about Saskatchewan, Canada. A relocation service company president said he is moving more people to Saskatechwan than ever before. 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 SaskJob.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.”

http://www.reginainformation.com/2009/03/saskatchewan-get-top-billing-on-cnn.html

reviewed by Moishe Alexander