"So why do people get so worked up about housing market predictions?"
I probably get asked the same question 10 times a day by random people I meet: "how's the market?" That seems to be the standard opening question from people looking to spark a conversation with me, and it always works. For a while, my response would depend on the time of year, demand, the area or building we were talking about. Now my response is pretty standard: "It's crazy". The conversation inevitably shifts to where I think the market is going and what factors are at play that will keep prices rising or cool them off. I'm always happy to provide my insights to anyone I meet but I always end those conversations with the same honest (and hopefully refreshing) sign-off: "but who knows." I mean, I don't. Can the condo market continue to rise 1-2% per week forever? Most likely not, but do I know when the upswing will stop? No. Nobody does. I can certainly make a case for the "craziness" to slow down when I see investors starting to sell their units because the cash flow on equity they are getting from their tenants' rent no longer makes sense. Because I've seen that starting to happen. But I can also make a case for the "craziness" to continue because there are enough end-users out there who will, by any means necessary, find their way to own in the Toronto market and condos are now the only affordable option. Because I'm seeing that happen too. Anyone can analyze a market but anyone who says they can predict one should probably stop talking. So why do people get so worked up about housing market predictions?
"Their obsession with real estate without a doubt perpetuates some (if not most) of the hysteria"
Which brings me to the real point of this post. You're all probably sick of hearing me and every other agent go on about how "crazy" the market is. To be honest though, I bet most people would be going about their day without worrying about all the "craziness" out there if it weren't for the media. And by media, I don't mean blogs like this or non-editorialized facts that come from reliable sources like the Toronto Real Estate Board. I'm talking about opinionated reporting and cherry-picked stories from major news outlets. Their obsession with real estate without a doubt perpetuates some (if not most) of the hysteria, causing real estate to be the number one topic of conversation in Toronto for people aged 18-64. (I completely made up that stat but I think you get where I'm going with this). I wish the media would step back for a minute and talk about something else. Not because I don't love hearing and talking about real estate all day every day. Because I truly do. But because MOST of the information that is being disseminated is not accurate. It is opinion. Or, at best, opinion loosely based on fact. But opinion nonetheless. There are always headline grabbers such as "No clear way to deflate Toronto’s ‘historic’ housing bubble" and "Canada would pay the price if Toronto’s real estate bubble burst". These are actual headlines from the past week from mainstream newspapers. Notice the constant use of the word "bubble"? It's things like this that inevitably starts to influence people's decisions. When I read all these headlines, there is one emotion that is always being triggered: Fear. Fear of a housing bubble, fear of never being able to afford property in the city, fear of missing out. And fear is a dangerous emotion that can create huge volatility in markets. We've seen it in the stock market. We saw it in the US housing market. And I'd bet anything that mainstream media is hoping to see it in the Toronto housing market. So they can start talking about all the doom and gloom that is to follow once that so-called "bubble" has burst.
The media is always looking for their next big breaking story, because that's how they get eyeballs. And eyeballs turn into advertising, which keep them afloat. I've always been against news reporting as a business because there is an inevitable struggle between profit and ethical reporting. When the housing market in Toronto calms down (and it will calm down, because all markets calm down. Notice I said calm not crash), I'm already dreading the headlines: "Toronto real estate market bursts" and "Is the honeymoon over for Toronto real estate". And people will unquestionably react on those headlines too, possibly pushing the market to extremes. But remember, this is the same media that has done everything it can to keep thousands of people OUT of the Toronto market for the past 7 years, warning of the "inevitable" real estate crash. And everyone who listened to the media for all those years is either priced out of the market forever or is looking back thinking "man, we shouldn't have waited to buy". Those headlines cost people hundreds of thousands of dollars and you can bet nobody at any news outlet will be apologizing for being wrong for all those years.
"Stop reading articles, stop watching news reports, and stop talking about real estate with anyone else except for people who are in the market every day"
Many buyers and sellers I deal with on a daily basis are, in at least some way, basing their decisions on what they see in the media. "Adil, did you hear, the market is up 30%! Should we sell?" Or "Adil, the market is up 30%!? Should we wait for things to calm down before buying?". And it's at that point when I have a real conversation about WHY they are thinking of selling or buying and what they plan on doing after they sell or buy. And then I tell them to stop watching and reading anything to do with real estate. Stop reading articles, stop watching news reports, and stop talking about real estate with anyone else except for people who are in the market every day so we can base our decisions on what WE see in the market, not what the media or your neighbour or your barista thinks is going on. I base exactly ZERO percent of my personal decisions about real estate on what I hear/read/see on TV or in the newspaper and I counsel my clients to do the same. Because the media is always the last to know about what is really going on in any market.
I started writing this post about something completely different but I turned on CP24 this morning and saw yet another misleading story about some unethical ways real estate agents are trying to win business in this market and rather than argue with the TV (as I do every time I see a story about the Toronto housing market), I thought I'd be better off making a post/rant about it :)
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Your Toronto condo lover,