Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000  Jim Reid, Broker, (905) 731-2000	INSIDE THIS ISSUE: MARKET FACTS: 1. Property Comparisons? 2. Keeping the Tradition? 3. Market Report 4. Economic Report * Average Selling price slipped only $9k from 2008 average. * July units sales up 28% from depressed July 2008. * 36% fewer active listings and 18% drop in new listings in July * Heritage Estates average price YTD $659k.   1. Property Comparisons? Lots of local people walk into my Open Houses and walk out thinking their local property is worth way more than reality. Most like their own home and have a natural bias, but they often don’t have a good grasp of what truly comprises the property value to active Buyers or what factors affected the Listing price. They often don’t consider how much the property might sell below asking price or how much has been recently spent on invisible updates or upgrades. They also don’t know the many possible reasons, or the real reason, why the property is being sold. Realtors often make comparisons to other local properties, but they may have never been inside the house or know why the house was being sold in the first place. In fact, both properties may be the same design and have new kitchens and flooring. But the costs of these updates could have totaled $30,000 for one property and $115,000 for the other. Even landscaping or swimming pools can be misleading and their value to a purchaser can range from unimportant to very important. Thus, even though there may be active Buyers in the property’s price range, the preferences and tastes of the Buyers often don’t fit the available properties. A fair guideline for homeowners is to compare what they paid for the house to the local average price at that time. (I keep this data for my clients.) If the house maintenance has been done, the relationship to the current average for similar properties should apply. If there are no updates within six years, then the Buyer will deduct the cost to update from the asking price. (This is why “Home Staging” is very important.) If upgrades have been done, the valuation of the property is much more complex. Some expensive upgrades may only appeal to a fraction of the buyers. For example, brick to brick window replacements cost twice as much as new window inserts. The latter option is fine with the majority of buyers, especially if you keep the original colour scheme and mullions. If you’re upgrading the complete house you may price the home over the local market. A partial upgrade can lose value if you don’t do the most desirable upgrades first. Of course, you need to select competent trade’s people, but always go over your plans with your professional realtor before you start investing significant dollars in your property. We aren’t just buyers and sellers, we are also investment counselors. 2. Keeping the Tradition? At one time or another we have all seen homes that don’t fit into the local neighborhood. The brilliant designers of Heritage Estate’s diversified Georgian styles made sure the original home purchasers signed a covenant to keep the original exterior colours for at least ten years. By doing this they helped maintain the look and charm of the area as they completed each building phase. They created a community that is unique anywhere in the world. But over time, not everyone kept this vision. White windows were 10% cheaper than cream. Subtle garage door colours became distinctive bright or dark colours. Cultural preferences overtook classic heritage on exteriors instead of only the interiors. The area has become less distinctive and more eclectic. These changes have held back the full potential market value of all homes in the area. I encourage local homeowners to bring back the traditional elegance to their exteriors as you can afford it. The original “Widow’s Walks” have almost all disappeared because it was costly to maintain these wood railings. Yet there are now long lasting plastics and metals that could restore these wonderful architectural features. The top lumber suppliers still carry the exterior dentil molding trim sections and lots of people have found plastic pillars that look just like the originals. Why not get a lovely new set of distinctive coach lanterns for your home this Fall? Inexpensive replacement portico trim kits can be had at the lumber shops. Just take in a photo of the old one. Be careful in your choice of new garage doors. Victorian and Georgian styles weren’t meant to mix in Heritage Estates. Many GTA neighborhoods never reach their full value due to non-conforming style experiments. Heritage Estates homes are substantially undervalued. This can be overcome by a return to Keeping the Tradition! 3. Market Report July 2009 produced a strong 28% jump in GTA unit sales over last July and average selling prices slipped only $9k which keeps us 1.7% ahead of the 2008 average. A key enduring characteristic of this year’s market is the 36% decline in active listings and the 18% decline in new listings. This limited supply is greatly influencing the strength of selling prices. It appears to me that there really isn’t a large excess supply of buyers, so we have a fairly balanced market. If listings significantly increased, then I believe prices would decline rapidly. The number of Buyers is likely somewhat inflated by the extra low interest rates. Most people aren’t buying the positive media and political economic spin for Canada and the USA. If they did then there would be many more new listings. People are more concerned about the news they aren’t hearing than the news they are hearing. (See Economic Report below) The local Heritage Estates market had only one MLS sale in July. Unit sales are still 44% down and the average price is about $659k. Discounts from list prices are often very high, so this suggests there is a strong reluctance to price close to the actual market values. Going forward I believe new listings will remain low as people who are able avoid getting involved in trading up or down during this period of uncertainty. The optimistic side of me has given way to the prudent side. I expect more economic clouds than economic sunshine. 4. Economic Report Regular readers may have already sensed that I feel the global economies have to go through another major trough before we see a steady period of economic growth. The questions are:”When will it hit, how bad will it be, and how long will it last?” But to answer these we need to understand, “What will get the recovery underway?” One powerful force is that now that the world is instantly connected, we have 6 billion people who have a lot of needs and limitless wants. They will force governments to make changes and work together. The other force is economics. The last fifty years has seen remarkable changes to the financial structure and systems around the world. Our present economic system is still a fairly new entity in historical terms. This new economic baby has been abused by greed, crime, profiteering, geo-politics and a basic lack of knowledge and understanding. Presently, the best minds available are trying to redesign the financial sector so that it can better serve the government and industrial sectors that in turn handle the needs and wants of people. Until they improve the present design, economies will be subject to the old rules and games. The traditional market rules of survival of the fittest and richest will dominate economic policies and drive us into the imminent next trough. With major portions of the global tanker, bulk and container fleets anchored in deep harbours, the products that keep industry active aren’t enroute. The second tsunami of USA sub-prime mortgage renewals is about to arrive. Commercial real estate defaults in the USA are apparently about to throw a major bunch of the small independent American banks into receivership. Unemployment rates around the world could take a major jump within six months. Canada is still fairly well capitalized, so we should ride through this second crisis as one of the least bloodied. We will likely see some bad times not far from home and in our major trading partners’ economies. As the global crisis escalates, (2010 – 2012?), the financial and economic powers will finally introduce new global economic structures – by 2013?