It’s summer time again – sunshine, heat, long days, ice cream (my personal favourite)……and plenty of articles about the demise of the real estate market. It seems that this happens every summer.

Recently, the Globe and Mail reported that “In Vancouver, the seller’s market recedes” (July 5, 2012). On another day, the headline read “Housing bubbles: Messy and unpredictable” (July 9, 2012). The sub-headline stated that “Potential buyers should exercise caution and not rush in, particularly in hot markets”. And this is only the Globe and Mail! And it’s only mid-July! And these articles appeared in a one week span! Imagine how many more articles like these you can find if you looked.

If you’re currently in the market and thinking of buying or selling, my advice to you is to be careful about what you read. Just because something is in black and white doesn’t mean that it’s necessarily true or applicable to your situation.

These articles tend to appear every year. Typically, they appear in the summer months, when the market usually slows down before picking up again in September. But the usual summer slowdown doesn’t mean that the real estate market is about to come crashing down. Further, prices in central Toronto have been on the rise since approximately 1997 (except for a small correction in 2008-2009) so I would venture to say that the market predictions contained in these articles have been wrong more often than they’ve been right. But how does this affect YOU? (Because, after all, while it’s good to engage in academic discussions, at the end of the day we all want to know “what does this have to do with me?” and this blog is all about practical information you can actually use.)

So this is what it has to do with you: If you delay your decision to buy a home because you think the market is going to soften based on what you’ve read, you might one day be correct and laugh all the way to the bank or you could be wrong and get priced right out of the market. For example, let’s say that you read a similar article 3 years ago and decided to put off buying a new home in Vancouver. According to the first Globe article, prices in Vancouver have increased nearly 35% from three years ago. As a result, you’d now be faced with three scenarios: 1. If you can afford it, you can pay 35% more for the home you wanted to buy three years ago; 2. If you can’t afford the 35% price increase, you can buy a smaller home and get less house for your money; or 3. You might be priced out of the market because you can’t afford to buy any home at all. None of these scenarios paints a pretty picture.

At the same time that these two articles were intimating a grim future for the real estate market, a client of ours was contemplating offering on a property. Turns out there were 7 offers and it sold for $102,000 or 17% above list price. In the middle of July. Since only one buyer bought the home, there are at least six other buyers ready to buy a similar home when it comes on the market. Does this sound like a cooling market to you?

I’m not saying you shouldn’t believe anything you read and I’m not casting aspersions on the media because no one has a crystal ball. I’m just cautioning you to be careful about what you read. Be selective about what you believe and take everything with a grain of salt. Ask your realtor for his or her take on what’s happening in YOUR market because he or she is intimately familiar with what you hope to achieve and the exact market in which you’re looking. Only then, after you have the best information and advice possible, will you be in a position to make the decision that’s best for you. Doing anything less might put you in the same unfortunate position as our hypothetical Vancouver buyer. Good luck!