Three years ago, we were interviewed by American National Public Radio (NPR) (Canada’ Real Estate Market Heating Up, Eh?) about the quick recovery of Toronto’s real estate market. After 6 months of price decreases during the mini recession of 2008, we had just sold a house in Little Italy for $100K over asking. The American media was shocked.
Last month, the journalist contacted us to do a follow-up story for NPR and the Christian Science Monitor: Is Canada About to Face a US Style Housing Meltdown?
We admit–we aren’t pros at all this media stuff. We sat down for 45 minutes and talked real estate. We assumed (correctly) that the angle of the story was another doomsday prediction, and we assumed (incorrectly) that we’d be representing the views of people actually living and breathing the market on a daily basis. Our 45 minutes of brilliant and balanced opinions were reduced to the following 2 sentences:
Still, Toronto real estate agent Melanie Piche says she expects real estate prices to continue rising.“People see their friends, how much money they have made in real estate,” she said. “And there aren’t a lot of safe places to put your money right now. Where else can you make 10 percent?”
The article was picked up by a number of papers and blogs, and unsurprisingly, the blogosphere went crazy with what I had reportedly said. We know Realtors get beat up in the media all the time. But this time the public was anti-Melanie Piche, the crazed realtor who offers ridiculous financial advice and greedily sees the future through rose-coloured glasses.
And so, we feel compelled to respond. Here’s what was really said during that interview:
We said that we anticipated that prices would cool from the 10%+ annual increases of recent years. In fact, we said we hoped we’d see a return to a more balanced market with 1-3% annual gains. I suppose that could be interpreted as “real estate prices will continue rising”, but certainly we weren’t predicting that our real estate market will (or should) keep up a breakneck pace.
We talked about the risks of interest rate hikes, mortgage rule changes and reduced amortization periods. We talked about the impact of the world economy. We talked about affordability. But I guess in the eyes of the media, if you don’t see prices falling by 25%, you only see prices increasing.
The actual quote used in the article was my answer to a question about why Canadian Buyers continue to get into the market and participate in bidding wars, when so many in the media are warning Canadians of a price correction.
I wasn’t suggesting that real estate guarantees 10% returns. I wasn’t suggesting that people should buy real estate instead of other investments. I was paraphrasing the mindset of a lot of buyers out there. In fact, we talked a lot about what we said in the Is the Sky Falling blog from a few months ago: what the risks are in the real estate market right now, and smart ways of avoiding them.
So there you have it, our response to the angry bloggers out there. Whew, that feels better.
And now..back to our regularly scheduled programming.