Casey Ragan

In his February 19 Toronto Star opinion-editorial piece, TD Chief Economist Don Drummond tackles four prevailing myths about Canadian banks.

Chances are, you've heard one or more of the following statements over the past few months:

· Canadian banks aren't lending;

· Banks are hoarding cash;

· Banks have been bailed out with taxpayers' money and

• the Pursuit of bank profits is a detriment to the economy.

If you subscribe to the idea that there's a grain of truth in every myth, Don Drummond offers an explanation for how these perceptions turn to beliefs, along with a rebuttal fit for any dinner table conversation.

"When something is said often enough, it has a way of becoming an accepted fact. My intent with this article was to set the record straight on a number of issues currently being raised regarding Canadian banks," says Drummond.

Doom and gloom about the economy has been saturating the media for the better part of a year now, while any positive stories about how the Canadian system is different always seem to take a back seat. Insightful economic pieces like this one are useful backgrounders for any conversation; whether it's with your spouse, your next-door neighbour, or a customer.

As Barack Obama stated last week during his visit to Ottawa, "I think Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven't always been here in the US. Its possible for us too to have a vibrant banking sector without taking some of the wild risks that have resulted in so much trouble on Wall Street." (CBC The National News interview)

Casey Ragan

TORONTO'S CONDO SPECIALIST

www.TheCondoLife.com

I think I should share the recent statistics, that were recently presented to me by my Broker. In January 2008, the average sale price for our Brokerage's listings was $387,000. The average sale price this January was $412,000. Even though the media will have you believe that prices are still down, you can see that is not the case.

This statistic is important, as my Brokerage, RE/MAX Hallmark Realty Ltd. has completed the most transactions in Toronto in the past few years. I believe that gives this statistic credibility.

So don't believe everything you see on TV or read in the newspaper. GTA averages aren't a true representation of the real estate market in Toronto.

Casey Ragan TORONTO'S CONDO SPECIALIST www.TheCondoLIfe.com

This is a good article on how buyers should think in a buyer's market.

Here's an excerpt from Gary Keller's new book:

"A buyers' market should be just that-a buyers' market. It's not a fence-sitting, waiting, loitering, delaying, dawdling, postponing, vacillating, hesitating, wavering, faltering, pausing, foot-shuffling market. It's a buyers' market. By its very name it means buyers should be doing one thing and one thing only-buying. So where are the buyers, and why aren't they buying?

The great irony of a buyers' market is that even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. The media becomes the excited purveyor of negative news and uninformed advice, and buyers buy it all. Actually, it feels like the only thing they're buying.

Their reluctance is ironic since not so long ago buyers were incredibly excited about buying-and it was a sellers' market. Prices were escalating and it was perhaps one of the most difficult times to buy value and yet people were buying like there was no tomorrow. Buyers were afraid of losing out by not buying, even though the advantage was all to the seller.

Now a shift has occurred. Fear is still in the driver's seat but the tables are turned-the fear of paying too much seems to stop most in their tracks and immobilizes them. When they should have been afraid of paying too much they weren't, and now that they shouldn't be afraid of paying too much they are.

It's one of the great paradoxical moments of any market and the herd instinct at its most pure. Reluctance in the face of great opportunity becomes an agonizingly defining characteristic of a shift.

There are two types of buyers-those who believe they can time the market and those who are always in the market and believe timing will find them. History supports the latter-it says that if you're always actively paying attention, although you may never sell at the peak or buy at the bottom, you can buy right and always do well over time.

Logic says that you can't predictably time the market to be able to buy at the absolute bottom and sell at the absolute top.

A simple technique to prove to that buyers (or sellers) can't perfectly time the market, is to do this easy demonstration: Take out a blank sheet of paper and pen. Now, starting at the top of the paper, draw a line going down and at the same time ask the buyers to stop you when the market has bottomed out.

As long as your line keeps going straight down they won't be able to. The moment you start back up, they'll say "there!" but of course they missed the bottom. Now, keep drawing your line up while asking them to tell you when the market has peaked. Again, they won't be able to tell you until you've rounded the top and started back down. Then they'll say "there!" and once again they'll be behind the peak.

This should be a moment of truth for them. Buyers cannot perfectly time a market-no one can. The smartest people know this. They play in the safe zone. The safe zone is where smart people plan to buy and sell. Anyone who buys at the top of a market is just unlucky and anyone who buys at the bottom of a market is just lucky.

People who buy in a buyers' market are the smart ones. They aren't looking for a killing because they know that's a matter of luck, not planning. They're looking for a sound decision with a predictable result and, therefore, ask the question: "Has the market dropped enough now to make a sensible purchase?" More often than not, when they're asking this question, they're already in the safe zone and the answer is yes.

Once the market settles or shows any sign of improvement, opportunities start slipping away. The very moment sellers no longer have to make concessions, they won't. And, since there is almost always group think at play with all of the waiting buyers, the pent-up demand will show back up and buyers may be faced with mounting competition for the best homes available.

Buyers who choose to wait until prices come down more are also gambling that interest rates will hold steady or drop. What is not widely understood is the impact interest rates can have on the real monthly costs of home ownership. Even a 10 percent drop in home prices is immediately nullified by a mere 1 percentage point increase in interest rates on a 30-year mortgage loan.

Falling home prices are a great opportunity for move up buyers. Even though your home sale price may be lower, the smaller loss at sale can be compensated by greater savings at purchase. If home prices dropped by 5 percent, here's what it could look like if you decided to trade up:

Old home price = $200,000

Sell at $190,000 = $10,000 less

New home price = $400,000

Buy at $380,000 = $20,000 savings"

By Gary Keller and Dave Jenks and Jay Papasan | January 2009

For more Toronto real estate news and advice, visit www.TheCondoLife.com.

All of the senior agents I speak with (which have experienced the ups and downs of our markets over the past 30 years) and the recent CMHC market forecast I recently attended, all strongly believe that for the next 6 months buyers should take advantage of our current market.

They don't see the market staying the way it is, as in past recessions. Previous real estate recessions had elements in it which we do not have. Higher interest rates, higher unemployment and higher inflation to name a few. This market is different. When the market turns around, prices will increase, and mortgage interest rates will increase. This slower market will be short lived.

For the first half of 2009 buyers will have an incredible real estate window in front of them. An amazing opportunity to purchase attractively priced properties than in past years, incredibly low mortgage interest rates, an abundance of mortgage money for qualified buyers is right in front of us.

Now is the time to buy a property, to move up, to add to our real estate investment portfolio's or to begin one. Homeowners who are able to use equity from their homes should consider buying an investment property of some sort. Clients who purchased properties in the early 2000's and who need a bigger family home should do it now.

The real estate opportunities of the next few months are too good to let go by. The "Window of Opportunity" in our present Toronto Real Estate market should be taken advantage of.

Real Estate is always a great investment, and now is the best time in years to buy.

Casey Ragan TORONTO'S CONDO SPECIALIST www.TheCondoLife.com

Toronto's Winterlicious 2009, runs from January 30 - February 12. The wildly popular prix-fixe menu promotion, also includes cool culinary events, cooking classes and more guilty pleasures. There are 150 participating restaurants, at affordable prices. Reservations start today. Bon appétit!!

http://www.toronto.com/winterlicious

www.toronto.ca/special_events/wintercity/winterlicious.htm

"TORONTO'S CONDO SPECIALIST" Casey Ragan www.TheCondoLife.com