Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000

 Jim Reid, Broker, (905) 731-2000

 

 

 

 

 

NEWSLETTER'S MISSION

INSIDE THIS ISSUE

1. Newsletter's Mission

2. GTA Under Pressure?

3. Canada Under Pressure?

4. Clients Make Profits!

 

 

 

 

"Thanks Jim! You were right again. I'm glad I switched my RRSP's into bonds and money market funds well before the crisis."        (&ldots; real estate client phone call Sept. 19, 2008)

The mission of this newsletter is to periodically provide you with timely "key real estate and economic data and information".

My 13 years as a realtor is complimented by many years in corporate marketing and economic forecasting.  It was this business experience and economic expertise that enabled me to alert my clients in August 2007, and warn them in April 2008, concerning the financial markets' structural instability and the imminent dangers in the stock markets.

In addition to keeping you abreast of current real estate conditions, trends and forecasts, this newsletter will hopefully give you a different perspective than what you will get from biased press releases and media reports.

Of course, I hope to benefit from this newsletter as well. It would be helpful if you passed it along to family, friends and acquaintances.

Also, I'm relying upon you for referrals for my real estate services.

My clients each receive two free tickets for a Caribbean Cruise* when I buy or sell their home. NOW, I'm extending this fabulous trip for two to those who provide me with successful referrals.

( * some conditions apply)

 

GTA Under Pressure?

 

 

 

 

 

 

"The CMHC can't hide their accelerating default rates much longer."

In many GTA neighborhoods, the market has stomped on the brakes. Unit sales are down 50% in many areas and August GTA unit sales were down 21%. Average GTA selling prices have slid over 8% since prices peaked in April. The 12-year Toronto real estate boom is over.

In 1996 in the GTA, 55,779 homes sold for an average price of $198,150. By the end of 2007, annual unit sales peaked 67% higher at 93,193 homes and by April 2008, the average selling price peaked 101% higher at $398,687.

My estimates for 2008 are 78,000 sales at an average price of $384,000, i.e. units down 16% this year and prices up 2%.

A mortgage company economist recently forecast 83,000 sales in 2009 at an average price of $377,000. My estimate for 2009 is 65-70,000 sales and an average price close to the $352k reached in 2006, i.e. a 6.9% decline.

A significant portion of GTA unit sales growth has been condos. Resale home sales are more normal, although the days to sell will likely rise back up from about 42 days to the more historical 60 days.

Also, next year's price decline may only be one price point, ($25k), which most homeowners easily exceeded during the past 5 years.

So, what will be causing this market adjustment?

Buyers know that prices have risen too high in the GTA because of panic buying and excessively generous credit terms: 40 year, 4%, mortgages and 5% down payments!  Economic fear and uncertainty are barriers to buying.  Buyers will only pay discounted prices.

Also, when prices rose 6-9% each year whilst mortgage rates were only 4%, the equity appreciation for homeowners was extremely profitable. But, with 2009 price increases less than mortgage rates, equity growth will be very low. Thus, sellers may be willing to drop their prices to cash in on their paper earnings from the boom period.

Also, the CMHC can't hide their accelerating default rates much longer. They have forestalled many foreclosures by several months. Also, the Toronto-Land-Transfer-Tax-Grab has severely dampened re-sales. The GTA is indeed under pressure!

 

CANADA UNDER PRESSURE?

 

 

 

 

 

"Canada is not likely to be as seriously affected by the economic crisis as the USA."

It has almost become a mantra &ldots; or a prayer? "Canada is not likely to be as seriously affected by the economic crisis as the USA."

Sounds positive, doesn't it? But don't be deceived by the political and media spin. The USA is in real trouble - and the global economy is holding onto the eagle's tail feathers! Smart "CDN Beavers" should head for the safety of their lodges.

During the next few months, we can expect central bankers around the world to pour $trillions into the economic whirlpool to try to slow it down, but I'm not confident they will be able to hold back the inflationary spiral at the other end of the whirlpool.

Unfortunately, the central bankers didn't adequately increase money supplies, so the financial sector found ways to create more credit during the global economic boom.

I haven't read anything to indicate that the central bankers, the private bankers or the financial sector have figured out the best way to get things fired up again. In fact, they may even make things worse by crippling their industrial clients.

I would have hoped that after 50 years of bankrupting millions of their small business clients that the banks would have finally learned how to turn them around instead. We need turnarounds - not bankruptcies.

Unfortunately, our government has lowered corporate taxes, so as our economy contracts, corporate wage slaves, civil servants and homeowners will have to fill the coffers.

MPAC just raised my property assessment 34% over the next three years. You can bet the mayor won't cut the Mill Rate. So guess who is going to end up paying for the mess we are in?

 

CLIENTS MAKE PROFITS!

 

 

 

 

Any results achieved that are better than other realtors are PROFITS for my clients.

Did you know that the average of selling price to original, (before price reductions), list price is only 93-94%, and that many deals are done at only 90%?

Did you know that for the past 10 years my average is over 97% and for the past two years it has been 98 and 99%? Do the math. My clients profit much more than the clients of the "high-volume" sales representatives.

Did you know that the average home sells in about 42 days, and if it doesn't sell by then, the average time jumps to over 100 days?

My last 9 sales all occurred within 2 weeks? Thus, my clients' uncertainty and stress was greatly reduced compared to most other sales reps.

Have you ever heard of a sales rep. telling the Vendor to raise their Listing price? In over 60% of my Listings, I've "Listed" their property at a price higher than they would have accepted. This has led to extra profits for my clients on many occasions.

With more than 16 personal web sites, over 80% of my Vendor's buyers viewed the property first on the Internet.

To PROFIT in this new real estate market, you need a professional marketing expert and a real estate broker&ldots; not just a sales rep.!

 

NEXT MONTH:

TAKE ADVANTAGE OF THE FINANCIAL CRISIS!