MacLeans Admits it has been wrong?!!


Blog by Arnold Shuchat | February 22nd, 2014


This blog post has been edited after learning that my assumed dates for the MacLean's article were incorrect.

Thank you for pointing out the accurate date of the MacLean's article I quoted where the author admits they have been consistantly wrong with their bearish predictions from the period between 2008-August 2011 when it was written.  I assumed incorrectly that the article was current as the extract was undated.
However, reviewing that time period, I must say, that in fact, notwithstanding their admission, they were actually bang on in that August article and if one would have sold at that time taking advantage of the huge arrest of the market from the fall of 2008 until March of 2001, one would be thanking MacLeans for the tidy profit.  So, the irony here is that while the 2011 article says they are getting things consistantly wrong, with the proper dating  to the article, I can say that they at least got the 2008 market dip right.
The trouble with this kind of market timing is that while the stock market may be a game to many, and our local housing market seems to have followed suit, there are negative consequences to actually trying to house our own communities including our children in the face of rampant international speculation in our back yard over the last number of years.  
While I cannot disagree that housing prices are outlandish, during the period from 2008 to date, a homebuyer would have paid off approximately 20% of his mortgage.  So without even accounting for transactions costs and hedged in that purchase by his own use and enjoyment of the home he would be doing ok now.  People need to live somewhere and in many areas rental prospects are bleak or too expensive.
So where were people who didn't buy property because they listened to the press or market bashers supposed to live over the last 5 years if they wanted to stick around Lotusland? 
Certainly the market has been tempered, is indeed more balanced now, aand most certainly some of the speculation will be removed with changing visa rules.  But other than the fall of 2008 and the slower period in 2012 (which would have felt like a crash to someone forced to sell at the time) those calling a major crash have to date been wrong; those who have relied on the expertise of anonymous bloggers have been confined to rental quarters and still face hefty prices in the market, all the while having paid down their landlord's mortgage.
A review of any of the typical real estate market metrics from the total Lower Mainland market over the last 3 years shows a few changes,but the dire predictions and skepticism have not been borne out by recent history....yet.  Unfortunaely this blog format will not permit the graphs I have assembled to illustrate the above to be tagged along with this post.  But I have saved them and will pass them along to anyone who wants to view them.
Well, nevertheless, here are a few graphs of what did actually happen: (your actual neighbourhood results may have differed, especially in Richmond)


 
The above graphs are fed with live data, and insofar as the reader may by interested in general Vancouver market statistics, revisiting this particular blogpost from time to time will via a bookmark allow you to watch the trends. In conclusion, I see patterns of market uncertainty over the last couple of years. But I don't see a crash having occurred. Your actual housing market may be quite different and if you did buy in certain areas in or about February of 2011, you may very well have lost about 20+ percent. But most didn't, and for many, it has been a terrific ride. What I do worry about is the younger generation getting in to real estate where many of the older folks are getting out. It is definitely a tough nut to crack, but there are certainly some good buys out there and there will be more as the speculators of the last market surge get their lunch handed back to them; and if so, who cares? Empty real estate is not generally a great investment and weeding out the speculators by this younger house hungry generation would be just the thing our market needs.