TTC Bus In 1923

If you commute in our city (or any major city in the world) how can you resist picking up a Metro and browsing through the day’s top headlines? This morning I picked one up and found out 10 things about the TTC. I was amazed to learn that each subway car filled during rushhour is the equivalent to replacing 910 cars in rushhour traffic. That is amazing! A service that many of us take for granted. Here is the top 10 list:

1- One six-car subway train replaces the equivalent of 910 vehicles in morning rush hour, while one bus replaces the equivalent of about 45 vehicles.

2 -The TTC’s fleet consists of 700 subway cars, 248 streetcars and 1730 buses.

3- In 1921, the first motorized buses began operating, and in 1954, the first subway line — from Union to Eglinton Station —opened.

4- By the end of 2009 (that’s just three months away), hybrid buses will make up 40 per cent of the TTC fleet, and by 2012, all buses will be equipped with bike racks.

5- If you don’t have the exact fare when boarding a bus or streetcar and have to pay the fare with a large bill, ask the driver for a refund voucher, which you can bring to the TTC head office for a refund.

6- The door chime on the subway is the first three notes from the Sesame Street theme song.

7- At the Bay subway station, there is actually another unused subway platform on a lower level, often used by film crews. It’s been used in films including Extreme Measures starring Gene Hackman and Hugh Grant, Don’t Say a Word starring Michael Douglas and many others.

8- Wheel-Trans, the TTC’s fully accessible door-to-door specialized system, makes about 5,000 trips each weekday.

9- With 1.5 million passengers each day, the TTC has one of the highest per capita ridership rates in North America.

10- The last year that fare revenues met TTC operating expenses was 1970.
source: Toronto Transit Commission

I share his view that our current recession is not cyclical but really represents a shift in paradigm into a new economy, one that he predicts will be driven by “the creative class” & not traditional industry. He also has some interesting views on real estate which I don’t share but none the less a very interesting interview.

Click here to view.

U or W?

As a Toronto Mortgage broker, my clients rely on my advice not only while they are making their financing decisions but also in the years after making the decision to determine whether they are still on the right road and on track.

As such, I pay attention to the economy. One of my favorite areas of interest is determining what shape (literally) our recovery will take.

Will it be a sharp quick recovery? Usually described as a ‘V’ or will it be a long drawn out recovery with an extended low trough, described as a ‘U’. Or will the recovery take place as a ‘W’ with two very distinct drops. We’ve already had one drop. It seems that we are on the road to recovery with Toronto real estate prices remaining firm, however, I suspect that we haven’t seen the end of the recession. I’m anticipating a second drop.

If you’d like to read more, check out Nouriel Roubini who wrote an insightful article in the Opinions section of today’s Globe & Mail, entitled “Double Dip Recession Threat“.

If you’d like to talk about your mortgage and determine how best to position yourself please don’t hesitate to give me a call. Christopher Molder, Toronto Mortgage Specialist 416.461.0204ext2

As a mortgage broker in Toronto, it’s important for me to keep on top of significant economic data. This data is useful to me as it helps me to advise my clients on decisions about interest rates and predicting opportunities and pitfalls in regards to their mortgage financing and real estate options.

The Globe & Mail reports an increase in the unemployment rate in their article “Jobless Rate Inches Up To 8.6%”. The article suggests that while the unemployment rate increase to 8.6% from 8.4% in May, the numbers are better than expected.

The Globe site hosts two interactive maps which break up the unemployment numbers by region, province, and city.
Map 1
Map 2

While unemployment numbers may not have a direct impact on real estate, from a practical “coffee table” economist point of view it should be telling you something. Currently, the real estate numbers (especially in Toronto) are very positive and it seems like real estate hasn’t really been affected by the global recession. However, it would be a mistake to believe we are invincible. With unemployment on the rise there lies the risk for the following:

1. Increase in bankruptcies,
2. Increase in power of sales on homeowners who can’t pay their mortgage anymore, and
3. Decreased real estate values as fewer and fewer consumers will have the appetite or ability to purchase and afford a home.

One positive is that with fewer consumer dollars circulating we may experience deflation which would mean interest rates will stay low.

Pressure on fixed 5 year: Down.

Financial Post – Market. Lenders typically like to keep a spread of 1.70% to 1.80% between their fixed five year rates and current bond yields. If the bond yield increases then the spread will shrink putting upward pressure on mortgage interest rates. The reverse is also true. If bond yields decrease then the spread widens and there is downwards pressure on fixed rate mortgages.

Don’t get me wrong, my fate is tied to a healthy economy. When people are buying houses that is good for my mortgage business however at the same time we need to be realistic and call things the way they are with some perspective. One client who is currently in the market for a condo picked up on the buzz coming from the realtor community and expressed some fear that she has missed the boat. To which I replied “Non Sense!”. Lets face it… you know we are in a recession when CBC is airing stories entitle “Wedding Bills” about how brides are cutting back on their wedding due to tough economic times!

In previous posts I talk about the conflicting sound bites coming from the media regarding the economy and the Globe article I mention at the beginning is a case in point.

I am not trying to dispute the great sales numbers from the past month ( i think it was an unexpected and delightful surprise to the real estate community who are trying to get as much leverage out it as possible) and I am not a doomsday sayer but with my back ground in economics and simple observation I am making a case for caution.

I did plenty of reading this weekend and let me present some of the tastiest bits for your reading pleasure:
Irresistable Rates Drive Canadas Recovery-Globe & Mail “Crisis averted in the housing market? Forget it. Prices may be climbing in some markets, but so are the interest rates that have fed the recent rise in sales. Meanwhile, incomes are stagnant, and jobs are disappearing in bunches; Fixed-rate mortgages with a five-year term can be had for about 4.25 per cent with a top discount right now, compared with 5.5-to-6 per cent in spring, 2008. A couple of months ago, five-year mortgages were less than 4 per cent”

Garth Turner, author of Greater Fool: The Troubled Future of Real Estate feels that the bubble we are experiencing is fueled by interest rates. “They’re so irresistible, especially to inexperienced first-time buyers. That’s what’s propelling the market.”; Mr. Turner’s concern is that rising rates will eventually propel the market lower by making houses less affordable. His level of confidence that the boom will last? Zero; After a peak-to-valley decline of almost 14 per cent in Canada’s national average price, he’s predicting another plunge for home prices that will be triggered in large part by rising interest rates; -Rob Carrick, Globe & Mail.

In the article Canadians Hoarding Cash- Globe & Mail my favorite economist Benjamin Tal of CIBC warned that the Canadian economy is going to be subdued due to less consumer spending. Consumers are afraid to spend more in case they lose their jobs or face another bout of steep losses in financial markets; and the people who have most of the excess cash are not the people who do all the spending.

Opinions columnist Derek DeCloet wrote “While a lack of confidence is a terrible thing, overconfidence in the recovery might be just as dangerous if it prompts Canadians to do the wrong thing.; Canadians are starting to save more. But the personal savings rate was still below 5 per cent in the first quarter, and it’s going to have to go higher, for longer, before a strong recovery can truly take hold”

Make your own conclusions from the cross section of articles that I have presented. It would be easy for me to keep my opinions to myself and write mortgages for anyone who requests one…but I feel it is my obligation to at least help you try and make sense of the market confusion.

Please feel free to leave your comments. If you’d like to speak to me about your mortgage or are shopping for a mortgage, call me.  416.461.0204×2. Chris Molder.