Real estate markets fluctuate, it’s the name of the game. In many ways it’s like the stock market, up and down, buy low, sell high – you get the picture. The only difference is that the real estate market is far less volatile than the stock market. Stock prices change every day, sometimes dramatically and with next to know warning. People lose millions of dollars at the drop of a hat. Real estate markets change more slowly and remain in peaks and valleys for far greater amounts of time.
So Real Estate is a safer investment then, right?
This is tough. The answer is both yes, and no. There are far more indicators out there to tip you off that the real estate market may take a dive soon, or that valuations may rise dramatically. So in some ways, yes, simply because if you pay attention you can easily stay ahead of the game. At the same time, few laypeople homeowner’s spend their time neurotically trying to interpret or predict the real estate market. It’s because of our naturally complacency, particularly when the market is at a peak, that we are hit so much harder when a valley comes along. Few people are prepared for it.
For Alberta, it’s last valley was in 2008/2009, when the rest of the country was really struggling economically. Many provinces suffered significant job losses, and in some cases entire industries were crippled. Since then, the Alberta market has been on a very comfortable hot-streak. Lots of people have bought and sold, making great investments and big dollars. Unfortunately, with the state of oil prices (in the toilet) the real estate market is beginning to decline. Anyone could have predicted it as soon as the oil news hit the wire, but what can you do? Unlike the stock market you can’t just unload a million homes in five minutes. Selling takes time.
Markets change, and then they change back. Don’t stress out – just ride it out.