Quote:
Originally Posted by blankall
The economic conditions now and in the 70s/80s are entirely different.
Even then, if you look at the "crash" of the early 80s, it was only about a 20% drop, that lasted for 5 years, at which point things rebounded to above peak prices within 7 years of the crash:
https://fred.stlouisfed.org/series/QCAR628BIS
A massive drop of 50+%, that will allow the average young person to buy a detached home again, would be totally unprecedented in Canadian real estate. During the last "crash", average citizens weren't snapping up cheap properties, as what was holding down prices was unaffordable mortgage rates.
A another crash is obviously possible, but with the current housing shortage, I just don't see it happening. We're already down over 20%, so if things follow the same pattern as the last crash, it's real estate staying level for about 4-5 more years and then skyrocketing up again. No further crashes.
IMO, the end of 2023 is likely the best time to buy, in terms of absolute price, as we should see a small decrease in prices through 2023 in most markets. Most forecasters have things going up from there. |
I mean, a huge price crash suddenly making everything affordable was never really realistic. High interest rates and recessions are what drive price crashes, and in that situation it's not like younger people are going to be flush with cash and credit to scoop up houses.
However, look at the long periods of stagnancy after peaks in that chart you linked. Inflation-adjusted real estate prices were the same in 1987 as they were in 1974 and had dropped as much as 20% in the interim. And they were the same in 2003 as they were in 1989, with a long period of prices being 20% below the 1989 peak. That's how affordability improves, as Real Wages increase while Real Property prices stagnate. So actual selling prices might not decline all that much in terms of dollars (and will even tend to go up eventually), but they become more affordable due to wage growth and inflation.
And that doesn't even get into the fact that post-1980, we have largely had a declining rate environment. So the actual mortgage costs for homeowners declined even more on an inflation-adjusted basis during those periods than the Real Property price would suggest.