The Market’s Flip-Flops
It seems the market analysis of the current North American real estate situation isn’t in agreement with anyone in particular. One day we’re hearing that everything’s doing better, but with some digging you can scratch beneath the hopefuls and figure out what’s really going on. The issue being that it appears nobody wants to accept what’s probably coming next.
As we discussed in a previous article – Are We There Yet? The Long Road To Recovery – the Canadian market is (according to some) going to experience another dip wherein housing value losses up for 7.8% may occur. Well, as it turns out, these predictions are being proven more and more accurate. For example, the Globe an Mail just published an article declaring a softening of the Canadian market – an indicator that the worst is yet to come. Part of the speculated reasoning behind the slowing growth of the Canadian market is the tightening of mortgage restrictions over the past year (another issue we talked about in our article Buyers Beware) in combination with low employment rates.
Another contributing factor we’re speculating could be the same as that of economist Dean Baker’s speculation for the economy and the real estate market’s suffrage in the US – over-production of housing during the bubble. Now, this reasoning seems feasible to apply to the Canadian market as well, as the lack of growth in the market and slumping sales could indicate and over-stock of properties which are in turn doing nothing positive for the market. It may have been productive to commence the construction of new properties now, or even after the next market tip to encourage more affordable housing (if these places were constructed with economic and real estate rehabilitation in mind) but at the moment it’s not looking like any of these places will be filled up quickly.
It seems as though the market’s at a current stale-mate with itself. On the one hand we have the sellers who are holding on to their properties for dear life, and on the other hand we have buyers who want to do nothing but pillage the market. It seems like to move forward the sellers need to cut their losses immediately before the market dumps again, or we’re never going to recover.
let us know your thoughts and ideas on how we can stimulate the market into a state of recovery in the comments below, or on Twitter.
image courtesy of Steve A Johnson
