Beware of the industry “Talking Heads” when making decisions in the Residential Real Estate Market!
As a public service announcement to my clients, both Sellers and Buyers, I say be cautious, sceptical, prudent and diligent when considering the various opinions of “expert economic analysts” when it comes to making decisions regarding the purchase of a new home or the selling of your existing home. Reminiscent of the “fun-with-statistics” game that anyone can use to bolster their viewpoint, one needs to be cautious before basing ones individual home investment decisions on broad, marco-economic trends. Remember that residential real estate is a very local business in that the many variables that affect the current market value and future price appreciation of your home are usually more heavily weighted towards local versus national statistics and trends.
There have been several headline articles referencing a few studies opining that Canadian homes are some significantly overvalued. Whether the basis of the argument is overall affordability based upon current prices, interest rates and general income levels or just a general, across the board slackening in buyer demand (following a prior period of pent up demand and short supply of product), coupled with a now growing supply level of available homes for sale, the conclusions seem to be that the Canadian housing market is in trouble.
What is really going on here and why should the average person pay the slightest bit of attention to analysts and economic forecasters that as a collective profession in prior periods “missed the call” on the tech boom collapse, the sub-prime mortgage fiasco, the international credit crisis and various other significant macroeconomic or large company specific events that cumulatively have destroyed trillions of dollars of peoples wealth?
I think that before anyone allows the media hype over a possible downturn in the national or provincial residential home price levels influence their particular decision to buy or sell a home it may be wise to examine your own situation in more detail. By that I mean have you investigated the following factors and weighted them appropriately in your own investment decision making?
· What are the economic strengths and weaknesses of the city and community in which you intend to transact?
· What is the general socio-economic profile of the area, community and neighbourhood? (Remember that in real estate investing, the mantra is location, location, location!)
· What are the positive and negative aspects of the particular property especially in relation to similar homes in the neighbourhood
· What is the current profile of your financial wellbeing in terms of net income, employment stability, investable wealth, level of indebtedness, debt service obligations, short and medium term financial obligations or commitments based upon family size, educational aspirations and age etc.?
· What are your family’s current personal needs and wants regarding your present housing situation and what is your investment time horizon?
· Is your local market in a balanced state or is it temporarily tilted in favour of either Buyers or Sellers due to current market supply and demand factors?
The forgoing list is not exhaustive by any means but by the time you have critically reviewed these factors and positioned them against the general macro-economic prognosis regarding what housing price levels may or may not do in the future I think you may come to the conclusion that your own personal situation and the direct factors that weigh on it is far more relevant than some market observers’ prognosis. Just as the average retail stock market investor gets whipsawed by trying to time the market buying and selling at precisely the wrong times after reading all the analysis by “expert analysts”, the average home buyer will most probably lose out if he or she is primarily trying to time their home purchase decision on a ‘hitting of the market bottom”.
My primary advice to those contemplating selling or buying a home in this market is to weigh heavily the local and personal factors impacting your decision, remember that interest rates while having risen are still far below long term averages and finally, that in many cases so called experts are so often wrong it’s getting harder to remember them ever being right! I think one should be cautious, sceptical, prudent and diligent when considering such opinions in the face of making one of the larger investment decisions of one’s lifetime. At the end of the day I believe that when evaluated over the longer term the decision you make today if properly evaluated, will pay dividends both financially and personally in terms of quality of life that no amount of guess work on short term housing market cycle timing will equal.
Equally important is to engage the services of a good REALTOR!
A little bit about me....
I have 22 years experience in the real estate industry, am a licensed Real Estate Broker as well as a licensed Mortgage Broker, have been an active resident of the Oakville community for over 18 years and am a proud member of the largest residential real estate brokerage company in Canada. With over $2 Billion of real estate transactions completed over the course of my career to-date, including in excess of $300 million in property sales, I bring an inordinate amount of expertise to the table to assist you with your residential real estate decisions.
I look forward to being of service to you with your residential needs!
Best regards,
Michael Blackler B.Comm., M.B.A.
Real Estate Broker
Royal LePage Real Estate Services Ltd.,
326 Lakeshore RD E.,
Oakville ON L6J 1J6
Office:905-845-4267
michaelblackler@royallepage.ca
www.michaelblackler.ca
Disclaimer: The views and opinions expressed in this article are solely the writers as an individual and practitioner in the residential real estate business and are in no way intended to represent the views or opinions of Royal LePage Real Estate Services Ltd.