I still recall in 1980, when my middle class parents bought three rental houses in one weekend because the values had fallen 50% and the rental income generously covered the maintenance costs. At that point, there were few buyers willing and able to purchase because most went into the downturn unprepared and heavily levered. It doesn’t have to be that way when we plan for the mean reversion phase in advance.
Edward Saxe experienced Toronto’s last housing boom and bust cycle.
During the housing boom of the late eighties the veteran Toronto real estate appraiser worked around the clock. When the founder of Edjline Appraisal Services bought a family home in North Toronto in 1989, he experienced the bust.
“I bought my property in October, moved in in May and between the time I purchased and the time I closed it had probably dropped 25-to-30 percent in value,” Saxe told BNN.
It turned into one of the most severe housing busts in recent memory. Between 1989 and 1996 prices in the Greater Toronto Area collapsed. In some neighborhoods, prices for some homes were cut in half. It would be more than a decade before they returned to their peak. Here is a direct video link.
See also Fort Mcmurray’s fall: A housing bust hits Canada’s energy boom town.
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