Sales activity in the Saskatoon market continued to be strong, up 8% Year to Date. Although sales activity has been strong in all price ranges this year, sales over $400,000 were 5% lower for April 2014 compared to April last year. During this same period, the number of homes selling below $400,000 increased by 18%. A surplus in the inventory of homes priced in excess of $400,000 has created a buyers' market especially in new homes. Typically, the higher the price the longer homes have been sitting on the market. This gets expensive especially for builders who are carrying these homes. Of the active listings available over $500,000 it would take a year at the current rate of absorption to clear out the inventory, this time frame nearly doubles for homes above $600,000. This is quite a contrast to homes priced between $250,000 and $450,000 where there is only 2.6 months of inventory.
A key element in pricing of new homes is the cost of land which many stakeholders fear is bringing "sticker shock" to purchasers in this price range. To move inventory, developers are forced to reduce prices and cut margins. Comparatively, the cost of labor and materials has not experienced significant increases in the past couple of years.
In April, the median price in Saskatoon took its first drop this year from $348,000 to $341,000. There were 884 homes listed by Saskatoon REALTORS in April which represents 31% of the total number of homes listed so far this year. The current inventory of active homes in Saskatoon is 1,443 which is an increase of 22% year over year. Based on the current rate of sales this represents 3.2 months of inventory which is just slightly below the five year average of 3.35 months.
Source: SRAR May 2nd, 2014 media release.