In the summer of 2002, the agile Dominican superstar Alfonso Soriano became the first New York Yankee in history to notch 30 home runs and 30 stolen bases in a single season. Soriano broke another record that year: He was the first Yankee to strike out 157 times in a season. Asked to explain his habitual wild swings, Soriano produced a great line: “You don’t get out of the Dominica by taking pitches.”
There are lots of other lines about investing in stocks and real estate. You can’t time a market.
The truth is they were lucky. If we really understood statistics we would know that in all systems someone has to win at some point.
So what is my point today?
Don’t try to time the real estate market. There are too many variables. In a balanced local economy real estate will match inflation.
In down years it tracks below the inflation rate, but eventually it will catch up and hence a boom.
This also works in the inverse. A year where prices exceed the inflation rate invariably turn to a down market as the price revers to the inflation trend line.
What does this mean for Vancouver and Kelowna respectively? Vancouver has maintained its trend line with inflation over the past few years and maybe exceeded it slightly. The Vancouver Real estate market is probably flat for 2012.
KELOWNA has been below inflation for 3 or 4 years and is probably headed for an upward correction in the next year as inventories decline and building permits stay low.