The latest headlines seem to be hinting at a recovery in the real estate market.
https://www.cbc.ca/news/business/crea-h ... -1.5247892
https://www.straight.com/news/1281996/r ... sales-july
Looking more closely at the numbers for Metro Vancouver, the picture doesn't look quite as rosy as the headlines imply. Sales may have picked up, but the price trend remains negative month-over-month, albeit only slightly.
metro_july.JPG
I don't think it's out of the question that prices may flat-line or even rise in the short term, but I don't see anything on the horizon to suggest a sustained recovery. We're still well into bubble territory and the global economy is showing significant signs of weakness.
I like the following graphic as a way to visualize where I think we are in this cycle:
stages_bubble.jpg
I did not make this graphic, but I added some dates and an arrow depicting where I believe we are right now.
This is also known the "bubble stages" chart. It's widely referenced in stock trading, but the same principles can be applied to any type of asset bubble... whether it be stocks, real estate, Bitcoin, etc. It turns out that human behavior is predictable regardless of the investment. People also don't tend to learn from past experiences. They say they know better, but then continue to rationalize their behavior with excuses like "this time is different", "we're in a new paradigm", etc. Human psychology is very resistant to change...
A graphic like this does have some limitations... it's not meant to be a perfect representation of what's happening, it's a very smoothed out trendline. In reality there's always some noise that obscures the true signal, especially when dealing with the current period. It also can't tell us when we'll hit each stage in the cycle, or how much prices will drop.
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