A Real Estate Lesson from History
Real estate or home buying always delivers its best performance. Real estate and home buying have been the biggest attraction for the investors for a long term now. People don’t wait to buy the property they just buy the property and wait. They say the real gamble is not played in the casinos. It’s out there on the field for the land.
Let’s rewind the clock back to 1984 and see how things have changed for the home buyers. The stats are collected with the interval of four years starting from the year 1984. Real estate market shows ups and down rapidly, which can be clearly seen if we see the growth rate right from the year 1984 till 2016.
If we consider the mortgage prices, grown income of the citizens, then we see that the purchasing capacity of the people has also increased. Citizens could easily afford more expensive homes, which ultimately raised the overall home prices.
Let’s see how the top areas performed during this time
The years 1988 and 1992 saw the biggest price growth. Why so? It’s because of the Expo 86, which featured Greater Vancouver and its province. The Expo 86 attracted many investors to the city. Due to the global exposure, the city got, its demand increased. The employment opportunities and expanding economy fueled the people to invest in the real estate in this city. And, Economic growth and employment opportunities resulted in increased salaries letting people invest more in real estate.
The similar rise we can see in the year 2008. This happened due to the infrastructure preparation for the 2010 Olympics, which again gave rise to the employment sources here and increased the salaries and hence the price growth.
Calgary also met the same fate of rising economic growth and employment sources and rise in the home prices can be clearly seen in the growth. The best year was 2008, again due to the Olympics of 2010. And, after the Olympics, the opportunities decreased at a very high rate so the prices went down to the ground. It is showing lowest growth in 32 years at that time.
Edmonton too showed its maximum in the year 2008 and a major drop in the next four years. As the economy suffered and the employment sources decreased, the prices also declined. 1992 showed rise because there was a sudden fall in the Greater Toronto Area.
Greater Toronto with the figures of 123% has shown the maximum growth in the year 1998 compared to all the other areas, and the lowest in the next four. It decreased to -4%, the lowest in the history. This situation generally happens when things go out of hand and everything is done in excess.
If you rev up the engine to its limit, it will overheat. Something similar happened in Greater Toronto in the year 1988. The prices were raised unnecessarily and the market overheated. The homes were overvalued and overbuilding was noticed until the year 1992. This plus the recession hit of 1990-1991. No jobs, bad economic status led to the biggest drop in the history of real estate of Canada in the course of 32 years.
Various political and global motivations were there resulting in the highs and lows of home prices in Canada. A sudden boom growth in economy and employment made people spend more on home raising the home prices and a sudden drop in the employment rates, recession, and decreased salaries have also made them buy the minimum to nothing which dropped the prices to the ground.