Mike Montague

I would be a hypocrite if I did not express at the same time that equal sympathy is due to those in the construction industry. The men and women who surveyed, cleared and graded the land, created the forms and poured the foundations, welded the steel frames and attached the aluminum outer shell. who designed and built the interior framing and installed the electrical, heating and pluming systems, tarred the roof and hung, taped and painted the drywall. Those who fabricated, warehoused and delivered the building materials and anyone else who gave their sweat blood and toil to the construction of those buildings that house the people who work in the automobile industry and who build all of our homes stores and offices and by their own hands created the skylines of our towns and cities.

Most of the above mentioned workers and many more are feeling the impact to their ability to earn a living from the economic slowdown we are in. Many find themselves having to put off the purchase or lease a new vehicle given the current economy and I know this directly impacts upon the automobile industry. It is a delicate system our economy, much like in nature if one species is negatively affected it is not isolated to them, it spreads throughout the ecosystem.

New construction is down considerably in the past two years which has resulted in hundreds of thousands of layoffs in the construction industry over the past 12 months across Ontario. Not headline news somehow but significant news to each of these workers and their families none the less. The impact to each of them and their families is as real and as significant as is for the families dependant on the automobile industry for their food and shelter. If the automobile industry and those it employs are worthy of a financial helping hand from the government, in fact from all of us, so then are the construction workers and anyone else who’s livelihood is or will be impacted. The very same economic changes pressuring the automobile industry to adjust its production to pre boom capacities once again are forcing others employed in the province of Ontario to do the same.

I worked in construction for eighteen years prior to becoming a real estate agent. The Sky Dome, Toronto Airport Terminal 2, Scotia Bank Plaza, Metro Convention Centre and Roy Thompson Hall are a few of the projects I was involved with. About this time every year, a week or two before Christmas a job foreman would call the workers together and hand out our pay checks. This was a standard Thursday afternoon routine only you knew that on one of those thursdays in the few weeks prior to Christmas there was likely a pink slip rendering you unemployed, usually until sometime in March or April. Ask anyone you know within the industry how familiar that sounds. During the recession of the early nineties there were more unemployed than working construction workers in Ontario.

I struggle to see how people working in the automobile industry hold seperate status above all skilled workers in Ontario. I do not in any way undervalue what they do, I only point out that what they do and what happens when they are no longer required to do it, is not exclusive to them in this province or anywhere else.

To everyone who gets out of bed and trades a piece of themselves for the food on their table, the roof over their head and the education of their children, union or non union, regardless of your title, I wish you the best of the season and remain hopeful that 2009 will see us moving in the direction of recovery.

Buy low, sell high, the universal principle of investment and if it were as simple to implement as it sounds we would all be reaping the rewards. The real skill is in best determining where the bottom of any market is before it passes by and it takes a few months of steady value increases to know we have hit it. It also lies in having the confidence to step up.

The logic one needs to apply is really no different than that used by a practical shopper in Wal Mart. When an item you have wanted goes on sale you snap it up, you don't shy away from it because the price has dropped. Perhaps if the headlines you've been seeing for the last six months read "Sweater market in trouble" then shopping for sweaters at any price tends to become an unnerving experience. That is exactly what happens in Real Estate and the media hyperbole typically overwhelms the opportunities lying within.

You can wait until the eventual upswing confirms the bottom has come and gone but by then the sense of urgency is returning to the real estate market and the squeamish have become frenzied buyers once again taking to the streets to stake their claims. Vendors quickly become aware that the negotiating control they lacked when prices were stagnant or heading south has now shifted back over to them.

Ok, so where are we now on that curve? Have we hit the bottom yet?

In Ontario and much of Canada over the better part of the last year demands for housing have softened. The biggest factor is the down shift in consumer confidence brought on by what we are seeing in the United States, and to a lesser degree here at home. It is a self fulfilling prophesy. The news tonight interviewed a couple in the mall and asked if they will be spending as much this Christmas. The answer was a resounding "no, the economy is too unstable." Meanwhile they stated their employment situation is unchanged. They and everyone are paying far less for gas and heating fuel than a year ago. Chances are they are in better financial shape all around than last November but the mood has changed.

Responsible spending within our means is taking hold, what will we do? Less spending and less borrowing to spend means fewer goods need to be produced by companies that expanded to accommodate a boom without any thought to it ending at some point. Now companies are downsizing to adjust and unemployment numbers are on the rise. The local widget plant is laying off 200 workers and when we see it on the six o’clock news our consumer confidence drops a little bit more and so on….

At some point when we begin to sense things are stabilizing the media hype shifts to everything is rosy mode. Stories on new and expanding businesses, profit gain and closing bell increases on the stock market get people excited and they start to spend their money and up their visa limits once again. New housing starts increase and we all do our happy dance spending and buying for a few more years. Donald Trump and Warren Buffett probably read Marshal McLuhan's works.

In the US it isn't quite that simple. More than just confidence has shaken their financial foundation. Their experiment with high risk lending has put them into a situation that will take a couple years at least to correct. Hopefully measures will be put in place to assure it can’t happen again, measures like we have here in Canada already that regulate lending practices.

Right now in the Barrie area, home sales are down; the number of active listings continues to accumulate with the inventory of resale home listings at record highs. Residential real estate prices on properties under the $250,000 mark have held their value and for the most part, continued to climb during the past year, all be it at a slower rate than in each of the previous eight years.
The under $250,000 range has been the most active for sales over the past year in the Barrie area. This is the price range most first time home buyers default to where carrying costs remain within range of what they were comfortable with paying in rent. In each of the next few higher $50,000 ranges the percentage of total sales drops lower and the gap between initial asking price and the percentage of initial list price received on sales drops as well the higher you go.

A combination of factors is challenging sales in the above $300,000 range, The first and most obvious is higher carrying costs and tighter qualifying requirements. A wave of fiscal and environmental concience has started to effect the housing industry the same way it has impacted on the auto industry. The Hummer is out, the Prius is in.