As we edge towards the beginning of a new decade, I can’t help but think about the ‘good old days’ of 2007/2008. Real estate was booming. Calgary’s economy was one of the strongest in the country. The unemployment rate here was minuscule, thanks to increased migration of workers to the ‘Heart of the New West.’ And the oil and gas industry was a part of a global trend of unprecedented profit margins and record-breaking growth.

Now here we are, just a couple years later and as our economic situation seems to be in a state of recovery, we seem to be slowly shaking off the rust, licking our wounds and moving forward. While some of the biggest scars are evident in the housing market, unemployment rate, and the oil and gas industry, it’s the latter which should continue to be a significant measuring-stick for what’s to come.

A recent article in the Edmonton Sun alludes to oil and gas taking a slow and steady approach towards recovery. Oil prices are up significantly over the lows experienced just months ago, and the new low in prices reached during the worst recession we have had since the depression surprised many,  and as oil prices stabilize (which forecasters are saying they will continue to do) heavy oil, produced in the Alberta oilsands, will also fetch a higher price.

The article also hints at the possibility that some of the upcoming oilsands projects, which were originally scrapped due to the sharp economic downturn, will be put back on the table. And that will likely mean more jobs, more net migration to Alberta, and more provincial economic dollars churned-out by the oil industry here.

Add to that notion the fact that steady growth in the oil industry will likely mean more foreign investment as well, and we’re slowly but surely setting ourselves back up for success – well at least on the oil side anyway. Natural gas, as the article illustrates, has certainly been a harder commodity to predict lately.

In the past I’ve shared my opinion that once we see the price of oil continue to climb higher, inflation will set in, and that’s when you’ll see not only the Bank of Canada push the benchmark interest rate higher, but also, interest rates in the mortgage market will follow-suit. And that means it will almost certainly cost you more to borrow money to buy a home or property.

So keep an eye on the oil industry as one of your key economic indicators – not just for big business, but also for everything from the housing market, mortgage rates, and your overall cost of living as well.

Thoughts? Concerns? Opinions? Send me yours.

No matter what business you’re in, respect and reputation are paramount. In the real estate game, they’re what separate the ‘haves’ from the ‘have-not’s.’ The ‘top-producers,’ from the ‘flop-producers.’ You get the picture.

And these days, it’s not easy for any realtor or mortgage broker to pin-point or target the next economic trend, without keeping a constant ear-to-the-ground. Or is it? Take a closer look, and the best of the best seem to position themselves for long-term success. And their secret is easier than you think.

In fact, a recent article posted on RIS Media, points out the strongest realtors and brokers are becoming more than just sales people – they’re becoming trusted, reliable, astute, advisors. The reason? They focus on the fundamentals. But it’s their vigilance in pursuing and understanding these fundamentals that truly pays big dividends – especially for the consumer.

For instance, in order to know where you’re going, you need to understand where you’ve been. But you also need to separate fact from fiction, truthful information from misinformation, and so on. And that means understanding the story behind the story.

The article wisely points out the majority of consumers base their buying decisions (or lack thereof) on what’s going on in the news and media. But so often those stories are taken at face-value, by a ‘follow-the-herd’ mentality. And unless someone’s willing to peel back the layers of the onion, the actual facts of the story seem to get lost in translation. The result is things, then, get blown out of proportion, consumers panic (or worse they get careless) and real estate takes a hit.

The top ‘real’ experts continually monitor the future by being aware of what worked (and what didn’t) in the past. By better understanding why these factors contribute to the state of any given real estate market, at that time, these realtors and mortgage brokers immediately become better, more efficient, prognosticators when it comes to the future.

The second part of their secret is staying on top of current government programs, incentives, policies and procedures. From updated tax breaks, to breaking news on lending guidelines. From federal incentives, to the latest stimulus packages, good realtors and brokers become great, when they’re the authority on what’s going on financially right now – as well as properly preparing buyers for what’s waiting in the wings. The best experts are able to keep their clients informed, with things like market updates, blog entries, website commentaries, links to the latest statistics and insight into the latest government initiatives. And they’re able to explain why and how these politics will affect the consumer.

Thirdly, the pros simply know their customers. They tell them why they should buy or why they shouldn’t. They counsel them on what makes sense versus what might be a leap of faith. They separate first-time, move-up, vacation, and revenue buyers. And they provide phenomenal, timely and money-saving advice that ensures not only repeat business, but also clearly defined leadership, respect, admiration and long-term success.

It’s as simple as this: the top real estate agents and the top mortgage brokers diligently focus on history, politics and truly knowing their customers. And in these dynamically diverse economic times, the ones who position themselves based on the above criteria, stand to gain the most. And so will the consumers who seek them out.

What do you think? Send me your thoughts.

Call it a tale of two hemispheres. The Bank of Canada’s recent decision to leave it’s benchmark interest rate at 0.25% comes on the heels of a noticeable rate hike Australia. And that’s got some of our nation’s top analysts talking – especially in the wake of the strengthening loonie.

A recent article in The Globe and Mail, illustrates the general consensus amongst Canada’s top penny-pinching pundits and prognosticators is one of cautious optimism.

On the one hand, they suggest that the closer the Canadian dollar inches toward parity, with its U.S. counterpart, the tougher it will be on economic growth here. On the other, they surmise that rushing into any sort of hasty interest-rate hike, akin to the latest hike Down Under, would be premature at best.

So what does that mean for business and the consumer? I guess the biggest challenge is what is “normal” policy anymore?  How can we plan and forecast when there is so much uncertainty coupled with the inability to forecast what the Bank of Canada will do.

Right now, the current state of our national housing market is certainly more balanced and stronger than it’s been since last winter. But both financial experts and critics point out that this recent real estate rebound is being increasingly overshadowed by a sluggish rebound in the economy.

Overall the BOC’s latest actions seem to reiterate it isn’t willing to play the role of ‘copycat’ just yet – even despite the constant concern that a rising loonie, especially above parity, will likely be bad for business.

What do you think? Drop me a line with your thoughts.

Well here we are a year later, after trudging through arguably the worst financial crisis in history, and the economy is still making headlines. The Dow Jones is up, past 10,000 once again, for the first time in more than 12 months. And the loonie is destined for parity against its southern counterpart – the U.S. dollar (USD). So what now?

Well for Canadians, the general consensus seems to be “uh-oh, a declining American dollar means more job losses here – not to mention undesirable, rising costs for our nation’s exported goods.”

But if we take a more educated approach, a devalued USD will ultimately be the key to stabilizing and balancing the world’s economic situation. And that’s what Kevin Carmichael touches on in a recent article in The Globe and Mail.

Sure, the weakening of the USD is due in large part to the fact the U.S. is still wrestling with some unprecedented debt – to the tune of nearly $1.5 trillion dollars (yes, you read that right). But some experts are willing to acknowledge that countries like China, India, Brazil, and yes, even Canada, stand to benefit economically from a recent shift set to change the world’s economy into something more resistant to financial meltdown.

Despite the USD’s decline, the article suggests the American economy will see a 1.5% increase in 2010, compared with 9% growth in China and 6.4% in India, alone. And as confidence, within the global economy, strengthens the U.S. will certainly feel some short-term pain, there is no doubt.

Here in Canada, Carmichael points out the Bank of Canada expects rates to remain at rock-bottom levels until the summer of 2010, even with several major Canadian banks recently hiking their 5-year mortgage rates by 35 basis-points, to 5.84%. And there are rumblings that’s putting upward pressure on the Bank of Canada raise it’s key interest rate, which would likely, then, pinch the U.S. dollar even further downward.

And in Australia, a recent rise in that country’s key interest rate was spurred by strengthening global markets in Asia – again, putting more pressure on the American greenback.

So what can we expect in the next 12 months?  Expect more stability to be sure, and expect more of the economic ‘pie’ to be shared or divided more thoroughly amongst the rest of the world. And it will happen because of the recent slip of the USD.

There is much talk these days about whether we are headed for deflation, or inflation.  In fact, just the other day a friend approached me and said “are you for inflation or deflation” which I thought was an odd question coming from this friend, specifically because our relationship doesn’t generally involve these type of questions.  So I think my main point is that this topic is making it to main street and sadly either way you look at it the result is not positive.

Ok so let’s address it.  First, my answer is that I think as I have repeatedly said, we are headed for inflation, and in fact it could be hyper-inflation which would likely be as bad as deflation, except of course if you are a real estate speculator.

Why, do you ask?  Well the main reason is, and I have been steadfast in this assertion, through the recession the governments across the world, but specifically in the USA, have been printing money at a breakneck pace.  With all that excess money in the economy the only plausible result will be inflation.  When?  As soon as that money starts to flow into the economy.  Yes, the tail end of a recession will always make people and more importantly institutions (banks) hoard their money. But hold on and fasten your seat belts when that money starts flowing.

Would you like to have the inside track on when inflation will trend up?  Book mark this page and return periodically to track  the M1 money multiplier graph.  The money multiplier measures how much money is circulating in the economy, and as you can see it has fallen steadily since the 80’s but fell off a cliff at the beginning of our severe recession.  Note: the Grey bars are all the past recessions.

Economists like Benjamin Tal have repeatedly reminded us of this law of economics, when money supply rises, which it has significantly, then inflation will follow.  Look for the M1 money multiplier to rise in the next 12-18 months will bring inflation.

Now, for all you people who have an insatiable appetite for real estate speculation, please don’t use this post to justify more real estate speculation.  To be clear, there is much to much risk in today’s inflated market to be involved in speculation.

Finally, and this from Peter Schiff, if you don’t know who he is you should.  Peter is one of the only experts who called the real estate disaster in the U.S.  He is currently saying that gold will hit $5,000 an ounce, due to what he believes to not only be inflation, but hyperinflation.  Why?  Because in is mind he thinks Bernanke, the federal reserve chairman, is keeping interest rates artificially low, to continue to save the housing and stock markets, at the expense of long term pain for the entire economy in hyper-inflation.

Where do we go from here?

1) Watch the M1 graph.

2) Buy any big ticket items you want (i.e. a house) now, as inflation will drive up both the prices, and the interest rates, which brings a net effect of substantially reducing affordability.

3) If you are tight on your budget, lock in your existing mortgage Tuesday.  Rates WILL rise, and likely will continue to do so, for some time.

A recent article from The Report On Business section, of The Globe & Mail, says Canada’s economic growth is sputtering. But is the forecast really that bleak? Well I guess it depends on who you ask.

Several of our country’s usual prognosticators paint a picture of stalled-growth, based on Q2 numbers – which came in significantly lower than predicted. Canada’s GDP flat-lined in July, despite noticeable gains in the manufacturing sector.

The article outlines an original, collective, average of approximately 0.5% growth for the latter part of 2009, based on previous expert forecasts. Now, many are saying that number is rather optimistic, given that the latest Stats-Can numbers suggest otherwise.

Should we be worried? Well obviously if you believe the economy has a false hope then yes you should be worried.  If, however, you believe all this is part of the recovery, I think, in large part, educated people know that employment numbers are always a lagging indicator.  Are we sputtering? Yes?  Are we surprised?  No?  The same people complaining that the economy is not recovering quickly enough are likely the same people who were crying “the sky is falling!!!” 12 months ago.  Some people always want to view the glass as half-empty.

Take a look in the rear-view mirror, and you’ll note our country’s primary economic indicator sporting a 4% gain, over the last 90 days, according to the National Bank. But is that enough for the feds to ‘hang their hat’ on, despite what Ottawa feels has already been an adequate monetary & financial stimulus injection? Time will tell.

What’s your opinion? Send me your comments.

If you believe one of the more recent blog posts, by Garth Turner, you can soon expect to see the days of the 3%  mortgage, on the ‘endangered-list.’  By now many of you are aware rates are rising. And, depending on who you talk with, or who you follow, those rates are expected to keep rising. Or are they?  As many people who say rates are climbing, also say we are facing deflation.  Sadly Garth Turner in his own blog will warn on deflation on one day then warn of rates rising?  Anyway, I digress.

Turner says Alberta, in particular, is suddenly banking on the fact that investors will continue chomping at the bit to swallow-up provincial bonds offering a slightly higher yield, and better premium, than the feds right now.

The evidence? Well, Turner points out Alberta’s recent $600-million bond issue as a pretty clear-cut example of how competition between the provincial & federal bond markets will push interest rates higher. And if you believe those rising rates will toe-the-line when it comes to mortgage rates – that means mortgage rates will be steadily creeping-up too since (as Turner mentions) current mortgage rates are set in the bond market.

I think he is right here. When supply in the bond market is and will continue to be high this will push prices down, and yields up, which automatically push up mortgage rates.

Right now, we’re supposed to be heading into a time of economic recovery. And as we wade through those ‘choppy waters’ it’s interesting how often we look back and are able to see so clearly. Perhaps we’re in the calm before the inflationary interest rate storm. And if we are, none of us should be looking back saying “wow, I never saw that coming.”