Archives for March 2013

Flaherty – Mortgage Doublespeak and Linguistic Illusion

cash-houseLow Canadian Mortgage Rates

In a masterful bit of mortgage doublespeak and linguistic illusion the Minister of Finance stepped back into
The mortgage marketplace, warning about lenders engaging in prudent lending and not engaging in a race to the bottom.
This is an incredibly ironic stance for him to take since it was him and the Conservative government that encouraged the unprecedented loosening of credit underwriting guidelines 5 years ago.

Great Kelowna Mortgage Rates

Anyway, he once again misses the point entirely. He is obsessed with consumer credit quality and seems unconcerned that the rates are this low because the Bank of Canada and the US Fed are printing money at a record rate.
As anyone that reads this blog knows that Kelowna Lending & Mortage Co. The Lending Outlet has been offering 5-year money at 2.99 or 2.89 percent for the past couple of months. There is also an incredible 10-year rate at 3.69 percent.
This is good for borrowers, especially first time home buyers in Kelowna but is a sign of how weak demand is for borrowing outside the consumer sector.
Canada is lagging in business investment, junior companies are finding it impossible to raise cash, and the general industrial and commercial borrowing side is dead as a doornail.
For economies like the GTA, Quebec, and Vancouver to thrive the country needs to encourage the growth of export-oriented manufacturers. Instead of ragging in consumers, Mr. Flaherty should focus on repairing our manufacturing industry and thereby creating jobs.
A good job lets you repay a lot of debt Mr. Flaherty.

First Time Home Buyers Kelowna

Peachland Mortgage Broker

images-4In the summer of 2002, the agile Dominican superstar Alfonso Soriano became the first New York Yankee in history to notch 30 home runs and 30 stolen bases in a single season. Soriano broke another record that year: He was the first Yankee to strike out 157 times in a season. Asked to explain his habitual wild swings, Soriano produced a great line: “You don’t get out of the Dominica by taking pitches.”

There are lots of other lines about investing in stocks and real estate.  You can’t time a market.

The truth is they were lucky. If we really understood statistics we would know that in all systems someone has to win at some point.

So what is my point today?

Don’t try to time the real estate market. There are too many variables.  In a balanced local economy real estate will match inflation.

In down years it tracks below the inflation rate, but eventually it will catch up and hence a boom.

This also works in the inverse. A year where prices exceed the inflation rate invariably turn to a down market as the price revers to the inflation trend line.

What does this mean for Vancouver and Kelowna respectively? Vancouver has maintained its trend line with inflation over the past few years and maybe exceeded it slightly.  The Vancouver Real estate market is probably flat for 2012.

KELOWNA has been below inflation for 3 or 4 years and is probably headed for an upward correction in the next year as inventories decline and building permits stay low.