Is It Boom or Bust? Predictions For Alberta Real Estate
Realtors are constantly asked to predict what the real estate market will do in the coming months or even years, and as much as realtors work in the industry every day, it is impossible even for the most seasoned realtor to predict the future. For instance, no one, not even the expert economists and mortgage bankers predicted that Bank of Canada would reduce it's interest rate in January. All the indicators were, and still are for an interest increase, so that move came as a surprise to everyone, with some banks reacting by reducing their rates to consumers and others not budging an inch, or a basis point.
In a restaurant recently, I overheard the server telling the table next to me about how housing prices were going up and she'd better hurry and get into the market fast. A few days later at the hairdressers, the woman next to me was complaining about how their realtor was an idiot because their home had been on the market for six months and all they'd got was one low ball offer. When everyone becomes a real estate expert, that's scary!
As much as I love real estate and have bought and sold many properties in the past 20 years, I've never been able to predict what the real estate market will do with any great accuracy. Predicting real estate prices is like trying to predict the stock market....you just can't do it!
Is Real Estate A Commodity?
20 or 30 years ago, real estate was more of a life style purchase and less of a commodity. In recent years, it's become more of a short term commodity. Think back a minute on the last real estate boom. How many people did you know that purchased that second property with the intention of flipping it? How many people were building new homes will keeping their old won on the idea that was smart to hold two appreciating properties at the same time? Now think about how many people you knew at that time who thought making money with real estate was easy?
Supply and Demand, the real reason prices change!
Sometimes people rush to purchase real estate due to a fear of rising interest rates which will make housing less affordable. That fear is not new. It's always with us. Interest rates like real estate prices are impossible to predict. When you're buying real estate, you need to focus on more tangible and concrete factors. Be sure you are buying a home you can afford today, and not over extend your financial ability to service a mortgage and all the other expenses that go along with home ownership.
Buying a home is the largest purchase you will make in your lifetime and it should not be rushed. It's ok to be impulsive about buying a new pair of shoes or a suit but when it's a $300,000 investment, basing that on speculation on maybe interests rates will rise is not a wise move.
I won't entertain you with my predictions on real estate pricing. The best advice is to focus rather, on purchasing a home that is affordable and on the location of that home. If your real estate purchase is a long term investment, then fluctuating prices in the ensuing years won't affect you at all. The only time to concern yourself with price fluctuations is when you're selling.
Be careful what predictions you hear. Remember that even the experts are only able to guess and they don't always get it right either. We've been hearing of interest rate hikes for the past 10 years, and so far that hasn't happened. Make your decisions for buying a home on your own sound financial analysis. Short term, both prices and interest rates could go either way. It's impossible to predict.