The biggest problem with cycles is when they get in the way of what we want to achieve now. Yes, they can be very inconvenient. The simple truth embodied in this month’s headline is that up-cycles are great when we own property or are in the market to dispose of same and down-cycles are great when we don’t own property and are of a mind to acquire some. Reverse the sentiment (not great/rotten) when the “up” or “down” do not coincide with our present desire/position. Yes, we are into a higher supply/ lower demand phase which many believe we will see more of before we see the brakes being applied and the cycle starting to go the other way.
It never ceases to surprise one that the inevitability of cycles is accepted by the majority when these are in the ascendant phase but once we reach the descendant phase, the “it’s all over” and “it’ll never improve” talk outweighs the rational. This is seen in its most extreme form with the highly emotive and tantalizingly newsworthy terms which contain the word “bubble”. Those most affected by a down-cycle are those unable to sell their properties and need to and, yes, another subgroup, called real estate agents. Not as much sympathy is extended to this latter group. This specific supply/demand imbalance manifests itself in a (significant?) shrinkage in the number of properties that sell. When, say, only 1 in 10 homes is selling (read sales for the period divided by number of homes for sale i.e. inventory) then 90% of those wanting to sell are disappointed. Consider too the shrinkage in the “number of sales” pie. If that drops to, say, one half of the sales of a former period (month, or heaven forbid, year) this could likely be somewhat detrimental to the income of the, largely commissioned, real estate sales force. Yes, the unhappy will, understandably, “beweep” their situation and seek to ascertain, what or whom, is to blame. Sadly, but not surprisingly, there is another group adding fuel to the argument (and showing their – often unconcealed – delight) and that is the group who are not home owners but wannabe acquisitors, impending or at some future time. Their mantra is ‘drop, drop, drop you prices’. Fear not, gentle reader, this is not the ‘dark side’ but merely a normal part of the supply/demand and acquire/dispose aspects of home ownership.
Yes, prices will inflate and yes, prices will deflate and there is very little that we (individually) can do about it. We can choose not to buy or we can choose not to sell. We can choose to rent or we can choose to relocate.
Again, visit my website to see and “hear” the new developments. I continue my commitment to keep you… www.OnTopOfTheMarket.ca – the “go to” site for North Shore Real Estate analysis and jumping-off point for FULL market listing information.