Saturday, January 30, 2010
As Intrawest continues to negotiate with its lenders, no one for sure knows what will transpire come February 19th during the Olympics when the auction of assets is scheduled to take place and no one can speculate what the future outcome will be for Blue Mountain or the Village at Blue.
One thing is certain however, this is yet another example of an acquisition funded with massive debt gone bad. I am currently reading an excellent book entitled "Billion Dollar Lessons" written by Paul Carol and Chunka Mui. For those of you interested in business this is an excellent book chronicling some of the more significant business blunders of all time including acquisitions made by companies that turned into colossal mistakes.
Purchased by Fortress Investment Group LLC in 2006 for $2.8 billion U.S., Intrawest like a lot of other highly leveraged companies has struggled under a significant debt load. As long as a steady stream of cash flow continues in order to make the loan repayments, leveraged buyouts can be a success. More often than not however, many companies in this position find themselves facing changing economic times or a downturn in sales revenue that ultimately means disaster.
Many experts believe that an auction of assets in this economy at distressed prices will not benefit anyone, especially the creditors. Will Intrawest's woes be another footnote in the book Billion Dollar Lessons? I guess with February 19th fast approaching we'll soon know.
Monday, January 25, 2010
In today's residential real estate market, home inspections have become an integral part of virtually every resale property transaction. Most REALTORS® will insert a home inspection "condition" into an Agreement of Purchase and Sale, making the buyer's offer conditional on obtaining a satisfactory home inspection. Does this mean the house has to be perfect? No. Is this a tactic to potentially get out of a deal should the buyer(s) change their minds? No. The purpose of a home inspection is to simply obtain a report on the condition of the property at that point in time. If done thoroughly, a home inspection will help forewarn a buyer(s) about potential problems with a home suggesting that further examination is required ie: bring in a structural engineer or conduct a mold test etc.
Television personality Mike Holmes has repeatedly criticized home inspectors and rightly so. Some inspectors lack the knowledge, training and or experience to thoroughly inspect a property and render an accurate assessment of its condition. However, let's not lose sight of one thing. A home inspection which typically takes 2-1/2 to 3 or more hours is only a "visual" inspection and most inspectors will duly explain that to the buyer(s). A well qualified inspector will enter a crawl space, go up into the attic, pull the cover off the electric panel, run the appliances and so on. They don't however punch holes in drywall to examine an inner wall structure nor can they visually assess the interior of a home's foundation walls if the basement is fully finished. A well trained home inspector will however note certain conditions that could be the tell tale signs that are masking something much more serious.
CBC's program Marketplace recently did a segment on home inspectors the main focus of which was in relation to grow houses. Click on the link below.http://www.cbc.ca/marketplace/2010/grow_op_cover_up/main.html
In this show, four out of four home inspectors missed and or ignored warning signs that the subject property had one time been a grow house. That's a pretty shoddy reflection on the home inspection profession. To date, the home inspection industry has a long way to go before it is regulated to the same extent that we as REALTORS® are. The Canadian Association of Home and Property Inspectors is working diligently to improve the training and effectiveness of its members. The irony is however, if a REALTOR® were to sell a home with known deficiencies and failed to protect their client, the REALTOR® would stand to be in a lot more trouble than a home inspector that had failed to properly assess and report on the home's issues. A consumer's only recourse with a home inspector is with a civil suit. A REALTOR® on the other hand faces severe consequences both civilly as well as with the Real Estate Council of Ontario (RECO), the body enforces the Real Estate and Business Brokers Act, provincial law with which we must adhere. If found negligent, RECO can bring forth a variety of measures against a REALTOR® including fines, mandatory training, suspension or worse, revoking of a REALTOR'S® license thus ending their career.
It is by far in a REALTOR'S® best interest to recommend a well qualified home inspector, one that will leave no stone unturned in fully inspecting and reporting on the condition of a property. There is nothing to be gained and a lot more to lose by having a buyer(s) purchase a home that turns out to have issues that should have been detected in a home inspection. It's not only a matter of "let the buyer beware," but the REALTOR® as well.
Sunday, January 24, 2010
Friday, January 22, 2010
Disaster relief for the victims of the earthquake in Haiti has spread globally including right here in Collingwood.
A benefit concert is being held this Sunday, January 24th from 3:00 to 10:00pm at Fairways "The Party Place" located at 2-20 Balsam Street (across from Montanas) Admission $10.00 with 100% of the proceeds going to ad the people of Haiti.
Fellow REALTOR® and musician Fran Webster of "The Webster Family" has helped to organize this event which will include numerous local bands and singers including: Aaron Garner, Fig Leaf Jazz Band, Ladies Night out, Jeff Cunningham and others.
This sounds like 7 hours of great music featuring a variety of local talent all in the name of a very worthy cause. John Nichols the Peak FM's morning man has agreed to host the event with Fairways donating the space. Sunday's weather is calling for a temperature of +7 with rain. Sounds to me like a perfect day to stay indoors listening to some good music in support of a great cause.
Thursday, January 21, 2010
Canadian ski racer Ashleigh McIvor, the 2009 FIS World Champion in ski cross and Stanley Hayer, the 2009 Winter X-Games winner and multiple World Cup medalist, raced for the first time ever at Blue Mountain. McIvor finished second.
Commencing at the top of the Silver Bullet chairlift, the course arched across the top of the Tranquility and Smart Alec runs before descending into what was previously known as the Yahoo terrain park with the balance of the course snaking its way down Smart Alec terminating at Blue's central base lodge.
For those unfamiliar with ski and snowboard cross style racing, four competitors run the course simultaneously in a roller derby style race to the bottom. The top two finishers of each heat moved on until the field gets whittled down to the final few. All in all it's a pretty exciting format with racers jockeying for position often resulting in multiple spills. I took in a few heats at the top of the course then skied down to the bottom where a sizable crowd was on hand to cheer on the Canadians. Errol Kerr a ski cross racer from Jamaica was on hand and was a popular competitor with the kids, signing their helmets etc. at the bottom of the course. Who can forget the Jamaican bobsled team from the 1988 Olympics in Calgary that inspired the movie "Cool Runnings" with Canadian actor John Candy.
Ski and snowboard cross which started out at the X-Games are newly added events to the Olympics and they will no doubt add a great deal of excitement. The next stop on the ski cross tour is Lake Placid before the racers head to BC for the 2010 Games.
Tuesday, January 19, 2010
As far back as their October 6, 2008 edition, Maclean's cover was emblazoned with the headline "Canada's Looming Real Estate Crisis" followed by the sub-title "Why House Prices May Soon Fall Through The Floor." Further, the Maclean's March 2, 2009 cover story boasted "The value of your home is about to drop another 20%."
Late in 2009, Canada began to show signs of what will be a slow recovery from the current global recession lead by a strong real estate sector. Was there ever a crisis? No. Did home prices drop significantly last year? No they didn't much less did they "...drop another 20%." Sure, some over-heated markets such as Calgary and Vancouver that saw huge run-ups in prices over a short period saw price adjustments but the prediction of a widespread "crisis" by Maclean's and other purveyors of doom and gloom just didn't happen.
Little more than midway through the month of January, real estate sales locally are running more than double what they were in January of last year, currently at $12.4 million versus $11.9 million for the entire month of January last year. I suspect positive information such as this is not going to make the cover of Maclean's or other print media, it simply doesn't sell newspapers or magazines.
Thursday, January 14, 2010
The U.S. economy continues to struggle its way towards a recovery and has yet to generate any traction in the all important area of job creation. Many Americans even those with conventional low risk mortgages are under the threat of losing their homes in the next year or two the result of being unemployed. This has now spilled over into the two other segments of the U.S. real estate market as well.
The commercial real estate market is under great threat of collapse. As tenants go bankrupt, out of business or just start to close unprofitable retail locations etc. many investors with significant holdings in commercial real estate are going to incur massive losses. PriceWaterhouseCoopers believe that 2010 will be the worst time in 30 years for commercial property investors in the U.S. to sell their holdings. The question on every one's mind is what impact this will have on the housing market?
In short, this creates the potential for bad news in the luxury residential market. Investors, brokers, builder/developers, tenants and others that are engaged in some aspect of the commercial real estate market are often the buyers and sellers of luxury homes as well. If he commercial real estate market suffers any significant fallout stemming from the ongoing recession being experienced in the U.S. the luxury home market will be sure to take a hit as well.
Tuesday, January 12, 2010
Thursday, January 7, 2010
Given the market strength that was shown if the last quarter of 2009, all indications are for the momentum to continue during the first six months of 2010. What is unknown at this point here in Ontario, is the impact that the forthcoming harmonization of PST/GST will have as it will create added costs to both home sellers and buyers. Estimates are the average real estate transaction in Ontario will incur $1,400 to $1,500 in added taxes resulting in new taxes being applied to legal, appraisal and home inspection fees, real estate commissions etc.
As part of their 2010 market forecast, Royal LePage also issued their quarterly house price survey for the last quarter of 2009. Nationally, statistics show that house prices for bungalows and 2 storey homes rose at an annual rate of 6.04% and 5.2% respectively while standard condominium prices increased by an annual rate of 6.35%. Clicking on the above hyperlinks above will give you access to the two Royal LePage publications.
In my next posting I will recap the year-end results pertaining to local market activity here in the Georgian Triangle.
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