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Some Things Never Change: What We Can Learn From the Past

I started in 2009 with one goal: to dispel misinformation. A lot of mortgage “experts” were coming onto the scene at the time with outrageous claims and getting quoted by media outlets. They were all great writers, no doubt. The problem was a lot of what they were saying just wasn’t adding up. 

The world has changed a lot since 2009. But right now we’re facing a lot of the same challenges we were facing then. A turbulent housing market. Tough economic circumstances. And gross amounts of misinformation – perhaps more than ever. 

I may not have a smooth writing style or flashy branding like some of those guys who popped up in 2009, but I have always spoken from the heart. Right now is no exception. Here’s what I think you should know.

Market Corrections Are Inevitable

A lot of people like to talk about the rich getting richer and the poor getting poorer. Crazy inflation tends to spark those debates – but unfortunately, those debates don’t get us anywhere when it comes to discussing our personal finances. What we should be talking about is what happened last time we were in a situation like this. 

After the 2008 US subprime mortgage crisis, we suffered a short term stock market and housing correction. The stock market fell by 44% between September 2008 and March 2009, then jumped 51% by the time September 2009 rolled around. Same thing with the housing market. September 2008 to March 2009 saw a 25% decrease in real estate prices, quickly followed by a rebound over the next 6 months.

Here We Are Again

In the last 11 months, variable rates have gone up by 4.25% and fixed rates have gone up by 2.70%. Most experts agree that further hikes are unlikely, and any additional hikes will be minimal. From there, look no further than the past to see what’s next – an inevitable rate drop. 

Experts are forecasting for variable rates to fall by around 1.75% to 2.00% over the next 24 to 30 months. Housing prices will soar. And once again, we’ll be back on top. The truth is inflation goes up and down, rates go up and down, real estate prices go up and down – but if you zoom out, the housing market always consistently goes one way. And that way is up.

The Bottom Line

Don’t get taken in by dramatic opinions. Don’t point fingers. And definitely don’t try to time the market. Stay positive and remember that real estate is always a good investment whether it’s 2009 or 2023. Just be proactive and consult the professionals to figure out how to improve your financial situation.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114;

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