Someone commented on one of the Ask JO blogs that I wrote almost a year ago (wow, time flies!) and it got me reading what I had predicted back then.  It was an article about the Toronto Real Estate Bubble Bursting and he pointed out that the contents of the blog are even more relevant now than they were back then since some of the stuff I talked about is starting to come to be. 

Now it's time to reflect... I'm actually quite pleased that my predictions back then are still pretty on the ball. Crap continues hitting the fan in the US largely due to the sub-prime market and the super conservative Canadian Government has tightened up it's lending criteria and practices via CMHC.  The inventory in Toronto is starting to build up, while the prices are still steady; the good stuff is selling rather quickly, while the sub-par stuff sits and racks up those Days on Market numbers. Oh and a new point,  the role media plays in influencing and formulating the mindset, opinions and outlooks in people is absolutely amazing!

I'm going to comment on the last part about the media because now in Toronto, as happened across the board in the US previously, there is news - almost on a daily basis that talks about the doom and gloom of the real estate market.  I think this weekend, they talked about some 6% drop in the number of sales / prices and I got a call from one of my concerned clients asking how that would impact the imminent sale of his property.  The media is so powerful it's almost unbelievable.  It can make or break any trend, fad, belief, fear, opinion and then some.  So anyway, my response to my client was not to worry about what the news says, but at the same time, be worried because what they say becomes reality.  Again, I don't have a crystal ball, but brace yourself people... the market is probably going to do what the media is saying it's going to do -- and if you haven't heard, they're saying the Toronto Real Estate Market is ripe and ready to burst.

I've said this before and I'll say it again... "almost all decisions in real estate are made emotionally and then justified logically after the fact."  When you have masses of people acting with emotions first, you're bound to have trouble brewing.  Thus, many people who entered the market over the last while may not have entered with their heads on straight - buying new condos ready in the future that already cost way over present resale values, purchasing with completely borrowed funds because it's the thing to do, reacting to the hype and buying out of impulse, or bidding beyond logic.  In the thick of it, I think some people have actually forgot what home really is... it's a shelter - a fundamental need for a roof over someone's head.  It's not just an investment or quick buck... it's a home (for you or for your tenant) and it's supposed to be for long term.  If that's not what you were thinking when you bought it, then unfortunately, the way things are going now, you might lose your shirt. 

When you buy real estate, you really do make the money going in and not coming out.  If you bought right and are able to afford what you bought, then you should be relatively safe regardless of what happens over the next little while.  I am fully aware of the "news" and still, I recently purchased a condo myself -- it's because I believe in what I bought and the dynamics are right for me.  The property carries itself with a tenant and the most important part, I can afford it, so unless something drastic happens, I would never be in a dire situation to sell and I can ride out market fluctuations. 

Long story short, if you're buying or selling for the right reasons, then any market can be a good market. If not, then good luck to you...