Steady ahead for real estate - for now

James
James McLeod
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The landscape looks good in the real estate market, as it has for the past five years, according to Jim Fallon, vice-president Newfoundland for BMO Financial Markets.

But Fallon said the most important thing is for consumers not to get too caught up in it.

"We're trying to make sure people don't make emotional decisions, and basically panic and buy something they really can't afford," he said.

The landscape looks good in the real estate market, as it has for the past five years, according to Jim Fallon, vice-president Newfoundland for BMO Financial Markets.

But Fallon said the most important thing is for consumers not to get too caught up in it.

"We're trying to make sure people don't make emotional decisions, and basically panic and buy something they really can't afford," he said.

"Don't get caught up in buying too early or over-buying to really stretch yourself too thin."

While the real estate boom is still going strong for now, Fallon said the general consensus is that it'll come to an end in the near future.

Interest rate increases, expected to come in earnest later this year, making mortgages less attractive.

In the meantime people - especially first-time buyers - are clamouring to get into the market and lock in at low rates.

But that might not be the best move, Fallon said.

"What you buy with a locked in rate is peace of mind," he said.

"What's interesting though, if you look at the long run, the variable rates have been a winning strategy."

Similarly, he said, the conventional wisdom is that housing prices will level off, or even decrease, but in Newfoundland the fundamentals remain strong.

With large industrial projects in the works, and people moving into the province - especially the Northeast Avalon - there's a shortage of housing inventory.

"In the foreseeable future we're going to see continued recovery, the question is what pace," he said.

"What we're all hoping for really, is a sustained, steady recovery. We don't really want to see 12 per cent year-over-year property increases because that doesn't really help anybody."

jmcleod@thetelegram.com

Organizations: BMO Financial Markets

Geographic location: Northeast Avalon

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  • David
    July 02, 2010 - 13:23

    The banks refer to this market as Newfounldand , which explains why houses in Corner Brook are as expensive as St. John's...the lenders don't know there's any difference. br br Eventually, they will. And then CMHC will. And then everyone will.

  • David
    July 01, 2010 - 20:08

    The banks refer to this market as Newfounldand , which explains why houses in Corner Brook are as expensive as St. John's...the lenders don't know there's any difference. br br Eventually, they will. And then CMHC will. And then everyone will.