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THE SKY IS NOT FALLING


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Blog by Doug Treleaven | January 17th, 2009


THE SKY IS NOT FALLING

 

You cannot watch the news in Canada without hearing the doom and gloom scenario of what is going on south of the Border.  I think we are letting the anxiety of the US sub-prime mortgage trouble affect our opinion of the market here.

 

A great deal of the information we are presented with is discussional in nature but may be looked upon as facts.  While the information is left to an individuals interpretation, the end result is the potential to create unease or even fear on the part of the average consumer.

 

Let’s examine some of the factors in our economy that are positive. 

 

Employment is very high in Canada, earnings in Canada are on the rise, our economy is performing well, particularly in the Western provinces, and demand for consumer products is still strong.

 

On the other side, house prices locally have gone down.  For the most part, Buyers will get a deal if they are buying and while Sellers may take a bit of a hit if they’re selling, if they’re buyers as well it will most likely be a wash. 

 

I believe we also need to reference house value increases in the 2006 and 2007 years and clarify that those were record years.  How can we expect to have the same kind of increases year over year – it simply does not go on forever.  This type of market increase is not sustainable and we should realize that when our increase of 75% is followed by a 10% downward correction you’re still looking at a net of 65%.  That’s okay.

 

The sure fire way to create a downward spiralling market is to allow fear to dominate our decisions rather than facts.

The truth is, things are pretty solid here in Canada