Real Estate Market in Canada: Six Year Housing Boom is Officially Over

by Julie Broad and Dave Peniuk     

It was the Financial Post's recent headline that announced the "official" end to the crazy hot real estate market in Canada. The declaration was made a few weeks ago because the listings to sales ratio across Canada hit a nine year high and the year-over-year pricing increase was at it's smallest gain in over six years. I guess it's time to stop investing in real estate and move our money into stocks, bonds and GIC's. The run is over. Nobody would buy real estate now, would they?

Well, we would (and we will). We don't buy real estate for the short term. We aren't into flipping properties nor are we really trying to make a quick buck (not that we wouldn't like to - we've just learned that slow and steady is much less stressful and much more achievable). We mostly buy and hold; only selling when we need to make adjustments to our portfolio or because we desperately need some cash.

If we find a property where the numbers make sense, that is in an area with a promising future and it's a property type that meets our investment goals then we will buy it. If the value does go down over the next few years, that is ok because somebody else will be paying off our mortgage with their rent money and we're not planning to sell it for at least 5 to 8 years (or longer), and by then we will be in a new real estate cycle.

Remember the media is always going to sell the extremes - things with the real estate market in Canada are almost never as bad or as good as the media makes it out to be. Even during the boom when prices were rising in double digits everywhere according to the media we still sold a property at a loss in Toronto after holding it for five years.

And while we're on the subject, in a changing market you may find the services of a real estate agent even more valuable, as they will have up to the minute news on the market activity, be better able to negotiate with realtors representing sellers that still have the "sellers market" mentality, and can spot opportunities you might have missed because you aren't in the streets everyday like they are.

Although we like owning real estate during a "boom", we also don't mind the "bust" because there are even more opportunities to buy! Start saving those nickels because the buyers market is around the corner!

Published May 1, 2008

On the subject of the media's portrayal of real estate conditions, Rob Chipman, a Vancouver-based real estate agent and blogger, recently discussed a recent artcile in the Vancouver Sun where he was quoted. Simply stated Rob isn't buying into the media hype that's either trying to convince readers the Vancouver market is still hot, or that we're doomed. He evaluates investment properties one by one with metrics, and recognizes that real estate does not always go up. You need to have goals, criteria for investment and make smart choices whether the market is going up or down. He also indicates that newspapers are not the place to get real estate market information. It's a blog worth checking if you want to put your finger on the Vancouver real estate market pulse.

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