Real Estate Professionals: A Great Resource in Global Economy
by PJ Wade
Now that Canada's economic future is irrevocably-linked to global politics, international trends and foreign crises, buying and selling real estate in local Canadian markets takes on more challenge. Canadian consumers need to see "the big picture" to make informed real estate decisions in this potentially-volatile economy. Although things may be fine at home, Canada can be vulnerable -- directly or indirectly, in whole or in local areas -- to economic uncertainty caused by external forces. Licensed real estate brokers and salespeople have fiduciary responsibilities to keep their clients abreast of economic and social factors that may influence value for the types of property or specific neighbourhoods clients are interested in. For instance, media buzz about near-bursting North American housing "bubbles" may push unsophisticated buyers or sellers into later-regretted action or inaction. An experienced real estate broker or salesperson can explain the significance of these and other media reports to their client's situation. Brokers and salespeople provide the relevant real estate information and financial context that allows buyers and sellers to make decisions, but these professionals do not make decisions for their clients. Although many real estate professionals are fielding questions like "What's going to happen to interest rates?" and "Have real estate prices peaked?" they can not see the future any more than anyone else can. Yes, their experience, knowledge and training helps them interpret current financial statistics and trends, but, as they will tell you, no one knows the future. Savvy consumers realize that bringing knowledge and understanding to their seller or buyer agency relationship improves communication and, therefore, results. There is a wide variety of information available to consumers to aid in interpreting and understanding Canada's immediate and future economic directions. One source of information is The Bank of Canada. The Bank directs monetary policy to create a stable environment for economic growth and job creation and is the focal point for interest rate increases. To accomplish this, the Bank operates by "harnessing the benefits of low inflation" and, among other things, creating "a positive climate for low interest rates and productive long-term investment." According to the Bank, "banks and other financial institutions do not fundamentally determine the general level of interest rates. As intermediaries between lenders and borrowers, they merely reflect the relative intensity or balance between the supply of and demand for loanable funds." Watch the Bank's site for the latest news regarding changes in the Bank Rate that is the foundation for interest rates set by financial institutions. Staying abreast of economic shifts and going to the source for crucial information may help buyers and sellers apply their own business acumen to decipher incendiary headlines and avoid panic-reactions to frenetic news bites -- with some help from their real estate professional. To learn more ... - Statistics Canada's free online guide to the consumer price index is an excellent overview of this often-confusing economic tool.
- Investment returns: For potential buyers who are still weighing investment in real estate versus the stock market, the Bank of Canada's investment calculator will help compute criteria such as the after-inflation value of investments and the total after-inflation value of an investment for comparison with possible real estate returns that your real estate professional can help you determine.
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