CMHC Housing Market Outlook Fall 2008

CMHC posted their Housing Market Outlook for Fall 2008 earlier this month. Although media and many pundits cry bust it looks like a healthy market adjustment. Next year we can look forward to healthy sales and therefore rising resale home prices.

"Existing home sales across Greater Edmonton will fall by 12.4 per cent this year but should post a moderate rebound in 2009. A relatively strong economy, lower mortgage rates, solid wage gains and the absence of further price declines will underpin a modest recovery next year. Residential sales reported on the MLS® by the Realtors Association of Edmonton (RAE) will reach 18,000 units in 2008, improving by almost three per cent to 18,500 sales in 2009. Next year will represent the fourth best year on record with sales approaching the levels reported in 2005 but remaining well below the 21,200+ units sold annually on average during the peak years of 2006 and 2007." CMHC

Download your copy today HERE

The Hot Dog Parable - A New Twist

With more and more focus devoted to how bad we have things, I thought I'd dig up a mini version of the Hot Dog Parable.

The Hot Dog Parable: There once was a man who lived by the side of the road and sold hot dogs. In fact, he sold very good hot dogs....

He put up highway signs telling people how good his hot dogs tasted. He stood by the side of the road and called out, “Buy a hot dog, mister?” And people bought his hot dogs. They bought so many hot dogs, the man increased his meat and bun orders. He bought a bigger stove so he could meet his customers’ demands.

And finally, he brought his son home from college to help out in the family business.

But something happened. His son said, “Father, do you not watch television, or read the newspapers? Do you not know we are heading for recession? The European situation is unstable, and the domestic economy is getting worse.”

And the father thought, “My son is a smart boy. He has been to college. He ought to know what he is talking about.”

So the man cut down his meat and bun orders, took down his highway signs, and no longer stood by the side of the road to sell his hot dogs. His sales fell fast overnight. “You’re right son,” said the father, “We certainly are in a serious recession.”

If you're worried about the man who sold hot dogs, his story has a happy ending. Luckily for him, he had a daughter too. His daughter was able to show him that attitude, commitment and belief are what it takes to change, succeed and even sell hot dogs. After all, there are many folks who still want to buy them, 'recession' or not.

Letters From The Edge

My friend Ryan forwarded me an email from his financial planner last week. I wonder if you've received messages like this one I too? I'll paraphrase:

"Dear Ryan, as you know it's really hit the fan down there in the U.S.. The economy has taken such a beating we don't ever know when it'll be sorted out. Many of the stocks and funds that we've invested in have crashed. It's worse than pretty bad, it's downright awful. Every night I look at the bottle of Scotch on my bedside table and wonder if tonight it will hold the answers I need to know...

The only thing I can tell you for sure is not to panic. (He's panicking now and you can feel it in the letter, almost see the swollen streams of ink where the tears fell)

Keep your money invested in these funds even if they go to zero, because I have to eat too. And remember, everything will be ok one day. The markets can't stay down forever, right? Right?"

You could really hear the fear and uncertainty come through in his letter. I agree that the markets won't stay in the gutter forever. But, hey I'm not going to live forever either and I don't want to spend the next couple of years floating around in the toilet of discontent waiting for another big flush.

The truth is that time heals most wounds. However, when it comes to investing you sometimes have timelines to meet, like retirement for one. You don't want to be tossing good money after bad as things balance out. I also got a letter like Ryan's from my planner. I've actually been watching one of my stocks go from $26.00 a share down to today's new low of $1.44. So, I'm not making light of real losses.

Obviously I prefer hard assets and have 90% of my wealth invested into them. The simple reason is that time and time again a well purchased revenue property repeatedly proves it can survive and thrive a dip in the market and bloom during the peaks.

You know some people will worry and others will take action. That's just the way we are. Those that can brave the miasma of uncertainty today are the same few that will savour the smell of sweet, sweet roses tomorrow.

Edmonton has got a bargain sale going on. Investing in tangible cash-flowing assets will not only protect your wealth but also increase it exponentially over time.