Thursday October 30, 2008

Where now Toronto? or Psychology and the games people play.

Psychology plays a significant role in the changes that are occurring in the global
stock markets as it does with Downtown Toronto real estate. I have yet to see much failure in the real estate market in Downtown Toronto but the doom and gloom talk is getting to me. In order for there to be a serious downturn, the supply has to outpace the demand.

A significant number of homeowners have to be in a situation where they are forced to sell. Although I have met many buyers who are pausing to reflect on the global situation, I still have more buyers than suitable houses.

The same can be said for many of my colleagues. Until recently, the Downtown Toronto Real estate market (DTREM) has been on pace to match 2006. We'll see in the next few weeks how much the October numbers decrease with the uncertainty caused by market volatility. Certainly sellers are adjusting prices but many are still using evaluation from the top of the market. Some refuse to accept the changes.

 

How many buyers and sellers are directly affected by the stock fluctuations? I say most are not. The high end market is softening but it will come back. Many clever people are setting themselves up to profit when the market stabilizes while others lose money. This is where the psychology comes in. Consumer confidence... how many people think the US housing price decline will hit Canada? I hope most see the differences in the fundamentals. If not, contact me and I will send you a series of articles from various sources. Do you think that every state and city in America is in a housing crisis or would you agree that certain places still have healthy, relatively normal, real estate markets.
 

This may be the best time to negotiate as a buyer. Once "consumer confidence" returns, so will the price increases... but really, only hindsight is 20/20.