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

Cheers

“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,

Cheers.

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,

Cheers.

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.

Manhattan Living...

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

Cheers

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,

 Cheers.