Have you noticed lately that the headlines in today’s media are aimed squarely at our real estate market?
Have you noticed how each article seems to paint real estate either in a negative light, the worst decision ever, you don’t want it anyways, or the best one yet: It is unpatriotic of you to not help other buyers?
Here’s a sample of what I’ve been reading (and I love reading my newspaper – old-school, delivered to me by some guy at 530am who I have never met. Yup, I still read the news every day).
The Great Canadian Real Estate Fallacy which was an article that basically said we’re all screwed because we have let things get this far, and the author bought a house 25 years ago and the market fell the next day. 20+ years later he’s richer than he ever thought possible but still, Real Estate is BAD.
The Real Estate Game In Big Cities Is Broken And Young People Should Not Play It was written by a younger journalist at the Globe and Mail who did not foresee the expenses of removing skunks from under her deck or rebuilding her roof, and thus, is telling young people not to bother buying in Toronto. Just rent, or move the hell far away.
Owning A Home In 2021 Is Not As Great As You Think was an enlightening piece of journalism that focused on a 66-year old pensioner who is saying “Man oh man! I have to rebuild my deck on my $1M house that’s free and clear, and I don’t know where I’ll ever find the money to do so since I’m on this pension. I feel bad for kids these days. How will they ever…..”
Canada Risks Becoming House-Rich And Everything Poor was an opinion piece that basically said we are screwed if we let house prices continue to rise ad-infinitum because we’ll never afford anything else like trips or vacations or Costco runs.
And perhaps the most insulting piece I have ever read in the news -and that is saying a LOT – was today’s amazing The ONLY WAY Young Buyers Can Afford Houses Is If Current Owners Give Up Some Of Their Gains. In this piece. Rob Carrick actually has the guts to call me unpatriotic if I don’t agree with knee-jerk reactions made by policymakers to STOP my house from going up in value to HELP the young buyers of today from getting into the market.
EDIT, I thought the article above was one of the worst until I came across this one. After I read it the first question that came to mind was: “Do journalists bother to do any research before they write?”. Answer: Definitely not, at least not in this case. This part stood out for me as one of many reasons this argues for not buying a property:
You will learn, possibly to your surprise, that the deal is stacked so that you mostly pay the interest first. This means that initially you get almost nowhere. If you can prepay every now and then — I hope you insisted on that — the resultant savings will dwarf the payouts on the biggest investments you’ll ever make.
Simple amazing! And absolutely utterly incorrect nonsense. At a rate of 1.5%, for example, nearly 70% of your payment hits principal vs interest, in the first five years. That is amazing. When someone makes such glaring mistakes, how am I supposed to trust the rest of the piece?
(Note: This isn’t just one newspaper we’re talking about either. Financial Post, Globe and Mail and Toronto Start serve different political spectrums and they are all in full force against this market)
I want to make one thing clear. I am all for young people entering the housing market. I, along with every other homeowner, was young once. And I entered the market at the time where I thought the risk/reward was justified for me. Others should be able to do so when they deem the same thing. I’m even for policies that will slow down the growth of house prices. I am not on cloud nine, however and I don’t believe that house prices have to be caught up by incomes. If I read one more Tweet from an armchair economist who tells me that currently income:price ratios are 1:10, and that cannot conceivably continue, I will just shake my head in astonishment at how disconnected these people are.
Why is the media so against real estate lately? Is it possibly because they had an informal poll where over 80% of their “readers” suggested we have to do something ASAP about runaway house prices? Is it because the pandemic is going away (slowly) and there’s less news to report there? Is it because housing has always been the topic of the day and now with prices having gone the complete opposite of what everyone called for, we have to pounce? I don’t know why else. I do know that I talk to hundreds if not thousands of potential buyers a year and I often wonder – are they not reading the paper? Are they not influenced by these articles, for better or for worse? I sure hope not. I read on twitter where one guy actually sold his house after reading Evan Siddall’s opinion that house prices will fall by 9-18%. As we all know he was very wrong and that seller greatly regrets his mistake. Can you imagine! Making a decision like that because of a singular tweet?! What damage is the news causing then for the psychology of other buyers?
Here’s what I genuinely want to know. And perhaps I am naive. How come the Globe and Mail does not highlight people who have been first-time buyers and have made it on their own? And how well they are doing? How come we never read about someone who got a small gift, bought a condo, moved up to a house, took a risk, leveraged, built a tiny portfolio of property and is now well established? Why are we always crapping on the Real Estate market? Is the news trying to will a change?
I don’t get it. It’s fun to read because it gives me so much ammo for my twitter feed but I just don’t understand how far detached these headlines are from what’s really going on. What’s that? Well…
- Interest rates are so low that almost 70% of your payment hits principal
- The Bank of Canada has said we are expecting low rates for at least 2 more years
- Supply is the biggest issue and until/unless the Federal Government can step in and help, local planning rules and regulations keep slowing things down
- There are a ton of excited new buyers out there circling the wagons and demand is not expected to drop anytime soon
- We are hopefully going to see an end of the Pandemic by end of this year and on to much better lives moving forward
For the reasons above, I think the news should either come up with actual realistic reporting on what’s happening, or shut the hell up once and for all. There is no one that can hold them to account for misrepresenting what’s going on, except for you. The reader. Call them out on it like I do if you feel they are wrong. Maybe one day they will change their tune.