Garth George knows all about how timing can pay off in Western Canada's hot real estate market.
The 25-year-old commercial pilot recently sold his starter home in Edmonton for triple his buying price and took a job flying for a charter airline that services Saskatchewan's growing mining and energy sector. Last month, he paid over asking price for a move-up home in a nice Saskatoon neighbourhood. His competition on the deal? Eight other bidders from Alberta.
"I just got in at the bottom of the curve in Edmonton," Mr. George said. "I lucked out. Now I don't have any debt and I'm 25 years old."
Home buyers are running back to Saskatoon, fuelling a real estate frenzy in the city that has pushed average housing prices up more than 27 per cent in the first quarter and added $40,000 to the price of a typical home in just three months. In better sections of the city, agents say the increases have run in the 40-per-cent range. Last month, the average price of a home in the city cracked $200,000 for the first time.
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"It's hotter than a pistol," said Harry Janzen, the executive officer of the Saskatoon Region Association of Realtors who has close to three decades of experience in real estate.
Mr. Janzen said the dramatic shift in the market began in mid-January and continues today with multiple offers and bidding wars that have caused the city's real estate agents to seek advice from colleagues in Toronto and Calgary on how to handle such situations. "We've never seen anything like this before," Mr. Janzen said. "It's kind of fun, but its also kind of scary."
What's driving the trend?
Agents say a strengthening economy is clearly increasing the demand, but so is a huge influx of new buyers and investors from across the border. Many property-rich Albertans have targeted the city, they say, as the next in line to experience the kind of huge upswing in property values that have swept through Calgary and Edmonton.
Indeed, strong western markets continue to fuel the housing market in general, helping to set a new national record in unit sales in the first quarter. Last month, the average price of a home in Edmonton was up 47.8 per cent from the same time last year. The increase in Calgary was 27.6 per cent, leading to a rise in the national average existing home price of 9.5 per cent.
In Saskatoon, Mr. Janzen said the past six months has seen a "significant increase" in investor activity, with buyers from Alberta, B.C. and even Ontario looking to lock up property in the areas outside the city and shopping for income-producing existing homes, as well.
"Anybody who is an investor has to have their eyes closed to not see the opportunity," said Mr. Janzen, although he does have worries about the market if the current boom continues for too long.
As well as out-of-province investors, many of the new buyers, such as Mr. George, are coming to the city to live. Many are natives of the province who left for jobs in Alberta several years ago, but are returning now with families, looking to lower their cost of living and slow their pace of life. Mr. George, who grew up near Lloydminster, said he likes the city's smaller size.
Gary Busch, a real estate agent with Century 21, has seen a steady stream of Albertans in his office this year. Just this weekend he closed three deals. All the buyers were from Alberta. Mr. Busch said many of his clients are professionals.
Elizabeth Christensen is one of the returnees. The Saskatchewan native came home to the province from Calgary last year, months after having her first child. Her husband Stuart, an electrical engineer technician, had four job offers in Saskatoon when they decided to make the move. She also is planning to return to work part-time soon as a nuclear medical technologist.
"Living in a big city was just a big hassle," she said. Her husband has reduced his commute to 15 minutes from one hour and they paid off their debt with the money they made selling their home in Calgary.
Being careful
Homeowners are in an increasingly cautious mood when it comes to borrowing.
73 per cent have locked-in interest rates on their mortgages, up from 67 per cent last year.
Almost half of those who are ready to renew their mortgage say they will opt for five-year terms.
About 80 per cent of those surveyed said an increase of half a percentage point on their mortgage would not have a "significant impact" on their living standard.
SOURCES: CAAMP, ELIZABETH CHURCH
