Here is a great email I got from Bob and thought I would pass it along. Enjoy!
In the early 70's expanding competition from globalization brought competition that caused major fluctuations in interest rates charged by lenders as credit became more accessible and inflation caught the financial gurus off guard. This explosion of the baby boomers transitioning into home owners with families fed it all. There was no end to the prosperity. Mortgage rates rose for a short time over 20%. In 1982 the bubble burst as values had to be adjusted to suit the payments debtors could afford. The world recovered slowly and here in Prince George as 5-yr interest rates settled into the 10-12% range and values/sales were determined again by the catalyst of credit... payments....When UNBC was announced in 1990 Prince George immediately benefited over the next six to seven years until the Softwood Lumber Dispute slowed Northern BC substantially as many depended on the sale of word to the US. A comment often heard was: "imagine if we didn't have the University". And it was true. Interest rates continued to slowly drop. However, during that time growth did happen, even if it was not as robust. Increased Global competition helped reduce the costs of borrowing as overall, interest rates dropped slowly and prior to September 11, 2001, the overall forecast for the global economy was for slow recovery and growth (how often have we heard that?). Immediately after 9/11interest rates dropped world wide. And they continued to drop. Here in Prince George and surrounding area it was the catalyst that combined a new supply with the pent up demand. In 2002 the market started to move for the better and by 2004 things here were chugging along pretty good. About 2006 we started to see result of some success with the expectation of more to come. Interest rates demanded began to rise and borrowers rationalized the cost.. Again, a new bubble burst. This time in 2008. Blame can be set upon the creditors and debtors alike, but it really takes two to tango. Anyways, the enormity to the problem now was magnified by globalization. Getting in... and now getting out (of the problem while maintaining accelerating access to world markets. Once financial institutions started to fall, so great in 2008 was the fear of a collapse, the resulting damage and then letting order restore itself as it has in similar historical situations was too great for governments not to step in. Values and amounts of debts along with payments are being adjusted in Greece and the same will probably happen in Spain, Portugal and maybe even Italy. This is not growth and does not spur any reason for an increase in interest rates. For a long time. Last week word came from the US that interest rates will not rise at all until late 2014. We are tied closely enough that we will be in much the same boat. The advantage for investors/speculators in the Prince George area is that the growth in transportation alone to service the natural resources sector in Northern BC combined with the certainty of low interest rates equals opportunity. We are seeing activity in both the commercial and residential market. Some tire kicking and some actual buying. But as in most trends, many will not join in until the trend is a full swell. Now is the time when those with great insight, luck and guts will try to find the right real estate investment that will pay off handsomely in the next 4- 6 years. Credit will be available but less so as returns for lenders remain low. My point is, our financial world has become addicted to cash flow and low interest rates. The two are related and value becomes secondary to. The challenge debtors are faced with is maintaining the values they are contractually entitled to. As we are seeing in Greece, that doesn't mean they will get it. Interest rates will remain low and those who have asked for another "kit at the cat" should have it. I believe that in spite of the challenges displayed to us by the media, here in Prince George and surrounding area, we are on the verge of growth with diversity. What large cities are based and survive on. I would like the opportunity to talk to some of you about it. Please contact me if you have any ideas you want to work on. thanks, Bob Quinlan, mortgage broker
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