I’ve lived on the west coast for most of my life, and have enjoyed the benefits that come with living on the ocean. I’ve been boating, mostly sailing, since before I can remember. In all the years I’ve been on the water, be it locally or far offshore, in almost all weather conditions, I only once ever came down with motion (sea) sickness.

It happened when I was young, somewhere around 7 or 8 years old, and I wanted to die. I was propped up on deck with pillows, a sleeping bag, some Gravol® and told to focus on something in the distance, like the horizon. The idea there was to move my perspective away from the ups and downs surrounding the boat so equilibrium could return to my inner ear.

There have been a lot of motion sickness victims this past month with almost everyone experiencing the ups and downs on the global financial and commodities markets stemming from the credit crunch. Sure, that particular queasy feeling has nothing to do with a lack of inner ear equilibrium, but if you’re feeling a little nauseated over the huge volatility in the markets of late, one remedy is to look for some perspective away from the day to day gyrations in the stock tickers.

This is where I’d normally try to advise people to not check their portfolios every other hour because it will only increase your stress levels, which is true during good times as well as bad. That said, we are all human; we can’t help but look at what the markets are doing, so if we must look, then why not step back and try to see the bigger picture?

CNNMONEY.COM published a story this week attempting to explain some of the factors behind the continued volatility we are seeing in the markets. Paul La Monica makes some very good observations and points about the current volatility in the market, and when that may end. Yes, there is likely a lot of bad news that still needs to be priced into the markets, a lot of margin calls left to be covered and lots of desperate traders out there, but the point is there will be an end to the volatility, and that will likely happen before we start seeing a reversal in the economic indicators, especially in the U.S. While this article may not have you suddenly jumping for joy, hopefully it will remind some people that this too will pass, so long as you read past the headline!

On the topic of the economy, the Federal Reserve Board lowered the funds rate to 1% earlier this week, which helped the Loonie to its biggest single day increase since the Government of Canada allowed the Canadian Dollar to float in 1950. While many Canadians have been lamenting the Loonie’s fall from par, interest rates this low will have some economists starting to warn us about the potential risks of having rates go lower, the largest of which could be deflation! As always, no one will be able to accurately predict when rates will change again and in what direction, however, we are likely to start seeing more arguments that interest rates don’t have any further to fall: Central banks can’t charge negative interest rates to borrow money. Low interest rates and continued thawing of the credit freeze makes it a great time to borrow money. We expect this will bode very well the real estate market, especially if rates eventually start to go back up!

Thanks for reading, have a safe and fun Halloween.

At a time when positive news headlines from the financial markets are few and far between, it was great to see more than one positive news story today.  While it goes without saying that the media often focus their stories towards the extremes of good or bad news, today we do feel it needs to be said:  here is some good news!

The interbank rate amongst Canadian banks has been dropping for the last three days.  The interbank rate is the premium that banks charge each other to borrow short term money.  According to The Globe and Mail©, the interbank rate decreased by about one-tenth of a percentage point to 0.9% over expected central bank rates, while the London interbank offered rate (Libor) dropped 0.36 of a percentage point to 4.06 per cent, which represents the steepest drop in nine months.  All of this suggests that the “credit freeze” is starting to thaw as a result of the all the coordinated measures taken by the central banks of the G8 over the last 10 days, including the Bank of Canada.  This is all happening ahead of another potential rate cut by the Bank of Canada this week, which would be great news for Canadian businesses and consumers hoping to secure loans.  Story here.

Home sales in Southern California increased 65% in September, breaking a record that has stood for at least 20 years.  It appears there are buyers out there taking advantage of deeply discounted prices resulting from the foreclosure-fever that arose from the credit crunch.  While this is great news, many of the news agencies are also reporting that the data are for sales that happened prior to the financial meltdown of the last few weeks.  Indeed, many of these sales would have been for houses in escrow originating from sales that happened in the early to late summer.  That all said, this report is evidence that buyers are acknowledging there are great values in real estate in Southern California and if the credit markets start to improve (see above), the real estate market there may have the worst days behind it.  Story here.

So what does the news from Southern California mean to the real estate market in Victoria B.C.?  While it would be difficult to point to a direct correlation between those two markets, the fact that Southern California sales increased dramatically in September 2008 demonstrates that buyers south of the border are starting to see value in real estate (during a time of turmoil in their credit markets) .  Buyer confidence can often be contagious, and when combined with the news about the Canadian interbank rates, we are very happy about today’s headlines!