Keep it in the Neighbourhood

Shop the Neighbourhood, an initiative launched this week by Yellow Pages Group, urges GTAers to stay close to home on Black Friday, the day after the U.S. Thanksgiving, on which Americans traditionally haul out their credit cards and cash, lose their minds, and trample one another for deals at Macy’s. This year, that’s Nov. 29, although the Canadian Press says the blitz is planned for Nov. 30. You might want to shop local all weekend, just to be safe. Or all month. Or forever.

More than 50 business improvement area (BIAs) in Toronto have signed up to be part of the initiative, which aims to bring support and awareness to local businesses. The first shop local was held in Oakville last winter.

“They forget that they actually vote on what stores stay open and what stores close every time they go shopping,” said deputy premier Deb Matthews at the launch event.

“So if people started to think about their shopping dollars as votes for what businesses thrive or survive, I think they might think differently about where they shop and how they shop.”

Industry Canada says Ontario’s small businesses contributed to a quarter of the national GDP in 2011.

I like a good big box chain store as much as the next guy, but shopping local in my experience not only helps keep the little guys afloat, but it also has the power to enhance your quality of life. One of the nicest things about the European lifestyle is that they tend to do a little grocery shopping each day, which means they get fresh ingredients while avoiding the soul-sapping giant parking lot/fidgeting in long lines/inundated with fluorescent light effect of giant grocery stores. They shop at the butcher, the baker, the candlestick maker every few days, getting to know their proprietors, having a chat, and slowing down enough to savour their days. And if you’re looking for something specific, they’ll probably try to get it for you, unlike the big boxes.

Local bookstores (if you can find one) generally have real book-lovers behind the counter who will make recommendations, and may even have signed copies of books by your favourites on hand. Local boutiques take the time to fit you properly and can speak educatedly about where the clothing came from. You get the gist.

If you’ve never tried it, please do. Black Friday is as good a time as any.

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BILD says 2013 is shaping up to the weakest year in decades, which considering we’re all still standing, in a weird way is not bad news.

Total new home sales in September were up 4% over September last year, but after three quarters, the 19,327 sales are down 31% below the 10-year average.

BILD attributes the decline to low inventories owing to a lack of development land. Sales of new singles, semis and townhomes were at 39% below the 10-year average.

“Constrained land supply has caused land prices to increase dramatically over the past decade, particularly in the low and medium density sectors where it has grown as much as 232 per cent,” said BILD president and CEO Bryan Tuckey. "Near record high pricing has pushed the affordability of ground-related housing beyond the reach of many new home buyers in the GTA. This has resulted in a considerable reduction in sales, and the economic effects will likely be felt within a few years."

The low-rise sector saw a 6% increase over September 2012, with GTA prices now sitting on average at a mind-bending $658,869; prices per square foot in the high-rise sector went up modestly, but unit pricing declined to $432,853, and unit size decreased by 2%.

If you’re thinking of downsizing, this actually makes it a pretty good time to consider buying a pre-construction condo — you can lock in your purchase price now, at these lower prices, and let your current home appreciate for another year at least before you have to think about selling it.

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South of the border, however, they’re on the brink of another potential disaster, according to a top Federal Reserve official.

Dallas Fed president Richard Fisher told reporters in New York last week that he saw signs of a fresh bubble and warned about the central bank’s ongoing purchase of mortgage-backed bonds. The mortgage-market bubble was a major factor in the 2007-’09 financial crisis from which the U.S. economy is still recovering. The Fed since depressed interest rates and is buying $85 billion in assets each month, including $40 billion mortgage-backed securities, according to Reuters.

U.S. national home resales were up in August and median prices up nearly 15% over the 12 months prior, according to the National Association of Realtors.

“We have to be watchful and realize there has historically been an era of the Fed over-stimulating” since the Great Depression, Fisher said. He went on to tell a sideline meeting of the New York Economics Club that “with each dollar we buy in Treasuries and mortgage-backed securities, we’re getting closer to the tipping point.”

U.S. unemployment was high at more than 7% in August, although down from its post-recession peak of 10% in 2009. The government shutdown is delaying more current jobs data. Fisher accused the fiscal authorities of “slamming on the brakes and leaving everyone in the dark as to how they will cure the fiscal mess they have wrought.”

No amount of bond-buying can “offset the rot that is destroying our fiscal house and the blight it spreads over our economy,” he said, according to Reuters.

Take heed, Canada. Our own unemployment rate is right in the same neighbourhood, down to 6.9% from 7.1%, September over August, and prime is still low at 3%. I remember paying upwards of 15% on car loans in the ‘80s (which we could better afford because, thanks to Miami Vice, we didn’t have to buy socks).

You know what they say about those who cannot learn from history. They get foreclosed on. Just remember that there’s a very simple equation that will keep you out of trouble — don’t borrow more than you can afford even if interest rates shoot up.