Right now I’m most concerned the media is going to worry Canadians into a housing crash. Is this possible?
I think Yes, The media plays an active role in public perception and all these sensational headlines are fueling the downturn and spurning Buyers to withdraw from the market.
And if it persists, it spells trouble.
A frozen market quickly causes stagnation. In the past 30 days, Sellers in most every condominium building have either had to slash their prices or accept the reality they may have to pull their unit off the market. It’s suddenly created some extremely competitively priced properties, several which are now listed at 2009 prices. However, most are still not selling. The government can’t drop interest rates like they did in 2009 to fuel the market. Yet we need purchasers to buy. Without it, market stagnation will spawn a trickle-down effect that will paralyze the Canadian economy as a whole. With approximately 25% of our economy dependent on people buying and selling (think consumer goods like appliances and furnishings that are being transported across the country, home decorating, renovation and construction requiring all those materials and jobs, plus all that land transfer tax funneling into provincial and city government coffers), if the market stagnates we’re going to be in trouble.
I’ll argue that the welfare of the economy requires the current price correction, providing it doesn’t put a significant number of homeowners into negative equity circumstances. A ten percent drop in values provides more opportunity for the local market to buy, who were otherwise being shut out by the demand of foreign and local investors who were snapping up properties for a premium. A ten percent price correction helps ensure the ongoing filtering of buyers and sellers across all types of housing stock which is essential for a healthy market. So, despite the pain in seeing ten percent of the value of my (and your) real estate evaporate, I can reconcile it.
Right now, all of our listings offered for sale are at prices significantly less than Spring 2012 values. They’re terrific opportunities. But what the buyers don’t know, as they circle our listings like vultures waiting for another price reduction, is that our Sellers don’t HAVE TO to sell. Within the next thirty days, any of our listings which are not sold will come off the market or go into the rental pool where the dropping vacancy rates assures our clients a rent which will cover their expenses. HERE’S a November 1st article from the Toronto Star. And HERE”s an article in today’s Moneyville.ca.
While there may be some truth to these headlines, context is the most valuable tool. Fear is sourced, usually, from what we don’t understand.
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Tales From The Real Estate Trenches