Austerity Now ! Norair Yeretsian

Well the Bank of  Canada, decided to slowly start to raise rates
this may be a signal from the Bank that lends to the Banks
that money will cost more, in what appears a recovering economy.
The real professionalism will come out much later, when we shall
see if a more balanced growth environment is created and we are
not killing off any chance our businesses have to recover and correct
their position(s)  and growth prospects and start to re-hire  .

With rising interest rates, residential real estate’s rising valuation slows
and  declines historically speaking. This is not good news for real estate.

Just in time of course as the new harmonized tax :  HST comes into play

July 1, 2010 in Ontario,Canada and causes its anxiety among consumers.

This will affect all commercial real estate lease agreements and payments.
As we prepare a memo to all our tenants in our industrial/retail and office
buildings which says they must add an additional 8% to their current rent
to address the new HST ( 13% on top of the combined : minimum plus additional rents )
[ commercial tenants are currently paying 5% GST which will end at 11:59 June 30/2010].

This is a new tax for commercial real estate to incorporate into its system and deal with
at the end it does not matter , however in the short-term it will require an education.

For small start-up companies or individuals — it will be one more thing to worry about.

One more thing to be responsible for, however if you were involved with consumers
you as a business are already collecting this amount and it will now work out more in
your favor .As it is to run like the GST with input and output credits and the like.

Is there any time a better time to change / add new taxes ?
Is the economy in a condition to deal with it ?

We shall should find out.

Consumers are already uncertain about spending ( lower confidence) and
according to records are de-leveraging.

It is the summer months ( July and August) to test run it, before the last quarter .

If consumers cut back too much , we will loss more commercial tenants.
And everyone gets less revenue : private and public .

What is on the horizon as a counter balance to help push consumers to
spend and help the economy and businesses to invest and expand their operations.
Invest in research and development and push innovation — new products and services
or just better of both.
There is a sense of a pending federal election on the horizon – this wouldn’t help .
It will help pollster and advertising agencies involved with the political parties ,
but what about the rest of us ?

The City of Toronto does have an election coming up in the Fall 2010 and a new mayor to be elected
with hopefully a better fiscal management and just better management.

Save your money, because things are uncertain and there are price increases coming
and maybe tax increases coming — this may be the new normal economy and lifestyle .

An austerity life style for all ?

Let’s discuss your opinion on this with your comment below  or

on Twitter at  :  EnvoyCapRealty

nyeretsian@yahoo.com June 22, 2010

Is this the New Normal or Double Dip coming? Norair Yeretsian

Mr. Mohamed El-Erian (PIMCO, CEO: over sees more than $ 1 trillion of assets )
said we need only look to the key indicators to understand
where we are and what is happening in our economy and here is the short list ( below ).

This is the new normal economy get use to it . Things will move slower, on employment front.

Employment :  rather unemployment , well at least it is not increasing — its steady .

Consumer Spending : consumers are cautiously spending and not taking on any new debt.

They are starting to work on reducing debts.  Household’s de-leveraging – working on reducing of debt .

Government spending : Government is increasing spending and taking on more debt .

Government is increasing leveraging ,  increasing debt . This is not going to help in the long run.

Business :  Small businesses can’t borrow to spend and grow .
Big corporations have the credit ( and lines of credit ) but  not borrowing and
using their cash to buy back stock.
Not expanding , investing in new plant and equipment to grow.
This is not good for the long-term.

Housing starts : steady , stabilizing , getting better .

Demographics : the population, increasing / decreasing — aging .
The new tax base and the pension(s) – health care, more things to worry about.

The economist Nouriel Roubini described things and generally things are not good
in the economy and government does not appear to be doing anything right at this point
- this is a major concern and will affect all our lifestyles  in America.
With the future only having increasing taxes and possibly cuts to spending in many areas.

There is good liquidity in the economy, Government printing lots of money .

The U.S. economy is still the best on the planet, however  Asia will be coming up .

Roubini is concerned we may be heading for another Dip as the stimulus money
runs out and few to no other measures available for more stimulus.

El-Erian believes we are not heading towards a Dip again, however we
should not expect the economy to perform as it has/ had in the past.

It is always good to have at least two views on where we are and where we may be heading
think about your local economy and the status of its health :
where you are and where you might be heading.
The Key indicators and plus the Demographics of your location should give
you a better understanding of what is happening at the Micro level.

What is happening with the supply of re-sale housing , listings to sales
how many weeks / months supply is there at current demand ?

Most of my colleagues complaint of  lack of inventory ( good salable listings).

What’s the employment statistics in your area of the country .
Does the national average – really matter to you / your area’s economic health ?

If interest rates move, how will that effect the supply – demand dynamics in your area?

Will the interest rate movement effect affordability to the extent that
prices/valuation will be impacted in your location.

One of these factors ( variables) a lone, will give us the answer we are seeking -
- but the mix of these variables at the right time will lead us in the direction we end up.

What happens at the Macro level ( the nation) is more challenging to understand
immediately and we see the data historically ( end of quarter / half/ year ).

Mohammad El-Erian and Nouriel Roubini  [ Crisis Economics , new book ] on CNBC discussion June 15/2010

( The Realist and The New Normal )

Mirco -data ( and what it says ) and Marco ( what actually happens ).

What about innovations by individuals and companies ?
What about alternative energy sources development and implementation into our economy?
What about new discoveries  , that are game changers for the economy ?

What is happening in your area of the economy or country that is raising hope
for a new dynamic economy where new types of  jobs are be created and
new demands for housing are being driven?

Let’s discuss it below with your  comments / or on Twitter EnvoyCapRealty .

nyeretsian@yahoo.com    June 20, 2010

It’s A Mug’s Game! Norair Yeretsian

The chief economist Gregory Klump of CREA;

Canadian Real Estate Association, says” the real estate market is Cooling !”

Nooooo , is it the economy?

Is it supply and demand? Is it just year over year comparison?

Are we over supplied with stock and weak demand ?

Or, is it that summer is coming ?

“Next year prices should tend to rise with inflation”  said Klump  (CREA).

So it will be a stable market, in Canada.

Toll Brothers (nations largest luxury home builder)
chairman Bob Toll says the housing market in the U.S. is
getting better and better. From where they have been.
Their average home is $ 500,000 .

Toll Brothers have started to remove incentives, therefore raise prices .

Toronto, Canada a hot market for residential real estate,
” has now moved away from a seller’s market , to a more balanced market.
Even Windsor , Ontario is now moving towards a balanced market..”
according to Mr. Klump  (CREA).

The only thing we can say with a degree of certainty is
– where we have been.

The future : your guess is as good as mine !

Forecasting real estate prices, it’s a Mug’s Game.

Let’s discuss it : Twitter ; EnvoyCapRealty or add a comment below

nyeretsian@yahoo.com May 17, 2010

Deep Economy : Do things Locally ! Norair Yeretsian

The Wealth of Communities and the Durable Future :
Deep Economy by Bill McKibben is a book about location,location ,location !
You and I have the best location, to do all the things we want.
In Deep Economy, Bill McKibben explores our current state and problems and
suggests we can do better by doing it within reach/locally.
And thereby build a stronger and healthier economy by building many
micro local economies. Because we now have challenges everywhere and
it weakens the whole economy, example our food :

” Even apart from terrorists, the centralized food  system we’ve built presents risks.
The industrialization of poultry is the nub of the problem ‘ of avian flu ‘ says
Kennedy Shortridge, a Hong Kong microbiologist who has spent three decades
studying influenza viruses. Concentrated agriculture also manages to make us
sick on a fairly regular , if less dramatic, basis. Seventy-six million American
fall ill annually from food-borne illness; 300,000 are hospitalized, 5000 die.
Salmonella is the biggest culprit, and its prevalence has doubled since the 1070s,
which makes sense when you consider the enormous poultry barns and cattle
feedlots that grew up in those years.”

We may need to go smaller , faster.
Detroit , Michigan is planning on destroying many urban vacant homes
and creating farm land : Urban farms.
City councils in Toronto and London , Ontario have been debating whether
to allow residential properties the permitted use of : raising chicken, and
possibly other farm animals in their backyards ?
There is a minor movement to getting vegetable gardens growing on Hydro fields.

We could grow more of our food locally and become healthier in the process.
You and I have the best location : Ontario, Canada to do all that we want.
Geographically well located, and with a nice seasonality to grow and raise wonderfully.

Challenges exist and they must be addressed. Environmental issues of the lands is
another concern, testing must be done first prior to growing things on these properties.
And someone needs to establish healthy standards for the soil conditions for that the
results are beneficial for all.

Land and the quality of our land is very important for our health and well being.
When you buy and sell property there is a responsibility to care and protect the
future uses of these properties. Due diligence is important in this area to satisfy
all concerned that the properties are safe and clean ; environmentally.

Adam Smith (1776) in The Wealth of  Nations that ” it is not the actual greatness
of national wealth, but its continued increase” which raises wages.
Benjamin Friedman in The Moral Consequences of Economic Growth
provides a modified perspective on this increase. How modern commerce was
thought to be a one time event — that they would soon hit a plateau.
The new economic revolution showed that businessess could keep improving
their operations, apparently indefinitely.

” By the early twentieth century, increasing efficiency had become very nearly
a religion, especially in the U.S., where stopwatch-wielding experts like
Frederick Taylor broke every task into its smaller parts, wiping out inefficiencies
with all the zeal of a pastor hunting sins, and with far more success. “
writes Bill McKibben ( Deep Economy ,2007; Times Books)

Is it time to re-think, re-set and get back to the Garden of Eden ?

Let’s discuss it :  Twitter @ EnvoyCapRealty  or just below …

nyeretsian@yahoo.com May 16, 2010