{"id":1105,"date":"2012-02-15T07:43:50","date_gmt":"2012-02-15T12:43:50","guid":{"rendered":"http:\/\/www.holypotato.net\/?p=1105"},"modified":"2013-12-05T06:18:33","modified_gmt":"2013-12-05T11:18:33","slug":"housing-bears-must-be-patient","status":"publish","type":"post","link":"https:\/\/www.holypotato.net\/?p=1105","title":{"rendered":"Housing Bears Must Be Patient"},"content":{"rendered":"

Over at CMF user Uranium101 asks when the correction to Canada’s housing bubble will come<\/a>. He wants to buy a house. I’ve seen similar questions around, or people saying things like they’ll wait a year or a few months or whatever before buying. I’ve been fairly vague on timing for the most part, focusing more on valuations, but it’s a topic worth addressing.<\/p>\n

You’ll have to be very patient<\/strong>. On the one hand, we don’t have jingle mail and all the other positive feedback elements that sped up the US crash; on the other, after witnessing that wreck the common buyer may be a little quicker to slam on the brakes, slowing things faster here once the correction does start. Assume the two factors roughly cancel and our unwinding will proceed at about the same rate as the US.<\/p>\n

So if you’ve spotted the bubble with good timing near the top (and weren’t early like myself or Mike Burry or whatever), then for the US experience that would be sometime around 2006, maybe even as late as 2007. When is the time to buy? It’s still not clear if the US market has bottomed yet, but maybe around 2011\/2012 you agree that even if there is more downside, the fundamentals are back in line and that it’s worth the risk to buy again. <\/p>\n

That’s a good 5 years or so. More if you were early in spotting the trouble. Maybe you figure once the major declines started to peter out in 2009 was close enough; that would still be 3 years from the peak you’d have to wait. <\/p>\n

Similarly, if in Toronto you had spotted the problems close to the peak in 1989, you’d have had to wait 3-4 years before you’d want to pencil “house shopping” into your day planner.<\/p>\n

Real estate is not a fast-moving, efficient market, so patience will be required. But a 30% correction on a $600k house is $180k, and that savings can be even greater if renting is cheaper while you wait. Plus you expose yourself to less risk. Sitting out the insanity will require finding a nice rental you’ll be happy in for several years and patience, but you’ll be very well rewarded for it.<\/p>\n","protected":false},"excerpt":{"rendered":"

Over at CMF user Uranium101 asks when the correction to Canada’s housing bubble will come. He wants to buy a house. I’ve seen similar questions around, or people saying things like they’ll wait a year or a few months or whatever before buying. I’ve been fairly vague on timing for the most part, focusing more […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"_links":{"self":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts\/1105"}],"collection":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1105"}],"version-history":[{"count":0,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=\/wp\/v2\/posts\/1105\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.holypotato.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}