Up Markets and Down Markets, When to Buy and Sell. (Part 4)
This is part 4 of a series where I explore some of the views/assumptions commonly held by people regarding how real estate markets work and what they mean to people who are buying themselves a home. The following is intended to be read in the context of the rest of the series so I recommend reading the other posts to make this one make more sense. The first of the series can be found here.
“Aren’t the prices going to fall sharply because of all the foreclosures?”
This question was something I got a lot when I originally wrote this series in 2008. At the time there were swathes of foreclosures sweeping the US, particularly in certain areas where overleveraging madness led to a bubble. The mass panic that had settled in, mid to late 2008, thanks to media sensation about it, was a frustration that led me to write this series in the first place. The panic was unnecessary as the same dynamic did not exist here (thankfully) and I wanted to open people’s eyes a bit to that fact. Yet, I still got quite a few clients wanting to buy foreclosures because they thought they would be great deals, a myth I address in another post.
Below are my comments from 2008 when everyone was in a panic. I’ll leave them intact as I believe there will be another similar panic in a few years and everyone will again be listening to news stories that tell them “It’s never, ever been this bad before.” Around the time I wrote this actually, Canadian real estate guru Ozzy Jurock came to town and gave a great presentation of the cycles of real estate and how the media will report/cause it. He showed some great examples of how many times over the decades the same news cycle has occurred and recurred.
Things are not falling sharply, nor are they expected to. You see, the government in Canada pays close attention to the lending practices here, much better than what we have seen in the U.S.. All that sub prime stuff? Not a Canadian problem. Period. As for foreclosures… what foreclosures? If you were to take the time to look at the stats for foreclosures in British Columbia, you would find that the figures aren’t just low, but surprisingly low.
But don’t take my word for it, look it up for yourself. The stability of Canadian banking is something that has been bandied about in the media of late as well as in the more deeply informed circles of professionals who depend on their stability to make a living.
I like to ask a certain question to long time Realtors who have been in the business for a long time. By long time I mean 20, 30 or more years. I ask them point blank what sort of market they thought we’re in, in the big picture. Recently when I asked this, they all respond that they thought it was actually a pretty normal market. The fact that we recently had such an incredibly busy market recently makes anything different that follows pale by comparison. Each year was record breaking busy one after the other. So when things slow down even slightly it is noticeable when you only compare it to the last couple of years. A few years before, the same market of market activity would have been newsworthy for opposite reasons.