Last week I had the pleasure of meeting up with Jessi Johnson of the Jessi Johnson Mortgage Team to discuss the merits of a Variable Rate Mortgage versus a Fixed Rate Mortgage.
What is a variable rate mortgage?
This is a mortgage that has an interest rate that changes in line with the Bank of Canada’s prime rate.Variable rate mortgages tend to have a lower interest rate than a fixed rate mortgage, but the interest rate on a variable mortgage can change at any time.
Pretty much everyday someone asks me when prices in the Vancouver real estate market will hit bottom and everyday I say I don’t know.
I say I don’t know, because I don’t have a crystal ball and can’t see the future and as I licensed Realtor I can be liable if people take a hit relying on my predictions.
There are people out there who are saying they KNOW when the prices will hit bottom and they can tell when prices are bottoming as they are hitting bottom. Don’t trust these people!
What happens if prices stabilise and a bottom is called and then prices fall again? Nobody can accurately predict a market bottom and don’t trust those who say they can.
The market bottom can only accurately ascertained with 100% certainty AFTER it has been hit.
In making your decisions about buying or selling real estate and timing your transactions, do your own research. Read widely and speak to a variety of people with different viewpoints. Don’t rely on those who have simple answers that are too easy.
If something is too good to be true, more than likely it isn’t true.
Please leave a comment, I’d love to hear your thoughts!
American buyers are back in the Vancouver Condo Market! A good exchange rate for US buyers and the fact that some individuals and companies Stateside are weather the storm well means our American freinds and neighbours are back.
Is this a sign that Stimulus is bringing confidence back?
On another note this Video is the first I have shot with my new Flip Mino HD Camera. I’d love to hear your thoughts and feedback on the camera and this video from a technical perspective.
I’d love to hear your thoughts! Please leave a comment below!
Stimulus packages coupled with ultra low interest rates are attempts by national governments and central banks to reflate economies around the world. If these efforts are successful (I think they will) I think inflation will be an issue in 2-3 years in Canada. I think elected politicians and to a lesser extent central bankers will find it very difficult to stop priming the pump once things improve.
Inflation will cause prices and rents in Vancouver to increase while fixed rate mortgages locked in before inflation hits will decline in real and nominal value at an accelerated rate. Equity will increase at an accelerated rate for those with fixed rate mortgages.
Variable rate mortgage holders would see their rates and possibly payments rise in line with Bank of Canada rate increases to combat inflation.
If inflation does re-appear it will be very interesting time in the Vancouver Real Estate Market.
I recently posted on the stimulus pacakges being enacted around the world and it generated alot of conversation, which is great and I thank all those who participated.
I shot a video justifying my position and I’d like to share with you. I’d also like to hear what people who oppose the stimulus packages think should be done to deal with the financial cirsis we find out ourselves in.
The global recession has caused national governments around the world to enact huge stimulus packages to get their economies going. I think with the global nature of stimulus efforts we should pull out of this recession in line with the Bank of Canada and other commentators predictions by 2010.
What are your thoughts? Is it the end of the world? Are we going into another Great Depression?
I’d love to see your comments below.
I found this great interactive map on the Economist site and I wanted to share it. If you click on the countries you can see the details of each countries stimulus package.
That is a question I get asked all the time. Like I have said in comments my post on Why Vancouver Real Estate Prices Go Up and Down, if I knew when the Vancouver Real Estate Market was going to bottom, I would no longer be working…
What we can say for sure is where the market is going over the next little while and this is based on the consensus of expectation.
There is a general consensus in Vancouver among buyers and sellers of real estate that prices will continue to fall and buyers and sellers are acting accordingly.
We will see the bottom of the Vancouver Real Estate market when buyer and seller expectations diverge and the consensus is broken. Buyers will still be thinking prices are coming down and sellers will have some good news to give them hope that if they hold there will be hope going forward of hight future prices. Price will start to rise and a new consensus will form based on rising prices.
The Ascent of Money. Wow! What a book! I read this book when I was away in Mexico growing this crazy red beard you see me with in all my recent videos.
Niall Ferguson is an Economic Historian at Oxford and Harvard Universities and the authour of several books. In The Ascent of Money, he accurately predicted the Credit Crisis of September 2008 in early 2008. Very impressive!
In Chapter 4 of his book he discusses Real Estate. If you are interested in why property prices go up and down, this should be required reading…
Have a look at this article below by Paul Krugman that I recently read in the Guardian. It explains clearly and in an easy to understand manner, what in the US and its effect on the rest of the World.
I am a big fan of Paul Krugman. I took Political Science at Simon Fraser University and I read alot of his stuff. I love it and I’d love to hear your thoughts!
We all go together when we go
The first great financial crisis of the 21st century has begun. Nobel prize-winning economist Paul Krugman explains how it happened, and how it can be cured
We all go together when we go
The first great financial crisis of the 21st century has begun. Nobel prize-winning economist Paul Krugman explains how it happened, and how it can be cured
I’m tempted to say that the crisis is like nothing we’ve ever seen before, but it might be more accurate to say that it’s like everything we’ve seen before, all at once: a bursting real estate bubble comparable to what happened in Japan at the end of the 80s; a wave of bank runs comparable to those of the early 30s; a liquidity trap in the US, again reminiscent of Japan; and, most recently, a disruption of international capital flows and a wave of currency crises all too reminiscent of what happened to Asia in the late 90s.
