Casey Ragan

I just read a great article from my Broker/Owner of RE/MAX Hallmark Realty, that sums up our current market perfectly.

"BUY when most are selling and SELL when most are buying.

Simple words to live our financial lives by. In spite of being familiar with these words, many people get caught up in the frenzy of a group with their actions. Years ago I recall my first experience with group dynamics when buying a commodity. In this memory, it was GOLD. In the early 80's I remember seeing people lining up on Bloor Street in downtown Toronto to purchase GOLD. As I recall - the price of GOLD was going through the roof and the masses (hyped up by the press and others) were anxious to get in on the action before the price got too high. Sensing a great financial opportunity to make some money by speculating or trading on the price of GOLD, people who never had traded were now lined up to pay money for the opportunity. You guessed it, soon after observing the lineup the bottom fell out of the GOLD market and thousands were left with worth less trinkets and their memories.

Earlier this year I recall another group queue on Bloor Street. This time it wasn't GOLD people were queuing up for, but expensive (per sq foot) condos soon to be built in a prime Toronto location. I wasn't involved but I was told Realtors were actually paying surrogates $1,500. to secure a spot in line for them. Many spent several nights waiting for the opportunity to buy. Most I suppose, but can't say for sure, were buying in the hope of speculating on the rights to the units. This project, like many - wasn't scheduled to close for several years and for sure prices would be higher down the road was the group rallying cry.

I hate line ups of any sort - especially when I am lining up to hand over some of my money for a group traded commodity. When I see lineups it usually is a good indication to me that things are primed to go south for that product or service. Anytime speculators get involved, good things do not happen to the group. Which leads me to today's real estate market.

BUY when most people are not buying. That's today's real estate climate. People know that any long term investment in real estate will pay off for them. Why wait for the crowd to get back into the real estate action? There are fantastic opportunities to own great Toronto residences and investment properties today. Low mortgage rates, a good supply of product to choose from and lower prices all add up to a very good real estate environment.

And just think, you don't even need to line up."

Ken McLachlan, Broker/Owner RE/MAX Hallmark Realty Ltd.

So buyers, TAKE ADVANTAGE!!

For more valuable real estate information visit my website www.TheCondoLife.com.

If the cup of coffee you were drinking on Tuesday morning didn't wake you up, the headline on the front page of the Globe and Mail most surely did.

The headlines screamed "Housing sales hit 20-year low as real estate slump widens" followed by huge sub-head noting an 11 per cent decline in prices and a 44 per cent drop in Ontario housing sales in large RED print, based on the December 15th press release issued by the Canadian Real Estate Association.

The only problem with the article is that it is incorrect. In the third paragraph, the author writes "Between May and November, the average price of an existing home in Canada fell by 11 per cent, matching the drop in 1990 that coincided with the onset of a painful recession. Housing prices would go on to fall about 20 per cent and it would be another decade before they managed to make new highs."

Unfortunately for the Globe, there was no 20 per cent drop. According to the Canadian Real Estate Association, the Canadian average price actually rose approximately 15 per cent from 1990 to 2000. There were three moderate dips in housing values in the decade - 1990 (3.4 per cent), 1995 (4.6 per cent), and 1998 (1.5 per cent). Average price in Canada has climbed consistently since 1998. It's also important to note that the decline in national housing values have typically been modest and have bounced back almost immediately. Finally there are no two consecutive years of falling prices.

While the national housing picture has been a picture of stability, average housing values in Ontario have seen slightly more volatility over the past 27 years. There have been six decreases in average price noted - with five of the six occurring between 1990 and 1996. Prices fell 17 per cent during that time frame, after climbing a phenomenal 70 per cent between 1986 to 1989 ($107,158 to $182,186). Residential average price has been on an upward trajectory since 1996 - the longest uninterrupted period of growth since 1980.

Based on our comments, the Globe and Mail has printed a correction in this morning‘s newspaper, page A2

So now that the folks at the Globe have been straightened out, we shift our focus to the challenges today's economic realities are bringing to the housing market. Truth be told, there is not a sector - not even gold - that has not been hard hit by economic turmoil in recent months. Real estate has held up remarkably well, in light of current market realities. We need to see some economic stability - and a recovery in consumer confidence levels - before we can expect housing markets to rebound. Job security will be key.

Inventory will also play an important role. If inventory levels subside, we could see stability return to housing values. To illustrate, new listings fell seven per cent in the Greater Toronto Area in November. If this trend continues, and existing inventory is absorbed, housing values may remain relatively stable in the year ahead.

I'd like to conclude today's communication with the story of a hot dog vendor in Chicago who sold the very best hot dogs by the side of the road. His business was booming, people loved his hot dogs, and his business steadily increases month after month. The man loved his business and believed in the need to provide great food at a great price.

This man was so busy advertising and selling his hot dogs and making lots of money, that he didn't even have time to read the newspaper or listen to the radio. Consequently, he never heard a word about a predicted recession or the need to cut back to save for the potential economic slowdown. As long as he continued to offer his delicious hot dogs, his customers bought them. He kept selling, and they kept buying.

Then one day his college educated son told him that an economic recession was surely coming. His son told him that people wouldn't have enough money to buy his hot dogs. The successful hot dog vendor believed this, so on his son's advice, he cut back on his advertising. Additionally, he started ordering less supplies and product, because after all, people would be cutting back soon.

He even went so far as to take down many of the billboards that lead to his roadside stand. And sure enough, people stopped coming to him. People stopped buying his hot dogs, and he eventually went broke.

Then he thought to himself. "How smart my son is in predicting this."

Don't be influenced by what you read in the newspapers or hear on your television. It's true that market conditions have changed, but human nature has not. Real estate is one of the largest investments people will make in their lifetime. It's also one of the safest. Get out and spread the word. If you bought a home in 1980 worth $67,000, that property is valued at over $300,000 today - an increase of 350 per cent and the profit is capital gains exempt. It's no wonder that Canada has one of the highest homeownership rates in the world, at close to 70 per cent.

No matter what the investment community will tell you, you can't live in your mutual fund.

For more real estate market information visit my resource centre at www.TheCondoLife.com.

I see great opportunity in today's market for buyers and sellers (looking to trade-up). I think that the negativity presented by the media is clouding the judgment of buyers, investors, and sellers moving-up to better properties.

It is true that sellers were getting a greater return in 2007, but at the same time, were paying more on the buyer's side.

Due to super low mortgage rates (lowest in recent history), buyers and sellers (looking to trade-up to a better property) are experiencing the best market in over 10 years.

Investors and buyers dream of the current market conditions, so why all of the negativity? Take advantage of the current market, as it might not be this way until 2019!

For more market information go to my Resource Centre at www.TheCondoLife.com.

This is an article from Globe and Mail website by Madelaine Drohan. This is a great read and very positive!!!

Madelaine Drohan has covered business and politics in Canada, Europe and Africa in the last 30 years. Twelve of those years were spent at The Globe and Mail, first as a business reporter, then European correspondent and finally economics columnist. She is currently the Ottawa correspondent for The Economist and also writes for the Economist Intelligence Unit.

Crisis? What crisis?

MADELAINE DROHAN

Globe and Mail Update

December 4, 2008 at 12:32 PM EST

OTTAWA - Canada may be in a political crisis, but it is not in an economic one. Why do so many people prefer to believe that we are?

In the rancorous debate in the House of Commons last Tuesday, the words "economic crisis" were uttered 51 times by members of all political stripes as they wrestled for control of the country. On Bay Street and Main Street there is constant talk of economic meltdown and frequent references to the Great Depression as if we are poised on the brink of a similar precipice.

The facts don't back this up. There are trouble spots, certainly, especially in the North American auto industry and the forestry sector, both of which were already in decline long before banks started toppling on Wall Street. And there is no denying that the U.S. economy is in bad shape, which will eventually have some as yet undefined impact here.

But the latest figures show the Canadian economy was still growing through the end of September, unemployment remains low and most forecasters are calling for a modest contraction next year, which while unpleasant is hardly a nightmare scenario.

Clearly there is something to be gained from saying we are in a crisis, even if we aren't.

The political motivation is easiest to identify. The Liberals, New Democrats and Bloc Québécois could hardly say they wanted to topple the Harper government because it intended to cut their funding. That would look too self-serving to voters. Blaming the government for not reacting to a non-existent crisis is a much easier sell.

The Conservatives, meanwhile, started out dealing with the facts, insisting that the current situation did not call for extraordinary measures. This message was somewhat spoiled when they also tried to argue that hard times called for partisan cuts. By mid-week they'd given up all pretence of defending reality and were invoking the non-existent crisis as a reason that the country needed the stability only they could provide.

The only consensus among the warring politicians was on the supposedly dire state of the economy. There was a competition to outdo each other in misleading and irresponsible statements about where the economy was heading.

John F. Kennedy, the late U.S. president, once said that the Chinese character for crisis had two elements - danger and opportunity. It is the latter that explains why many companies and indeed whole sectors are backing the crisis theory now.

The banks were in there early, calling for extraordinary government aid because of the impact on Canada of the global economic crisis. The Harper government is in the process of borrowing $75-billion dollars, ratcheting up interest-bearing debt in the process, in order to buy mortgages from the banks. Somehow this generous gesture on the part of Canadian taxpayers, who might well have wanted to spend the borrowed money on other things, has slipped below the radar.

The North American car makers also have their hands out, claiming they need help to survive the crisis, even though it has been clear for some time that they were in deep trouble of their own making. "Help us out of the hole we dug," is not a winning argument when it comes to prying loose government money. So the crisis is invoked yet again, in both the U.S. and Canada.

The car makers are far from the only ones who gain from a crisis atmosphere. All those infrastructure projects that the federal and provincial governments have vowed to speed up mean extra work for engineering firms, designers, suppliers and builders. Who among them would dare mention at this delicate juncture that things really aren't that bad?

Then there are the media. Alarmist headlines and stories are so much more fun to publish or broadcast, regardless whether they reflect the facts. Bad news sells, is the maxim. Journalists don't like to think that they are selling a product, but their corporate owners are keenly focused on the bottom line.

That may not mean there is overt pressure to consciously slant coverage towards the negative. But every journalist worth his or her salt knows subconsciously that a crisis story is more likely to hit the front page or lead the broadcast than some namby-pamby item about things going better than expected.

This deluge of bad news and catastrophic predictions eventually seeps into the public consciousness, frightening people into spending less and saving more, thus helping to create a real crisis. That said, it was heartening to see an Ipsos-Reid poll this week in which 56 per cent of respondents said they thought doomsday predictions of severe recession in Canada were exaggerations.

There is still common sense to be found in Canada, just not among our political, business or opinion leaders.

For more market information, check out my Resource Centre on my website www.TheCondoLife.com.

I'm part of a network of Condo Experts, North America wide. If you are interested in what other experts have to say about condo life, and its benefits, across Canada and the U.S., check out www.condobenefits.com.

For Toronto condo news, listings and other valuable information go to my site www.TheCondoLife.com.