Jeremy Nagel Mortgage Update

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Wow! What a great week- 30 degrees yesterday, TSX is up over 11,500, oil is up over $72, Cdn dollar is up over 94 cents and mortgage rates have come down slightly. 5 year fixed 3.89% quick close special.

Here’s a great mortgage strategy:
Take today’s variable/adjustable rate product for the next 6 – 12 months. Set your monthly payment to reflect an interest rate of 5% or so. By doing this you are creating a buffer between the actual payment (payment based on your committed rate), and your newly set payment (based on the 5% or so). However, more importantly, the additional payment–over and above the actual payment—will go directly against the principle.

Earlier I suggested this strategy for 6 – 12 months, and this is because we may wish to lock in to a fixed rate once the prime lending rate moves upward. In this case, it’s extremely important that you are not only working with a mortgage planner, but that your lender gives you a rate guarantee upon locking in. Not all lenders offer these guarantees; it’s very important to have the lowest fixed rate in order to make this strategy effective. Equally important is knowing when might be the best time to lock in. This is where I can help. It’s crucial that you are not fumbling through this blindly on your own. If done correctly, this strategy can save thousands of $$$$.

Home Reno Tax Credit deadline is fast approaching!

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Home Reno Tax Credit deadline is fast approaching! Under this program, all goods must be acquired and/or completed before Feb 1, 2010 to be eligible.

Examples of HRTC Eligible and Ineligible Expenditures Eligible

  • Renovating a kitchen, bathroom, or basement
  • New carpet or hardwood floors
  • Building an addition, deck, fence or retaining wall
  • A new furnace or water heater
  • Painting the interior or exterior of a house
  • Resurfacing a driveway
  • Laying new sod


  • Furniture and appliances (refrigerator, stove, couch)
  • Purchase of tools
  • Carpet cleaning

Maintenance contracts (furnace cleaning, snow removal, lawn care, pool cleaning, etc.)

I have a PDF of the Government Brochure outlining all of the details. Let me know and I will email it to you.

#206 335 Garry Crescent – $159,900

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This RENOVATED 711 square foot One Bedroom condo in a Quiet Concrete building is Immaculate! Curl up to your Woodburning Fireplace and admire the New Flooring, Ceramic Tile, and Carpet. Freshly Painted and New Light Fixtures throughout. Updated Appliances in the Large Kitchen. Located on the Quiet side of the building with Large Covered Balcony with Additional Storage Room. Secure and Well Cared for building with a strong Condo Board. Secure Heated Underground Parking. Convenient Location with easy Access to Deerfoot and McKnight for Quick Access to Downtown. Easy Access to Public Transit. Walking Distance to many amenities such as shopping, dining, and Golf. All of this for $159,900!!! Best Value in the Building!

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The State of Real Estate Today

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Here is a great article written by a fellow Realtor in BC. Much of the information applies to Calgary’s current market. It is a bit long, but worth the read.

Yogi Berra said: It is deja vu all over again. That is how I feel today. I wrote 10 years ago, in September of 1998, that we were having a case of the Yeah, buts! I think we are there again.

Here is what I said then:

It is wildly unpopular to be positive in British Columbia these days. We are down, we feel down, we want to be down and down we are. Particularly in the real estate market, we like to wallow in our self-imposed misery. No matter what the positive news, no matter what the uplifting statement it is always countered with a frown followed by a seemingly knowledgeable: Yeah, but.

I find this amazing. In 1960, the average Vancouver home sold for $13,105. Thirty-eight years later (1998), the Real Estate Board of Vancouver reported the average sale price as $346,540 (Sept. 98 single family home). Assuming long-ago you had plunked down ten per cent or $1,310 as down payment and hung in there; you would now be gloating over a 26,455-per-cent return on that original down payment. And you have a roof over your noggin to boot. Amazing. Exercise in fantasy but if this lift kept right on trucking for the next 25 years, by the year 2023 that $13,000 home will be commanding $7,119,420. And antique you will still have a roof over your gray hairs.

But at various times in our history, the Yeah, buts scare people out of their wits. They are told that real estate’s day is gone; that this is a New World and that this or that factor will sink real estate investment. Of course, the Chinese have disproved that theory for 2,000 years; the Europeans and North Americans have founded their empires on real estate. In fact, ownership of even the humblest real estate has been the greatest wealth builder bar none for the average person. It has made the average North American wealthier than his counterpart in any other part of the world. In fact, it is the defining difference between rich and poor nations. But no matter to the naysayer this time it is somehow different.

Today, for some inexplicable reason it is all right for investors to be exhorted to invest for the long-term when it comes to highly speculative mutual funds, to stay the course even while they suffer outlandish losses in their portfolios.

Sound familiar? Only difference to the above is that the $346,540 average single family home price in September 2008 stood at $818,400!

When I look at the collapses in the Mutual Fund sector – where in some cases over 90 percent (!) in value was eroded several times in the last 30 years, something you NEVER see in real estate and now the NASDAQ at 48% lower than last year, ditto for the DOW and the TSX 46% lower since June I shake my head. I can’t recall any time when I have seen any such losses in real estate in such a short period of time.

I also said in the same 1998 newsletter: Most losses in real estate come from foolish investments following the wrong trend, listening to a guru, and getting swept up in an emotional pre-sell binge. Yeah, but, say the naysayers now Vancouver has had it, now it is different this is now 1998. Of course, we had the ‘Yeah, buts’ in the past too…

Again sound familiar? I could share with you the ‘Yeah, buts’ of yesteryear but take a look at the ‘Yeah, buts’ of today:

A ‘Yeah, but’ Survival Kit:

First check whether the Yeah, but is true, reported falsely with a bias or regurgitated nonsense. Today we must listen to statistic after statistic about how down the US markets are, how it is the end of the world. I am called by reporters that just want me to support the negative bias they are reporting and when I dare to say something positive, I am treated like a lunatic. I spoke to a few hundred Realtors in the last two weeks and I am appalled at some of the negative vibes people right in the industry are giving out. Those are people that KNOW or should know that the purchase of one’s home has been the best thing for 40 years even if bought at previous worst times like 1998, 1987, 1982, 1974 – see above. Re-read that newsletter carefully and note the comparison to today.

So, to survive the yeah butters, first learn to ask: Is this true? Then what effect will this really have and then learn to reply either with a firm: Not true! Or So, what?! In fact, the ‘So, whats?’ are a great answer to the Yeah, buts.

Yeah, but in the US 3.4 % of all homes are in foreclosure. So, what? 94.6% of homeowners are paying.

Yeah, but … in the US one in 143 homes is in foreclosure. So what? 142 are not!

Yeah, but … all housing markets are crashing in the US. Not true. Data from Integrated Asset Services LLC of Denver shows that 75 of the 360 counties showed month-to-month increases in prices. Compared to September of 2007, Western and Midwestern housing prices improved slightly while Northeast and South continued to weaken.

The top 5 markets that showed an increase in prices in September compared to a year earlier are: La Paz, Arizona, up 12.1% (and 22% higher than in August), St. Clair, Illinois, up 9%; Plumas, California, up 7.5%; Cocke Tennessee, up 6.5%.; Washington, New England, up 5.1%. … there are dozens more.

Yeah, but … sales volumes are crashing. Not true. The US markets with the steepest decline in prices, have now the largest increase in sales between 35% to 45%.

Yeah, but US unemployment is rising at 6.1%. So what? Of that number some 4% is built-in second and third generation welfare and in any case … So, what again. 94.5% are working. (BC was at 7.8% in 1998, East Germany at 12%.)

Yeah, but the US is creating a huge debt. The outcome will be a banana republic like South America. True, huge debt. NOT true … Banana Republic. The US is a $13.2 trillion dollar annual economy. The economy of France barely fits into California, Turkey into Washington and Canada into Texas. It is NOT a Banana republic.

Yeah, but you have to admit that money is created out of thin air. True! I say it all the time and the outcome will be more inflation of hard assets after we go through a valley of clearing out the excesses.

Yeah, but … Ozzie, we are getting older in BC we have more people in the age group of 44-60 than any other. True! So, what? They have all the money, they can afford to buy the second home and the recreational property and when they die they leave the money to their kids here in BC and Alberta where over a trillion will be inherited by the next generation. AND we are also getting more new births in BC than anywhere else!

Yeah, but people will not want to live in big houses anymore. Not true! We need the big houses, because we still have our kids living with us. They used to leave at 19, now they come back with 2 more kids at 24.

Yeah, but … some developments have gone down. So what? They needed to, we were overbuilt. Normal! Also, $113 billion in projects are still going ahead in BC.

Yeah, but … pre-sales are not moving anymore. So what? Again, when we overbuild, we will see developments fail. Normal! It happened from 1995 to 2000 as well. When everyone stopped building we cleared out inventory and started again in 2000.

Yeah, but real estate sales volume is falling. So what? Our volume is falling as measured against 2007, and measured against most other years volume is higher.

Yeah, but vendors can’t get their price. True. So, what? Buyers can get theirs. Who says that vendors are entitled to ever-increasing prices EVERY YEAR. Traditionally Vancouver’s prices have reversed 8 times in 30 years only to make new highs later.

Yeah, but prices are down a lot. So, what? Downtown Vancouver new condos are becoming affordable. Over 100 Westside properties are listed at $100,000 or more below assessed value. Vendor take-back financing will make a come back.

Yeah, but … it is harder to raise financing than ever before. Not true! In the early ’70s we could only get 75% financing, there was no easy mortgage money available in the eighties, every deal had a second mortgage. In 1990 the average 5-year mortgage was 13.5%. In our monthly Real Estate Action Group there was over $20 million raised this year through joint ventures. Just become more innovative.

Yeah, but … Realtors have to leave the business. So what? The professionals will stay and do well. That is what the market needs anyhow.

Yeah, but the gloom forecasters may be right this time. Never. Harry Browne, How To Profit From A Monetary Crisis told us in 1974 to sell real estate. Howard Ruff told us 20 years ago to sell, move into the hills, buy dried food and a machine gun (presumably to protect the dried food). Ravi Batra forecast the Depression of 1990. And John Erdman wrote The Crash of 1989 but he also wrote The Crash of 1979. Do I hear The Crash of 2009? Even if they were right, so, what? We’d all be in the same boat anyhow.

Yeah, but … employment is slowing. Not true. In the last 8 years BC had the highest employment gains in Canada. Employment stands at an all-time record.

Yeah, but unemployment is rising. Not true! At 5.4% BC is in 44-year record low territory. (See the US above as per built-in unemployment.) In any case, 94.6% are working.

Yeah, but … forestry is down. True … but so, what? BC still accounts for two thirds of Canada’s lumber exports, half of it is chemical pulp exports, 40% of it is paper exports.

Yeah, but mining is down … not true and so, what? More gas and oil leases sold than ever , almost $2 billion worth in 2008. Also BC still produces 98% of Canada’s copper ore exports, 7% of Canada’s coal exports and 40% of Canada’s national zinc exports.

Yeah, but … energy is down … So, what? It is down for everybody. BC ranks second nationally in producing natural gas, BC ranks third in producing hydroelectricity.

Yeah, but … with the economic recession there will be fewer tourists. Not true or at least with the falling dollar tourism in Canada is downright cheap for Japanese and Americans.

Yeah, but … now we have an 80 cent dollar again. So, what? Helps our exports. Helps tourism. Helps foreign buyers buy real estate. Low dollar helps BC and Alta exporters.

Yeah, but … there is so much change … True! And isn’t it wonderful? We can re-invent ourselves. Opportunity abounds.

Yeah, but … Ozzie, I cant help it, I am worried. So what? It is a proven fact that 90% of all the things we worry about NEVER happen! The 10% that will happen, don’t worry, get into some action about what you worry about.

Yeah, but … all the people we watch on TV can’t be all wrong and they say we are going into a deflation/depression/crash/years of misery. Not true! They can, and have been, all wrong. Those are the same people that said about your stocks: Stay the course, while they sold to you. They also said, that markets after a 20% decline would go up again and then all the way down. They said the small investor is back (nonsense, he has been wiped out). Get away from them. Most people today have CNN or BNNitis. Before they get to work they are already regurgitating the bad news from Asia and Europe and expect the worst in North America. Do not be one of them. For your own mental and physical health get away from the naysayers. Markets become the stories people tell about them. Money is made by those that keep their own counsel.

Ok enough with the Yeah, buts. For now … But I will create a ‘positive news’ section in our weekly Facts by Email and I urge you wherever you are to send me any and all positive news you find. I will group them by economy, tourism, people, work-related, country etc. and send you a final package of good news or the final version of a Yeah, but survival kit.

Yeah, but are there no real problems on the horizon for BC?

Of course there are. I am bullish but not foolish. Forestry in BC is hurting, Oilsand projects in Alberta may be delayed, employment may slow down. Yes, we have problems. The world has changed and is continuing to change; today’s new world seems like a frightening place but so were the nineties, the eighties, the seventies and the sixties. In 1961 not one house sold in Burnaby. In 1969 I couldn’t give away brand-new $19,900 full basement homes. In 1974 the US stock market crashed by 40% and the gloom descended on Vancouver’s housing market too. Headlines had ‘Realtors prowling like hungry tigers’ or ‘Real Estate prices will never recover again’. In 1981 and 1982 real estate values did crash by 45% in 18 months. 5-year mortgage terms were written at 16.5%. In fact, all of the eighties saw a five-year mortgage term at an average interest rate of 12.45%, never less than 10.75%. In 1988 the end of the real estate world was predicted following the 1987 crash.

Had you listened to all the doom and gloom of 1961, 1974, 1981, 1982, 1983, 1986 and 1988 and not bought a house you would have done a serious disservice to yourself and your family. Of course, this is a new world. You have to apply some new principles. Get some unbiased advice, listen to where the Yeah, buts come from, make some intelligent decisions. Discard some of the old standbys. Note that now you will make the most money on the day you buy not when you sell and forget about location, location, location; trend and time identifiers will rule. It is also true, that we are at the end of this cycle and it may well be a downturn of the longer variety. The last 3 of which lasted 3 years on average and saw an average of 17% declines in price. (Average meaning some lost more and some lost less.) We said in October 2007 to take some chips off the table to protect what you have becoming more and more important. Remember, that most people that are complaining about prices going down are talking about prices being down as opposed to 2007. We are still much higher than 2006, 2005 etc. (In most markets in the US prices have not gone below 2005 and 2004 as well.)

No matter what business you are in, not just real estate, your best market remains between your ears. Stay positive, upbeat and you will attract business, people and friends to you. We have choices as Bill Bartman said: IN tough economic times, with screaming headlines there are two kinds of people: Those that run and hide (and cry around the water cooler) and those that become filthy stinking rich! Which are you?

I have had the privilege to lead big real estate companies, make speeches and write a real estate newsletter during my 38 years in and around the real estate world. I know this:

There are no good or bad markets, only good and bad deals. I have seen the absolute worst deals in the so-called very best markets (i.e. some condo hotels at Whistler in 1995 and 1996) and I have seen the very best deals in poor markets. I have listened to the gloom and to the boom. I told our subscribers not to buy in Vancouver in 1995 and I told them to buy (carefully) in 1998. Every year for thirty-eight years somebody tells me that there are too many realtors in the business, that no one can afford to buy anymore (yep, they said it in 1969 too) and then they say: I wish I had bought 10 years ago.

Don’t become involved in the gloom. Prices rise on properties in places where people want to live – such as BC and not in Northern Saskatchewan, where you can buy a building lot for a buck because people don’t. People will want to live in the opportunity-rich West – the most fabulous of all places in the world – FOREVER. The whole world crowds our immigration offices for a chance to come here, to work and play here. We are already here!

Real estate shopped wisely, purchased with good sense and good unbiased, independent advice (hint, hint, wink, wink) will outperform all other investments you will make in your life. It always has and it always will.