One doesn’t have to be an expert in the real estate market to grasp that there’s something different in the market today.  Call it what you will, a sense, intuition or just plain old gut feel but there’s little doubt that things are changing.  The only question that remains is the degree of change?

Here are the facts as we know it:

• Home sales have dropped month over month by 5.8%, which is the biggest monthly drop in two years
• Number of newly listed homes is down 1.7% month over month
• Greater Vancouver Real Estate Board states that re-sales were down 30.7% as compared to August 2011.
• Toronto Real Estate Board states re-sales were down 12.5% as compared to August 2011
• According to the August 2012 CMHC quarterly report, second quarter insured mortgages unit volumes were down 25%

Indeed, things are different today.  The data speaks for itself, and the debate today has been reduced to correction versus bust.  I think it is far too early to come to come to any final conclusion but that will not stop stakeholders and the press from jumping into the debate. This issue is way too sexy to resist, and there’s a lot on the line for our economy and policy makers.  I came across an interesting quote from Wayne Moen, President of CREA., “August’s sales figures will no doubt provide comfort to policymakers, providing the first clear indication that the recent changes to mortgage regulations aimed at cooling the market are working as intended”. Very eloquent but policymakers may find the end result as comfortable a slipping into a pair of size 34 jeans, when you’re a size 38!  Policymakers insisted the most recent changes to mortgage rules targeted the tail end of the credit curve; therefore, the overall impact to the market would be marginal.   Nothing about the statistics indicates marginal, and I suspect home owners in Vancouver and those in the mortgage industry would agree.

 Look for the Vancouver market place to garner special attention in the coming months.   As an example, “the housing market correction appears to be under way, driven by the sharp downturn in Vancouver”, according to TD’s Chief Economist, Craig Alexander.  He went on to say, “we expect the slowdown will become broader based following a fourth round of mortgage insurance regulation tightening by the federal government”.  The way I interpret this is what goes for Vancouver, also goes for the entire country.  And then there’s the obvious, if it all goes bad, you know who to blame. 

Until next time,

Cheers.

Leave it to bureaucrats to come up with an acronym which acts as camouflage for the truth.  QE3, Quantitative Easing Part Three, is code for bail-out.  Politicians and bureaucrats are loath to use that term for fear of negative press and political ramifications.  If it looks like a duck, and it quacks like one, it’s a duck!  US Federal Reserve Charmin, Ben Bernanke, announced a couple of weeks ago that the Fed would inject $40 billion a month through purchases of mortgage back securities.  This move by the Fed is viewed as being dramatic in that it is a two pronged approach.  Firstly, there’s no defined time limit and they will not deviate from this policy until they succeed.  What does Fed deem to be success?  Full employment.

Rarely has the Fed exercised its authority and flexed its muscles in a such a manner.  This is a sign that the Fed has little confidence that the Whitehouse, Congress and Senate, will put their bickering and their campaign posturing aside to do what’s right.  This move has put Bernanke into the Republican crosshairs, we can use that reference in Canada because we Canadians wouldn’t take that term literally.  Being so close to the US presidential election, it’s odd that the Fed would make this move now.  Say what you will about Bernanke, he’s injected himself into this political campaign.  I believe his motivation was not political but of necessity.  Managing the economy has not been president Obama’s stronger suite, and the Republicans wouldn’t agree to anything today that Dem’s might suggest.  Fixing the US economy has been put on hold for over a year now because of the length and nature of  presidential campaigning.  Maybe Bernanke was willing to roll the dice because he has nothing to lose.   His tern as Chair expires in 2014.  The Republicans are questioning the need for a Federal Reserve Chairman, and maybe Bernanke has already decided that if asked he will not accept reappointment.  If he does step aside it would be a challenge for whoever replaces him as Chair, given no defined end date for QE3.  It is always easier to make bold decisions about the future knowing that you may not be subject to the consequences of that decision in the future.

The reverberations of QE3 will be felt here in Canada.  Bernanke has stated that the Fed is committed to leaving its target interest rate close to zero until 2015.  A few short months ago the prediction for a rate increase was 2014.  Clearly the Fed believes interest rates are too high in the US to encourage investment and mortgage borrowing.  I am not sure how enamored the Bank of Canada is with this decision.  Up until now the Bank of Canada has been in lock step with the US Fed.  Will they deviate from that?  I highly doubt it.  So, an overnight lending rate increase may have been pushed out for another 12 months in Canada.  That’s good news for consumers, especially for borrowers renewing their mortgages over the next 24 months.  The not so good news is that if you’re a first time home buyer, don’t expect the government to reverse the most recent changes to mortgage rules anytime soon. 

Until next time

Cheers

Dateline- Sunday, September 16, 2012

As I write this blog I’m sitting on a plane waiting to go home. Of course the flight is delayed, which seems to be a given when traveling. The process of boarding and getting through security was extra special on Sunday. American Homeland Security is on high-alert due to American Embassies being under attack throughout the Middle East. Security lines were longer than normal which contributed to my overall crankiness. But what would have made even Mother Teresa cranky is flying to or departing from the world’s worst airport known to man, San Francisco International Airport.

If at all possible avoid the disaster of the San Francisco International Airport. One option is heading to LAX in Los Angeles and drive and extra two or three hours. It’s the same amount of time you need navigating this incoherent and most idiotically designed airport. This is not just my opinion; the people who work there feel the same way. Announcement after announcement is made abound flight delays. One customer service agent actually announced, “The delay is our fault because we don’t have enough runway’s, that’s the way it is folks at San Francisco International Airport“. Not enough runways? I don’t know anything about running airports but I would assume the number of runways is important.

I don’t expect much from airports. I get it, it’s not a fun place to be and we’re all cattle to be herded in a certain direction. We all put up with airport staff that have no idea about customer service, (by calling us passengers it means we can be treated like gum at the button of their shoes) and act as if they’re working there forcibly and under duress. We are all willing to put up with this for the simple pleasure of getting in and out of an airport in an orderly manner. Not much to ask, unless you’re at San Francisco International Airport. The car rental process at that airport is laughable. The location of the car rental lots might as well be in Oregon. Getting in and out of the building or to your terminal requires a Sherpa Guide and a donkey. That’s just the beginning of the Nightmare on PO Box 8097.

All will be well in a few hours when we touch down in Toronto. Can’t wait to walk through that sterile, humorless, devoid of any personality, cavernous, charmless airport which is better known as Toronto Pearson International.

Dateline – Thursday, September 20, 2012

Still cranky, maybe it has nothing to do with airports. Maybe as I get older I’m becoming a curmudgeon. For fun I will go home tonight and bitch about teenagers, politicians, the weather and my chronic back pain. Anyone want to join me for the early bird dinner special? Oh wait, that’s in Florida. Don’t get me started on those idiots down there. I can’t believe how slowly they drive in the passing lane on the Interstate, and the weather, my god it gets hot, and…

Until next time

Cheers

“It is to our collective benefit to ensure that the talent pool is deep, and cultivating that talent will enable our industry to flourish and grow.”

Well, sort of.  Last week CAAMP forwarded the attached video to all members, and seeing how I did the narration I thought it would be appropriate to use the video as my blog.  In the event you didn’t get a chance to see the video,  it speaks to one of my initiatives, organic growth for the channel.  This is an issue that we as industry should all be cognizant of.  Succession planning is critical for any organization, and the same principles hold true for an industry.  Many of the past and present leaders of our industry still have time to make significant contributions.  But with each passing day we get closer to passing on the leadership torch.  Who will be the ones to take on that responsibility?  Many of our future leaders are among us now, and some maybe contemplating our industry as a vocation.  Identifying future leaders, and providing them with council and visibility, will assist  our industry through transition.  It is to our collective benefit to ensure that the talent pool is deep, and cultivating that talent will enable our industry to flourish and grow.  Where will the next generations of brokers, lenders and insurers going to come from?  Would it not be to our benefit to have university and college students choose brokering as a career path?  Can we continue to count on people just bumping into our industry and deciding that they’ll give it a go?  Our industry is at a crossroads.  Our market share has flatten, intense competitive factors are at play and we all now face the challenge of strong regulatory headwinds.  Our future leaders will have to be far more sophisticated to deal with these issues than we are today.  Our industry is evolving, and it will be imperative that the leadership skill level evolves at the same pace.

Until next time

Cheers

Most polls show the race for the oval office within the margin of error.  Stunning considering the economic mess our friends to South are in. What’s more staggering is the incumbent may perform the greatest slight of hand trick ever known to man. To be reelected based on today’s economic data would be Houdini like, straight jacket and  all.

For all intent and purposes the presidential election campaign begins post labour day weekend.  Up to this point all the primaries and conventions have been but a mere warm up.  From here on both parties will resort and say to whatever it takes to win.  The nastiness will begin in earnest, and for the president it’s imperative that the focus is diverted away from the facts.  The fact is that unemployment rate in the U.S has been understated for some time now.  The latest numbers has the U.S. unemployment rate at 8.1%, down from 8.2%.  The decrease is a function of people who have stopped looking for work, and no longer count.  Over 60% of people in the U.S. now believe their children will not be better off than they are.  Over 50% of people believe the economy is getting worse.  The latest job figures came in less than what was expected, and yet according to a new poll by Reuters, the president has actually widened his margin since the Democratic Convention.  Me thinks those who were polled must have all lived in Ontario at some point because that is the only explanation I can come up with for the bump in the polls for the president. Why let facts get in the way of a good story?

Like the millions of people outside of the U.S., I really wanted this president to succeed.  He represented change and his election was a signal to the world that race will not play a part in determining the leader of the free world.  But simply being cool is not enough to get elected.  Then again millions of Americans disagree, and to them I say, you deserve what you elect.

Until next time,

Cheers.