Lauded as a disrupter in the real estate industry, Steve Saretsky is a little unconventional, maybe even a little contrarian in his viewpoints on the market, but his approach is data driven, and he gives an honest opinion on what’s going on.
The Saretsky Report is a monthly, detailed analysis of the Vancouver real estate market including data and charts--a valuable resource for anyone interested in staying up on market trends.
His content is geared toward financial education and a deep understanding of the real estate market, which he hopes will provide real value to people who will take that information and make the best decisions possible for them.
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Unaffordable housing in Vancouver
Vancouver has been in a real estate bull market for twenty years. No matter what kind of real estate you’ve purchased in Vancouver, you’ve probably done extremely well.
Prices were driven up due to historically low interest rates and the real estate bubble of 2015 and early 2016, which was associated with a huge flood of foreign money and locals also competing in the market.
There’s also a psychological element to the market as well, meaning higher prices beget higher prices, creating a kind of positive feedback loop.
We’ve now reached a point where housing has become extremely unaffordable to the extent that it has begun creating social unrest. There’s a social divide: if you own real estate and you have for a long time, you don’t care; if you’re renting or a millennial, you think you may have the short end of the stick.
What causes home prices to rise?
One of the first things to understand is what causes home prices to rise. The media presents it as a shortage of homes, but according to Saretsky, if you look at any real estate price boom, you also have to have mortgage credit growing in order to support home prices.
If your income isn’t going up, and prices are going up 20% per year, the only way to afford to purchase a home is to take on more leverage. Banks have to be there and willing to lend to you.
Banks work as a business. When real estate is going up, they see it as profitable, so they lend. Conversely, when the markets start going down, the banks get a little bit tighter.
“A banker will give you an umbrella on a sunny day and take it away from you when it’s raining,” says Saretsky.
Debt increases your risk
When taking a look at Canadian household indebtedness, Canada is one of the most indebted countries in the world.
Interest rates recently almost hit zero, but with inflation, interest rates have had to rise and are continuing to rise. Households, and specifically those households with more debt, are using more of their income toward increasing interest payments, which is not productive for the economy, nor is it sustainable in a potential market downturn.
Having more debt limits your financial freedom in times of economic crisis, and prevents you from potentially benefiting or profiting from opportunities you would have had with more financial liquidity.
Stay up on current economic trends, locally and globally
Being educated and knowing where we are in the economy is the first step in being prepared for whatever happens in the market.
With the right information, you can make informed decisions when renting or purchasing a home. The market will inevitably experience some volatility, so there’s an incentive to thinking more long term.
With stable income, job security, or just the right kind of planning, you may be able to thrive, not just survive, during a housing or other economic crisis.
Be prepared to make the best decision for you
It’s all about mindset, says Saretsky. You can either accept the inevitability of an eventual crisis or say you’d rather not know, effectively burying your head in the sand.
But if you’re willing to take a look and your own financial situation and keep an eye on market trends, using free resources like the monthly Saretsky Report, you can be less impacted by recession, and even make your income grow during recession.
Steve produces content with a focus on financial education and a deep understanding of the real estate market
What’s happening right now in the Vancouver real estate market?
Understanding what causes home prices to rise
Canada is one of the most indebted countries in the world
Education and economic awareness is valuable