We can relax a little bit and be re-assured that 2014 will be a busier year in Real Estate than 2013.
One week, an article reads ‘The Bubble’s going to burst and the Market’s going to crash’.
Then, another week we see ‘Our Market is stable and going strong’.
Once upon a time (right after the US market crash) we were told that “When the US sneezes, Canada catches its cold”.
Well we are in 2013 and we didn’t catch that same economic cold and what would then constitute as “the sky is falling” has not happened.
Although corrections of up to 20% have been seen, it’s what our delicate market needs as preventative measures. Maybe our crash is this 20% correction.
Some skeptics believe that it’s just a delayed effect due to low interest rates that eventually must rise.
While yes, agreed that higher interest rates bring prices down, there are factors that will counter its negative effects.
How Can we Keep Market Value HIgh?
1) We are doing it right! Major financial institutions tightening lending means only the truly qualified are purchasing, weeding out the band wagon of speculator investors putting down only 5% down payment. There have been many reported delayed final closings due to those 5% downers having a difficult time being approved. This prevents prices from falling because it won’t be so competitive when a building closes and you won’t get a beehive of Investors desperate to sell the properties they can’t afford.
2) Slow down Lego maniacs! Developers have slowed down starts and launches of new home projects. This shortens supply driving prices up, while immigration and first time Home Buyers will drive demand up. Land value has also gone down http://www.realnet.ca/
3) US Economy is recovering faster. They’re buying more products from Canada and improving job growth in Southern Ontario, especially in the building products industry. http://articles.washingtonpost.com/2013-07-31/business/40907945_1_adp-report-government-spending-moody-s-analytics and http://www.voanews.com/content/us-economy-advancing-faster-than-estimated/1739751.html
What we will see in 2014:
1) Higher Interest rates
2) Higher Cap rates
3) More product in the market (due to projects closing from previous years)
4) Busier trading in Real Estate
5) Prices down slightly but still inflated from where “they should be”
So what should you do to avoid the uncertainties of the market?
Best advice is if you’re thinking of selling your home, buying your next step up or down size home, or a first time home Buyer, the sooner you get into the market, the less variables you will have to contend with…because 2015 is a whole different story.
To be continued…..