Thursday, October 02, 2008
If you are like me, you are nervous about the state of the real estate market and financial markets here in Mississauga, the GTA and for that matter, all across Canada. This financial market meltdown has been prolonged and deep.
So where are we today in our marketplace. This is a short synopsis of my situation and provides a snapshot to look back upon in 3 to 6 months from now.
I looked at my rrsp's today and they have dropped about 20% since July of this year. Same thing goes for my resp for my children, probably 25% drop with those. My stocks have been free falling for about 3 months and the end seems nowhere in sight. What a ride we've been on for the past few months.
This financial meltdown caused by the financial 'crisis' in the US has now impacted our GTA market. This is not helping our local real estate market.
There are other factors that are affecting our local economy too. There is an upcoming federal election in a few weeks, finally an election in the US next month, (after what seems like about 2 years of campaigning) and uncertainly in many industries. The price of a barrel of oil has yo-yo'd between $100/ barrel to $135 and now back to about $105. The gasoline price at the pumps has also gone up and down like the roller coasters at Wonderland. And it seems like the price went up and stayed up much longer and higher compared to the shorter and lower regions.
All of the above would indicate that we too are heading for financial troubles here in the GTA. As any of you know, I am an eternal optimist, I think positively about every situation, try to look at the positive side of things in life, have a positive outlook on life and try to avoid reading the papers too much to reduce negative thoughts. With all of this said, even I have become a little skittish over the past couple of weeks.
I don't think that our GTA real estate marketplace will follow the lead of the US real estate meltdown. With that said, it does appear that our market has changed. I noticed this subtle change last fall in our market. The larger homes and more expensive properties were taking longer to sell last fall. Properties that are not 'staged' or near 'perfect' condition were selling in a week last fall, now they are taking a month or two, if they sell at all in our current market. Townhomes in Mississauga still seem to be selling like hotcakes. This may be because they are still quite affordable and appeal to a large segment of the market. Condos too are still selling well, in spite of nearly 500 condos for sale in the Square One area alone! In the W15 area which surrounds Square One, but south of the 403 there are 463 condos currently for sale. 463 condos is a great deal of properties. With that said, they too are selling well.
One of the beautiful things about turning 50 (and there are not many), which recently occurred in my life, is that for some reason you feel like you have earned the right to tell people how you feel because you have paid your dues. Now I know why 'old' people talk so much, they too feel they've earned the right to do so and I am no different!
The negativity in the press and the economy over the past 3 or 4 months is having a negative effect on our marketplace. As well, all of this negativity has also affected our psyche. When our psyche is affected, many of us stop spending and tighten our spending. This in turn slows down demand for all products and services and the problems increase.
We have problems in the manufacturing sector that have been ongoing for about 2 years. We see the effect of this directly on prices of small and large ticket items. See how the price of new vehicles has dropped and is now very close to the price in the US, unheard of 5 years ago. Our dollar was above par for some period of time in the last year, first time since the mid 70's but it back again to just below par, about 95 cents compared to the US dollar. Still close to par.
So where am I going with all this? Our Mississauga and GTA market may slow somewhat over the next couple of months due to the reasons above. our market is typically slow in late November and certainly December is our slowest month of the year. January can be a slow month in real estate depending upon the weather. So, with a slow October, we are looking at 3 or 4 months of slower than previous year 4th quarters.
I believe that once the US president is sworn into office in January the US economy will begin to improve, if only due to 'hope' Hope is everything in life and the US will be no different. Hope will affect our psyche. Once we have hope, we will begin to spend again which will in turn help the economy. People in the US feel it will be 5 years or longer to return to where they were 12 months ago.
All of this reminds of the graph that is shown on my site at http://www.mississauga4sale.com/Market-Emotions-Cycle.htm that shows the emotions of the market. It's a great graph and certainly we in Canada are between the two points of Fear and Desperation. Does this mean that we must continue on the downward slide into panic, despondency and depression? I hope that we can go from Fear and Desperation to Hope, but only time will tell.
We are in for an interesting ride over the next 3 to 6 months. Let's hope that we can reach "hope" and "relief" sooner rather than later.
I wish you all the best to you and your family.