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

INSIDE THIS ISSUE: MARKET FACTS: 1. CONDO LIVING OUTLOOK? 2. CHEAP MORTGAGE RATES? 3. MARKET REPORT 4. ECONOMIC REPORT 1. GTA UNITS SALES SLIP 7.5% in April and 20.4% YTD. 2. GTA AVG. PRICE jumps up  6.5% in April to shrink YTD loss to 2.9% and the loss from the market peak to 7.6%. 3. 30% fewer April listings wipes out over-supply. 1. CONDO LIVING OUTLOOK? Condo living offers an array of lifestyles in an increasingly diversified and complex market environment. Condos come with aristocratic appointments and services down to basic finishes and no services. Prices range from under $200k to over $2m. The average downtown, (C01), condo has 600 sq. ft., 1 bedroom, 1-4pcs washroom, a $300 condo fee, $196/mo. taxes, and 1 underground parking spot for $320k. This $300 condo fee is less than home depreciation or maintenance costs. But, this average unit costs $533 /sq. ft. compared to under $200 /sq. ft. for resale homes that sit on land vs. a piece of air in the sky. In addition, a resale property's land is always owned vs. the piece of air occupied by a condo that has no value when the building is eventually demolished. But, living in the air has fewer burdens than on the ground. Thus, the real essence of a condo is LOCATION, LOCATION, LOCATION! The other primary appeals to condo owners are the absence of household maintenance and the compact living space. There is a general feeling that condo owners tend to get out more to restaurants and cultural events, travel more and use their cars less often. Recent renovations of old buildings into Lofts have helped alleviate the "small-space" feeling of most apartment building condos. The market for condos is often clustered around key locations in the GTA and in resort areas. The resort units offer many advantages over the upkeep required by cottages and chalets. The boom in construction of GTA condos may be reaching short-term saturation, but prices have held a bit better than resale homes and even unit sales have slowed down to a lesser degree. Aggressive government taxation policies are likely influencing many people to downsize into more economical condo lifestyles. During the early stages of this economic downturn, the brand new pre-construction and in-process condo building developers are offering excellent purchase incentives. Daily, I'm getting e-mails from them to entice my clients. Wouldn't it be nice to own a Downtown condo, a Resort condo and a Caribbean condo? Now that would be a pretty neat retirement lifestyle! Why not "Call Jim" to get started.   2. CHEAP MORTGAGE RATES? So, the May 1st. variable rate mortgage is at 3.25% and the 5 yr. fixed rate is at 3.95% at your grinning banker's office. These rates are great for first time buyers, and for those whose current mortgages are about to expire. But, for the other 90% of mortgage holders, we are left holding the bag. While rates trend upwards, the Banks apply their 3 months interest penalty to lock-in or rewrite a mortgage due to upsizing or downsizing your home. However, if you want to get out of your present mortgage nowadays, the banks are digging out the tiny 4pt print clause somewhere in your mortgage contract that you haven't read, that allows them to penalize us the full interest differential. In other words, if they stood to make an extra $30k interest at the old rate, you will have to pay them this amount to get a new mortgage at the low rate. Also, if you got a discounted rate, they use the old posted rate to calculate your penalty. So, if you sell now and don't get a new mortgage with them, you will pay a very heavy fine. If you transfer the remainder of your mortgage and renew for 5 more years, they will blend the effective interest rates. Thus, if you are planning a move now, be sure to visit your mortgage lender as your new home may cost you much more than you expect. Also, if you can pay down your principle by a lump sum, you might be able to cut some dollars from the penalty. You would think that the government would have made some provision to counteract this money grab in their "stimulus" package? But, with their usury laws only kicking in at 60% interest per annum, homeowners don't appear to be being robbed by the bankers. By the way, the new home builders association figures McGinty's blended tax will grab an extra $2.1 Billion from new home buyers. Boy, I can't wait to buy a new home to support our government!   3. MARKET REPORT A 30% reduction in new listings in April quickly created a more balanced supply-demand ratio in the GTA. This helped stimulate an average month-to-month price rise of 6.5% vs. the 4.8% rise last year. Thus, YTD numbers are tracking a bit better with prices off only 2.9% from 2008's average and unit sales remain down 20.4% during the first quarter. Historically during falling economic times, house prices will take three steps down and one step up. In April, we saw one of these "step-ups" of $23k.  The average price in April of $385k is now 12% above the bottom hit in January 2009, and just 3% below the 12-year market high reached last April. Overall, Vendors should be pleased with these holding high prices. April unit sales were down only 7%, but it would still be prudent to ensure you have sold before firming-up on a purchase. Locally, Heritage Estates sales are slow, but two properties that have been on the market for 751 and 270 days finally sold at prices 15% below their original asking prices. I expect this market will do well until July. My primary concern is how long GTA real estate markets will hold up before the international economic pandemic reaches Canada.  Global economic reports are far from cautiously optimistic, although there is a growing consensus that the USA residential real estate market has most likely hit bottom. On the other hand, the commercial real estate market could fall as the manufacturing sectors respond to cutbacks in consumer spending levels. I see a bumpy ride ahead.   4. ECONOMIC REPORT Nowadays we are seeing the absolute naiveté of politicians when it comes to economic and financial matters. Also, the internal corrupt oligarchy within the Liberals expects to officially anoint their new leader without a democratic election by the membership. Canadian political party leadership is truly in desperate straights.  How can anyone bail-out Chrysler for over $2 billion and accept only 2% equity? This not only represents poor stewardship of our taxes, but also reeks of fiduciary irresponsibility. How can Harris, McGinty and Ignatieff succumb to this fraud! Chrysler already has been charged by Revenue Canada for slipping over $1 billion in taxes to the USA instead of Canada. These people cannot be trusted - period! And what about the GM bail-out? They are members of the same gang who just wear different colours. The global oligopoly in the automotive sector needs to be broken up - not held together. According to Statistics Canada, the 300,000 workers in this industry represent less than 2% of our labour force and produce GDP at a rate the same as an average Canadian worker. Our economy can easily absorb them into a new auto industry and other areas for much less than the billions we have been pouring into this sector. Heck, let them make helicopters! A key factor in our future economic growth will be to rearrange the global sourcing paradigm that spread like an epidemic in the multi-national corporate sector during the past 15 years. Secure countries with stable and educated workers will produce the high tech products of this century. This is an opportunity for Canada that mustn't be ignored. Canadian policies that attempt to protect the status quo will prove to be very expensive in the short-term, and thus delay our long-term growth into the new economy that will emerge out of the present cataclysm. Our economy will soon reflect the major cutback in consumer spending around the world. We mustn't believe that the recent movements of the stock markets are anything more than stock broker speculation using other people's funds.   OUR GOVERNMENT'S MOTTO SHOULD BE: "NO YOU CAN'T!" VS. THE USA'S "YES WE CAN!"