Perspective

While sipping aphrodisiacs with gay little umbrellas in them this holiday weekend, staring out to sea, it occurred to me there is confusion in the land. Or at least this blog (close enough). I will take a moment to clarify.

Recently more invective than usual has been raining down upon me, as my views on real estate become sadly mainstream. Sadly, because it’s too late for many people to now save themselves from loss and heartache. Had they paid heed a year ago to warnings the market was inflated and gossamer, they could have bailed with both a smirk and a capital gain. But, alas, this is why we’re human. We’re made to screw up, believe what we want to and be influenced by the herd.

As the critical season starts, it’s too late for most homeowners. Sales are plunging, prices wobbling and buyers retreating. The first of a two-stage retreat has begun. It will take a long time to reveal itself fully, as it did in the USA, Britain, Ireland, Spain, France and other lands where greed humped reason. Those in the industry who argue this is a five-month, 10% correction, and those poor wannabe-vultures who fall for it, will be distraught.

Instead, this are the opening pages of a story of asset deflation in which the major influences – such as demographics, bailing Boomers, structural unemployment – have yet to be tasted. In five years, especially ten, real estate will again be shelter. Like cars, rendered affordable by the marketplace. In the process, countless dollars in equity will be lost. It’s best to know this now.

And best to put the criticism in context. Like this guy in Kelowna. Many readers sent me links to an article he wrote in recent days on the Centre for Policy Alternatives report on our housing bubble – ‘an accident waiting to happen.’

I had to dig deeper and was not surprised to find that Garth Turner’s name was associated with the report. Mr. Turner lost any remaining credibility he had many years ago and continues to repeat the same ridiculous assertions that Canada’s housing market will bleed 30% of it’s value… check back two years and you will find him telling you that it was going to happen two years ago.

The author of the report is the left leaning think tank, the Canadian Centre for Policy Alternatives and the only reason I mention it is so that like me, you can ignore the next unrealistic study that they deliver to the media to get more attention, which, I believe is why Mr. Turner would continue to make such wild and unrealistic assertions…publicity can’t be a bad thing for a politician can it?

With regards to interest rates, take a look at the stock markets this week as the Canadian exchange continues to increase the spread from it’s US counterparts, this alone is reason enough to suggest that interest rates may not be skyrocketing up any time soon as is the fact that our economic recovery is still quite shallow and not built on a solid foundation.

With regards to real estate in Kelowna, most REALTORS are finding that they are seasonally busier both showing properties and writing offers and our market is I believe relatively well balanced and poised for an increase in absorption rates over the next year.

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This is why a media publication should never ask a realtor to write a column. At least this one. So focussed on burying bad (and realistic) news, he mangles what’s left of the truth.

For example, I have nothing to do with the bubble report he refers to, other than being asked to comment on it. I’m not (thank God) a politician. The value of the TSX is absolutely no determinant of interest rates. And mortgage rates are now irrelevant to real estate values, obviously. Nobody has suggested the cost of money will skyrocket. As for Kelowna realtors being busy writing offers, the local real estate board’s latest numbers show a 48.93% decline in sales. Gulp.

Did I warn people two years ago? Yes, I admit. Would I rather have folks bail too early than too late? Absolutely.

And I’m not done yet.