As is my usual habit, I awake at 5 -make a latte and sit down to read my papers, which waken me as they hit my front door- it is my morning ritual. I spend some time on the Globe’s business section- not because I really have a good grasp of the stock market, but I like to keep abreast of the business/economic markets which have their own take and advice on real estate.
This morning there was an article regarding homes, there are lots of these and depending on who you believe either the market is over inflated or is still continuing to grow. Most of the info about markets are based around the Toronto or Vancouver markets so not as relevant to the Ottawa market.
However, information not to be ignored either by any means.
Part of the article today (again mostly about the TO and Vancouver market) had something I think is worth sharing .
I have been in the business a long time and have been through the up and down markets- interest rates of 21 %, price and wage control economy’s as well as the boom high teck market and the last 20 years of good growth. I am often asked by older clients about when to sell. I thought this part of the article summed it up nicely:
Is it the right time to sell your house? Look at the historical data
part of an article from the Globe and Mail paper written by Robert Champion
For many older Canadians, their home is their single largest asset. As we age, many of us sell our homes and use the proceeds to help fund our retirement. Knowing that we will need to sell our homes at some future date, we look at the rising house prices and assume that they will continue to rise. We believe that we will benefit from deferring the decision to sell. That can be a huge mistake: If you choose not to sell your house in the near term and prices decline, a health or financial crisis could force you to sell at a much lower price.
For older homeowners, here is the key takeaway: The historical data shows that when house prices decline, it takes 10 years or more for them to recover. Younger homeowners have time on their side; they can afford to wait for prices to recover. Older homeowners may not have that luxury.
Buying and selling a home are the biggest financial decisions most of us are likely to make in our lifetimes. Our behavioural biases mean that we tend to make decisions based on recent data that fit our view of events, rather than incorporating long-term historical data. We base our decisions on the fact that house prices have risen significantly in recent years and ignore that fact that they declined by 30 per cent in the 1990s. It’s different this time, right!
Robert Champion is vice-president of client services for Toronto-based Sprung Investment Management
I am not suggesting that prices are falling, just if you are thinking of a move, planning a retirement and a new lifestyle you know what you have now and what your home is worth – no one has a crystal ball.
To quote my old friend Michael Provost
“Where do you want to be in 1 year ?- where do you want to be in 5 years?”
Take a look at our historical data.
Ottawa Real Estate BoardResidential Resale Activity
1980 – 2014- Year Sale Price Change
Residential Resale Activity 1980 – Last Year (Chart) (1)