I had a chance to renew my mortgage the other day. It was surprisingly a really happy occurrence. Typically you would figure that the act of going into debt would fill you with hesitation, but this time around it was different. It was made that way because my monthly payments actually decreased ….. by a wide margin. And that makes me happy. I guess you could call it a silver lining in an unstable market. A silver lining that I took full advantage of and am happy I did so.
There is no denying that our real estate market in Alberta is affected by the strength of our Oil and Gas sector. Absolutely. As our major industry it has influence on the working lives of one third of us. This needs to be respected and recognized. The thing is, as a resource commodity the price attributed to its value moves up and down with the worlds market. Sometimes low and sometimes high. In listening to the media reports over the past few months you could expect that the effect of falling oil prices is having catastrophic effects on our entire economy. Some predictions are calling for the end of the oil sands with $20/barrel prices and a once robust industry brought to its knees. I however beg to differ.
I am no economist, nor do I know much about how the Oil and Gas industry works. l do, however, know quite well about market cycles and the fluctuations in price and value within the housing market.
The vast majority of us, when making our financial decisions, take the best advice we can from the sources of information we have around us. And it is important that during this time of uncertainty that we consider several key points:
1. The job of the media is to generate interest.
A broadcasting friend of mine likes to use the term ‘if it bleeds, it leads’. And that is quite true. By adding weight to an issue it will have a tendency to generate interest and it is that interest that gauges the success of a media outlet in its ability to communicate to its audience. Stories about the effects of falling oil are not immune to that strategy.
2. Of course a drop in oil prices is negative to our market.
This sector is a major driver of our economy. Some people will unfortunately lose jobs, government coffers will suffer from a drop in royalties and there exists a potential that investment in our province will decrease. This has an effect on us all. That said the price of oil and the strength of this industry is cyclical. It comes down, but it also goes up. And nobody knows exactly how long this cycle will be. There exists today a widening disparity between ‘experts’ and their predictions on a return to $70/barrel (profitable) oil. I think that disparity will only grow.
3. There is opportunity in this market.
So many times I hear of people upset that they missed their chance to own their own home. That prices in our market are too high and continuing to grow. To them I would say that the growth curve for property values in our market have climbed steadily over the past 15 years. So has the cost of renting and unfortunately once that rent cheque gets paid, that money is gone with no improvement to the renters bottom line. This makes owning your own home one of the wisest investment decisions you can make. And today, although I wouldn’t label it a buyers market, I would say that prices are stable and there are most definitely deals to be had.
4. Interest rates are LOW!!
I locked in my mortgage for 5 years at the lowest rate I have ever had. It’s this rate, and the ability to put up a down payment that are the two largest stumbling blocks to owning your own home. One is a matter of financial ability and commitment. The other is wholly dependent on forces outside our individual control. So when the Banks offer mortgage rates in the 2% range it is important that we recognize the opportunity that presents.
I have a homeowner focus. No doubt. I am a home builder after all. I want to see all of us with the chance to own our own home because I know about the pride that comes with homeownership and the value that it brings. I also feel it is important that I speak up when I see a good opportunity and I believe that time is here. So if you are thinking that you’re ready to explore homeownership then go out and take a look at what’s available. And if you happen to decide on Avi Urban then I want to be the first to congratulate you on your new home purchase.