The CNN Recession - How Real is it and How Does it Affect Us?

By Mark Jennings-Bates



Having just returned form a short cruise in sunnier climes, I feel refreshed and ready to jump headlong into what I believe will be a very exciting and challenging year ahead.

As usual, on vacations, I have the opportunity to spend a little more time reading, and this time was no exception. I took with me a fascinating book by Malcolm Gladwell, Blink. Malcolm Gladwell is the author of another best selling book, The Tipping Point and Blink is equally captivating and thought provoking.

Essentially, in the book, Gladwell probes the ability for the human mind to make decisions accurately with what we consider to normally believe to be a lack of information. He terms this process "thin slicing" and by no means suggests that all decisions should be based on more of an intuitive input but stirs up a mental discussion on why the mind has the power with so little information to make apparently accurate decisions.

This topic has always intrigued me and personally I have learned to use my wife's more powerful intuition to aid me in decision-making. Gladwell goes so far as to study the results of different groups of purchasers, those who intently research decisions to buy a product and those who make a more intuitive purchase. In the study he found a trend towards more successful decisions being made intuitively with higher value purchases.

I have mentioned in previous articles that my personal belief is that we have too much information available to us and it often creates a form of "decision constipation". Many years ago the media industry was behind the curve on information so the delay to us as readers or consumers was compounded. Now, the media is able to create the news based on our google or yahoo search trends and very recently someone mentioned to me that this economic challenge might be referred to in the future as the CNN recession... interesting thought indeed.

My point in the discussion is that in every instance, when it came to purchasing a home or building a home, I would have a habit of doing much research and study to support my decision, my wife however, would have a "feeling", either in support of or against my decision. In every instance, her support has ensured a successful transaction from our families' point of view. On the odd occasion where I pushed ahead on the evidence from my data, but against her intuition, the purchase was not successful!

I am not proposing that we all run out and buy homes without thought, but I am suggesting that the challenge today is that consumers are caught like startled deer in the headlights, confused because of information overload and defaulting to not making decisions and hence avoiding mistakes. The truth is there are many opportunities that are being overlooked in the process. For the first time buyer, prices are very favourable, selection is better than it has been for many years and mortgage rates are at an all time low. For the investor, access to credit is positive and there are some very good opportunities to acquire properties that either cash flow or offer potential for upside growth as the economy cycles back. Those people who are brave enough to move now will benefit in the future. There is a saying that I like that indicates that there are three types of people in the world, those that make things happen, those that watch things happen and those that said "what happened?" It is very pertinent to today's economic reality I believe.

In reflecting on the cruise ship experience, I look back on a time when 2,500 people were spending money freely, laughing and joking, telling me that they personally were not impacted by economic woes and were free of media impact. When I arrived back in Canada I found friends asking in reality, how many people in Western Canada will have a T4 slip that varies radically from 2007 to 2008 to 2009. The answer is very few! Most people are still collecting pay checks the same as they were two years ago, are paying less in interest payments (substantially!) and can access capital if required for their home purchase.

In 2009 let's hope that we don't simply "watch things happen" I know which group I will belong to.

Happy New Year.

Mark Jennings-Bates is a British Columbia Based Realtor with Coldwell Banker Horizon Realty, the country's #1 Coldwell Banker office. His website, http://www.BCResortHomes.com offers subscribers the ability to access unique and high level investment insights into trends in British Columbia's interior with a focus on resort and lifestyle investments.

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