And in the case of Toronto’s Mayor, Rob Ford, we’re talking major inferno. I had no intention in commenting on the allegations, and now admission that has dogged the Mayor, and captured the imagination of the local populace and comedians worldwide. The question of “did he or did he not” rendered every other issue irrelevant. Now we all know.
Full disclosure, I supported Rob Ford, and encouraged family and friends to do the same. Finally, there was a candidate I could support for policy reasons rather than packaging. Let’s face it, central casting would never send a Rob Ford look alike to a movie set to play a mayor in a movie, Toronto voters learned a valuable lesson on voting for packaging rather than results (see Toronto’s previous mayor). So, finally there was a candidate that spoke to the silent majority and who appeared not to be a part of the establishment and intelligentsia. It worked; Ford got elected by a rather large margin. But his actions today amount to flipping the bird to all his supporters, including me.
From first day of the Ford administration, certain media outlets were determined to bring down the mayor. Some of the media coverage was repugnant, they spoke in code. They didn’t believe he looked the part, and they were vicious in their criticism. But at the end of the day that wasn’t the reason for Fords eventual demise. Was it because he FINALLY admitted to smoking crack? Don’t think so, and I’m basing that on the media coverage of other well know political drug users. Not much has been written about President Obama’s admission that he used cocaine while in college. I guess the media gets a pass on that one because Obama’s cocaine use was in the past and not while in office. Okay, what about the present? What about Liberal Leader, Justin Trudeau, who admitted to sparking up and enjoying the odd joint while sitting as a member of parliament? Where was the moral indignation from the press? I don’t believe that Canada has legalized marijuana, yet. The press’s hypocrisy aside, Rob Ford’s eventual demise is not because of drug use; but the fact that he lied about it.
There are lessons to be learned by the Ford fiasco, like what not to do in a crisis. Ford’s struggle for political survival today can be traced to hubris. If an individual or a business, believes they’re above the rules and arrogant enough to believe they’re immune from fallout, might as well start writing their professional obituary. When Ford stopped listening to his handlers and their recommendations, it was the beginning of the end. When your inner circle jumps ship because you’re on a path of ruin, and you’re still adamant about doing it your way only, the inevitable results will follow. In politics and business there’s a play book to follow in times of crisis. In politics when you get caught with your pants down, or in Fords case a crack pipe in his mouth, you follow the tried and true methods. He holds a press conference, uses his family as props in the in the background, looks straight into the camera and admits he lied, and promises to get help. If he can muster up tears that really works well. He comes back in sixty days and it’s all behind him, But if you lie about it for months, daring the police to release the video, and you only come clean because you realize there is no out, it’s too late.
My heart goes out to Ford’s family. They’re the innocent victims in all of this, and I struggle to rationalize why politicians do this to their families. But we’ve seen it before, and we’ll see it again. Here’s something to ponder, the guy who smoked crack and was inebriated many times while on the clock, brought fiscal responsibility to City Hall, eliminated wasteful spending and ensured there was a budget surplus. His predecessor other hand had the right look and pedigree, nearly drove Toronto into bankruptcy. Go figure.
Until next time,
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It’s amazing how many thoughts can race through your mind in a matter of seconds. The images are vivid, yet vanish in seconds.
I had such an experience earlier this week. There I was, about to start a meeting with the Minister of Finance, Jim Flaherty and my mind went racing down memory lane. For a split second, I found myself recalling the very first mortgage application I ever filled out. This was twenty five years ago. I met my first customers on a Saturday morning, but as it was my first deal as a mortgage broker, I would have gladly have met them at 3:00am. Oh, the knowledge I had back then. For example, I was aware that mortgage’s was spelled with two “g’s”. I was so wet behind the ears that I had to keep a drawer open in my desk so I could refer to an old Statement of Mortgage. I wanted to make sure I didn’t miss anything, so I kept taking a peek at a completed Statement of Mortgage. I had to resist the urge to laugh at the memory.
In a couple of nanoseconds I also thought about the first time a fledgling national association called CIMBL made their way to British Columbia to pitch brokers on why they should become members. I was in attendance at the pitch. I remembered standing at the back of the room listening to CIMBL’s talking head, saying without embarrassment, “if you do not become members of this association lenders will not pay you a finder’s fee.” I couldn’t help but think, “you fool, you just set this new association back by three years in British Columbia”. I was wrong, it was five years. There were many other thoughts that kept running through my head, especially about CAAMP, and how far we’ve come as an association.
But I had to clear my mind and prepare for the meeting with Mr. Flaherty. Jim Murphy, CAAMP President, Daryl Harris, CAAMP Chair, and myself were given the opportunity to meet with the Minister of Finance this week. The purpose of the meeting was to share our thoughts and concerns for the mortgage broker market. Both Jim and Daryl did an outstanding job, laying out the facts in a balanced and measured way. It was our hope that the Minister of Finance would view our positioning points through the lens of consumer choice and the important contribution the mortgage broker channel makes to the Canadian economy. Jim Murphy has done yeomen’s work on behalf of our industry in Ottawa and this most recent meeting added another layer to the relationship foundation between CAAMP and the Finance Department. Kudos to both Jim and Daryl.
As for my role at the meeting? I spoke briefly about the important role that mono-line lenders, like MERIX, play in the mortgage broker channel. Most importantly, the choice we provide for Canadian borrowers. I also spoke briefly about the contribution that mono-lines make to Canadian tax role. Mono-lines provide greater choice for borrowers but they’re also job creators. I made it very clear that we ask for no favour. The mono-lines are prepared to compete but the nuances and difference between mono-lines and banks should be factored when making decisions which impacts funding for the mortgage broker channel. The Minister of Finance stated that his office would consult with our industry about all the recent changes and what our needs might be going into 2014.
One of the things I am most proud about during my time on the CAAMP Board is the relationship which has been built with Ottawa and the regulators. I wasn’t too long ago when it was difficult to get a phone call returned from the powers that be. Today, the calls are being returned and we have an opportunity to sit at the adult table. Influence cannot happen without dialogue. I believe CAAMP’s efforts are being noticed. It’s why we don’t hear the “cash grab” argument with the frequency we once did. Today, even the haters have some difficulty arguing that the nominal cost to be a member is not worth trying to protect our collective wallets.
Until next time,
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I’m spending some time in airports this week, and I use that time to catch up my reading. I came across an on-line article by Christina Pellegrini, “Why real estate doomsayers continue to be wrong.” The article originally appeared in the Financial Post Magazine. There was something different and unusual about the article which left me out of sorts after reading it. Figuring I must have missed the nuance, I read the article again. Then it dawned on me. The story was fair, balanced and looked at both sides of the story. That’s something which is sorely lacking when it comes to stories about the real estate/mortgage industry in our country.
For far too long the doomsayers have dominated the airwaves and print media. I get it, it sells. Crash, bust or apocalyptic meltdown gets more attention than a stable and balanced market. But shouldn’t someone hold the doomsayers accountable or at the very least ask the question, “you were way off, please explain?”
Pellegrini attempts to do just that. There was a great quote in the article from Canada Mortgage Trends, Rob McLister. With respect to where prices may be at some point in the future, Rob said the following: “Anyone that purports to tell people where prices are going to be in two, three, fours years down the road is a fraud. Housing is stable at this point and there’s nothing on the horizon that we can say with certainty is coming that would derail the market.”
Facts and trends can be debated, and that’s healthy. The problem today is there doesn’t appear to be much debate. Rob’s viewpoint, along with many other in the article, is not only refreshing but necessary. A balanced story, irrespective of the topic, requires work. It’s time for some to stop being intellectually lazy.
Until next time
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What I learned this week was that for some business entities a $19 billion market is just not worth the effort. It’s been well documented that global wireless giant, Verizon, made a preliminary bid to purchase Wind (for an estimated $700 million). Verizon was also kicking the tires of Mobilcity, and contemplating a takeover. But alas, Verizon had a change of thought and announced this week that they are not considering entering the Canadian wireless space. I also learned that when the Canadian wireless oligopoly is threatened they don’t stand by idling and allow the chips to fall where they may.
Rogers Communication, BCE Inc. and Telus Corp went on a very impressive campaign to protect their piece of the pie; airways were saturated with ads by all three. The theme of the ads ranged from job loss in Canada, to the ever popular saying mouthed by most 12 year olds, “it’s not fair”. I spend a lot of time in the car and listen mostly to talk radio. I think every second ad on the radio was about the evil American wireless empire potentially coming to Canada, and changing the wireless landscape as we know it. I was impressed how the wireless companies came together to fight off a potential business threat by trying to push every emotional hot button of Canadian wireless consumers. They had no shame. If it meant wrapping their issue in the Canadian flag, then so be it. The ads also produced humour. Not sure if that was the intent but a few of the ads made me laugh out loud. Like the one ad that suggested a recent survey showed that wireless customers in Canada would be willing to pay more in fees because of the great services provided by the big three wireless companies. Ah, okay. I’m not going to question of the integrity of their survey, and I’m sure a survey actually exists. Like the survey I have, which indicates that 80% of Canadian mortgage consumers would be willing to pay a 50 bps interest rate premium from mono-lines because of the important role they play in the Canadian mortgage space. Full disclosure, our survey respondents where myself, Kathy Gregory, Donald Zuill, Jill Paish and Jason Kay. Sure, we all happen to work together at MERIX and Paradigm, but that in no way influenced our survey results.
Whatever the real reason was for Verizon’s decision not to enter this market place will never be truly known. Maybe their $700 million dollar offer to Wind was nothing more than a trial ballot to see how their competitors, consumers and regulators would respond. Verizon now has a clear picture of how the wireless oligopoly in Canada will respond if they decide in the future that entry into a $19 billion wireless marketplace is worth the effort.
There’s a lesson here for the mortgage industry as well. BCE, Rogers and Telus are fierce competitors, but that didn’t stop them from putting their competitive nature aside to protect their pie. Not just a slice but the entire pie. They took their fight directly to the Canadian wireless consumer, and for now, they won. Now they can go back to divvying up their spoils.
Until next time,
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Well, not really. I think I would rather watch eight hours of Degrassi reruns in a row than go fishing. My family, friends and acquaintances who enjoy fishing are rolling their eyes right now and thinking: “this coming from a guy who spends hour after hour trying to get a little white ball to fall into a ridiculously small hole. And all the while offering profanity-laced commentary.” To that I say, whatever! My aversion to fishing is that it’s too exhausting. You’ve got to cast the line, open a beer and take a seat. Whew! I’m fatigued just thinking about it.
All kidding aside, I’m off for a family vacation for the next couple of weeks and I actually might go deep sea fishing. We’ll see. Therefore, blog posts may come sporadically or not at all over the next couple of weeks. It will all depend on whether something funny as hell happens while we’re on vacation. Which usually happens in our family.
I thought a fitting way to end the week was to comment on a recent phenomenon happening here in Ontario. Not sure if it’s making its way to other parts of the country but I hope it does. It’s about random acts of kindness and by all accounts, it appears to have started in Ottawa. For some reason it all centers around coffee. Last week a man walks into a Tim Horton’s coffee shop in Toronto and asks the cashier how much would it cost to buy 500 medium cups of coffee. The response was $825. He pulls out his wallet, plunks down $825 and says “I’m buying the next 500 cups of coffee.” He then walks out of the coffee shop without giving his name and he didn’t bother to wait for the people standing in line behind him to say thank you.
More of these stories are coming to light and I think it’s so cool. Not many can afford to drop $825 worth of coffee on total strangers but one cup of coffee every now and then? I think so. But what is really cool is how these random acts of kindness generate stories. The recipients of the free coffee will tell at least one person about what happened to them that day. How many of us can say that we did something so selfless and kind that at least 1000 people are talking about it? So I tried it this morning, on a very small scale. Every street in downtown Toronto is being dug up, resulting in brutal traffic congestion. I work at the corner of Bay and Richmond and a portion of Richmond is closed due to road work. There are two police officers monitoring the intersection and as I walked by them today I said, “gent’s, I’m just on my way to Tim’s, can I get you a coffee?” The police officers were most gracious but declined. And I walked away feeling a little better because I made the gesture and I also know that I just created 4 new stories about simple kindness.
Until next time,
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Do my eyes deceive me? Is there a plethora of solid economic news? Let’s see, there aren’t any new weather disasters or heat waves to be concerned about which would impact housing. Well, that’s a start. Add that to some positive economic news and I’m almost afraid to continue on with the blog. What the hell, I’ll tempt fate. There’s some positive news coming out of Canada and also for our neighbors south of the 49th parallel.
The results of the most recent Thomson Reuters/University of Michigan U.S. Consumer Sentiment Index has reached the highest level since 2007. Given what happened in 2008, the near collapse of the global economy, these results are significant. The strength and weakness of the U.S. economy is dependent on consumer spending. After 2008, American consumers did something awful – they stopped spending and started to save. Their levels of individual savings reached record highs, and it was a convenient statistic for doomsayers in this country to point too. The soapbox rhetoric sounded something like this: “look how responsible the Americans have become. We should learn from them.” Saving money is wise but we have also learned that if the U.S. consumer doesn’t spend, we feel it. Like right in the derriere. Our economies are intertwined so any good news south of the boarder, as it relates to consumer spending, is good news for us. We have lots to sell them and with the falling loonie our products and services are more affordable. So come on American consumers, be patriotic. Dip into your savings accounts and don’t be embarrassed about having a larger credit card balance. Spend for the love of your country and your most appreciative neighbors to the north.
The good news here at home is the average Canadian net worth is on the rise. For the first time ever we’ve topped the $400,000 barrier. Okay, most of that is real estate equity but I don’t think we should have to apologize for that. Having a balanced portfolio mitigates risk, but wealth is wealth. Kudos to the people living in Ontario. The province which proudly claims that it’s “Yours to Discover” has discovered that paying down debt is not a bad thing. Ontario was the only province to lower non-mortgage debt, resulting in Ontario having the largest percentage increase in average net worth in the country. Saskatchewan is climbing the net worth charts given their newfound riches, due in large part to natural resources and real estate value. B.C. still holds the distinction of having the highest net worth at $662k. When it comes to B.C. we all know that if you own a home, you’re a millionaire. Unfortunately, to realize any gain, British Columbians would have to sell their home and move to Nunavut. Sure, the average temperature in Nunavut in January is -48, but you would have all that cash to throw into the fireplace to keep yourself warm.
All in all some good news across the country. I don’t want to push the “good news” stories too far. The law of averages dictates restraint. I may have gone too far already. So I’ll apologize in advance if a meteor hit’s the earth (the apology only applies if the meteor actually lands in Canada) and ruins everyone’s week.
Until next time,
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I’ve been a little tardy with my posts recently. No earth shattering reason why other than life events and other priorities taking precedent. For example, last week I spent a fair bit of time contemplating the Canadian Health Care system. I did all this “deep” thinking while visiting the hospital and spending countless hours in an emergency room. I wasn’t the patient, my brother Tom was. Here’s the Reader’s Digest version.
My brother started experiencing sharp stomach pains early last week. My brother has a high threshold for pain so when he mentioned that he was experiencing pain my radar went off immediately. The next day the pain persisted and became more pronounced. I told him to go to emergency but he said: “I’m going to give it another day because I have a doctor’s appointment tomorrow. I’m sure it will be better tomorrow.” Tomorrow came and so did more pain. Off to the doctor he went. His family physician ordered an ultrasound, and upon review of the results, the doctor’s diagnosis was that the pain was probably caused by gas. He prescribed what amounts to nothing more than antacids. A few hours later I called my brother to see how he’s doing and he answered “not well.” I told him I didn’t give a damn what his doctor said, we had to get him to emergency immediately. He agreed and his wife took him to the hospital.
My brother got to emergency at 5:30pm and after a few hours the doctor treating him ordered another ultrasound. At midnight the doctor notified my brother that he wasn’t going anywhere. His appendix had ruptured and surgery would be required. We’re still not sure how his family physician mistook gas for a ruptured appendix, but needless to say my brother will not require his services ever again.
I couldn’t make it to the emergency room until 9:30pm that evening. To see my brother sitting there, I.V. attached to him, resting his head on the wall in an attempt to get relief, just killed me. I’m wired to fix things and there wasn’t a damn thing I could do. I was sitting next to my brother when the doctor came at midnight to tell him he wasn’t going anywhere because his appendix would have to be removed. He apologized and said he might have to sit in the waiting room until the morning because there weren’t any beds available. My mind started to race and I thought I would go home, get a reclining lawn chair from my backyard and set up a makeshift bed so he could get some comfort. To everyone’s relief a nurse came forward and said that she had a solution, bless her heart. She found a gurney for him to lay down on in one of the examination rooms.
Once my brother was comfortable, due in large part to the morphine drip, I could retreat to my own thoughts. Of all the voices in my head, the loudest one was saying, “how can a country with a standard of living such as ours, reduce health care to this?” To be absolutely clear, our doctors, nurses, technicians, support staff etc., do an amazing job. It’s the strain and the weight of the system that leaves medical practitioners no choice but to keep patients waiting hours for treatment and in some cases, left sitting in hallways to wait for a bed to become available. The responsibility for the state of our health care system today falls squarely on the shoulder of our policy makers. Politicians in our country do not have the courage to confront the sacred cow, better known as universal health care.
For the record (in the event I decide to enter into politics one day and someone claims that I once said that the sick should be left to die on the sidewalk because they couldn’t afford health care) I believe every Canadian has a fundamental right to health care, irrespective of economic standing. But I also believe it is irresponsible to continue on a path that will ultimately lead to a poorer standard of health care and ultimately bankrupt the system. It’s time for us to have an honest dialogue and dismiss those who always invoke the class warfare argument when this subject is broached.
Allowing for a multi-tiered health care system does not mean that the poor and indigent would not have free access to health care. It would mean that there would be different ways to distribute health care, thus relieving some of the pressure on government funded health care. A user pay system or some form of privatization will have to be a part of the solution. By the way, it’s creeping into our system already. For example, there are two private health care facilities within walking distance of my office. I know this because I’m a member of one. I pay an annual fee and that accords me the right to access a doctor, nutritionist, physiotherapist etc. I had to join because when I moved back to Toronto from Vancouver, I had a hard time finding a family doctor. Why? Offices were not taking new patients. So much for universal health care.
I’ll gladly pay, on top of what I already pay through taxes, for the ability to see a doctor. Being a member of a private health care facility does not mean I get bumped up in the queue for tests. In the last two years I needed to have an MRI and C-SCAN and in both cases the wait time was between 4 to 6 weeks. At my request the private facility arranged for the tests to be done in Buffalo, New York, at a cost of approximately $250 per test. I had the tests done within 48 hours. I would have gladly paid that sum for the ability to have the test done in my own country. Maybe I’m missing something but I think private clinics would lessen the burden on the government system, thus increasing the efficiency of care.
Our multi-tiered system is also made obvious when we look at how athletes receive treatment. Why is it the case that if I’m a professional hockey player in this country and I hurt my knee on a Saturday night, an MRI is done on Sunday, and the surgery is on Monday? Could the teams be paying for it directly? I wonder. Should we believe that MP’s, Cabinet Ministers, and the PM himself would wait 4 to 6 weeks for an MRI, or wait in the emergency room for 8 hours? Once again, just wondering.
The only way the system will change is if we, the majority of Canadians, force the politicians into doing something. A politician has two primary goals: getting elected and then getting re-elected. Up until now, doing nothing about the health care systems hasn’t cost them votes. There will be no change unless that changes.
Back to my brother, he’s recovering and doing well. Not back to normal but getting close. One thing about this ordeal is we learned about our father’s brush with appendicitis. It happened back in 1966. One night my dad was in excruciating pain. My mom called their family physician, in the evening no less, and the doctor did what doctors did at that time. The doctor made a house-call, took one look at the condition my dad was in and proceeded to escort him to his own car and he drove my dad to the hospital. My dad was operated on within an hour of arrival.
Until next time
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One of the byproducts of getting older is perspective. Gone are the days of being emotionally invested in a professional sports franchise. What happens on the ice, the court, the diamond or football field will not alter my life one iota. Irrespective of what happens during a game the same responsibilities await me the next morning. I don’t get worked up over million dollar athletes who get to extend their childhoods by playing a game for a living. But I must confess that the historical meltdown by the Toronto Maple Leafs Monday night brought back memories for me. It’s been a long time since I yelled at the TV, wondering if my flat screen TV was going to be functional by the end of the game.
Alas, sanity prevailed. As soon as the game came to an end I went back to being my dispassionate self as it relates to the local hockey “heroes”. I’ve long since stopped being an apologist for the Leafs. Don’t get me wrong, I go to games but I go more so for the experience. So now when people, usually those who reside in other parts of the country say to me, “Leaf suck”, my answer is, “agreed”. That usually stops the conversation. Now, there was no stopping the conversation about the Leafs colossal collapse Monday night. Leaf nation is stunned, numb and frankly I worry about some being suicidal. Everyone in Toronto is talking about the Leafs blowing a three goal lead with only ten minutes to play in the seventh and deciding game between the Toronto Maple Leafs and Boston Bruins. The analysis by the sports media is, and will continue to be, unrelenting. This is way too much fun for them. One radio station found a creative way torture Leafs fan by interviewing a statistician who calculated the probability of the Leafs winning that game from a historical context. Kid you not, the stat’s geek looked at every game seven played in the NHL since 1918 to determine the probability of the Leafs winning the game. For example, when the Leafs made it 3-1, based on history the probability of the Leafs winning was 95%, when the score was 4-1 it was 98%. I laughed out loud in the car when I heard this. This exercise was nothing more than plunging the knife a little deeper. Poor Leaf fans, maybe the team should change the saying The Passion That Unites Us All to The Therapy That Unites Us All.
The only impressive thing about the game was the press conference with Leaf coach Randy Carlyle following the game. To have to face the media and answer questions why he and his team failed so spectacularly cannot be easy. Like in business a leader’s character is measured by how they deal with adversity. A hockey coach is the leader of the team. Most teams take on the coach’s personality, and if that holds true for the Leafs it will serve the players well. Carlyle made no excuses. Someone in the media asked if the officiating worked against his team and he refused to be drawn into that debate, he simply said his team ran out of gas. He was calm, leveled headed and waited until there were no more questions to be answered. I couldn’t help but admire the dignity and accountability he exhibited under the most trying of circumstances.
So now that the Leafs have gone down in the hockey chocking history, I’ll have to change my TV viewing habits. Maybe I should start watching Dr. Phil. I suspect some Leaf fans might be making an appearance on the show.
Until next time
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“I wonder how you would feel if you received a call from the government saying we would rather you not buy down interest rates.”
Ever run across something that doesn’t sit right. That nagging doubt that you can’t put your finger on, and it just hangs out there. I experienced that a few days ago after reading an article in the Globe. I decided to take few days and give the article one more glance to see if my original reaction would still be the same. Yup, nothing changed. The article in question appeared in the Globe on Wednesday, March, 20th. The headline read, “Flaherty Pushes up Lending Rates – Finance Minister called lenders to express displeasure at mortgage competition, raising bankers’ hackles“.
Few will or should care about a bankers disposition, but I think we should all care when big brother over reaches. I do not how else I can categorize the direct influence over pricing by the government in the private sector. As reported in the Globe, Minister Flaherty contacted Bank of Montreal to chastise them for lowering rates in an attempt to buy market share. A call also went out to Manulife, but the scolding was delivered by one of the Minister’s underlings. It’s easy to say who cares if faceless corporations get their wrists slapped. But any government encroachment of pricing in the private sector should give us all pause. Imagine you are a mortgage broker who has embarked on a strategy of rate buy-downs. The merit of such a strategy is irrelevant, what is relevant is that you have the right to earn or lose money based on your competency or incompetency. We live and work in a free market economy, and the state plays an important role; pricing of products should never be one of them. I wonder how you would feel if you received a call from the government saying we would rather you not buy down interest rates. I get it – that would never happen based on the actions of a handful of brokers. But entrepreneurs of all sizes share a common principals, and for it to be different based on the size of the enterprise alone undermines the fundamentals of competition.
Another part of the story I find troublesome is why did this become public? I suspect the Minister of Finance would be put directly through to the CEO of both Bank of Montreal and Manulife. For appearance sake alone this arm twisting should have been done in private, and not worn like a badge of honour in public. The general public already believes that the working relationship between the government and banks is too cozy; these stories don’t help to dispel that notion.
Until next time,
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Payment Shock – It’s a term we’re familiar with in the mortgage industry, and it’s in the news again. But hallelujah, this time it has nothing to do with the mortgage industry. Nope, payment or bill shock making the news today is about the billing practices of the duopoly which controls all things wireless in Canada. Here’s the definition of a Duopoly – “situation in which two companies own all or nearly all of the market for a given product or service. A duopoly is the most basic form of oligopoly, a market dominated by a small number of companies. A duopoly can have the same impact on the market as a monopoly if the two players collude on prices or output. Collusion results in consumers paying higher prices than they would in a truly competitive market”.
You can decide if the definition fits as it relates to the wireless providers in Canada. As you’re mulling it over keep this in mind, the OECD (Organization for Economic Co-operation and Development) conducted a survey which concluded that the average Canadian cellphone user is paying among the highest bills in the developed world. To be exact, the OECD determined that Canada has the third highest wireless rates in the developed world.
Not surprising neither Rogers nor TELUS agree with the OECD findings; but regulators are causing both companies some indigestion. Both Rogers and TELUS are regulated by the CRTC (Canadian Radio-Television and Telecommunication Commission) and a new wireless code is being drafted by the CRTC. The CRTC would like the service providers to automatically suspend certain services once a customer is charged an additional $50 above and beyond their normal monthly plan. At first blush you may agree with the CRTC position, but keep mind for most of us in the mortgage industry we would exceed the $50 overage by the first Tuesday of every month. Imagine if you had to call your service providers every time the meter went past $50? If you think wait times for service is less than satisfactory today, imagine what it would be like if this was implemented? Rogers and TELUS were summoned to the hill to provide their thoughts and views on the proposed draft. Suffice to say that neither Rogers nor TELUS said, “we agree with you CRTC, and it’s about damn time you did something about the high cost of wireless fees in Canada.” They said what you would expect them to say, and why wouldn’t they? They’re protecting their own turf. Setting aside the self-interest of the wireless providers in Canada, the real issue is when regulators want to do right by consumers but the practical application of said efforts may result in even more consumer dissatisfaction. Regulatory changes or new “codes” being enacted and implemented has a domino effect. Everyone in the mortgage industry already knows that.
On one hand you can applaud the CRTC for trying to do right by consumers. Who wouldn’t want to pay less to their wireless provider? On the other the CRTC’s position is a little bit of a head scratcher as it relates to practicality. As for the CRTC this might be a case of not seeing the forest from trees. Instead of expending all this time, energy, money and brain cells on way to protect consumers from price shock, maybe the CRTC is missing the obvious. Maybe the CRTC should make it easier for new entrants into the Canadian wireless market. Competition serves consumers well. Why shouldn’t that apply to the wireless industry in Canada?
Until next time,
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Much has been written and said about mortgage debt and affordability recently. No point in belaboring what has and has not been done to address this issue. I’m sure there will be plenty of that in the future, as well ample hang ringing about the so-called condo bubble, specifically in Vancouver and Toronto.
The so-called “condo crisis” (oh, how the mere thought of it makes the press salivate) in Vancouver and Toronto came to mind after I read an article in the Wall Street Journal. The article focused on the cost of condos in Manhattan. The current median price of a condo in Manhattan is the lowest it’s has been since 2004. Could Manhattan’s experience be a harbinger of what’s to come for Vancouver and Toronto? If it is then maybe the 36 people in Toronto who don’t own a condo already should go and get one.
According to the Canadian Real Estate Association, the average home price for the month of December in Toronto was $501,361, and in Vancouver it was $730, 912. Remember this includes dirt to go along with the walls. In Manhattan the average condo price in 2012 was $835,000. However, adjusted for inflation it was the lowest since 2004. Can you imagine the headlines if Toronto was similar to Manhattan’s reality? The median price in Manhattan for a 2 bedroom condo was $1.26 million, 3 bedroom was $2.37 million and a 4 bedroom was $4.75 million. Adjusted for inflation these are the lowest prices since 2004. According to the Wall Street Journal article there’s a disconnect between buyers and investment indicators. Buyers are saying there’s not enough affordable housing and yet when you take inflation into account prices have actually declined. So is it a good time to buy a condo in Manhattan? I’m not familiar with the Manhattan’s housing cycle so I’m not sure, but what I can say is this: at an average price of $2.37 million for a 3 bedroom condo in Manhattan, I think Toronto is a good buy.
Some might be aghast that I would compare Manhattan to Toronto. Well, Toronto is the 4th largest market between the US and Canada. Therefore, I think it’s valid to look at values on a comparative basis. That’s exactly what foreign investors did when buying property in Vancouver and Toronto. As absurd as we think our prices may be, the investor from Hong Kong looks at our market and thinks of great value. As we all know value is driven in large part by consumer perception. The perception of Vancouver and Toronto is that consumers buying condos are doing so at their own peril. Yet in Manhattan, home buyers lament the high cost and scarcity, all the while being told now is a good time to buy. It’s interesting how some things never change. Here’s a headline that helped shape New Yorkers perception of their condo market, “Great Scarcity in Apartments…Never before has there been such scarcity of apartments on Manhattan Island.” That headline came from the New York Times, in 1916!
Until Next Time
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On Monday, February 4, a little piece of Canadiana is no more. Yesterday was the official date where banks and businesses would no longer receive pennies. Yes, that useless little copper coloured currency has gone the way of the Canadian one a two dollar bills – out of circulation. The difference being that the one and two dollar bills were replaced by coins. Why? Because they were actually worth something. The penny? Not so much.
I like money, who doesn’t? But for most people the penny has become a nuisance. For most people it’s been like this for a long time. How many times have you reached into your pocket to retrieve change and penny drops on the ground. You look down at and say to yourself, “it’s not worth the effort of bending over and picking it up”. So you just leave it and walk away. You do this not because you think you’re a baller. You leave it be because it’s not worth the effort of bending all the way down to get it. What would total strangers think of you if you we’re to ? Not going to allow anyone to think poorly of you over a penny. Nope, that useless, bacteria infested coin just isn’t worth a simple knee bend.
I suspect right now you’re thinking, “Soon the penny will be history, and I wish someone would provide me with some useless information about the penny which might come handy if I ever play Trivial Pursuit again”. Lucky you! The penny was put into circulation in 1858. The high cost of copper back in 1920 forced the government to make the penny smaller in size. The Queens likeness first appeared on the penny in 1965. Shall I go on? No, eh? What if I was to say, “A penny for your thoughts?” Just dawned on me that “a penny for your thoughts” really means that you don’t put any kind of value to what the other person is thinking. Finally! There’s some value in a penny.
Until next time,
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