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Is the Real Estate Boom Over In Canada?

By
Real Estate Agent with RE/MAX four seasons realty limited

Last Monday, Garth Turner's new book, Greater Fool:  The Troubled Future of Real Estate, came out in bookstores across Canada.  It got him some pretty good media coverage which is not a bad thing for a politician potentially facing an election this year.  Way to go Garth!

This former business editor and infomercial guy has a penchant for making predictions but so far, he's almost always been wrong.  Like in 1987 when he predicted a real estate recession was at hand.  Interestingly, in an article in last weeks 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 condo's in Toronto last week  I'm not sure that's a good thing though.

· 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 in Collingwood - Blue Mountain 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.

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!

Comments (6)

Dahl Real Estate Group
Platinum Living Realty - Scottsdale, AZ
Scottsdale Luxury Homes

It sounds like your market is still strong, here's to hoping you are right and it continues. 

Mar 22, 2008 03:16 AM
Kathy Clulow
Uxbridge, ON
Trusted For Experience - Respected For Results
Marg -  My sentiments exactly - if Garth declines we can always buy each other a glass of whine or mention each other in our blogs.
Mar 22, 2008 03:17 AM
John Cahill
Century 21 Leading Edge Realty Inc - Scarborough, ON

Marg

The March home sales news from Toronto is, unfortunately, not so bullish:

"Toronto Real Estate Board says GTA resale housing market still down"

"With 3,183 transactions to mid-month, sales in the GTA and in Toronto declined 14 per cent and 18 per cent respectively compared to the same timeframe a year ago."

Maureen O'Neill, president of TREB, attributes this in large part to the absurd amount of snow we've endured this winter. The last time it was this snowy in Toronto was in 1939. But, I see some of the same things here in Scarborough that you are reporting from Collingwood. Now that the sun is starting to shine, properties that I want to show are selling in a matter of days, close to or over list. Of course, these are carefully priced properties, where the owners or the listing agent have not had stars in their eyes.

Here is another doom and gloom view, in today's Toronto Star, from financial columnist David Olive:

http://www.thestar.com/News/Canada/article/349667

 

Mar 22, 2008 06:41 AM
Marg Scheben
RE/MAX four seasons realty limited - Collingwood, ON
Edey - Collingwood, Ontario
With headlines like "Five Reasons To Start Worrying Right Now" on the front page of the Star, all this doom and gloom may become a self-fulfilling prophecy.  Does a slowing in sales volumes equal a recession?  No!  People need to stop listening to the media who will take a blip and turn it into a full blown siren.  Yes, volumes are down yet prices are still up.  Let's be honest here folks, a correction is a necessity and certainly a preferable alternative to a recession.  I truly believe that if we just continue to focus on serving the needs of our clients and, if we keep our eye on the ball, we'll be just fine. 
Mar 22, 2008 07:31 AM
Paul Viau
Nova Scotia Real Estate Blog - Halifax, NS
Nova Scotia Real Estate Blog + Photo Services

I'm not sure how to call it! We had a correction here about 2 years ago and we seem ready to move on. Certain segments are already humming. We have a large influx of people retiring here from out west. We have a labour shortage  and are trying to attract a younger crowd. 

I will read his book, but will take it with a grain a salt. 

Mar 23, 2008 12:28 AM
Marg Scheben
RE/MAX four seasons realty limited - Collingwood, ON
Edey - Collingwood, Ontario
Paul - your market does seem to be doing really well out there in Halifax from what I've seen and heard.  You live in a beautiful city.
Mar 23, 2008 03:07 AM