Want to be popular? The most recently available statistics say 70% of Canadians are owners of real estate, so if you're looking to win friends talk bullish about the housing market...it'll be bull alright, but you'll be loved.
Who wants to hear that their most prized asset is going to drop in value by a quarter? If your home was recently valued at $400,000...how are you going to feel when someone says it'll only be worth $300,000 in another couple of years. Not too good I'd bet, and probably angry. Probably as angry as the guys who bought stocks like WorldCom and Nortel for $100 plus.
That's the psychology of the market at work, and it doesn't matter whether the market is stocks or real estate. People like to hear that they're financial dynamos, that they've made all the right moves. Smart money sellers looking for top dollar need eager buyers, and there's no shortage of industry 'experts' looking to validate even the dumbest decisions.
How could buying real estate be a dumb decision? Ask the thousands of Canadians who plunged into sub-prime mortgages over the past couple of years.
SUB PRIME?!?! That was in the U.S. not in good old risk averse Canada!!!
What should we call mortgages amortized over 35 or 40 years requiring no money down? If that's not sub prime then what is? Especially when interest rates are the lowest since...uhm, ever.
So who else is chiming in predicting a major correction for most people's most valued asset?
In today's Globe & Mail economist David Madani is saying that housing prices will decline over 'the next few years'. YOU CAN READ IT HERE
How popular is Mr. Madani? Not very I'm betting. Mortgage broker Gordon McCallum devotes about 10 paragraphs on his blog, explaining why this economist is (in his heavily biased opinion) out to lunch...Why David Madani is Wrong.
The mortgage broker might be more popular, but I think those who listen to the economist will be richer for it.
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