Jun 24 | Posted by Barry

Got your attention, huh? It’s a real catchy headline. I am certainly not the author. It has been used by many, mostly by the press and the stock market industry. Catchy headlines sell papers (or attract web viewers). Negative predictions about the real estate market released by the stock market industry are intended to drive money back in to the money markets which is somewhat self-serving. Rather than sensationalizing, what’s wrong with the truth? The fact is, stable or “steady as she goes” doesn’t sell papers or shift money. The truth is that real estate values have increased no less than 5-7% year after year for the past 16 years (with the exception of the 10 month blip and immediate rebound of ’08-’09). Significantly better than the stock market, I’m sure you would agree.

In fact, the harsh introduction of Mayor Miller’s new land transfer tax, coupled with unrelenting, unsubstantiated comparisons to the U.S. real estate market presented by the press, served to be the catalysts for the short-turn correction. Unlike the States, the overall Canadian real estate market did not have prior years of double-digit inflation and did practice safe banking and lending. Canada has been recognized internationally for our conservative practices and continues to attract new immigrants, enjoys low interest rates and for some wealth transference.

Sure it would be wonderful if you could buy at the bottom and sell before a correction, but for most of us, timing doesn’t matter if you are buying and selling during the same period. Changes in family needs and wants are typically the reason for real estate moves, not financial threats. If you want to take a stab at predicting the direction of real estate values on a short term basis, watch for changes in the ratio between monthly listing inventory and the number of sales. Supply and demand rules!