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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

April 3, 2018 | Gen H

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Days ago a certain pathetic blog offered these crazed words:

This blog has teemed for years with snarky, whiny, self-absorbed, envious renters and malcontents who cheered market-killing politicians and prayed for the day they could buy without being forced into a bidding war. They were consumed with both FOMO and rage, supporting any and all government action they thought would punish ‘the rich’ homeowners, and level the field.

Well, kids, this is your moment.

Sales are down. Competition is gone. Mortgages still historically cheap. Sellers desperate. Prices tumbling. Realtors ripped. Bargains at last. You’ve moaned long enough. If you’ve wanted a single house, this could be the moment to try. Man up. Or shut up.

The theme of that post was simple. Human nature makes us crave what’s going up, and run screaming from that which falls. People spend months or years bitching about stuff (like houses) being too expensive, then recoil from buying when it gets cheap. Why? Because fear replaces greed – fear prices will fall further. In short, human nature makes us err when things are rising (by paying too much). It makes us miss opportunity (through paralysis) when they decline.

The reaction to that post was classic. The steerage section rose as one to dis me for suggesting they go forth and make a low-ball offer. ‘No way,’ the beast screamed. ‘You’re way too early. This puppy’s going down another 50%! Why would we catch a falling knife?’

Well, in some markets there will be more declines. In others, nope. All real estate is local and what’s a smart strategy in Halifax may be suicidal in Calgary. BC is pooched. 416 is not. 905 is nearing the bottom. Montreal is cheap and steamy (mais oui). The prairies are comatose. Alberta is troubled. Every city is unique. But there are commonalities – and recently they’re suggesting a correction in the detached market may soon have played out. If you are waiting for 50% off, in other words, you may need a few decades. Hope you’re 12.

One big reason conditions are changing is the fact there are so damn many young people. Yes, they have irritating tats, beards, iridescent oxblood nail polish, buy Jukes and vote NDP, but they’re also just as house horny, mindlessly materialistic and vacuous as their parents. These days they’re pouring into condos (big mistake), but that’ll soon change. With condo prices rising and the value of detacheds falling, the leap from one to the other shortens.

Also, in a burst of good news for realtors, it seems the Google generation – with more info at their fingertips than any humans who went before – are pretty thick. Monetary policy. Tax strategies. Market momentum. Regulatory environment. It’s all a fuzzy blur. Just ask RBC (which must be happy, too).

The bank’s latest buyer-intention survey published Tuesday is an eye-opener for those seeking a market collapse. Seems 50% of the little peckers (aged 18 to 34) plan to buy real estate in the next 24 months – the highest number in eight years. A whopping 84% think a house is a good investment and one in 10 would actually buy a residence the way they purchase drones, coconut oil and fairy lights – online from Wayfair without ever seeing it. Remember there are now more moisters than Boomers.

Also great news for the real estate business: despite the incessant bleating of this blog about the new mortgage rules and the impact of rising rates, few care (or read this drivel). An incredible 60% of young buyers have never heard of the B20 stress test and even fewer feel affected by the increasing cost of money. That could be because half of them expect to get the money from the Bank of Mom. And, of course, she’s loaded.

Will prices drop more? Will sales levels decline? Should we expect this rutting season to be a pale imitation of last year’s? Will the March numbers about to be released suck? Yes and yes, yes. Sentiment is negative about detached properties. The news will be stark. The rabble at the bottom of this blog will continue to moan, foment and gnash.

But bargains have emerged. Deal prices are not asking prices. Sellers are hurting. You might be surprised at the result of your tough offer. If, of course, you’re man enough to act before some toked-up Mill crushes it.

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April 3rd, 2018

Posted In: The Greater Fool

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