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"Real
Estate Bits - 2"
January 2009
Money Matters
Presented By: Nino Pasquariello - Manager - Scotiabank
Yonge and Eglinton Branch
(416) 932-3885 #7000
E-Mail:
nino.pasquariello@scotiabank.com
Stay The Course Through Changing Markets
The ever-changing market conditions of the past few months have left many investors questioning their investment plans. Understandably, some investors are wondering whether it's better to move into safer investments until conditions improve.
You should know that this strategy comes with its own risks. Trying to time the markets this way is tricky. What generally happens is investors end up selling low and buying high. That's because, over the long term, markets tend to trend upwards through a range of economic conditions. A better strategy is to build a diversified portfolio, take a long-term view, and maintain your discipline.
Lessons From The Past
In more challenging market conditions, like we are experiencing today, perspective is key. History shows us that the financial markets are cyclical in nature and that over time, markets tend to rebound, rewarding the discipline and persistence of those who remain invested. Ups and downs are a normal part of investing, as the downturns typically set the stage for the next upward advance.
This happened after the bursting of the technology bubble in the early part of this decade. After that event, the markets advanced for five consecutive years. History shows that in each decade from 1950 to 2000, the Canadian stock market generated a compound annual return of at least 10%.
History would suggest that at some point, the markets will move beyond the current credit crisis and resume their upward trend. That's why it's important to position your portfolio for today and tomorrow.
However, it is important to understand how we reached this current stage in the economic cycle.
How We Got To This Stage
We started hearing about the credit crisis in late 2007, but its roots stretch back to the U.S. housing market at the start of the decade. That was when falling interest rates made mortgages more affordable, which fuelled the housing market and led to higher real estate prices.
Some companies began offering consumers "sub-prime" mortgages. In other words, they lent money to potential homeowners who had little in the way of down payment and, in some cases, to people who could not prove that they could repay their mortgage debt.
Between 2004 and 2006, as interest rates began to rise, housing prices started to fall and more homeowners, especially those with sub-prime loans, began to default on their mortgages.
Banks became cautious about lending to each other, fearful of how many bad loans were on their competitors' books. This made it more difficult to obtain credit for banks, businesses, and consumers.
A number of banks and financial institutions in the United States faced significant financial difficulties and bankruptcy, which led the U.S. Treasury and other banks to acquire weaker banks. The credit crisis spread internationally, and the economies of many countries began to be affected.
In Canada, conservative lending practices, more diversified business models, and greater regulatory oversight, have limited losses compared to financial institutions in the U.S.
What Should Investors Be Doing Now?
It can be difficult to keep emotions in check in today's environment. But in times like these, it pays to take a step back and gain some perspective by focusing on what you can control.
That means making sure that your investment plan and portfolio are positioned to weather the ups and downs of the markets. Diversification and asset allocation are the best ways to position your portfolio for today and tomorrow. Here are some of the essentials:
- The asset mix in your portfolio suits your objectives, risk tolerance and investment time frame.
- Your investments don't overlap sometimes having too many mutual funds means that you end up holding simila investments, instead of broadening your diversification.
- Your portfolio has investments from the different asset classes of equities, fixed income, and cash.
- Your portfolio is diversified geographically and across industry sectors.
When these essential elements of successful investing are in place, it's easier to take a long-term view and maintain your discipline.
Peace of Mind
Is your portfolio ready for these markets? Are your investments working together to reduce risk and meet your goals? A Second Opinion can help you make the most of what you have.
Regards,
Nino
Pasquariello.
Tricks Of The Trade:
New Year – New Challenges
In recent months I’ve chatted with many people about our current economic realities. Many people are afraid of job loss, mounting debt and are tempted to cash out their investments so that “at least have something left”. If you’re not retiring in the next 5 years this may not be a wise plan. Instead try to learn as much as you can about your personal financial situation. Speak to your Bank, your Accountant or your Financial Advisor, and find out about all your options. Try not to focus on the nightly news and the ongoing doom and gloom reported in the newspapers and television business programs.
Don’t assume that you should sell your home, unless this is a part of a re-structuring of your financial portfolio. There is absolutely nothing wrong with down-sizing or changing your lifestyle. There is also nothing wrong with upgrading to a different home or neighbourhood if your financial resources are sound. At about 70% - Canada has one of the highest rates of home ownership in the world. Canadians like to invest in real estate and over the long term this investment is one of the most secure that you will find.
Canadians did spend money over the holiday season with electronics, jewellery and sporting goods being the big winners. This may have been due, in part, to the deep discounts that retailers were offering, but nonetheless 2008 holiday spending was up about 2% over the 2007 season. It’s a known fact that every area of the world economy has been hit by the current financial recession and real estate has also been affected. However, it is important to know that average prices in Canada have increased since 1998 and that the Toronto market has enjoyed an upward trend since 1996. This year will undoubtedly bring about an overall slowing in the real estate market. Consumers are becoming more debt conscious, but if you are making the decision to move, then take the time to learn about your various options and make the determination that is right for you and your family.
You have to live somewhere and that will either be in your own home or a rental property. There are positives and negatives to each scenario and they may be short or long term - but life will go on. Relax - Don’t Panic and find out what is best for you.
Regards,
Rosemary...
Okay, Okay - Here's The Joke …
Another
Really Bad Joke
A Lesson To Be Learned From Typing
The Wrong E-Mail Address …
A Minneapolis couple decided to go to Florida to thaw out during a particularly icy winter. They planned to stay at the same hotel where they had spent their honeymoon 20 years earlier. Because of hectic schedules, it was difficult to coordinate their travel schedules, so the husband left Minnesota, flew to Florida on Thursday, with his wife flying down the next day.
The husband checked into the hotel. There was a computer in his room, so he decided to send an E-Mail to his wife. However, he accidentally left out one letter in her address, and without realizing his error, sent the E-Mail.
Meanwhile, somewhere in Houston, a widow had just returned home from her husband's funeral. He was a minister who was called home to glory following a heart attack. The widow decided to check her E-Mail expecting messages from relatives and friends. After reading the first message, she screamed and fainted. The widow's son rushed into the room, found his mother on the floor, and saw the computer screen which read:
My Dear: I know you're surprised to hear from me. They have computers here now and you are allowed to send E-Mails to your loved ones. I've just arrived and have been checked in. I've seen to it that everything has been prepared for your arrival tomorrow. Looking forward to seeing you sweetheart and I hope your journey is as uneventful as mine was.
P.S. It sure is hot down here!
Mid-Month Market Update:
Mid-Month January GTA Housing Resales at 888
TORONTO, January 19, 2009 – Greater Toronto REALTORS® reported 888 sales during the first half of January compared to 1776 in the first 15 days of 2008. “According to Statistics Canada the economic situation throughout Canada changed noticeably over the past year with job losses in the fourth quarter of 2008. Toronto is not immune to this, the GTA housing market has been impacted,” according to TREB President Maureen O’Neill.
The average GTA price mid-way through January is $332,495 from $367,574 during the same period in 2008. The median GTA price was $301,000 compared to 316,000 last year. “While sales have declined, listings have remained high. GTA home buyers have benefitted from more choice,” explained Ms. O’Neill. “Historically, increased choice in the marketplace has equated to a moderation in price growth.”
In January 2009, stronger declines in sales and prices were experienced in the City of Toronto. “Sales for January a year ago may have been elevated by the flurry transactions completed before the city’s land transfer tax went into effect,” added Ms. O’Neill.
“The costs of home ownership in the 416 has increased due to the added land transfer tax many home buyers now face in the City of Toronto. Some households considering the purchase of a home in the City have either put their decision on hold or looked elsewhere in the GTA.”
Please note that the figures below are mid-month only.
Summary of Mid Month January Sales & Average Prices 2008 and 2009
City of Toronto - (416):
2009 Sales = 369 Average Price = $350,835
2008 Sales = 800 Average Price = $394,205
Rest of the GTA - (905):
2009 Sales = 519 Average Price = $319,455
2008 Sales = 976 Average Price = $345,745
Totals:
2009 Sales = 888 Average Price = $332,495
2008 Sales = 1776 Average Price = $367,574
Ask An Expert?
These are just some of the professionals who can help you
with your home ownership concerns. If you subsequently
choose to establish a business relationship with any
person/company then you should be sure to define the
specific details of the relationship or business contract
before you proceed.
-
Ask An Interior Decorator?
-
Ask A Kitchenware Retailer?
-
Ask A Landscape Designer?
-
Ask An Employment Lawyer?
-
Ask A Banker/Mortgage Broker?
-
Ask A Firecode/Retrofit Specialist?
-
Ask A Garden Sculpture Specialist?
-
Ask A Basement Waterproofing Specialist?
Business Referrals
Client & Networking referrals are the foundation of a
successful real estate sales representative's career. Over many years in
this industry I have enjoyed the confidence and repeat
business of my clients. I appreciate your on-going support
and want you to know that I will always look after friends
and colleagues you refer to me with professionalism, care
and respect.
Rosemary Wright
Sales Representative
Sutton Group-Bayview Realty Inc., Brokerage
Independently Owned & Operated
(Bus): (416) 483-8000
(Fax): (416) 463-0159
WebSite:
www.rosemarywright.com
E-Mail:
mail@rosemarywright.com
Direct
Page: (416) 582-1216
"Professional Service With A Personal Touch"
This newsletter is never sent unsolicited. If you wish to
be removed, please reply to this
E-Mail with the words "Remove from Newsletter" in the
subject line or call me at
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The intent of the newsletters - "Real Estate Bits" &
"Real Estate Bits - 2" is to provide information to you
regarding real estate. Personal details such as your
name, contact information and address are never revealed
to anyone without your consent. In accordance with the
new
Privacy Act,
your consent must be given
(either implicitly or explicitly) to receive these
newsletters.If you do not want to receive my newsletters
- please notify me. My newsletters are not
intended to solicit Buyers or Sellers who are currently
under contract with any Broker.
The information and opinions contained, statistics and
articles are courtesy of TREB, CMHC or other individuals
or companies and are believed to be reliable, but their
accuracy is not guaranteed. Sutton Group-Bayview Realty
Inc., Brokerage and Rosemary Wright accept no
responsibility whatsoever for any loss arising from any
use or reliance on the accuracy and timeliness of the
information contained herein. Every endeavour is made to
ensure accuracy. These newsletters do not render
financial, legal, accounting, home inspection or
professional advice. They are for general educational
purposes only. They do not offer do-it-yourself advice.
We encourage you to always contact the appropriate
professionals or specialists to address your individual
needs.
E&OE
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