Do You Trust The Media Headlines?
Media headlines and predictions are pretty much always wrong, but so many people base major decisions on them. That can be very risky.
I want to play a game. Have you guys seen the movie Saw? Or any of the Saw franchise? I truly believe it's one of the best horror/psychological thriller movie franchises ever. I won't spoil them for you if you haven't seen them but one of the key lines from the movies is "I want to play a game". Trust me, it's not any kind of game you'd ever want to find yourself playing so how about we all play a much more family-friendly game together?
If you know me at all, you know my disdain for mainstream media, specifically when it comes to real estate reporting. It's usually unresearched drivel written by reporters who are not in the industry, who together pull dramatic sound-bites in order to get the most views. Come for a drink with me and I'll tell you how I really feel ;)
Wifey probably thinks I'm nuts but she sees me yelling at my computer or phone almost daily when yet another misleading headline pops across my screen talking about Toronto real estate. I think she actually enjoys seeing me all worked up because she will quietly send me articles then wait for me to blow up. When I think about, I can see why she enjoys doing it, haha.
Here's the game I want to play. I'm going to show you a bunch of media headlines and you're going to guess when those headlines were from. And together let's see if any of these headlines or predictions have ever been right. I'll give you the answer right after each one, so scroll slowly and try not to cheat. Cool? Let's go:
1 - "The people who bought at the peak of Toronto's real estate bubble, and then lost hundreds of thousands within months."
There's only one time in the past decade I can think of where this actually happened and it would have been in the summer 2017 immediately after the Liberal's foreign buyer tax came into place when real estate activity effectively came to a standstill across the GTA. But nope, this article was published by Maclean's on May 4th, 2018. Explain that to me - Maclean's publishing an article a full year after the fact. If that isn't misleading click-bait, I don't know what is.
2 - "Average price of Toronto home expected to increase by $100k this year."
Pretty rare to see a headline that says prices are going to go up, right? This was published by BlogTO on Jan 31st, 2017. Not even 3 months before the market took a huge dip from Kathleen Wynn's foreign buyer tax. So much for that prediction. The media can't even get a positive one right.
3 - "Toronto house prices expected to climb 25% this year."
I'll save you the trouble. This is another BlogTO masterpiece published on March 20th, 2017, less than 30 days before the market dropped. Another positive prediction gone wrong.
4 - "Toronto home prices could be in for a big fall according to housing bubble watch."
I'm going to really punish BlogTO today. This was published on July 31st, 2019. If anyone knows anything about TO home prices, you know this prediction was about as wrong as it gets. Home prices in TO are up double-digit percentage points since this article was published. Good job BlogTO.
5 - "Toronto housing affordability hits worst level ever measured in city, RBC report says."
I feel like I've seen this headline every few months for literally years. This was from the Toronto Star on Sept 29th, 2018. And they've probably reused the same headline about a dozen times since.
6 - "Toronto real estate market is headed for a cliff."
Two different clients sent me this exact same article for my thoughts. Was this back in 2009? 2017? Nope. This was published by Now Toronto on Aug 1st, 2020. Where exactly is this cliff they speak of? I kinda wanna bookmark this one to see how it pans out a year or two from now. Who knows, maybe the media will finally get one right. But I'm not betting on it.
7 - "Toronto Real Estate Prices Literally Look Like The Textbook Chart For Asset Bubbles."
So yet another "Toronto Housing Bubble" article, which honestly could have been published anytime in the past decade. This was by Better Dwelling on Sept 7th, 2018. Prices are up significantly since...I guess that "bubble" still had room to grow.
8 - "Canadian Real Estate Works In A Cycle, Here’s Where We Are."
I want to include part of the actual article on this one to give a little more context, as the headline itself doesn't say much: "Phase three is the hypersupply phase, which is the phase I believe we’re entering in Toronto. This is when everyone feels like a real estate investment genius, even though most people can’t even tell you much they paid in interest. Construction starts picking up, and starts to catch up. The supply will inevitably overshoot demand. Toronto is a great example of this right now, with over 70,000 units currently under construction."
This was published by Huffington Post Canada on Nov 24th, 2017. "Supply will inevitably overshoot demand" is my favourite line from this article. Never happened folks. In fact, under supply of housing has been the theme in Toronto for years, and nearly 3 years after this article was published, under supply is still a serious issue. Good job guys.
9 - "Toronto's Housing Bubble Has 24 Months To Live: BMO."
Another one of my favourites. I'll include the first couple sentences from the actual article here for you: "The last time a bubble burst in Toronto, prices fell for seven years. Desperate homebuyers, take a two-year breather. Housing speculators, take warning. Toronto’s house-price juggernaut is two years away from the sort of peak it reached it 1989, when a housing bubble burst in the city, BMO Economics says."
Any guesses? 2009? 20016? 2019? Nope. Published by Huffinton Post Canada on March 13th, 2017. They got that one completely wrong too.
10 - "Canada's housing bubble makes America's look tiny. Comparing Canada's infatuation with real estate against the peak of the U.S. housing bubble yields some disturbing insights."
Another headline I feel like has been published over and over, trying to compare Canada's real estate market to the US subprime disaster of 2007-2009. This one was by Maclean's on Oct 31st, 2016. I wonder if anyone from Macleans sold their Toronto house back in 2016 waiting to buy back in after the "crash". I mean, if they really believed in what they were reporting...
11 - "This is how Canada's housing correction begins."
I'll give another beating to Maclean's here. This was published Jan 3rd, 2019. Do you know any type of market correction that begins with prices rising 15-20%? That's what Toronto housing has done since this article was published. Also, I think it's irresponsible to report on "Canada's housing market". If house prices in Saskatoon drop, does that mean sellers in Toronto should worry? There is no "Canadian housing market".
12 - "Toronto Real Estate is Experiencing a Correction, Not a Crash."
I'll keep these quick now. This was from Toronto Storeys on May 20th, 2020. I think these guys need to look up what "correction" means.
13 - "Toronto's Housing Bubble Predicted to Pop: Report"
I love a double whammy so I'm going to hit Toronto Storeys again. Published July 31st, 2019. Average house prices in TO are up 15-20% since.
14 - "Canada’s housing bubble looks a lot like the U.S. around 2007."
From Canadian Business on April 7th, 2017. So where is that US-style meltdown everyone was waiting for?
15 - "Toronto housing shrugs off pandemic as prices smash record."
This was BNN Bloomberg from July 7th, 2020. I wanted to include this one because while "houses" are hitting record high prices in TO, condos are not. This headline is making some of my condo seller clients think they can get record sale price we saw back in Jan/Feb of 2020. You can't and won't get those prices for your condo right now. It's a tough conversation but houses and condos are not the same market right now. Take a read of my previous blog post here for more context of what's going on right now. That theme hasn't changed. Houses are hot. Condos are not.
16 - "CMHC sees home prices falling up to 18%, may curb underwriting."
One of my favourites, from our own CMHC's lips. Published by BNN Bloomberg on May 19th, 2020. I've never seen such a dire prediction from our own beloved CMHC, and one that is being proven to be so wrong as we speak. Which ties in perfectly to my final headline...
17 - "Is Canada’s housing market nearing a watershed moment?"
I feel like this headline (along with CMHC's oddly specific house price decline prediction from #16) could have been written at literally any moment in the past decade, by any number of journalists, economists, or "market pundits" who seemingly want to keep screaming that the sky is falling until the moment when there is finally weakness in the housing market so they can say "I told you so". But let me ask you this - if an economist or journalist predicts that a housing correction is imminent, then watches the market appreciate 10%, 20% or even 50% before finally falling 10%, does that make his prediction right? You can't keep saying "it's going to rain" every single day until it finally does and still reserve the right to say "I told you so". Oh yeah, that headline was literally published today by BNN Bloomberg. The first line of the article says everything I need to know: "I've been worried about the housing market for a while." No kidding BNN. By the way, I've been carrying around this umbrella for a while too. Where's that rain?
I chose not to link to any of the above articles because I didn't want to do anything to improve their Google rankings even the slightest bit. But take my word, these are all legit articles that are floating out in cyberspace for you to find.
The takeaway? Find me one article that has shown a fully accurate prediction of what any market will do (up or down), and I'll show you 50 that have been completely wrong. So be very, very careful making life and financial decisions based on the media. In fact, I tell all my buyer and seller clients to stop reading headlines, and to stop listening to what their co-worker who has been renting for 20 years is saying about the market - we will do our own research and come to our own conclusions based on what we are seeing in the market ourselves. Because the media will never be there to say "I'm sorry, we got it wrong". They just move on to the next headline.
Have you checked out my previous blog posts?
Your Toronto condo lover,
Adil Dharssi Sales Representative iPro Realty Ltd, Brokerage Direct: 647-223-1679 (call/text) Email: Adil@AdilKnowsCondos.com