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1 Comments Q1: Mortgage and Housing Recap

Article written by Boris Bozic on the 03 Apr 2013 in Mortgage

Now that the first quarter is in the review mirror, for those companies on a calendar year, we can now do our analysis to determine if the previous ninety days is a harbinger of things to come for the remainder of the year.  The experience, results, of the first ninety days of the year was difficult to label.  Changes to the mortgage rules, consumer confidence and weather had to be factored when trying to determine if this was the “new norm”.  Speaking to many of my industry colleagues, no one could say with any certainty that the most recent results are now the “new norm”.  That was my stock answer when I was asked but I think hard data is providing clarity.

There’s an old adage that I’m rather fund of, the numbers are what you are.  Rationalization or any form of sugar coating does not change the numbers.  The same holds true for the industry.

Here are some facts courtesy of the Canadian Real Estate Association:

  1. National home sales declined 2.1% from January to February
  2. Housing activity came in 15.8% below levels in February 2012
  3. The national average sale price was down 1% on a year over year basis in February
  4. Housing inventory is now 6.8 months, compared to 6.4 month for the previous month.

So what do these stats mean?  Firstly, the numbers above shouldn’t come as surprise to anyone who has been in this industry longer than it takes to have a cup of coffee.  We all felt it in the first quarter but waited on data to provide the proverbial exclamation point.  Also, angst and misery loves company.  “Ah, it’s not just me”.  No, it’s not just you but when you get beyond that you start dealing with the matters at hand.  The numbers provide a road map for all of us.  The housing inventory today suggest we’re in a balanced market, supply and demand.  Too much supply leads to equity erosion, and too much demand leads to irrational values.  The elimination of both is good for our respective business, and the market as whole.  According to statistics new listings are down sixty per cent; concerning at face but extremely positive relative to values.  Home owners are not dumping properties by slashing pricing.  Employment is stable, cheap money is available, therefore, home owners are less inclined to have a fire sale.  I think it’s clear that cheap money will be available well into 2014, and if the bottom doesn’t fallout to our economy, directly impacting employment rates, home values should remain stable.

Factoring in B.C. –

The national home price average looks different if you remove the BC numbers.  Statistically B.C. impacts the national numbers positively and negatively given the median price in B.C.  So the impact of the “new norm” will depend largely in part on what region of the country you do business in.

Changes to mortgagee rules were intended to slow things down.  Mission accomplished.  Now we all have to deal with the reality of the market place.  Banks will continue to invest heavily in their propriety sales forces, meaning even more competition for mortgage brokers.  First time home buyers were impacted the most by all the changes to mortgage rules, and as we all know the first time home buyer is the mortgage broker’s sweet spot.  Consumer confidence is an issue, and all the negative chatter has had an impact.  So, this is now the “new norm” – to that I say, “fine”.  Adversity and challenges leads to collaboration.  If you’re a mortgage broker reading this, your issues are my issues because my business depends on yours.  By working together we’ll overcome the challenges, and we’ll get our respective share by taking it from others.

Until next time,



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Andrew Furino @Twitter ID Website Reply

There is a part of this that rings very true…”…By working together we’ll overcome the challenges, and we’ll get our respective share by taking it from others….” We need to grow the broker market share form the banks that hold that 70%+ of the market and not worry about what the other brokers share is.

I heard a radio advertisement the other day challenging consumers to ensure they spoke to “the right mortgage broker”. Are we not loosing sight of where the only place is we can grow our market share from? It certainly is not the other brokerage firms.

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