Live~NRGY

http://business.financialpost.com/2012/07/11/canadian-housing-prices-are-not-sustainable-david-rosenberg/

Question (Math 101) – How not to buy – or is it just me??? But in this case seems like everyone forgot how to add 1 + 1

So you bought a house a few years ago – say for argument’s sake $100,000 with higher interest than today’s low rates. You’re okay and doing great now because the house is worth let’s say $200,000 or more and rates are extremely low. You’ve got equity – right on the money you bought at the beginning of the skyrocketing house prices.

Now first time buyers are buying into the skyhigh housing market and go get a high mortgage with low interest rates. Seems reasonable right.

Question #2 – Okay has anyone really really taken the time to figure out if lower house prices and higher interest(but not too high) is better than high house prices and low interest rates. Exactly how many people statistically are getting these low interest rates really? Bank mortgages are tailored to individual situations, so it seems reasonable to assume some sort of Bell curve around most people not being able to take advantage of ridiculously low rates. Only few individuals in my opinion statistically would be able to take advantage of the current economic situation and profit from low interest rates. Exactly the type of individuals that could probably afford to go out and buy a new house with all the cash they have on hand or in the bank.

Now let’s not forget all the other banking instruments linked in and to the mortgages. Hmmm, at least the positive is that you if are smart enough you can deduct mortgage interest and grow a financial investment. Word of caution – get good financial planners and backup accountants and work those numbers to your retirement. Finally when in the slightest of doubt or gut feeling not right – do a re-org and pull your investments into as safe a place as possible.

As for me, my own envy to buy is countered by knowing that house prices have topped in more mature Markets like Ottawa where the numbers spelling – D O W N and L O W E R. Too many boomers not enough incoming “fresh meat” as they say.

At least Alberta is buffered by incoming demand due to NRGY natural cycles. Demand will remain strong and able to withstand contracting fluctuations and tendencies elsewhere. Anyways I don’t want to say more to impact and create artificial cycles. Just take everything with a grain of salt as always, artificial agents being the word of caution here in their roles as skewed change agents.

And as with any business in business – don’t blame banks for wanting to make money – afterall it’s their MAIN & PRINCIPLE bread and butter. Where there’s a demand, business step in. It’s up to consumers and people to decide how to manage their investments and money. Afterall as a consumer, everyone wants your money that you’re ready to spend. Right – so you can invest wisely by taking your time – you’re only going to make someone else richer if you’re doing it too quickly. Time works both ways – by way of interest. Want it now – pony up, wait & see and it’s bound to go down at the right time !