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Posts from the ‘The Morning Meeting’ Category

21
Jan

Top 4 Take-A-Ways From 2015 Real insider Client Briefing

insiderThis week I had the opportunity to attend the RealNet sponsored “Informed Advantage” client briefing entitled “GTA 3.0 – Property Market Crisis or Opportunity”. As usual, I enjoy any chance to sharpen my overall knowledge of the real estate market particularly The GTA and specifically downtown Toronto. If you haven’t attended this briefing before, put in your day timer for next year. You will be glad you did. There where several great speakers, including Benjamin Tal, Deputy Chief Economist CIBC World Markets. I took copious amounts of notes and so I thought it would be worthwhile to talk about the top 4 take-a-ways from the day. Oil, Interest Rates and The Canadian Dollar, The Euro zone and The US recovery, and Ontario’s future. Call it a quick primer on what’s going on at the start of 2015.

Lets start with Oil.

Tal believes that falling oil prices are essentially a ‘Black Swan”, meaning there is no reason prices should fall. His says that it is nothing more than a big expensive experiment by OPEC. Saudi Arabia has been slowly losing market share to Russia, Venezuela, The USA and Canada. They can produce oil at roughly $20 per barrel and make a healthy profit. Russia and Venezuela produce it at a substantially higher price, nearly $100/barrel, while Canada’s Oil Sands projects break even at closer to $60/barrel. Simple economics dictate that if you lower the price of oil substantially you will squeeze out the competition. Tal believes prices will stabilize around $60/barrel. This amounts to a monumental savings for Canadian consumers. (Annual savings of $17 Billion, $1800 per family).
A couple of other points to discuss that relate to oil, namely, China is one of the largest importers of oil. Tal expects China’s economy to benefit from lower oil costs which will have a ripple effect around the globe. Alberta is expected to slip into recession as a result of Oil Sands layoffs. The Alberta Government could suffer up to a $10B budgetary shortfall however with one of the lowest tax rates of all Canadian provinces, they are likely to increase taxes to make up, at least in part, the difference. Tal reminded the audience that the last three major recessions followed a huge spike in oil prices. He believes that lower oil prices are a positive event that will benefit 85% of the Canadian population. Here’s a new catch phrase….The efficiency paradox…The cheaper something gets the more we consume.

Interest Rates and The Canadian Dollar
Tal believes that the Bank of Canada won’t touch interest rates, in fact his belief was that the rates might even go down. He obviously has a very powerful crystal ball as his prediction came true. The reality is that lower oil prices will limit the need to increase interest rates. He was clear in his thinking that the BOC’s agenda is to keep the Canadian Dollar low. A low dollar helps exports and fuels manufacturing. Speaking of interest rates Tal pointed out that one segment of the lending market we should watch out for is the alternative or B lenders. They are typically unregulated and are rising in popularity by almost 25% per year. In his mind this growth has all the ear markings of a blooming subprime market. The good news is that overall this only represents 2.5% of the residential lending market. And since we are on the BOC topic, Tal brought up their recent report claiming that Canadian Real Estate was 10-30% overvalued. He believes that this is a grossly oversimplified report (comparing it to a junior high school project) that only measures against other countries. What the report fails to take into account is the fact that overall values are driven by two markets, Toronto and Vancouver. Both those markets share similar properties that are creating high average prices namely they are the dense city centres and are bound by strict geographic limitations. Vancouver has water on one side and mountains on the other while Toronto has water on one side and is surrounded by a Greenbelt. In both cases, limited land is responsible for higher prices.

The Euro zone and the US Recovery
Where China’s government has the ability to orchestrate a soft landing and oil will fuel the next growth spurt, Europe is a different story. Two factors are weighing heavily on the Euro. First, Italy is in its third recession in 6 years and the winner of the Greek election could default on the countries loan or opt out of the EU altogether. Currently the Euro zone has almost negative interest rates which could effectively force a run on the banks. Tal believes that despite all the turmoil the Euro will survive.
The US recovery is being led by one simple fact…the easing of credit. The US needs higher rates but the market is driving the Fed and not the other way around. Employment is also rising and remains a strong indicator as to the health of the economy. The US recovery has many benefits to Canada through increased demand of lumber and manufactured goods.

Ontario’s Future.
Currently one in four Canadians live in Ontario’s Golden Horseshoe. The population is expected to grow in the region by 2.4 million people by 2036. Cap rates for investment properties are at an all time low, land prices are at an all time high as are new condominiums and low-rise development in the GTA. Despite that, the GTA hit a record high $13.5B in property transactions in 2014. George Carras of RealNet calls this a “Crisi-tunity”. 5 significant office towers are underway in downtown Toronto (with size more planned) but as Carras explains, much of the current commercial development is driven by a replacement mindset, meaning tenants aren’t looking for more space…they are looking for better space. It is interesting to note that Downtown Toronto has the second lowest vacancy rate compared to eight of the largest Canadian commercial centres.
Ontario is a major consumer of oil and will benefit from lower prices. Any effective layoffs in the oil fields will be absorbed by increased manufacturing thanks to US demands and low dollar. Peter Norman, chief economist for Altus Group has looked carefully at long-term housing demand and states that aging in place is on the rise in urban centres which has contributed to lack of freehold inventory. Meanwhile, Millennials are choosing apartment living in ever-increasing numbers. Hot on the heels of a strong year in condominium growth, the biggest concern for developers moving forward will be the time required to deliver new product to the marketplace. Municipal requirements and bank financing are slowing the process down greatly. It is important to recognize that the large increases in average home pricing is not limited to Downtown Toronto. Carras cited an example of a 3300 sq ft home in Vaughan that sold in 2004 for $573k. That same house in 2014 is now $1.553M.
In large part due to the restrictions of the Greenbelt, prices of low rise homes have rapidly escalated since 2011 and are now at $705,813. The price gap with high rise homes, which were only slightly lower by comparison back in 2011, are now $251,337 lower. High rise prices still increased in 2014 (up 4% to $454,476).

Clearly there is a lot to digest here. If you are able, download a copy of 2015 RealInsider™ Client Briefing. There are over 160 slides from the presentation available. Great stuff to share with your clients who are worried about buying in Toronto.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

6
Jan

You’d Be Surprised Where Those Leads Come From

pushing a rock
We’ve been told a thousand times that the key to success in real estate comes from prospecting. I only have three things to say about that….true, true and true. If you aren’t willing to prospect you will not have a successful career. We are taught to keep adding names to our data base. The truth is that we should consider the act of prospecting akin to filling up a leaky bucket. Every once in a while a droplet (buyer or seller client) drops out and we make money. I believe this to be a fair representation of the process. We fill that bucket with our friends and relatives, the names of people we meet at open houses, or door knocking, or at social gatherings or through connections we make on Facebook or LinkedIn. But there are other sources that we pass up all the time because we either don’t think about it or we think that specific contact just doesn’t have the capability to buy. Time to think again. Clients can come from some of the strangest places and through the weirdest connections.
A few weeks ago I heard a story of a lady, lets call her Jane, who received a Christmas card from someone she met years ago in another city. That person (Sandy) had put her name in their personal bucket and for years had sent out cards at every holiday. This year Jane took the initiative to send Sandy an email to say thanks for the card. That email opened up a flood of conversation which eventually drifted to the topic of a client of Sandy’s who was moving to the same town that Jane lived in. Yep, you guessed it. Referral!
It got me thinking that we, as agents, should not leave any stone unturned. If a random Christmas card from someone in a different city could lead to a serious referral then there has to be other connections that could prove fruitful as well. It could even translate across different careers. Who’s to say that the appliance repair guy who fixed your dishwasher two years ago might actually know someone who is planning on selling their home and doesn’t have a Realtor?
The lesson this year is simple….look beyond traditional borders when prospecting and don’t leave any stone untouched. There’s money out there somewhere and it can come from some of the craziest places.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

17
Dec

Mission Possible. The Ultimate 12 Week RE Sales Contest. Task 12. Share The Love

Well it’s finally over. After 12 gruelling weeks my contest is over and we have a winner. Time for a big shout out to Graham Rowlands who demonstrated a very well-rounded approach to getting points. He didn’t just do one or two things, he approached each challenge with an open eye because he knew that building a routine was key to his success.
So for the last task I asked the agents to share our office experience with agents from other companies. If they enjoyed the past year, my meetings, Mastermind, our social gatherings or even our contest, then share the love with others and if they thought someone would fit well into our environment then they had to let me know. It would be my job to make the connection and let that agent know they were recommended. Sure, it’s kind of a backhanded recruitment strategy but rather than me call random agents isn’t it nice to be recruited not just because you are successful but because other agents think you would add value and fit in to a thriving office?
Finally, as I close out my posts for 2014, I want to encourage real estate managers everywhere to share their meeting topics. It is hard work to keep agents engaged week after week. Sure, when some new initiative, policy change or interesting media story emerges you can build a great meeting around it but other times you just have to come up with something fresh and entertaining. I run 45 meetings a year and I would be the first to admit that some are complete duds but when they are good they are worth sharing. RealtyLab is a perfect vehicle for sharing so if you have something good just let me know, I’ll try it out, I’ll write about it, and I’ll give credit where credit is due. I look forward to all the great ideas in 2015.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

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