Wednesday, January 02, 2008

2008 Predictions - How close were the 2007 Real Estate Predictions versus actual and my Real Estate Predictions for 2008

2008 Predictions for real estate, interest rates and the GTA economy.2007 Real Estate Market Predicitons for the GTA

Blogging is supposed to be personal writings that compel you to continue reading the story. All too often my blog has contained plenty of facts and information and been short on my personal views, observations and opinions. Part of this is due to time constraints, part due to the fact that I am a logical engineer thinker and mostly because I am not much of a creative writer. So here goes my shot at wowing you with words of wisdom and predictions for 2008.

One of the interesting things I've noticed is that as I approach 50 I feel I have a right to express my opinions more freely due to my earned right of experience. I teach a course to other 'newer' agents about the internet and the importance of having a presence on the web. Certainly I've tried to maintain a high profile on the web by uploading over 1700 pages on my site to date. That does not include my 353 blog posts to date. I digress.

After 20 years in the real estate business and having gone through the dark recession years for real estate from March 1989 to 1994 you can understand if I'm a little gun shy when I look at the current market. We've now experienced about 12 years of unprecedented growth in the real estate market. If you don't believe me, check out this graph. Old school business thinking was that economics went in 7 year cycles. Clearly this is NOT the case in the GTA real estate marketplace any longer. Long live Garth Turner. He was always an inspiration to me, good or bad, he would hang his thoughts on the line at any time. I miss his articles and predictions.

We've experienced year over year increases for 12 years in a row with no end in sight. I wrote this time last year and predicted a 4-6% increase in prices for 2007 Was I ever wrong! It seems that our prices will increase over 11% this year! Last year at this time I was worried that maybe our market was stalling a little due to increasing interest rates and slowing sales. Again I was a little too conservative.

So here we sit in Canada with low inflation, low unemployment, low interest rates and a strong economy. The US is faltering due to their sub-prime lending crisis and looks like it will last another 8-18 months, at least. November 2008 is a US election and in all US election years in the past 20 years our market has slowed in the 3 to 4 months preceding a US election. Canadian dollar all time highs. So with all these upcoming uncertainties you would think that I would predict lower increases or a softening of our marketplace. Nope. I think our market will continue to hum along due to low vacancy and rates and more buyers than sellers and continuing lack of land for new development.

For 2007 I am happy to report that I was wrong. I predicted an increase in the GTA average price of about 3-4% and the actual increase was about 11% Wow, was I ever wrong on that number, and many people are quite thrilled about that!

This is what I predicted that would happen last year this time for 2007

    • I believe that we will see a steady and 'normal' market in 2007. We will not see the huge price increases that we saw in 2004 and 2005. Prices should increase about 3-4%, a little better than inflation for the year. As always, if you are thinking of selling, February or March may be the best months in 2007.
    • This is what I predicted in December of 2005 for the real estate market in 2006. I was just a little lucky!
      It is interesting that many of the experts are predicting prices to rise only slightly for 2006, but nearly as not as much as they did in 2005. I would agree with this line of thinking. The last 4 months of 2005 showed signs of a more "normal" market. The market so far in 2006, up to the end of February has been normal, but nowhere near the sales volume or price increases that were experienced in early spring of 2005.
    • As long as rates stay about where they are we should see another year with a healthy real estate market for 2006 with modest price increases.
    • And sure enough, it appears that 2006 price increases will be about 5% compared to the nearly 10% we saw in 2005. The real estate boom in Toronto and the GTA is over, for the time being that is! We will have another real estate boom in Toronto, it's only a matter of time.

Read the entire post here:

Mark's Crystal Ball for 2008

This is what I predict for 2008 in real estate, interest rates and more!

Mark's Predictions for 2007

Mark's Predictions for 2008

  • I see that our marketplace in the GTA will see price increases just above inflation, in the range of 4-6%

  • I believe that mortgage interest rates will come down in the beginning of the year and stay lower compared to today's rates and not increase again until just before the US election in the fall

  • Rental vacancy rates will decrease, thus rental rates will increase about 7-10% or more this year. A 'typical' 10 year old 3 bedroom townhome in Erin Mills currently rents for about $1400 to $1550 per month and this will
    increase by at least $100 per month by this time in 2008 This will only continue to make real estate investment properties more desirable and lucrative, it's time to buy another property if you can afford it!

  • The condo market will remain a strong part of our marketplace, due to affordability and lifestyle choices

  • I believe that the US will be just begin to see the light at the end of the tunnel by the end of 2008, their sub-prime mortgage crisis will have peaked and they will be on the road to recovery

  • A barrel of oil will have reached $120 per barrel sometime in 2008, mostly due to an international crisis and absurd speculation fueled by the pundits and the press

  • Along a similar vein to the last prediction, gasoline prices will peak at $1.20 per litre sometime in 2008 but will be $1.00 by year end.

  • Gold will break $900 (and it does not matter whether it's US$ or CDN$ much anymore!) sometime in 2008 but settle to $735 by end of 2008

  • If the experts are now stating that 82% of all buyers begin their real estate search on the internet, I believe that it will be 90% by the end of 2008

  • Watch out for following the emotions of the marketplace and stick to your long range goals

  • I believe that Mississauga will continue to be one of the top cities in Canada and the world to live in and that people will continue to choose Mississauga as one of their top choices of places to live in the GTA Read about the psychology of ownership. Real estate will always be an excellent investment especially if you get a firm hold on your finances and will continue to be the best long term investments in your future and your children's future that you can make!

Read more 2008 predictions and information at my site.

Search the MLS or read more about Interest Rates, Power of Sale Properties, Price Trends and more at my website. Homes for Sale

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
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  1. This is an excellent post and I love your predictions, I hope that all of them come true.

    Thanks for such great insights,

  2. I just bought a townhouse for 425K, so I hope your prediction on 4-6% average increase doesn't come like 2007 and we will see a 12% like last year, :((