Analysis on the History and Tendency of Real Estate Investment

Release Date: 2017-03-09Back

Real estate company Bosley Real Estate Marisha Robinsky released the following chart showing the easing of housing prices in Toronto. Many senior investors and market analysts are beginning to worry about this and the national economy completely derailed house prices can go long, then there will be no large-scale market adjustment, hope that through today's analysis, we can next to the real estate where to go, there One's own judgment.

Most areas over 60 years [average price increase] trend

This chart can explain two points:

1. In the long run, house prices in Toronto have been on the rise;

2. In the short term, house prices will fall for several years or even ten years.



Over the past 63 years, 23 years, or one-third of the time, Toronto's house prices are falling.

In the early 1960s house prices fell for four years, the biggest drop of 25%.

Between 1974 and 1985, house prices fell 12 years, the largest decline of 20%.

Between 1989 and 1996, house prices fell 40%.


[Market adjustment] and [substantial rise] through history

Market adjustment

In the real estate market, refers to the price from the historical high prices began to go down, and then bottomed out, back up before the historical high point of such a market behavior.

Substantial rise

In the real estate market, the real rise refers to the market has been adjusted after the highest point in the previous price position, continue to rise.

The two concepts used in most of the 60 years of housing prices, Toronto prices fluctuate up and down, in fact, is repeated in the market adjustment and real rise. In the figure above, the red line represents the market adjustment interval, the blue line represents the real rise range.


We can clearly see that from 1959 after the market highs, Toronto experienced the first 7-year market adjustment, until 1966 to rise again. The rally continued until 1974 and then there was a market adjustment again. 12 years later, in 1986 the market adjustment ended, house prices once again burst up, 86 to 89 three years time prices almost doubled. 1989 real estate bubble was officially broken, Toronto appeared for 20 years of market adjustment, until 2009, real estate prices rose back to the level of 1989. In other words, if a customer entered the real estate market in 1989, until 2009 his house was up to buy the time when the price. In fact, most of Toronto's real estate investors paid a heavy price for that time.


In Toronto 60 years of the average price trend analysis, the longest one real rise lasted for eight years (1966). We have been up this time has been maintained for 7 years, if according to historical inference, we may have next one to two years of upside.

Investment in real estate market risk

real case scenario

Mr. S was emigrated from Hong Kong to Toronto in Hong Kong for 87 years, selling a Hong Kong house, paying 25% down, the rest by loan, four separate houses in Scarborough, one self occupancy, three rentals,


87 years, the central bank continued to raise interest rates, 1990 Prime rate reached 13.5%, rent income is not enough room, the housing market sell-off, house prices began to fall, to 92 years fell by 25%

Also means that the first phase of 25% have all lost light. Mr. S's job income is only enough to maintain the monthly supply from the housing, desperation, all three rental houses were forced to auction.




High inflation, leading to the central bank to raise interest rates, high interest rates led to falling house prices.

Assets are too concentrated in real estate, can not resist the high interest rate risk;



Diversified investment in "high interest rates high return" products, hedging risk;

The dividend insurance investment, which is positively related to interest rates, is the most effective hedge against real estate investment risk.


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Source: Bosley Real Estate Marisha Robinsky, part of the source