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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

November 16, 2017 | Careful

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

I admit it. She’s winsome. Eye candy. Made for YouTube. The woman fits right in with the other babes and hulks that Toronto’s hip Stomp Realty likes to employ as agents. But April Brockman is more than just a talented, vid-friendly presenter. She’s a one-woman marketing frenzy.

Rising from her roots in Wasaga Beach, she did four years working as a credit union assistant, then exploded onto the hormone-drenched set of The Bachelor Canada in 2015 where she stole Hunky Tim’s heartand accepted his rock. (Sadly the affair ended six months later. Tim Warmels made the big announcement on his blog. But they’ll forever be besties. All good.)

Anyway, April’s a realtor. As stated, she’s a great promoter. Her client videos are professionally done, simple and powerful, direct and compelling. If you were a house-horny Mill looking for a credible condo chick (as she calls herself) to make stuff happen, this is your woman. Plus you’d get to hang with her during showings. Closer than Tim is these days.

April Brockman is reaching a lot of people. Even more than this pathetic blog, I imagine. Big Facebook following. Twitter feed. Eight thousand Instagram followers. Sustained media coverage. Snappy web site. It’s how Donald Trump came to be president of the United States, by the way. Social media rules.

This brings us to April’s message on B20, the universal mortgage stress test the evil bank regulator is about to foist on all the moisters desperate to get into real estate ownership at inflated prices, and crushing personal debt. She is saying what so many others are telling buyers – if they delay making a purchase in 2017, they could be pooched in 2018.

Here it is. Enjoy.

The key message: “That means, if you purchase this year, you’ll have $147,000 more than if you purchase in 2018.”

This is YouTube logic. You can qualify to buy a $707,000 condo today based on the prevailing 5-year mortgage rate if you earn $100,000 per year and have $140,000 to put down (thanks, Mom). But if you wait for the stress test, the same income and down payment will get you a place worth only $560,000. This is obviously sad,  and wrong.  So, buy now. How hard is that to understand? It means, “if you purchase this year, you’ll have $147,000 more than if you purchase in 2018.”

Of course, April fails to mention that in the first scenario (buy now) the mortgage would be $567,000, and in the second (buy in ’18) the debt would fall to $420,000. Payments would be reduced by a sharp $700 per month. But there’s a bigger issue at play which also gets no airtime from the Stomp Lady – valuations. If credit is so reduced for all buyers that the unit they can purchase must be 21% cheaper after B20 lands, then why won’t real estate prices follow? Where are April’s buyers supposed to come up with the extra $147,000 that is about to be so cruelly stolen from them? If they don’t have it, how can they give it to the greedy sellers? So in order to find a buyer, won’t vendors ask for less? And what if you buy a $707,000 place from this woman in late 2017 only to watch it turn into a $560,000 condo in a year or two? Goodbye $147,000, and you have a mortgage worth more than the real estate.

Make no mistake. Prices are where they are (stupid) because interest rates were pushed lower and credit flowed like champagne during a Bachelor tryst. When rates rise and credit shrinks, it’s over.

We still love ya, April, but maybe Tim was right.

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November 16th, 2017

Posted In: The Greater Fool

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