Please Look Past the Headlines

A couple of days ago, the Globe and Mail published an article entitled "Home Sales Plunge, Market 'clearly' in Correction Mode"

For the average Joe, looking at this headline without reading the details would likely result in misinterpretation, drawing incorrect assumptions and generally cause panic among homeowners.  

Again, this article focuses on “National” numbers.  As I have always said, the “Canadian” real estate market is non-existant….it is made up of tens of thousands of markets and submarkets.   Yes, other markets may feel a slight ‘domino effect’ resulting from neighbouring markets dropping in value, but the market in Yorkton, Saskatchewan, for example, will generally not be affected by a slump in the Vancouver or Toronto markets – an entirely different set of factors are at play in Yorkton namely oil, potash and other commodities that are the backbone of the economy.

For real estate investors and even the average home owner, this article should all be ignored – even if you live in Vancouver and Toronto (the 2 markets that are feeling the worst effects of the ‘correction’).   Again, focus on your own sub-market.

If you read further into the article, you find that, not only have prices not dropped….they have actually increased by 1.6% from December 2011!  But you won’t see that in any article headings – it’s not what they want you to see.  They want you to see the shocking numbers – the double digit declines – that will sell newspapers and cause panic among regular folk. 

While I don’t disagree that the market will go through some sort of correction over the next year or two, I understand that this will likely be restricted to the markets that are at the highest risk and have the highest inventory of high priced homes (Toronto and Vancouver).  For all other homeowners, please ignore this article and focus on your own market and submarket because I can guarantee that if prices are dropping in one area, they are going up in another.