The real estate market in Saskatchewan remains very strong, with sales year to date up 22.7 per cent over 2019.

The median price is up just over one per cent, with new listings down 14.6 per cent. The market is definitely leaning to a sellers’ market currently.

What this means for sellers is that it is a good time to be putting your property up for sale. If you are in the market to buy a property, make sure that you have your financing in place prior to making your offer and minimize your conditions to make your offer as appealing as possible to the seller.

In the larger picture, it seems as though our real estate market has found a bottom and we are starting a move toward increasing prices and stronger market fundamentals.

We are now on the home stretch for our profit centre model.

Using the EL CP TAR model we have covered Equity, Leverage, Cash Flow, Principal Pay Down and Taxes.

Equity is the difference in what a property is worth, and what is owed against it. Leverage is using a little bit of your own money to purchase and control a property, and having the remainder of the purchase funds from another source (bank or private lender).

Cashflow is the money that is left over from the rents after paying all your bills. Principal Pay Down is that portion of the mortgage payment that goes toward decreasing your amount you owe on the property.

Taxes refer to the ability to save on your taxes through real estate investment, because the government wants to incentivize people to help provide and take care of housing for our fellow citizens. You can do this by depreciating your property and through other tax deductions related to the property. Always consult with your tax professional to create the right game plan for you.

This month we are going to talk about Appreciation. This is another nice profit centre. Appreciation occurs when the value of a property increases over time due to people paying more for real estate in general.

Appreciation can happen when a new commercial development is announced or if there is a large in-migration of people with a small amount of housing inventory.

Appreciation can be a little tricky though. If you are purchasing real estate hoping that it will increase in value, you are not investing; you are speculating.

Appreciation is nice but it should not be the only reason to get into a property. In markets like Toronto and Vancouver, there is currently a lot of appreciation in their markets which makes it seem like real estate investing is easy, because the prices seem to be continually increasing.

It is always a good practice to make sure that your numbers will work, even if there is zero appreciation. I have seen some people advertise a large return over a few years in a rapidly increasing market.

Again, this is not investing, this is speculating. Analyze your property using all the profit centres to make sure it makes sense from every angle. There is more to a good real estate investment than appreciation, but it can be a nice bonus to your real estate portfolio.

Next month, we will wrap up our EL CP TAR discussion with Reinvestment. Until then, have a fantastic holiday season. See you in 2021!

(Brad Chisholm is a Realtor and real estate investor based in Saskatoon Sk. You can find him at bradleychisholm.exprealty. com or brad.chisholm@exprealty.com.)

-Brad Chisholm