Last week in the news I read, I read that there is a 40% chance that real estate prices will level off. They didn’t say when but usually with experts they like to give themselves a lot of time to be right or a lot of time so we forget that they are wrong.
The experts say that with the 16 point plan to cool the real estate market, prices will either go up, down or sideways.
Which is it?
What else is there?
Sideways is what most of us want. That’s the plan.
We don’t want any sudden movements.
A year and a half
A year and a half into this madness and the average price of real estate sold in the region is over half a million dollars now. Prices were up 40% last month compared to the same month a year ago.
If you own a house, chances are that you made more in equity last year than you did in salary. But it is not real wealth, if you own a house, it’s trapped wealth. You have to live somewhere. You can’t just pick up and move to Fredricton, Daytona or Saigon.
Home buyers reading the news that there is a 40% chance of house prices levelling off, read on and see that there is a 30% chance of prices falling. Optimistic procrastinators. That’s who those people are. Ten years ago people were saying that they were going to wait till house prices dropped by 20% before they would buy. Now prices have doubled.
Whoops. The world does not always conform to the way you want things to be.
What goes up…
House prices could come down. It won’t be until interest rates go up though. And that won’t likely happen until 2019. That might be when mortgage interest rates climb above 5% again pushing most homes beyond the reach of most buyers.
The smart money now should be looking for a way to untrap that wealth. Change is coming One of my 365 Rules about Real Estate is that you cannot time the market.
The smart money is going to sell out, move into the Barrel Yards or Collingwood, or Taipei.