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HomeMy WebLinkAboutTimes Advocate, 1991-02-27, Page 5ITI S YOU ,i R R 1 J S 7 T r S i Times Advocate, February 27, 1991 Pape 5 Some optimism Will lower Interest rates spark our housing market? B Adrian Harte EXE R - While war winds down in the Persian Gulf, an odd series of events are happening back here. ..i tu,. 'Rte stock market is surg- ing, not panicking, gaso- line prices are far lower than they were before war broke out, and in- terest rates appear to be dropping. Analysts and businessmen have been insisting that good things are bound to happen in Canada once we get our interest rates back in line with what people commonly consider affordable. Companies have been reluctant to invest in new property and equipment, and consumers likewise, have been cautious when buying those things they have to borrow money for, especially homes. Now, as interest rates ease down from the 14 percent levels they were only weeks ago, can we ex- pect to see a resurgence in the lo- cal real estate market? Will de- pressed housing prices and sales be sparked by rates that now near 11 percent and may possibly drop to single digit figures in the next few months? Ken Agnew at the CIBC says that if a surge in the real estate market is on its way, he hasn't seen anything of it yet. "The big concern is the econo- my," said Agnew, noting that peo- ple are more likely to be keeping their fingers crossed on job securi- ty than taking risks on mortgages. "Every day we pick up the paper with the right answer," she said. New logo for National Trust TORONTO - One of Exet- er's trust companies will be getting a new corporate iden- tity with a brand new logo and slogan. National Trust, formerly Victoria and Grey, will be shedding the familiar VG in- side an N logo for a symbol of a person, neither male nor female, set in a triangle sur- rounded by the sun. Gone too will be the white and blue colour scheme in fa- vour of "golden yellow and teal". The new slogan is "Helping you secure your future". In announcing the new logo, Bryan Mehlenbacher, president and chief executive officer, said the change sig- nals a new era of growth and opportunity for the trust com- pany. National Trust's net income for 1990 totalled $71.7 mil- lion, compared to $78.2 mil- lion in 1989, despite the sof- tening economy. Assets under the trust company's ad- ministration have risen to $33.3 billion, with corporate assets now at $15.7 billion. The company employs more than 5,000 individuals and has a branch network of 184 offices across Canada., there's layoffs," he said. The "flurry of mortgages" is not here yet, said Agnew, but suggest- ed they might be on their way if in- terest rates continue their trend of "drifting on down". Sandra Forbes, loans and mort- gages manager at the Bank of Mon- treal, said that it has been a long time since interest rates have been as low as they are now. It was June 1988 when loans of 10 3/4 percent could last be had. "It would be nice if this June we could get it back to that," said Forbes, noting that last April rates were hovering around the 14 1/4 and 14 1 3percenr • Mark, well above wit*' khe 'considers the benchmark for affordability - about 12 percent. Since the rates started their down- ward trend in December, Forbes said she has seen the number of in- quiries about mortgages pick up. "This month in particular we're having more inquiries," said Forbes, although she notes that February 1990 set a record number of mortgages for that month. One trend that is apparent is that people who have to renew present mortgages are only signing on for shorter terms of six months or a year, likely in the expectation of even lower rates to come. Although Forbes can envision rates heading even lower in the months to come, she said she never advises any customers on the basis of predictions. "Nobody's got the crystal ball "It's more or less a buyer's market right now" Al Vasily, manager of Geiser Kneale Realty, said the real estate market is still slow and suggests potential customers are patiently waiting for lower interest rates to bring monthly payments down on the properties they want. Vasily said he saw a possibility of single digit interest within a few months. People are curious, however, and Vasily said customers for proper- ties in the Grand Bend area are do- ing a lot of shopping and viewing, but few offers are coming in. They may be waiting for an end to the war, suggested Vasily. When an offer does come on a home, Vasily said the seller may be disappointed. "Offers are really coming below what people are asking," said Vasi- ly, but also said that if low interest rates do light up the 'market the high number of homes for sale could disappear quickly, shorten up the supply, and eventually boost prices. "Come May or March I think we're going to see a lot of activity," he said, claiming that the current balance of depressed prices and low interest is going to make for an attractive marketplace. Vasily also noted there are dis- tinct differences from town to town in the real estate market. The Grand Bend area, he said, is fairly stable because of its appeal to the retirement home market - people who will buy when they need to and no longer have to worry about employment prospects. Exeter, said Vasily, is definitely a slow market today, and people are hesitant to upgrade to more expen- sive properties. Nevertheless, Vasily classified both the Clinton and Hensall real estate markets as quite "dead", mainly due to the high impact of the recession on local employment. What is selling better than most today is the home in the $120,000 range. Vasily said he would like to .see a bigger selection of homes be- tween $80,000 and $150,000 on the market. He also believes that if builders could come up with new townhouses, or new single family tomes under $170,000 they would tell quite well in the coming months. CAN find the best GIC 2 yr. Let us shop the market for you Nevertheless, those who are look- ing to buy are in a good position. It is definitely a "soft" or a "buyer's market". "No question about it," said Vasi- ly. "And I think it's going to go on for quite a while." Ron Cottrell at Canada Trust Re- alty agreed that prices are not as strong as they were, noting that anyone who bought a home last year and wants to sell it at a profit this year will have a hard sell. With prices down, Cottrell said he has .noticed an increase in the number of first-time home buyers looking for property. This is good, he said, pointing out that when more people get into the market, they stimulate buying and selling up the line. Even in harder economic times, said Cottrell, people are turning to real estate as an investment for ob- vious reasons. "Traditionally, real estate has turned out to be a damn good in- vestment," he said, citing statistics that show a home will appreciate 99 times out of 100. "It's more or less a buyer's mar- ket right now. It's a good time to be buying," said Cottrell, but warned that sellers have to be rea- listic in their asking prices in order not to scare away customers. People are interested in buying nevertheless, insisted Cottrell. "Not everyone's feeling as un- comfortable or pessimistic as the news media ha,s led us to believe," he said, predicting that as interest rates stabilize at more affordable levels, the market will take off. "We're really optimistic...we feel we're going to have a hell of a good year, state Cottrell. The proof he said, is that while tha'e are quite a tew $200,000 and over home on the market being largely ignored, homes around $ 120,000 are beingnapped up. However, those already with $120,000 homes are waiting for in- terest rates to drop before they start looking at upgrading to the $ 180,000 market. One thing which does worry Cottrell is the tendency to high lot prices in Exeter, which is going to affect the base price of even the most modest home. "If you have to pay $40,000 for a lot, needless to say it's going to af- fect the prices ," said Cottrell, who hoped Exeter land values could be kept more in line with the surrounding communities. All the same, Cottrell said he ex- pects big things for this year's peak real estate months of April, May and June. Now! The Standard Trust MORE INTEREST MORE OPTIONS MORI , SERVICES GREAT RATES! 3-5 years • ,>:)i111 cus:rj,itt -1O, • G.I.C. 411 STANDARD TRUST Member — Canada Deposit Insurance Corporation 386 Main St. S., Exeter NOM 1S6 RRSP HOTLINE: Ilig Gasser-Kneale Exeter Grand Bend Hensall 235-2420 238-8484 262-2607 235-1060 Call now to save time and avoid line-ups. 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