Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000  Jim Reid, Broker, (905) 731-2000	INSIDE THIS ISSUE: MARKET FACTS: 1. Fractional vs. Timeshare 2. Hot Features 3. Market Report 4. Economic Report * May Price reaches 2008 market peak at $396k * YTD May unit sales still down 15.8% * May Listings down 21% from year ago May June-July Fcst: Low Stock = Flat Prices 1. Fractional vs. Timeshare? With 78 million baby boomers edging into "empty-nester", semi-retirement or retirement lifestyles, developers are panting at opportunities to provide second "part-time" residences for this prosperous generation. But historically, vacation properties have been difficult to finance both from development and ownership contexts. Thus, creative schemes have arisen to raise funds for these projects. "Timeshare" has experienced some success, and now "fractional ownership" is the new boy on the block. The key element of "timeshare" is that people pay $10,000 to $60,000 for the right to stay for a fixed period of time at fully serviced resort properties. Depending upon the dollars given up front, the participants are allocated "points" that they can spend each year at different locations in different quality acaccommodations. There are also per diem charges to pay at these resorts. "Fractional" ownership is similar to condos, but you get to use your unit for a set number of specific weeks per year. The cost/week varies with the season, and the total annualized value of the unit usually comes in at 50-75% above comparable properties. Also, there are per diem fees to pay during occupancy. There may be a slightly better resale market for "fractional" than "timeshare" units. The benefit of fractional ownership is that since you can buy an equity portion of a luxury unit in an exotic locale, there will be mortgage financing available. One can use a $million unit when they want it at a fraction of the purchase price. There are risks that the developer can't sell enough units to get his project off the ground. Assurances based upon the intrinsic value of the land may sound legally ok, but the numbers after court costs unlikely offer any real protection for your down payments. I'm pretty cautious about these two "second property" schemes. They don't add up for my semi-retirement lifestyle that wants a place for three to four months a year in the tropics. I think a purchase in a popular resort with a good property rental management team is safer. Now why doesn't someone offer a "three month rotating" fractional with a rental and property management back-up? 2. Hot Features? So, why is it that one recent sale in Heritage Estates took 281 days, 2 agents, and 2 price reductions to sell at 20% below original list price? Yet another one sold in 11 days with a 4% price reduction. I had sold both properties previously, but this time I was only involved in doing an accurate market evaluation on the second property. Clearly, the first house was substantially over-priced when it was first listed last August. But even when the market recovered, it still took a $70,000 hit from the new proper market price. The owners lost a lot of money by not investing in its' potential selling features. The second property, which was in a poor location, flew off the market at only $5k less than I feel it was worth. This was because its' selling features had been optimized. The slow seller was clean but had no furnishings and hadn't been painted in more than four years. It had a nice basement apartment with a walk-out, but the kitchens and appliances were all over ten years old. The bathrooms were all original and the light fixtures were dated. For $5-10k, the house could have been repainted and staged including contemporary lighting. This 1-2% reinvestment in the property would have brought about a sale at least $75k above the actual selling price. I don't know if their agents discounted their commissions, but it wouldn't have helped the Vendors. The other property recently had a new kitchen, new painting, new light fixtures, new window décor, new powder room, some new flooring, new landscaping and updated maintenance items costing about $100k. The house and property looked great! The sale hadn't been planned. But they recovered all of their costs plus commission from the price they paid fairly recently. Bottom line - your property must look great to achieve great results!  3. Market Report WOW! May unit sales exceeded May of last year and prices are now at last year's market peak once again in the GTA. What recession? So much for my positive spin - Two good months in real estate can't be relied upon for longer-term projections. These strong numbers don't reveal that listings are down 21% and YTD unit sales are still down 16% from last year's market. The fact is that there are just as many buyers as last year due to the low interest rates, but fewer people are interested in selling right now. This is helping to hold up prices. Also, there are two markets operating at this time. The clean and updated properties are going fast at top dollars, but the rest are just sitting and low bank appraisals are killing lots of deals. Also, high ratio mortgages can't cover renewal penalties and even more deals are collapsing. (I even had to cancel one of my listings because of this.) The number of price reductions, and discounts from asking prices, are at record levels. Vendors are looking for commission discounts instead of looking for agents who can effectively create a higher perceived value and negotiate a higher selling price. "Penny wise and pound foolish" seems to rule listing presentations. I'm still getting 97% or better for most of my clients, but in Heritage Estates my competitors are losing 4-15% for those who didn't list with me. It feels like a hard hitting hockey game, but then I enjoy the challenge. 4. Economic Report At the beginning of March I sent each party leader and the Finance minister a 16 page macro-economic assessment with 20 fiscal policy recommendations. The letters I got back this time seemed to indicate they actually read my report - but probably not! On page 3 I explained how and why their January $30b budget deficit estimate should have been $50b. Finally, in June the Minister reworked his numbers 66% to my expectations. (Gloat, Gloat) Unfortunately, the expected speculation in the stock markets isn't based upon any tangible and reliable economic data. The data they are using is the results of other people's gambles. The fact is that China is bailing out of Yankee dollars by buying up minerals, commodities and croplands around the world as fast as they can. The US deficit exceeds 100% of their GNP, and they have created enough extra currency to make the German Weimar Republic blush. "Experts" tell the media that (Hyper?) inflation is 12 to 18 months away. Perhaps they want this much time to borrow as much as they can and then transfer their assets to gold and property before interest rates take off? (I've heard that more millionaires are made during bad times than good times&ldots; but I think there are more bankruptcies as well.) Anyway, stockbrokers and their clients may have to work this summer, so we'll see the market do some more dipping and diving like a confused square dancer going in a circle. I don't think the Canadian banks have fully come clean yet, (there are likely some nasty losses being hidden off balance sheets somewhere), but they are sure making money from ordinary consumers nowadays. Our car-loving premier Dalton has a massive tax grab coming and our car-hating mayor Miller is about to stick it to his bike-riding constituents. Stevie in Ottawa is madly trying to hold power while he plans the biggest tax raising party in Canadian history right after the 2010 lotus land Olympics. We are all on our own. Anyone know if the gun registry still applies?