Hey little buddy, how are you doing? No, no, the world hasn’t ended yet, and I didn’t think you’d be one of those people who would be whipped into a frenzy about the state of the world’s economy.
Well yes, the markets are still way down from where they were last year and Barack Obama hasn’t had time to fix all of George W. Bush’s mistakes just yet. True true, the Canadian Parliament is still on hiatus during these tough economic times, but regardless, that doesn’t mean you should still be hiding under the kitchen table. Here, take my hand … I gotcha. I promise things will get better, you just wait and see.
What’s that? You want to watch the news. Um, are you sure that’s a good idea, seeing as you’ve been crouched in that dark spot for five weeks now? Yeah, I think giving your eyes time to adjust to the light would be wise, so we’ll just leave the tube off for now. I think there’s a Sports Illustrated on the coffee table over there. That should help you ease back into news of the world.
But wait, oh no, don’t touch that newspaper …
And another once-brave soul is crippled with fear by the doomsdayers in the national media.
It’s true, the Canadian economy is in tough right now. There’s no sense sugar-coating it, or ignoring it – it just is what it is. Corporations are looking out for the best interests of their shareholders and taking jobs overseas where they pay their new staff a pittance. Then North America’s Big 3 automakers received a multi-billion dollar bailout from both the U.S. and Canadian governments to get them through the next few months, although it’s difficult to see how GM, Ford and Chrysler will suddenly begin making smaller, more fuel efficient vehicles in the next six months, saving the companies’ bacon, as well as the jobs of hundreds of thousands in Ontario alone.
Undoubtedly, times are tough. Jobs – especially in Ontario – are at a premium. People are saving their money because they could be next in the unemployment line.
Our governments don’t seem to have a plan, nor have we even had the chance to hear from our federal politicians since early-December when the Prime Minister asked for a proroguement of Parliament in order to buy his government time in the face of being overtaken by a coalition government.
In other words, things are a complete mess. We’re told that every time we turn on a television, open a newspaper or listen to the radio.
But us Canadians, for the most part, can always find the silver lining. What would that be? Well, we’re not the United States of America for one. We aren’t in full-blown recession, despite some saying we’re on the brink. We don’t have a skyrocketing unemployment rate (although it continues to climb in some parts of the country). We don’t have families foreclosing their homes at an alarming rate, destroying the one industry many thought was infallible – big banks. In fact, our banks are doing OK, although they’re being a bit more careful when distributing loans these days, which means they’ve learned from the mistakes of their American counterparts, and there’s nothing wrong with that.
In fact, Canada’s real estate market is holding up relatively well, considering the doom and gloom that we’ve been force-fed over the past six months, with some declines in house sales and starts in most parts of the country. People could have freaked out, listed their home for next to nothing just to get out from under what remained on their mortgage and moved into an apartment with cheap rent. But Canadians – for the most part, because there’s always an exception – haven’t flipped out or bought into the hype of “the next Great Depression” and other buzz words designed to make us tune in at 11 for more.
What has probably been created in the current economic slow-down is a return to ‘normal’ market prices in most Canadian centres. In Alberta and B.C., prices skyrocketed during the oil boom after the past five years. Now, oil prices have dropped to about $50 per barrel, and gas is about half the price at the pump as it was at its peak of this past summer. So as the oil and gas industry comes back down to earth, the real estate market should do the same.
The same goes in metropolitan areas like the Greater Toronto Area that have seen unprecedented growth and house price hikes in recent years. Now, prices are slowly creeping down to more acceptable levels, as people are in a ‘wait and see’ mode before buying during the current economic climate. What that does is create a more competitive sales environment and puts the buyer into the driver’s seat.
And here’s where the savvy – and gainfully and securely employed – have a chance to capitalize on a flooded market. People need to move homes, condos, and apartment buildings, in order to move onto the next stage of their lives. If people aren’t lining up to purchase their property, a potential buyer could be in a position to do some serious negotiating. So undercut. Offer them something they almost have to refuse, and then wait for the counter-offer. If they drop their price, definitely budge from your original offer, but keep that price low – lower than you even feel comfortable offering – to see just how far they’ll bend before telling you to take a hike.
Sure, there’s a chance you may lose a shot at buying your dream home, but there’s also a good chance there’s another dream home currently sitting on the market with an owner that may be more willing to dance. We’re not at the point where people are simply walking away from their homes, so people are still looking to make a profit, and should have plenty of wiggle-room, so take advantage of it.
And here’s the kicker – Canadian banks are still willing to be involved in the real estate market through low interest rate mortgages. In fact, some are even encouraging people to spend at a time when most would think they’d batten down the hatches and hope people don’t start foreclosing. Sure, you will be heavily scrutinized when applying for a mortgage – they’ll want proof your job is recession-proof, no doubt – but think of the opportunities for smart and savvy real estate investors who can smell a deal at a time when the market is in flux.
Chances are, if you’re visiting RateSupermarket.ca today, you’re thinking about buying a home, looking to compare mortgage rates or at the least, doing some research to find out what you can afford and what bank will make your dream come true. Well good for you. Don’t listen to the naysayers, doomsdayers, and those carrying umbrellas to protect themselves from falling skies. Don’t hide in a cave to await the return of a perfect economy, because the economy as we know it may never be the same, so if you’re secure in your job and comfortable getting into a mortgage and have the blessings (and monetary backing) of a good financial institution, go for it.
When everyone’s telling you this isn’t the time, you may find there’s no better.
Dwight@RateSupermarket.ca
RateSupermarket.ca staff writer
Questions or comments? Please send all your questions or comments to Dwight@RateSupermarket.ca.
