Just on the heels of my other post we find another story where the reporter makes sweeping predictions based on a very narrow focus.He uses a $4 million dollar home that is not selling and having to drop prices by close to 10% as an example of our ailing housing market in Canada and further goes on to predict that maybe we are following the US into a measured slow down.  Did it ever occur to this genius that maybe the home was over priced in the first place?  Or that a $4 million home likely does not well represent the overall Canadian real estate market as a whole.  Did he ever bother to look at the facts when he reports that a small area of West Vancouver and its woes of recent price declines again does not really reflect the overall Canadian market in either size or scope, or the make up of the typical Canadian real estate participant?So, once again, know the facts.  The current media reports of large price drops in Canadian Real Estate is as a result of micr areas like West Vancouver that in the short term can skew the numbers.  Also know the facts, our mortgage market and our real estate market are no where near the same fundamental challenges facing our neighbours to the south.Don’t fall into these stories written by uninformed sensationalists who are just trying to get their name in lights.  

There has been more and more experts this past week or so to all agree that the recent media reports regarding the housing market have been overstated (link)“We argue against taking an overly alarmist view to domestic housing prospects,” said Adrienne Warren, economist and real estate market specialist at Scotiabank. “This is not a U. S.-style bust caused by over building, speculative buying and imprudent lending, but rather a cyclic slowdown accompanied by a valuation adjustment in several large centres where booming demand conditions and temporary supply constraints led to an overshooting in prices.” In a separate analysis, TD Bank calculated that home prices last month were down only 4.6 per cent from a year earlier, less than half the 10.9 per cent reported by the Canadian Real Estate Association.“As suspected, the difference arises predominantly because of large double-digit drops in sales in some of Canada’s most expensive markets in British Columbia, which our index controls for,” TD said, noting that sales in thatprovinceweredown50per cent from a year earlier. “Since average prices in British Columbia are the highest in the nation, the drop in sales tends to overstate the extent of price declines.”Putting EVERYTHING into perspective, even for people in western Canada is that even if there is a drastic 15% drop in prices since the 2007 peak, this will leave much of the appreciation in the market over the last 10 years in tact.As we have said numerous times in the recent future.   If you are a seller, and you need to sell. Then accept your fate and know that your house has to be priced at 2007 peak prices or slightly lower.  If you can’t accept that, then wait 2-4 years or longer to see if our market can get to your expectation of 15% to 20% higher then 2007 peak prices.If you are a buyer, then buy properly priced product.  It is out there.  Get your realtor to show you what the home sold for or what very comparable homes sold for in 2007 that is the price, and if you get it, then you are doing well.  Enjoy the buyers market. 

Many people ask me why is falling prices bad.  Other then the obvious threat to companies who sell the goods making less profit, and maybe cutting employment etc. there is the bigger risk to the economy that people in the herd put off major purchases in anticipation of cheaper prices.  This race to the bottom mentality comes full circle to put additional pressure on businesses profit margins etc. I know it is hard not to scream and cheer when you pull up to the gas pumps and see .80 cents a litre for gas remember what that does to the overall economy.  If your livelihood depends on a strong economy then be careful what you cheer for.