Regardless of whether the market is up or down, buyers have one question: is this the right time to buy? Understandably, buyers want to know the direction of the real estate market. Are prices on the way up or down? Am I buying at the peak? How long before a rebound? Should I wait for price-drops? The honest answer is nobody knows! Even economists who specialize in real estate markets have a difficult time predicting what’s going to happen. Before looking at the real estate market, economists must take into consideration a multitude of variables, such as:

• Interest rates a year from now
• Gasoline and food costs a year from now
• If the average household income is appreciating at the rate of inflation
• The level of immigration
• The volatility of world financial market’s
• The impact of the US upon Canadian market’s
• Employment levels
• The state of national economies

These amongst other key economic indicators form the foundation for outlooks on the real estate markets. To produce outlooks for the real estate market economists must study social and demographic changes that drive demand. Factors may include:

• Number of first time home buyers
• Consumer preference for urban V.S Suburban living
• Consumer confidence

Consumer behavior is very difficult to predict and have a huge impact on the real estate market. Consumer confidence is the fuel that drives real estate demand. When the economy is strong and the real estate market is seeing year-upon-year growth, the public expects prices to constantly rise. If this confidence is too high it leads to speculation as people attempt to profit off short term increases in property value. In-effect value appreciates not because of economic fundamentals, but because people want them to. Prices reach an unsustainable level which leads to a sudden drop in prices – the market, in-a-way, corrects itself. The extent of this drop in value often-times depends on how irrational the market was before the peak – the more irrational, the bigger the drop. Another important factor to consider is personal preferences/situations. See the real question shouldn’t be “Is it the right time to buy”, rather “Is it the right time to buy for me”. Amit Bhandari Sales Representative with Signature Service GMAC Real Estate W: amitandroy.com This article was originally published by Amit Bhandari on Realty Kitchen.