FALL 2006
Real Estate Update
Ian & Linda’s Real Estate News
The End of the U.S. Bubble?
that favours maximum leverage, Americans have been using their homes at ATMs. Thanks to generous lines of credit and multiple refinancings, they’ve renovated, furnished their nests and moved up to ever larger homes. In the past decade, the percentage of U.S. household wealth tied up in homes has climbed to 48.5 percent from 38.7 per cent and recently The past year has been rough on conmajor retailers, including Wal-Mart and Costco sumers, first mortgage rates began to have warned of substantially weaker profit in rise, then there was the jolt from sharply the months ahead as consumers cut back. higher energy prices and now the apparWhat sold in a weekend there last year is tak- ent end of the long real estate boom is at Economist Clement Gignac of National Bank ing months to unload and increasingly nerv- hand. It is all combined to make Ameri- Financial Inc. in Montreal argued that the price cans feel distinctly poorer, and less con- boom in oil and other commodities may keep ous sellers are slashing prices to get rid of properties before their value sinks even fur- fident. Mirroring other recent surveys, Canada from following the United States into a the U.S. Conference Board reported last recession. He says that Canada escaped U.S. ther. week that its consumer confidence index driven downturns three times in the 1970s, and suffered its biggest one-month drop in this time could be the same. He puts the odds The once red-hot housing market in many August since the devestation of hurriof a U.S. recession at 40 per cent, but just 15 areas of the United States has fizzled and per cent here in Canada. economists and policy makers are question- cane Katrina a year ago. ing whether the end of the housing boom sigIf you’re thinking that this doesn’t mat- From “The Housing Collapse Heard Round the World” nals the beginning of the end of a long run ter much to you you might want to think Barrie McKenna, The Globe & Mail September 3, 2006. for the world’s mightiest economy. ______________________________________________ again. For nearly a decade now the U.S. The U.S. housing crash may prove to be the has been the economic driver for much OWNERS CAN’T BE STOPPED economic equivalent of the canary in the coal of the world—Canada included. The FROM RENTING THEIR UNITS mine—a warning of impending danger in an U.S. has been sucking up excess savings and everything in sight, from cars to economy that has surged too far, too fast. According to the Ontario Condominium homes and everything that goes into Many experts are now openly speculating Act declarations may contain conditions them. about a possible U.S. recession next year, or restrictions with respect to leases of brought on by consumers reacting to the units however a declaration cannot give a shrinking value of their nest egg. If they are Morgan Stanley chief economist Board the right to prohibit an owner from right, the fallout could prove to be far nastier Stephen Roach warns that “the non-U.S. leasing to a tenant of whom the Board than the collapse of the technology bubble at world remains heavily reliant on selling does not approve. Owners who lease out exports to wealth-dependent American the start of the decade. their condo must inform the Board, in consumers”. writing, within 30 days. They must proThe housing market has been a perfect convide the tenant’s name, the owner’s adHousing has emerged as an increasingly duit for economic activity, funnelling and dress, a copy of the lease/renewal or a leveraging billions of dollars worth of house- vital economic driver—for consumpsummary of it. Landlords must also prohold wealth into consumer spending in recent tion, jobs and overall economic activity. vide the tenant with a copy of the bylaws, Encouraged by low interest rates, innoyears. If Americans decide to save rather declarations, rules and regulations. than spend it could have a dramatic effect on vative mortgages and a tax system Real estate agent Andrea Gaus knew that the market was out of whack when the price of a typical four bedroom house near good schools in the leafy Maryland suburbs of Washington shot past the $1 million mark. “It got to the point where appreciation was so high that it priced people out of the market”, Ms. Gaus said. But the peak has passed, and the consequences of the deflating bubble are buffeting the housing market in Washington and across the United States. consumption, sending the economy into reverse. According to economist Peter Morici, “The wealth effect has been very important in fuelling the recovery. It doesn’t appear like that is going to be available any more. Housing prices have finally outrun incomes.”
RECENT VICITIM STEPS FORWARD TO ADVOCATE FOR CONSUMER AWARENESS OF REAL ESTATE TITLE FRAUD ProtectYourTitle.com launched as consumer information resource First Canadian Title is calling on homeowners to take a stand against real estate title fraud. The company announced it has enlisted the help of Susan Lawrence, a Toronto-area victim of real estate title fraud, and launched www.protectyourtitle.com to demonstrate to consumers that fraud can happen to anyone. Lawrence, whose home was mortgaged for almost $300,000 by fraudsters who forged her signature and walked away with the money, will be speaking publicly about her experience and the need for greater consumer vigilance. ProtectYourTitle.com provides fraud prevention tips, case studies, Q&As with industry experts, and links to partners such as the RCMP, OPP and PhoneBusters, an anti-fraud call centre operated by the Canada Competition Bureau. First Canadian Title estimates the average case of real estate fraud to be $300,000, compared to estimates of $1,200 by the RCMP for cases involving credit card fraud. Meanwhile, industry insiders estimate that real estate fraud costs Canadians between $300 million and $1.5 billion each year. The Law Society of British Columbia, after four years of investigations, recently approved $32.5 million in payments to cover a multimillion dollar real estate fraud case involving Vancouver lawyer Martin Wirick. The high-profile case involved transactions between 1998 and 2002 and affected hundreds of victims in the scheme. A recent report by the Law Society of Upper Canada made headlines when it revealed that 72 of Ontario’s 36,000 lawyers are currently under investigation for mortgage fraud. The report says fraud is a growing problem across the entire real estate industry and it urges, Realtors, mortgage brokers, lenders and consumers to address the issue. Because the onus is on homeowners to prove that a crime has been committed this kind of fraud can be very costly both financially and emotionally.
Grandma Johnson’s Scones
1 cup sour cream 1 tsp baking soda 4 cups all-purpose flour 1 cup sugar 2 tsp baking powder 1/4 tsp cream of tartar 1 tsp salt 1 cup butter 1 egg 1 cup raisins (optional) In a small bowl, blend the sour cream and baking soda and set aside. Preheat oven to 350 degrees. Lightly crease a large baking sheet. In a large bowl, mix the flour, sugar, baking powder, cream of tartar and salt. Cut in the butter. Stir the sour cream mixture and egg into the flour mixture until just moistened. Mix in the raisins. Turn dough out onto a lightly floured surface and knead briefly. Roll or pat dough into a 3/4 inch thick round. Cut into 12 wedges and place them 2 inches apart on the prepared baking sheet. Bake 12 to 15 minutes in the preheated oven, until gold brown on the bottom.
THINKING OF MAKING A MOVE?
We can help - we have access to housing information not just for the Oakville/Burlington/Mississauga area but across the country. We can let you have videos/DVD’s on how to maximize your home’s potential with easy but effective fix ups and we can even put you in touch with an excellent “one stop” service who will take care of any jobs you don’t want to tackle yourself. We can give you all the information you need to make a sound decision and provide you with a free, comprehensive Market Value Appraisal. Just call and let us know how we can help.
Personalized, professional service and competitive commissions from 3%
IAN & LINDA DARROCH
RE/MAX ABOUTOWNE REALTY CORP (905) 842-7000
1 (800) 776 7981
Broker
www.burloakrealtors.com iandarroch@cogeco.ca lindadarroch@cogeco.ca
Sales Representative
We are both members of Re/Max Hall of Fame
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