Keeping market fluctuations in perspective

It’s holiday time.

Time for family, time for friendship, time to give thanks, time to reflect, and time to simply sit back and enjoy the moment. Well that’s what it’s supposed to be like.

These past couple of months have been quite different than the past few years. Recently the declines in the price of oil have taken some people by surprise, and now some – especially Albertans – are getting concerned with their job security as the last time we seen these times come the oilfield exploration activity slowed down and many were laid off, and that trickles down through our entire economy.

The news media doesn’t help with their ‘insights’ that the sky is falling along with your housing prices and that we are set up for a housing crash.

Well, if you, like me, pay attention to the news, then the message has been the same every month since 2008. The media has been discussing how Canadians are ill prepared and that our prices are too high and unsustainable.

Certainly there may be some overvalue in the market, but I wouldn’t say anything to liken it to a housing crash. From a mortgage professional’s standpoint, it’s more demanding than ever to qualify for a mortgage. The guidelines and restrictions placed on the Canadian consumer are such that those that do qualify jump through more proverbial hoops that it physically scares them. So much so, that a recent poll states that Canadians would rather go to a dentist than try and qualify for a mortgage.


A root canal vs a mortgage application? Most of the year we are caught up with just ‘catching up.’

Well, I’m not here to forecast that it’s going to be all roses. The price of oil is manipulated by OPEC, and some of those countries are trying to hurt North American oil production and the only way they think to do that is to sink the price of oil that it devastates our economies.

Well, realistically they are oil producing countries too, and the price directly affects them, likely more so than us. It only scares us more as our countries are widely dependant on consumer confidence and without it, people stop spending. The real question is, how long can those oil producing countries like Saudi Arabia and the gulf states along with Russia hold out at these prices?

Reality is, this is a short term thing, many countries in OPEC aren’t as wealthy as the gulf states and are dependant on $80-$100 oil. Which means those ‘not so have’ countries will pressure the other members in OPEC to manipulate oil to the side where it’s more economical.

The gulf states won’t be able to afford to both keep oil down and aid financially the countries that need oil at a much higher price.

How long will this last? Well who knows, it’s been a couple of months already, and it feels like we are nearing bottom or at bottom of the price of oil. Plus we are in winter in the northern hemisphere where most of the global population lives and furnaces are pumping to stay warm.

Yes, this will affect those that haven’t been able to prepare as well as others, and there may be some extended layoffs in the spring once we get through the drilling/exploration season in Alberta. But I don’t think that it’s going to be a long lasting one. Reality is the gulf countries enjoy a comfortable living as well, and the price of oil is always manipulated which means that it’ll soon be manipulated back to the economical side soon enough.

So since it’s the festive season, and there’s really nothing you can do about global issues, shut your brain off, relax and enjoy your time with family and friends. We race to get here every year, and there’s always something pressing, but nothing more pressing than those that love you and need your attention.

Jean-Guy Turcotte is a mortgage broker with Dominion Lending Centre – Regional Mortgage Group in Red Deer.