jimreidrealty

Shame on Canadian Media

2010-10-13T17:23:00.006-04:00

During the Toronto municipal election campaign, an anonymous element produced some highly defamatory and slanderous signs and placed them on a major downtown street. Fortunately an ethical citizen saw them and removed them before too many people saw them.

But... somehow the local radio and TV media got pictures of them and then broadcast the slanderous material all day and night. It was clear which candidate was being targetted, but the media denied knowing which candidate was being attacked. They took the position of common sense absentia in favour of running a story to defame the front running candidate.

This kind of unprofessional, unethical, biased and sensationalist broadcasting is expected in tin pot dictatorships - not in Canada. It even smells like they are trying to copy some of the ugly American political slander.

If a media corporation has a biased political agenda they must be forced to declare themselves before distributing imbalanced reports. Otherwise the CRTC should immediately suspend their licenses.

We expect the Canadian media to be objective and neutral in their news reporting. In this case, they had an option to not mention the content of the signs, but instead chose to take a political stance against one of the candidates. They are interfering in the democratic election process and the possible outcome.

I don't know the CRTC regulations, but this is surely an instance where severe punishments are appropriate. We can not allow a lack of sound judgment to become commonplace in our media.

Something sure stinks and it ain't a skunk!

Bob the Beaver

Spring 2010 Real Estate Market

2010-03-02T14:01:00.005-05:00

Sellers

With only half the number of sellers putting their properties on the market during the last 12 months, we can expect a small flood of new Listings this Spring. Of course, the properties that show well should get sold within 30 days as long as the Vendors don't try to raise the prices. It is unlikely that the multiple offer mania in some areas will happen again this year as there should be proportionately more active Listings.

Over-priced Listings will continue to sit until the prices are reduced after 60 or 90 days. Unfortunately, over-pricing and under-pricing is very common nowadays. Few realtors have the skills to create an Excel database of your area and then analyze the mix of properties. Also, very few have even been inside more than 1 or 2 homes in the area, so they make wild guestimates based upon sales of completely different local properties. Sometimes they just accept unrealistic and biased prices that the homeowner comes up with.

Unfortunately, many Vendors, (and their agents?), don't understand the stigma of an older Listing. In most cases, the list price is reduced by larger amounts and more frequently. The Vendor ends up getting 3-5% below what they would have got if they had priced right in the first place. Most of the eventual Buyers aren't fooled by the agents who re-list each time there is a price reduction.

Vendors who list with discount agents rarely see all the facts. The discounters don't make enough to afford a proper and effective marketing plan. They tend to also over-list and have the most price reductions and the most expired Listings. The fact that they can't negotiate a normal commission rate should indicate that they aren't going to be able to negotiate the top selling price either. Many don't have the knowledge or expertise to effectively pre-market and pre-sell their listings and pricing strategies.

Buyers

The number of Buyers will still exceed the number of new Listings as people try to lock-in some reasonable interest rates before the Summer arrives. However, these Buyers aren't foolish.

They usually have done a lot of Internet shopping and have created some biases in their minds. Most have agents who will at least check competitive sales in the area. Also, the bank's appraisers tend to be quite conservative, so an over-priced home will not get financed.

There are still a surprising number of Buyers who decide they will work with the Listing agent in the expectation that the Vendor will sell for less if they get a commission reduction because the agent represents both parties. This is one of the greatest myths in real estate sales.

The are a few Listing realtors who will fully educate these buyers on local market values and adopt a professional mediator role. In this way, the Buyer and Seller tend to obtain very good deals in a win-win scenario. But this often doesn't happen.

The fact is that the Buyers tend to focus on the .5 to 1% commission discount instead of the actual fair market value of the property. From my experience, the discount always benefits only the Vendor. The Buyers are not treated equally and thus end up paying as much, and often more, than if they had their own realtor. There are also quite a few other areas in the actual Agreement of Purchase and Sale where these Buyers can come up short if the agent favours his/her Vendor client over their new Buyer client.

The fact is that this whole area involves trust and integrity. An agent with an outstanding reputation for trust and integrity will make sure both clients get a favourable deal. An aggressive or pushy agent will have difficulty representing both parties fairly.

Let me know if you have any questions.

Jim

Bail Out the Consumer

2009-01-20T15:11:00.005-05:00

In order to respond to the economic crisis in Canada, the government's strategy is to: a) Provide major financial support to Banks and mega-companies, b) Spend $billions on construction projects, and c) Make a few miniscule changes in tax rate reductions and tax deferral gimmiks.

Banks & Mega-Companies

The Canadian government has begun to provide almost interest free loans to large Canadian banks and even global corporations to supposedly keep them from laying off people or closing down Canadian operations.

The Canadian banks have bankrupted over 350,000 canadian businesses since I left university to work in the business community forty years ago. During this time, the banks drove out or bought out, all their small competitors. They have padded their pockets at the cost of all these failed family businesses, never mind their bankrupting millions of Canadians with their usurous interest rates and frenzied credit card spending campaigns. Loans to banks will never help consumers get out of debt!

The multi-national corporate loans must be paid back, and all they really do is postpone accountability for these organizations to their employees and stock-holders. There is also extremely high risk that these loans will never be repaid. Foreign owned companies will just shut down Canadian operations as they have frequently done in the past. Thus, loans to these firms will not help consumers get out of debt.

Construction Projects

Of course, lots of highway, sewer, bridges, transit route construction will help our immigrant intensive construction workers earn paychecks. But, these government contracts are always under-bid and cost at least twice the approved amounts. Only a few companies have the expertise to do these projects and they all collaborate on which ones each one takes on. Only a few projects will really create new jobs and new organizations that will be around in ten years. None of these projects help Canadiuan consumers get out of debt or earn investment capital.

Tax Rates & Deferrals

Personal Income Taxes of $110 billion were 47% of government revenue in 2007, whilst corporate taxes paid were only $38 billion, or 16%. GST, which is mainly paid by consumers, was $31 billion, ie. 13%.

Any huge tax cuts to corporations will do nothing for consumers. Also, the new "tax free savings account" are no more than a worthless "guilt gift" that insinuates that Canadians wouldn't have lost so much retrement income during the stock market crash if their RRSP funds had been in these new $5,000 bank accounts that earn $50 per year interest tax free! Wow, is our government ever generous!

They promise the GST will slip to 5%, but that is not what consumers care about. So what, if our $50 dollar fill-up at the gas station plummets down to $49.50? Whoopee! I can get a half cup at Tim Hortons.

Help the Consumer!

Our government is forecasting a $30 billion deficit will be caused by all the extra spending they will do. Yet none of this spending is going to make a significant difference in our family take home pay or our debt reduction or our recovery of lost property value or our lost RRSP values.

Our government is truly missing the whole solution to our economic woes. It doesn't take a million economists or a million beavers to see the sense in driving our economic recovery through our families and consumers.

If consumers can't spend, it doesn't matter what loans you give to business. The businesses will all fail. It isn't the fact that someone has a job that drives the economy. It is the fact that consumers can make purchases that drives economic growth activities.

a) Take Home Pay

By slashing income taxes 30%, the governemnt will lose $30 billion and the consumer will be able to pay down their debts, reduce their interest expenses and increase their savings and discretionary expenditures. All of these improve our economic prospects.

To offset the lost tax revenues, the government can increase the GST to 10% and thus recover most of the $30 billion. The consumer much prefers to pay tax on discretionary purchases than on their pay stubs.

b) Debt Reduction

During the last century, lenders could be given jail terms for the interest rates Banks and Retail Corporations are charging on credit cards. Credit card fees and interest rates should be frozen at rates such as 5% over prime. This would enable faster paydown of these debts.

People who lose their jobs should be allowed suspended interest and payments on credit card debt, much like the way student loans are deferred.

Credit card interest and line-of credit interest should be non-taxable. Mortgage interest should be tax deductible.

RRSP redemptions should be tax free if applied to mortgage principal reductions.

Also, price freezes should be placed upon household essentials such as basic foods, gas, elecricity, car insurance, home insurance, etc.

c) Lost Property Values

Devaluation of home values directly impacts the net worth, or family's assets for retirement. With the number of seniors doubling in ten years, this will represent a major social catastrophe as senior's can't financially provide for themselves. Presently, less than 15% of seniors are financially self-sufficient.

Recent Market Value Assessment, MVA, increases must be fully offset by reduced Municipal tax Mill Rates. As MVA's decline, the capital value losses should be applied as tax credits that may be paid into mortgage principal.

Home improvement items relating to maintenance and updates, not upgrades, should have no GST or PST taxes.

d) Lost RRSP Values

The stock market crash wiped out over 30% of RRSP holdings for many Canadians. Clearly, as retirement savings or retirement asset investments, RRSP's are vulnerable to the financial sector's weaknesses.

Thus, Canadians should also be able to have tax breaks from investing in more secure assets such as their home or land. Redemptions of RRSP's should be tax free if the funds are paid into mortgage principal for their primary and/or secondary residences or recreational/ retirement properties.

Also, RRSP values as of January 31, 2007 should be frozen on account and once losses are taken, these should be applied as income tax credits carried forward. This would assert to Canadian consumers that they were not the cause of the present deflation and that our government is prepared to provide some protection from the full financial impact upon individuals and families.

All of the above proposals will positively impact the wealth of individual Canadians across the country and at all income levels.

Bring these ideas to the attention of our leaders and decision makers.

Jim Reid

Real Estate Questions?

2007-09-06T17:05:00.000-04:00

"Got any Real Estate questions?"

Are all Realtors the same?

Will I get a better deal by not having an agent when I buy?

Can't I find my next property on the Internet?

Is it better for me to use a personal agent or hire a team?

Do high "unit volume" sales agents/teams usually produce the quickest sales or get the best price?

What is the difference between a "Sales Representative" and a "Broker"?

What is the difference between a Listing Agent, a Selling Agent and a Buyer's Agent?

What is "Dual Agency"?

Do all agents treat their clients fairly in "Dual Agency"?

How do I get an accurate estimate of how much I'll get for my property?

What will it cost to do specific maintenance, updates or upgrades to my property?

Is there any difference between Royal LePage, Re/Max, Century 21, Sutton, Homelife, etc.?

How important is the technological expertise of my realtor?

Does someone need any marketing, sales, advertising, computer expertise to obtain a real estate sales license?

Can I get out of a Listing Contract or Buyer Agency contract?

What are Marketing Fees and how do they affect the sale of my property?

Should I make an Offer when there are multiple Offers on a property?

Should I use an "Area Expert" to Buy or Sell property?

Perhaps you have a question of your own. Why not post a comment or send me an e-mail?

Jim

Jim Reid B.A., M.B.A., Real Estate Broker
http://www.jimreidrealty.com/

USA Debt a CRISIS for ALL?

2007-08-16T08:52:00.000-04:00

Record Consumer Debt + War + Record Borrowing + Record Loss of Markets + Record Mortgage Defaults = Economic Crises = Stock Market Crash = Increased Interest Rates = Economic Depression

Many people are becoming aware of the huge $billion borrowings by the USA from overseas banks and investors. This has been happening daily for the last three years and their debt has reached enormous levels in recent months.

But consumers are working away diligently in North America and borrowing heavily for their houses, cars, and toys. Their daily overheads are also increasing as local governments raise taxes, cable and phone companies jack up communications costs and the oil cartel manipulates prices ever higher.

Clearly, we are on the long ride up to the top of the roller coaster.

Quite frankly, as of August 2007, I think it is time to really tighten our seatbelts!

For the average middle class person our financial options are rather limited. But there may be a few steps one can take to get through a global financial crunch.

We need to get our debts into the lowest possible interest rate. Thus, roll every debt possible into your mortgage.

The possibility of reduced mortgage interest rates is not very high. Banks increase rates instantly, but reduce them very slowly and reluctantly. Futures markets are speculating a quarter point drop this Fall and another quarter point drop next Spring. This is merely guesswork and not a reliable indicator. Thus, for the sake of a possible 1/2 percent gain, it isn't worth the risk to stay in a variable rate mortgage. If we have a financial crisis, rates can jump up two or three times this 1/2% and create a huge increase in your mortgage payments. Your downside is much greater than your upside!

Whatever you have in RRSP's needs to be protected from the stock market. Aside from a small portion in gold stocks, my broker has put everything into treasury bills for a few months. If the market drops we can get back in at lower prices after things settle down. Right now doesn't appear to be a good time to hope for any significant gains in the value of our small but important retirement portfolio.

We have also begun to economize by reducing avoidable expenses. The cable TV has been replaced by an aerial that brings in the 6 or 8 channels we watch mostly anyway. Our cell phone packages have been modified so that we don't get extra charges every month. We bought a more reliable older vehicle to replace a high maintenance gas guzzler. Lights don't get turned on around the house unnecessarily. The dishwasher must be full and we wash lots of items separately. Only full loads go into the washing machine. I think you get the picture.

For those of you with a larger home than you need anymore, it may make sense to downsize now. (Of course, I would appreciate your listing!) Your home is worth top value now, so it makes sense to cash in on your appreciated equity. You might even consider giving up some of the luxury or high quality of your current home for something more modest. In five years or less, there should be an opportunity to return to the luxury lifestyle again.

(The last economic recession began in 1989 and dropped for 4 years, bounced along for 4 more years and then the present boom began in 1997. Real estate prices declined 23%, although this time around , due to local immigration, I don't expect more than a 15-18% decline.)

So, what kind of thinking has brought me to this dire prediction?

With the USA accounting for 30% of global gross product, whatever goes on there affects everywhere in one way or another. The absolutely incredible massive debt of the USA has used up a huge portion of their liquidity. To get out of debt, they would normally produce more goods, resources and services to sell around the world. But... a major portion of these things are now being produced elsewhere. The USA is no longer able to rely on huge exports to generate wealth for them.

The card that may topple everything is one of the USA ace cards. Their property mortgages are a fundamental building block of their whole economy. With massive short-term below-prime mortgage lending to over-extended buyers in 2005 and 2006, the USA is facing its' largest mortgage default rate in history.

Unfortunately, some clever stock brokers accumulated thousands of these mortgages into large investment packages and sold them to banks all over the world. (Our local CIBC has a few $billion in these and just wrote off $300 million last week.) But, the majority of these come due over the next few months!

Quite a few large mortgage lenders have already collapsed in the states. Now we are seeing some major European financial institutions on the edge of collapse.

Unfortunately, our neighbour is still spending billions in unresolved expensive military conflicts, its consumers are borrowing at unrestrained levels and its' government is borrowing like crazy. Sorry folks... if my bank manager saw me behaving that way, she would pull my plug fast!

However, they do have their US currency being used all over the world. The easiest way to pay off their debt is to issue more money, ie. inflate their way out of debt. It appears they are already doing this. Also, this means that they will have to begin to raise their interest rates to offset this inflation.

Since Canada's economy is so strongly tied to natural resources, we don't have their economic problem. But our interest rates will have to follow the USA in order to attract capital investment. This is why I believe it is likley a good time to lock in our mortgage at a fixed rate under 6% while we still can.

China and India are booming. Their economies are in a mad rush towards prosperity. We have seen one Chinese stock market crisis in 2007 and there may be a few more as the speculative investors get hit. But generally, these two massive consumer markets are about to create some fairly "stable" major capital investment opportunities. Once their reputation for safe investments arrives, their economies will attract massive amounts of capital.

The world capital markets will be attracted to them, not the USA. Global conglomerates will be investing in new projects overseas, not in North America. Thus, the economic growth rates in our local economies will become more gradual than in recent decades. In fact, if there is a period of international economic crises, we may even experience a depression until the global economic alignment is revised.

I hope my concerns are unfounded. But having ignored my potential downside in a new business venture back in the 1970's, and paid heavily for my optimism, I try not to gamble more than I can afford to lose.

The USA has been on the economic losing end of overseas wars since 1967, ie. 30 years. (They haven't conquered and gained fabulous riches as the nations of the past centuries did.) It appears that their economic dominance is about to significantly diminish rather than to continue to grow. This change represents a dowside potential for all North Americans.

Thus, I feel it is only prudent to take steps to protect my family's small net worth at this time. Perhaps you agree with me?

Seniors Facing Spectre of Impoverishment?

2007-07-30T16:43:00.000-04:00

"Canadian Seniors Facing Poverty!"

The media and politicians are quick to stir things up relating to crime, drugs, racism, sexual preferences, the handicapped or minority rights,etc. Businesses spend millions researching product preferences for all the deomographic groups under 50. But serious matters concerning Canadians over 50 just aren't that interesting to them and are of questionable economic or political value.

With the Baby Boomers rushing into senior citizenship status, Canada is about to experience a humungus financial disaster! Many millions of Canadians are about to be thrown into absolute poverty.

According to our last census, over 60 % of Canadians reach 65 years of age with a net worth under $250 thousand. Most of this is remaining equity in their homes. Only a small fraction is in RRSP's that may generate less than a $100 per month revenue stream. Their CPP will be paying under $700 per month. Their Social Security payments will produce about the same.

In other words, most Canadians will be living off less than $18,000 income per year. This is way below the poverty line!

On the other side, only 14% of Canadians at 65 have a net worth of at least $600,000. But with the average home in the GTA now costing $350,000, this only allows these "wealthy" Canadians $250,000 in investments. Their net worth will likely disqualify them from Social Security benefits. so the $15,000 income from their investments still doesn't get them above the poverty line.

Life expectancies are also increasing, but family disruptions brought about by the new morality imposed during the Trudeau era, means that the vast majority of Seniors will be on their own. We have a very nasty situation brewing.

As dementia set in, my elderly mother who paid her taxes faithfully for over 35 years, became a ward of the state. Her house equity was wiped out within 5 years of retirement. She became quite destitute and impoverished. In case you think I was being selfish, unfortunately at that time, my financial situation was also quite desperate.

I visited many of the "death houses" for impoverished seniors waiting to die. Visitors were few and far between. Smokers like Mom were stuffed into a former supplies closet until 8 weeks later when emphaseema finally took hold and her bed became available for another tragic figure.

How does it happen that a Canadian gives years of their lives and is not able to accumulate enough wealth to be self-sufficient when they become seniors? Is this the hidden plan? Once we are no longer a viable economic unit, is it the government's plan that we continue to be sucked dry and then hidden away in these drug induced semi-comas?

Millions of boomers and pre-boomers had their "nesteggs" wiped out by divorces in their 40's. Single Mom's and single Dad's have been barely able to get by due to Canada's profligate taxation schemes. Those families with dual incomes are taxed individually so that if there is a good year for one of them, the goverment claws back 42% income tax on their earnings!

Civil servants and other government paid groups have extorted generous pensions from the private sector Canadians. But it is the private sector Canadians who havenot been able to sustain decent incomes and maintain pension funds. Every time they are fired or lose a job, they need their pension monies to get by until they find another job.

Also, look at income levels of people over 45 in the public sector. Ageism has trashed a huge segment of our workforce. In fact, most are foced into "consulting" and aren't even considered part of the labor force anymore. They can't even qualify for unemployment insurance.

I call these people former "wage slaves" who become the "self-unemployed".

Can the government do anything?

There are many things that can be done right now to help ensure most Canadians become self-sufficient in their senior years. All of the changes must be designed to increase family wealth in Canada. These include a major policy shift away from "income taxation" to "expenditure taxation" and personal taxation to industrial taxation. We must also share the resource wealth of the nation with every citizen.

Some of these policies include:

Family Income Sharing

5 year Income Averaging

Real Estate RRSP's

Sales Taxes to Replace Income Taxes

Corporate Revenue taxes

Resource Duties and Citizen Distributions

New Enterprise Tax Exemptions

Family Tax Deferral Transfer Savings Funds

Public/ Private Sector Wage Equity Adjustments

Political Economic Performance Accountability

Criminal Prosecution for Mismanagement of Public Funds

International Economic Independance Policies and Regulations

Heritage Charter of Duties and Responsibilities of Canadians

Reporting of "Cash Economy" Transactions & Control Policies

Stringent and Severe Fraud Victim Compensation Laws

Government Management of Non-Renewable Resources

The key to successfully managing our society and our nation is Federal stewardship of the nation's Human, Physical, Technological, Informational and Financial Resources. The national goals and strategies adopted in these areas can then be allocated amongst the Provincial and local governments in an efficient and effective manner.

Recent attempts by Provinces to acquire more independance and authority from national powers, and the constitutional division of resources and powers, are both fraught with short-sited implications and self-interest perspectives that weaken Canada's national integrity.

The basic principle of Federalism must not be compromised by decentralizing control over the long-term development of Canada's five major resources. It will be our long-term vision that provides the adhesion required to keep our nation from fragmenting due to internal and external political and economic interests intent upon centrallized globalization of power.

Toronto Real Estate Buyer's Market Has Small Downsize Potential - by Jim Reid, Broker

2006-11-24T09:27:00.000-05:00

TREND: 1985 - 2005

This 21 year picture of annual changes in average selling prices and unit sales volumes demonstrates the versatility of the GTA real estate market.

Torontonians usually pull back in sales volumes when prices heat up: 1987, 1989, 1990 - but jump back into the market when prices appear low: 1991, 1992, 1994, 1996.

Interestingly, the 9.4% price increase of 2002 was stimulated by a large unit sales increase the previous year. But, since 2002 there has been a "recession" in price increase rates. Price increases have been diminishing, but politicians and real estate industry leaders have said nothing about this to the public.

Also, the graph highlights the "hyper-price-increases" of 1986 - 1989 that led to "hyper-unit-sales -declines" in 1987, 1989 and 1990. Clearly the message is that large price increases stimulate large volume declines. Similarly, modest price increases haven't had a significant affect on unit sales.

BUYER'S MARKET

Many GTA neighborhoods passed the 50% threshold of Sales to Listings in 2006. In fact the GTA slipped to 49.5% in September, officially entering a "Buyer's Market".

However, the "days on market" number is still quite good as it hovers around the 40 days to sell mark vs. traditional periods of close to 60 days. This means that more properties are being listed as homeowners decide to upgrade while interest rates are attractive.

The market average price increase will be close to 5% in 2006, but I believe that prices are probably flat. The GTA has a multi-billion dollar home-improvement market nowadays and these updated and upgraded properties are pushing up values. These are the properties that are selling in less than 40 days.

Homes that are not fixed up are sitting on the market. In one area they are averaging 130 days to sell and eventually sell at a 9.9% price discount vs. the 3.3% for the fast movers. This is what the "Buyer's Market" is really about!

Buyers are willing to wait for a home that doesn't need any maintenance or updating. They want to leverage their downpayments into a higher market value property. They don't want to waste their downpayment on making the property nice to live in. Also, these younger buyers are used to "new" things, so they don't want your "old" junk. They expect to live on the very edge of their "cash flow", so their mortgage payment will be "maxed" and there will be no savings for repairs and upgrades.

Vendors need to tune in to this new generation of "newbies". By cashing in on their escalated home equity through a line of credit, Vendors can create the cash to fix up their properties. If the work is done professionally, and with professional taste, the Vendor has an excellent chance of getting a return of more than 100% on their repairs and updates.

Alternatively, if they don't fix up their home, it will take them 5 to 6 months to sell and they will be grasping at a very low Offer!

FUTURE GTA MARKET

Speculation can drive a real estate market to extremes. Some neighborhoods have been affected by speculative activities, but generally it appears to me that people are putting a lot of thinking into different GTA neighborhood lifestyles.

There appear to be a lot of childless couples postponing family obligations. Their lifestyles are quite different than the Mom's and Dad's locked into wage slavery and hot chocolates at the hockey arena. Also, the pre-boomers who made a lot of money inventing things for the boomers are now entering their retirement lifestyles. The housing needs and expenditure profiles are quite different for these three major demographics.

Add to this balanced mix of homeowners the fact that the GTA is at 6 million now, with another million arriving over the next 7 years, one must conclude that any downside to the housing market must be low.

Also, take a look at the ultra-luxury condos and homes springing up around town and in cottage and ski country. Wealthy people from all over the world want a piece of Toronto real estate.

Perhaps the global recession that has just begun will lead to some economic restructuring, but with the improved market flexibility and adaptability built into many corporations nowadays, we shouldn't become too pessimistic. The movers and shakers who need cheap unskilled labor have already closed their local plants and have set up elsewhere. Our skilled labor force and capital intensive manufacturing sector produces products and services needed by rich people anyway. So we shouldn't be as vulnerable as economies run on cheap labor.

The bottom line... property values may decline a bit in the GTA during the recession, but if you are planning to hold onto a property for five years or more, then your downside risk of buying the right place now is nominal. In fact, with the right location your upside potential in the GTA is significant.

Jim Reid, B.A., M.B.A., Broker, ABR