FOCUS on WHERE you want to go NOT on what you FEAR!

FOCUS on WHERE you want to go NOT on what you FEAR!

What does the Real Estate market look like today and how does that affect you? There are so many things going on in the world today such as the coronavirus, market swings with ups and downs in the stock market and protests of all sorts.

It is easy to get wrapped up in all the news we hear every day and get panicky wondering how that is going to affect you and what you should do but the cold hard reality is that 95% of the things people worry about every day never happen. It’s a fact!!!!!

You hear things like it’s a buyer’s market or it’s a seller’s market, but what do those things actually mean? A seller’s market, in simple terms means that there is less on the market but there are a lot of buyers for that type of property but if it’s a buyer’s market that means typically there are more properties on the market then there are buyers. It’s simple when you think about it but then you turn on the TV and your head begins to swim with all kinds of terrible ideas of doom and gloom. Well…. That is what the media does. It’s main purpose today, in my opinion, is to incite panic and mayhem in the public and the markets. What you need to do is, take a deep breath and exhale…maybe do that a few times. My opinion is that less than 50% of what I read and hear in the news is actually true. It could be over exaggerating as it may be way less.

My Grandmother, who was a wonderful soul, would say to me in times of stress, Brian I know these things seem like the end of the world when they happen and insurmountable, but believe me, in a few months you won’t remember what the problem was. She was such a wonderful woman and a breath of breath air in stressful times. She was truly amazing!!!! I would do as she suggested, take a pause and reflect and NOT react. Amazingly it all seemed to evaporate and yes, a few months later I was on to new deals and adventures without a thought of that it was that stressed me so much earlier.

I believe that as we go through life and experience success and failures, that we eventually learn from the failures and start to adjust how we do things to avoid the pitfalls that lead us to those failures. I know that has been the case in my life and although I can be extremely critical of our governments at all levels, I do see that the financial collapses of the past have left behind reminders of what can happen when governments react the wrong way.

As I have been in Real Estate for 41 years, I have seen many ups and downs in the global economy, notably 1980, 1996 and 2008 and each had different catalysts. In my opinion, through the years those downturns began to be handled differently. In 1980, to contain and slow the economy, interest rates were ratcheted up to as high as 21% in some cases and the result was a global collapse of markets. That error was not repeated.

If you look at history, you can see how long these problems lasted before they righted themselves, and they were never very long. Interestingly, on average, a recession lasts 11 months. I am not saying we are in a recession because we are not, but for interest sake, here is a list of events and the length of time they lasted and as you can see these disturbances don’t last long:

The Energy Crisis Recession: (January 1980 – July 1980), Duration: Six months
The Iran/Energy Crisis Recession: (July 1981 – November 1982), Duration: 16 months
The Gulf War Recession: (July 1990 – March 1991), Duration: Eight months
The 9/11 Recession: (March 2001 – November 2001), Duration: Eight months
2008 Recession (December 2007 and ended in June 2009) Eighteen months

So, what do all these very different recessions have in common? For one, oil price, demand and supply sensitivity appear to be consistent, and frequent historical precursors to U.S. recessions. A spike in oil prices has preceded nine out of 10 post-WWII recessions. This highlights that while global integration of economies allows for more effective cooperative efforts between governments to prevent or mitigate future recessions, the integration itself ties the world economies more closely together, making them more susceptible to problems outside their borders.
Better government safeguards should soften the effects of possible recessions if they come as long as regulations are in place and enforced. Better communications technology and sales and inventory tracking allow businesses and governments to have better transparency on a real time basis so that corrective actions are made to forestall the accumulation of factors and indicators contributing to or signaling a recession.

More recent recessions, such as the housing bubble, the resulting credit crisis, and the subsequent government bailouts are examples of excesses not properly or competently regulated by the patchwork of government regulation of financial institutions.

Contraction and expansion cycles of moderate amplitude are part of the economic system. World events, energy crises, wars, and government intervention in markets can affect economies both positively and negatively and will continue to do so in the future. Expansions have historically exceeded previous highs in economic growth trends

For what it’s worth, my opinion is that we have historically the lowest interest rates in history and as such this presents the best buying opportunities we have ever witnessed. Presently, Bank of Canada cut its prime rate to 1.25% which is unbelievable. This happened right after the USA cut their rates. This presents a huge opportunity to buy either a principle home or investment property and lock in unheard of rates for long periods that will fund your retirement. We are here to help you put together a portfolio that will allow you the luxury of having the retirement you always desired. All you have to do is give us a call.

Have an awesome weekend!
Brian & Myles McCullough
www.mmshomes.com

RE/MAX of Nanaimo

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