As the holiday season approaches, everyone is gearing up, filling their calendars and shopping carts. Despite many economic concerns there also seems to be an air of normalcy to it all, which keeps things positive. I am certainly looking forward to the parties.

Toronto real estate statistics for resale homes in the first half of November are down over last year, but overall the market is still up over last year on year-to-date sales. Whatever is going on in the world Toronto housing values seem to still be climbing and a mortgage on an average priced home remains affordable in the GTA. Stats Can has indicated that weekly income is up 4.3% from a year earlier, which is great news for the people working.

The chaos in Europe has reared its head a little higher again recenlty with the Irish bailout plans, and the Globe has an article that talks about the implications at a very high level of this for the EU. When Canada used to mull more loudly about single currency with the US there were those who balked, basically as much as it might have helped with trade in good times, did we really want to be on the hook for their debts in bad? This is what is happening in Europe and such things really do affect global markets.

There are pundits calling for inflation and deflationary times, so all the downsides are covered by someone. At the moment though it does not look like we are going to see rate increases any time soon which is great for variable rate holders. The bond markets though are rolling up and down and fixed rates are changing and have done some interesting shifts in the last couple of weeks. For example 5 year posted rates went from 5.19% to 5.44% and now seem to be getting back to 5.19%. Discount rates sometimes lead and some times lag these changes, but even at the recent peak of 5 year discount at 3.89% we are still well below the historic norms or even the rates 3 years ago (5.7%). So life is till pretty good for buying or borrowing to renovate, invest etc.. or just pay debt down faster.

There is one issue I have run across from time to time with first time buyers and sometimes it involves the balancing act of figuring out when to get and and whether to "settle for something," instead of getting the perfect spot right a way. This is always a tough call and the last part really depends on what is available when you are looking.

The money part can be even trickier. I cannot tell people what they should do, but here is something I often raise for them to consider. Do you buy something you can afford now, even if it is not quite "it?" Or, do you save and wait for the next pay increase and try again later? In a down or flat market this is a no brainer, save and come back, but in a rising market you have to start asking yourself the following:
1) Can I save faster than the value of property is increasing? If not then you will fall further and further from your target?
2) Will the next pay increase be enough to carry the bigger mortgage needed?
3) Will interest rates keep me in the same market if I come back later? Or, will I be able to borrow less and therefore still be in a less than perfect place?

I do not think anyone should get over their heads, and some people do not want to compromise and all that is fine, but my view is that if you buy then at least you can move later and you are buying and selling in the same market and your home's value may have kept you in the game.

It is sort of like the stock market most people cannot time that either, but if you plan on staying then at least you are in your own home and one presumes that is why you went shopping in the first place.

Good luck and call me if you have any questions.

If you or anyone you know are talking about renewing a mortgage, taking out equity to renovate or consolidate debt, are thinking of buying a cottage, or are considering using the equity in the house to buy a boat, then please call or refer them to me. I will make sure that you or they get the right deal.

Keep well.

From the Newsletter - April

Tax deadlines are now down to hours for many people, I hope you are not one of them. It would be tough to be working on taxes on such a wonderful day. The kids are outside more now so watch out when you are driving, and it may be time to find out if your sunscreen is still any good or if you need to get some more.

I have booked our spring camping and will soon have to actually organize "the stuff."

I was at a short seminar on the HST and it seems to me that this is a great opportunity for businesses to keep prices stable while getting some tax breaks and actually making the clients pay more. I am thinking of contractors in particular, so I suggest if you are hiring anyone for work being done after 1 July that you get them to rethink their before tax quote.

On the rate front the markets are clearly anticipating the Bank of Canada raising rates, so we have seen several jumps in the last month or so.

I also went to a seminar last week with a Benjamin Tal speaking, I like his take on this generally. the sad news was that he does not think the signs of recovery in the US are anything solid, and that Stimulus spending is still holding things together, and that banks are holding on to foreclosed properties to prevent a flood on the market. He commented on the commercial real estate crisis in the US and said it will have a much smaller impact that others have intimated.

In the US manufacturing sector the improvements have all been capital related with very little impact on job recovery, which means consumers will not be strong enough to take up the slack when stimulus ends.

He also commented on the strength of China, but noted that if China slowed down then the demand for commodities would drop which would affect Canada.

Canadian recovery is slowing and people turning to self employment has helped the job figures. From a market perspective there is apparently some $120 billion in cash sitting around looking for somewhere to go that would give their owners good returns, and given that much of it is held by boomers they will lean to conservative and dividend forms of investment.

Mr. Tal expects a 50 bps hike in June/July then possibly another 100 bps before they stop and wait for the US to start raising rates in 2011.


The days of US as the key economic player are gradually diminshing. The rate information and news items will come in below.

If you want to learn more about the effects of the new rules that came into play this month please contact me or check out some links at CMHC.

News and update

Well clearly I have neglected this for 2 solid years, odd it does not feel that long. I think times moves more quickly these days because it hardly feels like I have been back, but I have indeed been home for 4 weeks after our lovely vacation. Buisness has been good and the rate changes have kept me on my toes.