Tag Archives: financial sector
If you have to ask, you can’t afford it
Deirdre Kelly – Globe and Mail
What’s it like selling high-end Toronto real estate in a down market?
There is no down market for high-end buyers. People may speak of a slowdown in a luxury market, but they misunderstand that luxury product does not move anywhere near the same speed as modestly priced product. This is because the luxury buyer has multiple homes, and thus has no sense of urgency. Their motivation for purchase is a lot different because they are not buying for shelter or investment. They purchase when they find what it is that they are looking for.
So how do you find that for them?
The salesperson has to be able to thoroughly understand the lifestyle of the purchaser and demonstrate to them how their lifestyle requirements can be met.
Since the luxury buyer is purchasing a large – huge by city standards – suite, they want to indulge their tastes. So it is better to sell a suite “raw” so that the buyer, with the assistance of their designer, has an open palate and can virtually customize the suite to meet their unique requirements. A high-end buyer does not want the builder to predict their tastes and requirements. They insist on having their own personal signature on this home. When they see something that is already in existence, then it is someone else’s signature, not theirs. They like to call the shots. They like to be in control.
Who are your buyers?
It’s a mixed clientele. Right now I’m selling to mostly local buyers who are a combination of old money and new. They range in age from their late 30s to their late 50s. Some are young professionals who have become incredibly successful and for whom a large luxury residence is important. I also have couples with substantial amounts of money working in more than one country at a time in the financial sector or in the dot-com industry.
Do they pay cash?
Yes.
Do they haggle?
They never haggle over the price. Once they find what they want, it’s far more important to them to get exactly what they want in terms of the finished product, everything from specific types of hardwood and top of the line appliances right down to the designer toilet.
Do they bring their designers with them?
In most cases, yes. And when a designer is involved, he or she is extremely influential in shaping the purchaser’s buying decision. The designer is actually far more important than an agent or broker in getting the purchaser to buy.
Can you describe the psychology of the luxury buyer?
These buyers are extremely sophisticated. They’ve researched everything. They know what they want and it’s not what someone else has. They are extremely discreet. They prefer to remain as anonymous as possible. They’re only rude after they’ve bought; beforehand they’re very, very nice. They’re also very precise and although they’ve made multiple purchases and to the average person a $7-million chunk of real estate is hard to even fathom, the luxury buyer likely already has several homes in that price range.
That being said, they take what they are buying very seriously. Most will put a lot of time and effort into the ongoing construction of the suite. Surprisingly, the actual sale can happen fairly quickly, but the time taken to decide on the selection of finishes can go on forever with no rush to expedite the process.
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Contact the Jeffrey Team for more information - 416-388-1960
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How Canada Squares Up
By Richard Blackwell – Globe and Mail
The growth may have be meagre, but the 0.4% annualized increase in GDP in the third quarter marked the first rise since the third quarter of 2008. That means, at least by the classic definition, that Canada is out of recession.
At one point, early in 2009, there were fears the downturn might spiral into a lengthy worldwide depression, with a contagion taking the global financial sector down the drain. That didn’t happen, and it is now possible to begin to examine how Canada fared compared with the rest of the world, and relative to previous recessions.
VERSUS EARLIER RECESSIONS
Of the Canadian recessions in the early 1980s and early 1990s, the first was by far the deepest and longest, lasting six quarters. Unemployment spiked to the 13% level.
The 1990s recession lasted four quarters and was about as severe as the one just ended, when measured by the shrinkage of the economy. But unemployment rose as high as 12% and it took a long time for the job market to recover.
This time Canada caught the recession flu from outside, mainly from the United States, and the country was in good shape with a significant federal budget surplus and solid financial institutions. As the recession took hold, quick interest rate cuts and huge stimulus helped turned the tide.
“It wasn’t primarily our fault, and we were fairly well prepared,” said University of Toronto economics professor Peter Dungan.
One reason for the relatively better performance on the jobless front in this recession, he said, is that in the 1980s and 1990s the labour force was growing much more quickly. Higher population growth, and the shift of women and baby boomers into the labour force exacerbated unemployment problems in those days.
Economist Dale Orr points out that it is not clear if the job market in Canada will recover quickly this time. Even though the economy is growing again, signs of employment picking up are still tentative.
“We’re still not home free with respect to employment, so maybe we should not jump to conclusions yet,” he said. Some important sectors – such as automotive manufacturing or forestry – are undergoing structural shifts and jobs in those industries may never return to earlier levels.
COMPARED WITH OTHER COUNTRIES
Canada’s downturn has been about as deep as that in the United States, and lasted roughly the same length of time. One key difference is that the U.S. has seen unemployment numbers jump much more sharply than here.
The credit crunch in the U.S. was worse than in Canada, Mr. Dungan noted, forcing corporations to make more severe job cuts. Housing and real estate problems were also more severe south of the border.
Compared with other countries around the world, Canada is somewhere in the middle of the pack.
Japan and much of the euro zone experienced more severe recessions, said Toronto-Dominion Bank senior economist Richard Kelly, although some of those countries are bouncing back quickly now. Few industrialized countries have actually outperformed Canada, with the exception of Australia, which has already recovered enough to increase interest rates.
The burgeoning economies of India and China slowed during the recession, but still managed to grow at levels that would make much of the world green with envy. China, for example will likely see its economy expand by 8% in 2009, according to the Organization for Economic Co-operation and Development.
AMONG PROVINCES
This recession was unusual, compared with earlier ones, in that every province showed a decline in GDP, Mr. Orr said. “In a lot of other years when Canada’s growth was negative, there was usually some province that wasn’t negative.”
Still, the reasons for the recession weren’t the same in every province. Ontario was hit by a downturn in the auto sector, Alberta was hammered by lower oil prices, while demand for B.C.’s forestry products slumped.
Quebec, which was battered in earlier recessions, fared slightly better this time because its aerospace industry held up better than auto manufacturing.
One common factor that damaged all provinces was the credit crunch, Mr. Orr said. That hurt businesses of every type and contributed to the decline in the housing market across the country.
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Contact the Jeffrey Team for more information - 416-388-1960
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Toronto real estate resilient in first half of 2009
One in five neighbourhoods have surpassed pre-recession average price levels
Canada News Wire
In the midst of the recession, approximately 20% of single-detached homes and condominiums in Toronto neighbourhoods managed to post an increase in average price, according to RE/MAX.
Comment: Remember, though, the Bank of Canada has announced that the recession is over. And with stocks up, retails sales up, consumer confidence up and real estate sales up – I think we can see it for ourselves.
The RE/MAX Return on Investment Report found that 11 (17%) of the 65 Toronto Real Estate Board (TREB) districts reported an upswing in the value of a single-detached home in the first six months of 2009, despite one of the worst first quarters on record.
The Beach (E02) saw the greatest percentage increase year-over-year at 3.79%, with average price rising to $715,422, up from $689,278 in June, 2008. Pickering (E13) placed second, with the average price of a single-detached home climbing 3.72% to $389,536, up from $375,577 from one year earlier. Willowdale, Newtonbrook (C14) ranked third, with a single-detached home rising in value from $754,470 to $779,537 – a 3.32% increase. Rounding out the top five neighbourhoods are newcomers Downsview, Weston (W04) – where prices have climbed 2.25% to $384,485 from $376,007, and Rouge, Malvern (E11) where a 1.99% uptick has brought year-to-date housing values to $345,468 (from $338,738).
“Purchasers clearly moved to take advantage of greater affordability in the marketplace in the first half of the year,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Prices were down in virtually every neighbourhood surveyed; supply of homes listed for sale was at an all-time high; and interest rates were at historic levels. If you’re a buyer, it doesn’t get much better than that.”
Given their more affordable price point, condominium properties fared slightly better than single-detached homes, with 13 (22%) of 59 TREB districts posting an increase in average price. Condos in Cliffcrest, Guildwood (E08) in the city’s east end saw the greatest appreciation in value, with average price climbing 6.45% to $175,855, up from $165,197 one year ago. North Toronto, Cricket Club (C04) ranked second with a 6.1% increase in average price, bringing condominium values to $301,065 (up from $283,746). Downsview, Weston (W04) clinched third spot, with a 4.37% increase in average price to $173,083 in June 2009, up from $165,834 one year earlier. Mississauga’s thriving Port Credit community (W12) experienced a 2.63% increase in condominium values year-over-year – with average price hovering at $304,954. Bendale, Woburn, and West Hill comprise E09, where the average price of a condo appreciated 2.46% over figures reported one year ago to $201,830.
“But that was then and this is now,” says Polzler. “Lower inventory levels combined with increased demand – comparable to what we’ve seen in recent months – is expected to place renewed pressure on housing values for the remainder of the year. As a result, average prices are forecast to be at par or slightly ahead of last year’s levels by year-end in almost all neighbourhoods.”
Case in point is areas like Toronto’s east end, where bidding wars are breaking out on single-detached properties daily. The average sale-to-list price ratio in E01 and E02 approaches 100%. Average prices are up in four of the 18 East District neighbourhoods. Overall average price in the east is down less than 1% to $346,597 from the January to June 2008 figure.
The areas with the highest percentage decreases in the average price of a single-detached home have also seen the greatest increases in the number of properties sold. The overall average price of a single-detached home fell by 5.17% in the Central District to $884,036, down from $932,198 one year ago, while the North District dropped 4.49% in value to $526,693, down from $551,452 in June 2008. Sales are up in both areas, with 2,000 homes changing hands in the central area (up 4.28% over one year ago) and 4,249 properties sold in the north (up 3% from June 2008).
Only one district reported an overall increase in the average price. Condominiums in the North District – comprised mostly of York Region – posted a 0.26% increase in values – and now hover at $275,822, compared with $275,113 one year ago.
“The momentum going forward is expected to be healthy – buoyed by positive economic data and a return to stability in the financial sector,” says Polzler. “There may be some bumps along the road, but all in all, the worst is over for the residential real estate in the Greater Toronto Area.”
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Contact the Jeffrey Team for more information - 416−388−1960
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