Shake Baby Shake

Come on Over Baby

This author admittedly suggests that it’s obtuse speculation that Jerry Lee Lewis was a Vancouver real estate bear. However, if he had been and barring the intended essence of his song, some of his lyrics might well describe the current state of Vancouver Real Estate when he wrote ‘Whole Lotta Shakin’ Goin’ On”!

Everything is Shaking

CBC reported that British Columbia real estate had some ground shaking news in the last 24 hours.

Whole Lotta Shakes

How many shakes are there? Let’s look at the number of earth shaking events that occur on our coast. From Earthquakes Canada here is a 1 day list of geologic events in B.C.:

1. Date Time Lat. Long. Depth Mag. F Region
2. 2009/11/17 20:15:00 51.88N 131.93W 20.0* 3.6ML 152 km S of Sandspit,BC
3. 2009/11/17 19:30:55 51.85N 131.80W 20.0* 2.9ML 155 km S of Sandspit,BC
4. 2009/11/17 19:04:11 51.87N 131.74W 20.0* 4.7ML 154 km S of Sandspit,BC
5. 2009/11/17 16:40:09 51.96N 131.20W 20.0* 3.0ML 149 km SSE of Sandspit,BC
6. 2009/11/17 16:36:45 51.79N 131.78W 20.0* 3.7ML 162 km S of Sandspit,BC
7. 2009/11/17 16:26:21 51.84N 131.63W 20.0* 4.6ML 157 km S of Sandspit,BC
8. 2009/11/17 15:54:27 51.91N 131.83W 20.0* 3.8ML 149 km S of Sandspit,BC
9. 2009/11/17 15:37:38 51.81N 131.95W 20.0* 5.5ML 160 km S of Sandspit,BC
10. 2009/11/17 15:30:40 51.77N 131.88W 20.0* 6.5Mw F 164 km S of Sandspit,BC. Felt
11. 2009/11/17 12:35:25 48.30N 122.65W 23.0 2.0ML 54 km E of Victoria,BC
12. 2009/11/17 08:03:38 50.47N 130.12W 10.0* 3.4Mw 192 km W of Pt. Hardy,BC
13. 2009/11/17 04:50:24 49.33N 128.23W 10.0* 2.8Mw 159 km W of Gold R.,BC
14. 2009/11/17 04:00:46 49.73N 126.98W 33.0 1.8ML 63 km W of Gold R.,BC
15. 2009/11/17 02:09:06 51.36N 131.17W 10.0* 3.4Mw 215 km SSE of Sandspit,BC

That’s one day – and, only on the west coast! According to Earthquake Canada there were in excess of three hundred in all of Canada in the last 30 days.

Shakers of the Past

Amongst us are those who suggested that the Vancouver Real Estate Market has been on shaky ground for some time. Bear types, sadly, the few who are left, did in the past, warn us that shifts in Vancouver real estate’s tectonic plates would happen. Fair to say, they suggested that the local market’s decline would experience equal catastrophic subduction.

Chicken Little

For at least 24 months and perhaps more, many bubble/bear blogs have chimed in with equal strength. For the most part, they weren’t Chicken Little talking about the sky falling but, as understood, the words written were more pointed. They knew that earthquakes are a certainty but, like earth science geologists, the bears shared the same problem – neither can tell exactly when the ‘Shakin’ will begin.

True Spirits

Unfailingly, they chanted in rhythmic blog cadence. They knew that at some point in time, given that current real estate and interest rate market continued, there would be personal financial houses that would slip off their foundations and crumble when the shaking started.

New Kids on the Block

In what seems to be a taking up of the bears cause, there appears to be a number of high powered individuals now wearing bear suits. Dressed they have come to the stage humming a tune clearly emulating Jerry’s bearish lyrics. Of interest, they have gathered in unison as if they were preparing for an audition.

BC Bear

November 17/09 – Cameron Muir the Chief Economist of the British Columbia Real Estate Association, the economic sage and champion of Real Estate in B.C., who on cue declares that ‘home sales are expected to moderate in the coming months as pent-up demand dissipates and eroding affordability begins”.

Carrick-teristically

November 17/09 Rob Carrick, the intrepid financial colonist for the Globe and Mail, says “there is growing concern” that “the homes being snapped up today could become unmanageably expensive when mortgage rates rise”.

Defending his interpretation of the tune, Mr. Carrick points to Michael Gregory the senior economist for BMO Nesbitt Burns, who according to Carrick says: “The Bank of Canada has been very clear on this,” – “ladies and gentlemen, rates are abnormally low and in the future they’re going to be higher. So be careful.”

Persisting in lyrical interpretation, Carrick points to Scotia Capital’s statement “that the risk posed by rising mortgage payments is compounded by the growing preference for 30- and 35-year amortization periods rather than the traditional 25 years, and by a trend to small down payments. On the cusp of a big run-up in mortgage rates, people are borrowing more and taking longer to pay what they owe.”

Irrational

November 12/09 Tony Wong from Your Home.ca brought forward the Billboard Chart Topper in this group of Jerry Lee Lewis wannabees.

According to Wong, Peter Aceto, the CEO of ING Direct, growled ‘Direct’-ly saying “low interest rates have caused some Canadians to act “irrationally” in the housing market, potentially taking on too much debt that could lead to economic difficulties down the road.”

Can You Feel the Beat

Are their renditions making your earth move? Are you sensing the deep tremble that shakes your bones? Are their lyrics leaving you with that ‘ear worm’ feeling that won’t let Jerry’s ‘Whole Lotta Shakin’ tune out of your mind.

What can you do to stop that ‘ear worm’? Hint: – the answer is not earth shaking.

Some Help

Thanks to Rob Carrick, here’s his carefully measured advice that is amongst the best:

Five ways to prepare for higher mortgage rates:

1. If you’re buying, don’t borrow as much as lenders will allow you to have.
2. If you have a variable-rate mortgage, where costs rise along with your lender’s prime rate, set your payments higher than they need to be to create a cushion to absorb rate increases.
3. Make a lump-sum payment on your mortgage or increase your regular payments.
4. Find out what your mortgage balance will be on renewal and use an online mortgage calculator to project what your payments could be if you were to renew at higher rates.
5. Remember that higher mortgage costs will limit your ability to carry other debts.