On Monday, Garth Turner’s new book, Greater Fool: The Troubled Future of Real Estate, will be out in bookstores across Canada. Chances are it will get some pretty good media coverage and everyone will be talking about his predictions of a real estate crash. Since I believe in self-fulfilling prophecies, he could be right but, not for the reasons he touts. He could also be wrong.
This former business editor, infomercial guy and now politician has a penchant for making predictions but so far, he’s generally been wrong. Like in 1987 when he predicted a real estate recession was at hand. In an article in today’s Toronto Star, it says,
try to find a respected Canadian economist who buys into Turner’s pessimism. People at the University of Toronto’s economics department, the Ivey School of Business at the University of Western Ontario and University of British Columbia’s Centre for Urban Economics and Real Estate couldn’t find one for us. While most seem to think a gradual softening is likely after 10 years of constant price increases, a U.S. style meltdown doesn’t appear to be on anyone’s radar. I think you will have a very tough time finding any economists who agree with Turner on this, says Tsur Somerville of UBC.
But he could be right. Or he could be wrong. Don’t know yet, do we?
So, here’s what I know:
People were still lining up to buy condos in Toronto last week
I tried to book appointments on Monday to show five different properties on Friday. By Thursday, 4 of the 5 were sold and two had competing offers in place.
The number of residential sales in the Georgian Triangle from January 1st to March 14th this year is up 9.2% over the same period last year AND, the average sale price of those is up 8%.
Employers are still complaining of labour shortages.
Here’s what I think:
I would not be surprised if we see some correction in the market over the next 18 months or so. After-all, how could we endure the endless negative press let alone impacts of the high dollar and the U.S. fall-out right next door?
I think any correction is more likely to be a slowing of sales volume rather than a decline in prices and, for some sectors, it may not be noticeable at all
There is a distinct possibility that if there is a correction, we could be exempt. Yes, that’s what I said. Did you know that even in the beleaguered U.S., there are areas where real estate prices have continued to climb? Just asks the folks in Manhattan, San Francisco, Grand Forks or Salem, Oregon. There is significant wealth (read: staying power) here in the Collingwood Blue Mountain area that will provide stability when times get challenging.
Cycles are guaranteed. Some day Garth Turner’s predictions will come true because what goes up must come down. When a correction happens here, I believe it will be driven by an over-supply in housing stock rather than by a monetary recession.
Yup, so far, I still stand by my predictions for the year and nothing has happened to rock that boat. Like Garth, I like to predict. If he’s right by the end of the year, I’ll buy him a beer and if I’m right, well, Garth you owe me a mention in your next book. Okay, well, at least a glass of wine. What do you think? Tell me your predictions.
When it’s time to buy or sell real estate in the Collingwood, Blue Mountain or Georgian Triangle area, contact Marg, an experienced and competent Broker who’s ready whenever you are!