Last month Oxford Economics released a report forecasting that “Canadian Home Prices Expected To Fall 24% By 2024 or can crash 40%”.
First off, I want to point out that Oxford Economics made a similar prediction in 2020 that the Canadian Housing market was expected to fall by 9% in 2021- which obviously didn’t happen.
Now, there are a lot of people who read this article and I just want to throw my two cents in there and say panicking and selling right away could be the worst move you’ll ever make.
In ancient Rome, there was a gentleman by the name of Marcus Licinius Crasses, who became one of the richest men in the empire by showing up to burning houses with all his fire brigade, made up of slaves, and a little bag of money and offering the owner these two options:
Either they can sell their property to him for cheap – and he and his fire brigade will put out the fire; OR, the owners can just watch their home and all their things burn to the ground.
The Real Estate market doesn’t change as quickly as a burning house but the idea stands.
When people panic they don’t always make good decisions. When you rush into a financial situation, emotionally charged, you might agree to sell your home for less than it’s worth because you would rather make something than nothing. Those who are “Panic Selling” right now are under the assumption that they might make nothing at all if they wait too long.
There are two big factors that the Oxford Economics didn’t seem to account for; 1) Cost of construction isn’t the same anymore, not by a long shot. 2) Not all areas of Canada works the same. Provinces and cities will be affected differently. BC and Fraser Valley population is steadily growing, Canada is looking to expect 1.2 million immigrants over the next three years- many of which will be moving to Vancouver.
So even if people are saying “real estate market is going to crash soon”, think realistically. At most we’re looking at a correction, not a crash.
Even when you look at the statistics there hasn’t been longer than a five year period since 1980 where people haven’t made at least a 7% increase on their investment.
So next time someone forwards you a story about how “Real Estate Prices are going to Crash” or “Bubble is about to Burst in BC!” stay calm, don’t panic, and stay smart.