Thursday, March 18, 2010

Is this a WISE decision? Choosing NOT to buy real estate!

I had a subscriber comment on our marketplace and decided not to purchase.

He said:

Despite the media hype, I am making a wise decision to not purchase a house at this time, the peak of the market.


I saw your reason for unsubscribing below and thought I would comment. I
tend to agree with you in my mind and logical thinking would say it's a bad
time to buy. Certainly if you listen to Garth Turner, he thinks the end is

Real estate prices are at an all time high and seem to have no end in sight.
My wife and I are looking to move and it's a more expensive house we want to
move to, so we too are afraid that the bottom may fall out. But, I've been
saying that since 2003 when the market began to take off like a rocket and
has not stopped (except for September 08 to January of 09) since that time.
I've been saying for 7 years that we must be at the peak and prices can't go
any higher, and they keep going higher.

Nobody knows what will really happen in the future, but many think the HST
and increased interest rates will only slow our market advance, not halt or
cause retreat. Only time will tell.

All the best!

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829


  1. Mark,

    When you throw in the towel the real estate will change the trend. Seriously, real estate prices will give up when lending practices tighten, liquidity to fund loans decreases (CMHC changes its practices of guaranteeing) or when most people realized that carrying a huge principal on a property in the current global environment is high risk. Lets face it many first time buyers are leveraged in real estate to the max. Until there is a pick up in employment this economy is all about staying liquid as much as you can.

  2. Hello, Thank you for your comment. Your thinking is logical, but logic has not had as much impact on the past few years of real estate increases as one would think.

    We are in for a crazy ride this year, nobody knows for sure which way the market will go after rates begin increasing and HST takes effect. Only time will tell.

    Have a nice weekend!

  3. Well the current logic is real estate prices go up and there is no way you can lose money, but I think this current demand is taking away from the future and at some point people will get priced out of the market.

    Obviously when you throw in low interest rates and allow people to borrow beyond what they should all logic is thrown out the window. This is a classic behaviour of madness of crowds

  4. Just keep in mind this the consequences of price decline in real estate are severe as for one real estate is not a productive asset with excessive leverage

    Exactly there is not logic in today's market. The market is irrational hence this real estate price appreciation will burst. When no one really knows, but looking at markets in general is better to play safe and downsize in current environment if you have that option. That is just my opinion.

    But the final stages of the price appreciation are crazy to euphoric to mad.

  5. Well there is a reason for this disconnect. Most people today look at the carrying costs as a more important factor than the actual price, so if you have interest rates that have not been seen in generations this will lead to irrational behavior and a process of bidding up real estate. The writing is on the wall. Rates cannot go any lower so future increases in interest rates should have a negative effect on interest rates, unless the government pulls out of its hat subsidies to buyers.

  6. Last sentence should read.

    Rates cannot go any lower so future increases in interest rates should have a negative effect on real estate, unless the government pulls out of its hat subsidies to buyers.