There is an old saying, “predictions are difficult, especially about the future”. So, as I looked at the Canadian Real Estate Marketing from the late 1980’s to the mid-nineties I present only the facts, with no predictions. 

    It was 1988 and I was replacing a mortgage legend at Montreal Trust. Hamilton, and area real estate was booming. It was easy to be successful as the mortgages came in two by two. It was not selling; it was order taking. Life was good. 

    As Hamilton homes kept selling fast and prices escalated fast, there were similarities to the local real estate market of 2020-2022. As 1987 approached, the Bank of Canada and mortgages rates escalated until 1991, due to inflationary pressure. 

    What ensued was a terrible recession. What I noticed and never forgot was a market psychology had totally changed. Canadians were scared and very pessimistic. Many lost their jobs and they ultimately refused to buy homes. As a result, this led to home prices dropping. Yes, dropping. Hamilton home prices dropped 15% to 25%. Toronto fell between 28% and 34%. When you compare the curves, you can see an inverse relationship between the rates and the house prices, with prices lagging behind by 1-2 years.


    In today’s market, real estate keeps going higher as the general public believes prices will keep going to elevated lofty values. They may be right. I have never thought home prices would reach these levels. I certainty did not predict any of this and I have to admit, I have been more wrong than right. As we are all consumers, keep an eye on inflation and interest rates. If they continue to rise, conditions can change in business, government and for consumers which can change the whole economy. Things do not go up forever. The only real question is, when will it change? I am not smart enough to answer, but keep monitoring rates, possible recession and market psychology. 


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