Would You Buy Manhattan for $24.00?
When I was new to the real estate business close to 25 years ago, I had a broker (hi, Joe!) who was an experienced real estate investor and often provided sage advice. One of his favourite sayings was, “The best time to buy real estate was in 1626 when Manhattan Island was sold for $24.00. The second best time to buy is now.”
There are some holes in the saying such as Manhattan may have sold for $951.08 instead of $24.00 but, does that really matter? The idea that the second best time is now, also immediately makes one thing that there were many other dates over the last 387 years that would have worked but the point is, you didn’t do it then, did you? So NOW may indeed be the best chance.
I’ll admit that every time we hit a new high, I think to myself, “wow, that seems too high for our market.” A year later, I look back and it seems reasonable or even low in comparison. When a softening hits us, such as we experienced in 2008, I think that it’s perhaps good as we’ll return to some normalcy when in fact, anything we lost in value was more than made up for within 18 months up here.
In the boom market of 1989, the average sale price of a home in Toronto was $273,698.00. I don’t have records that far back for the Collingwood area but I know that in 2001, the average was $170,302. Six years later, after a prolonged recession, the average residential sale price dropped to $198,150 in Toronto.
Today, the average residential sale price of a home in Toronto if about $530,000. Over 100,000 properties ell each year compared to about 27,000 in 1990. Times sure have changed. The 12 month average residential sale price in our area topped $334,000. (Incidentally, the 12 month, average residential sale price in the Town of the Blue Mountains is on par with Toronto at $528,505 last month according to statistics from the South Georgian Bay Association of REALTORS® MLS® data.)
Many other things have changed as well. Offers are done electronically, there are Privacy legislation procedures and policies, the Internet has changed the way we do business, advertising chas changed, commission rates have changed and we all carry smart phones and/or tablets in this age of instant communication.
What hasn’t changed is one simple fact. Real estate values go up and down in short term cycles but in the long run, they only go in one direction. My broker was right. Today really is the second best time to buy real estate.