It seems like every time you turn on the news or are browsing through social media, you are bombarded with reports that the housing market has taken a massive plunge.
These news articles and reports often come across as doomsday prediction. Serious and often grave looking reporters inform the masses that home sales or values (terms that although are completely different are often used interchangeably by the media) are down 25%, 30% or 40%. These reports tend to give vague statistical data, which is then manipulated in order to drive home whatever message will perpetuate the medias agenda. As the media well knows, bad news sells!
Seeing all this in the media I decided to do some of my own market research in order to fully understand where our current market is and how it got there as well as in an attempt to explain the changes of the last year and ward off all the doomsday sayers.
For my research I downloaded all the monthly sales stats in Clarington, an area I live and work, starting from January of 2016 until March of 2018. I choose to work with home values in dollar amounts because lets face it, the general public really only cares about how much their house is worth and not the actual number of sales per se.
To get right down to the point, besides normal seasonal fluctuations, you can see a steady moderate rise in home values from February 2016 through to October 2017. Starting in November 2017 home values rose sharply climbing in value over $100,000+ in just 5 short months! This is often quoted to be “the crazy time” in the market.
What led to this crazy time many people ask? Well unless you have been living under a rock almost anyone can tell you. There was hardly any properties available for sale. Buyers were stuck competing for available properties. Some Buyers needed to purchase in order to house their families, others wanted into the market believing that it was only going to keep going up from there and if they didn’t make the jump now they never would be able to. Sellers ultimately choose to wait it out, thinking they could predict the absolute height in the market and sell for “Top Dollar", or were too scared to sell because the prospect of being able to buy during this frenzie was going to be a daunting feat in itself. This coupled with record breaking low interest rates made for one heck of a messed up market.
The crazy market then prompted our all knowing (insert eye roll here), government to intervene. In an attempt to cool the housing market the government decided to put a ‘plan’ into place. This so called ‘plan’ did nothing but create mass media propaganda which in-turn created uncertainty and doubt in Mr. and Mrs. Home-Buyer. This put the breaks on the housing market within the GTA without actually doing a single thing. Now I can hear you all saying “What about the foreign buyer tax? That removed a bunch of buyers from the market.” Yes it removed a few, but no where near the amount that everyone believes. In implementing the Non-Resident Speculation Tax, A.K.A Foreign Buyer Tax the government also included loop holes designed to let these foreign buyers continue to buy properties on certain premises, such as through a corporation which in turn would actually give the foreign investor a tax break! (Don’t believe me? Look it up.) In all truth the only real thing that cooled the housing market was the governments ability to use the media to propagate to the masses creating fear and uncertainty.
In looking at the data you can clearly see the steep fall of the market from April 2017 (When the government started their propaganda campaign) through to July of 2017. Starting in August 2017 you can see a steady rise of home values as people started to realize the government strategies were all just a bunch of fluff, that is until the Superintendent of Financial Institutions announced in October of 2017 several changes coming to mortgage rules. These new rules were to take effect starting January 2018. January 2018 saw a slight decline in home values as the new mortgage rules took effect however was that because of the new ‘scare tactics’ or due to the normal course of seasonal fluctuations? February 2018 saw a slight increase in values while March saw another decrease. This decrease is not surprising when you take into consideration that there is an abundance of listings on the market at the current moment and Buyers have an array to choose from.
But let me paint you another picture. If you were to remove the statistical data from the onset of the ‘crazy market’ in October of 2016 through to the final landing in July 2017 in its entirety you would see that overall home values have risen at a stead pace from 2016 through to 2018.
When you are able to see past the craziness of the late 2016 to early 2017 market you can see that home values have not “Dipped more then 30%!” they have maintained a stead and sane increase over time. I believe the market is right where it should be if all that ‘craziness’ never happened.
So to all you nay-sayers out there I say don’t let the propaganda strategies get to your head. If you have been sitting on the fence playing the ‘wait and see’ game, I believe I can honestly say to you now is the time to climb on down and make your move. Our economy is showing steady and continued growth and this bubble everyone has been waiting to burst has pretty much just slowly deflated. Now is as good a time as any to make your jump in the market.