I write this post while acknowledging I have family – both immediate and extended – who are Real Estate Agents, and also acknowledging the fact that I will probably get a good amount of backlash for it. However, I feel it is my duty to say my piece on this topic, as this has been something boiling up for a while.

I have seen so many posts and articles from so-called ‘real estate experts’ over the last 18-months or so talking about the Real Estate Marketing, stating things like ‘there’s nothing to panic about’, ‘everything will be fine’, ‘markets won’t go down’, or ‘they will just level out and stay stable’ but what have we seen? In 2017 and the few prior years, most of these Realtors were ‘scaring’ clients into buying a home so as to ‘lock in prices now before markets go up higher’. Now, most Realtors are saying ‘hey the market has gone down a lot and it’s on sale, so it’s a great time to buy, and don’t panic’. Here’s a question to Realtors — is it ever a ‘not good’ time to buy? Most will always tell you that it’s always a good time to buy regardless of the market conditions or outlook, because in reality, they have to sell to make money – or in other words, they have to kill to eat. It’s like akin to asking a car salesperson whether you should buy a car or not – of course they’re going to say yes.

The reality is that the vast majority of Realtors are NOT market experts. They mostly just focus on selling homes and do very little, if any research, on the overall market, the economy, the trends etc… In my opinion, many are doing a huge dis-service to the average individual, by convincing them to buy in a market that really is not healthy for anybody. Real Estate prices are still way over-valued and the current market conditions, interest rate conditions, economic conditions, job market etc.. make it a recipe for disaster for many who are encouraged and convinced to buy a home. With all the numbers coming out regarding the debt situation in Canada and the overall uncertainty, the average person will be the who has to deal with the fallout when everything turns upside down. Everybody and their dog was saying nothing was going to happen prior to 2008, and look what happened. And for those who say the current situation is nothing like 2008 really don’t have much of a clue as to what really is going on and are really fooling themselves. In fact, many can argue that the current situation in Canada may be even worse than 2008.

I’ve even seen some people who tried to compare the current Real Estate market with that of 5+ years ago, trying to show ‘yeah we’re still healthy, and there’s nothing to worry about’. Newsflash – we’re not healthy and there’s a lot to worry about. 5 years ago we didn’t have rising interest rates, we didn’t have the same rules regarding mortgage qualifications (which make it much harder for someone to qualify for a mortgage), we didn’t have the same debt levels, we didn’t have the same uncertainty in the job market (i.e. minimum wage increases by 23% overnight on January 1, and job losses), we didn’t have trade/NAFTA uncertainty, we didn’t have an extended bull market like we have right now, we didn’t have the same political tensions/uncertainty we currently have etc… So how is it even logical to compare Real Estate sales from 5 years ago to today, and try to pull it off as the only thing that matters?

Real Estate agents are NOT Financial Advisors, and they (for the most part) generally have no other interest then helping you to buy/sell your home so they can get a commission. I constantly see listings and posts from people who say things like “Only $950,000 for a townhouse”. Only? How does that valuation even make sense? The market prices are generally based on supply and demand. Right now there is (and will continue to be) much more supply than demand. Even if people WANT to buy a home (i.e. demand), they’re affordability is way down (mostly due to the new mortgage rules and higher interest rates taking a big chunk out of what someone can afford to purchase), so they can’t even afford the homes that they want.

Everybody needs to take a breath and relax. Take some time and don’t rush into buying a home — we all know that it will be the largest purchase you will likely make in your lifetime, so it would be in your best interest to make sure you make the most well informed and education decision as possible.

I’ve been actively and publically saying since mid 2016 that we need to watch this market and be careful, and at some point it will come down. I sold my house last year and have been renting, waiting for an opportune time to get back into the market, which is probably one of the best financial decisions I’ve ever made in my life. Almost everybody was telling me that I’m crazy or foolish, especially those in the Real Estate side (my family included). Since then, the overall market is down about 15-20% across the GTA (depending on the area you live), which means that house prices are $100,000 to $200,000 lower than they were from the market peak about a year ago. However, I still remain adamant that we are not at the bottom. We are only a little over 1 quarter into 2018, and things are just starting to unravel and become clear. Yes, I am invoking a fear mentality to people, and that’s because very few other people will – the vast majority of others, including Financial Advisors, Real Estate Agents and Mortgage Agents will try to convince you that everything is fine and ‘don’t pay attention to the negative news’. Your mortgage agent or real estate agent is not going to pay your mortgage or take care of you when the market tanks, so you have to take the necessary steps to take care of yourself.

Home ownership in itself is not bad, but it doesn’t mean that everybody should own a house at all times. There’s a time and place for it. We are seeing increasingly articles coming out over the last few months about home prices and home sales declining, as well as the concept of ‘millennials can’t afford to own a home’ and young adults still living with their parents. This is one of the reasons that condo prices have been skyrocketing over the last year or so – because many can’t afford a home. We have also seen (and probably know some people) who are in a very tight financial bind, as they had purchased a new home without selling their existing one. Often the case was their Real Estate agents telling them ‘don’t worry, the market is hot, your home will sell’. Well, we know that’s not the case in a lot of situations.

At the end of the day, we all have to take the steps to protect ourselves, as nobody else really will. I would encourage individuals to be patient, and wait out the decision to make the largest purchase in their lifetime. There is a good chance the overall markets will take a big hit, and that can spell disaster for those who newly get into a home purchase, especially if employment takes a big hit. I know I will definitely get some flak from many out there, not just Real Estate Agents, but other Financial Advisors, Mortgage Agents etc… and that is all welcome. I am stating my strong current belief and I encourage everybody to do their own homework as well.