QUOTE (ThomasBeyer @ Apr 27 2010, 09:20 AM) don`t be so arrogant .. as indeed the economy was propped up in 2009 with super low interest rates .. and any new construction like in Vancouver or downtown Toronto or here in Canmore has a major economic impact .. take that away and economy tanks (like here in Canmore or in Vancouver or Kelowna) and prices drop ..
However, in many markets, prices have corrected in 2009 already, like Kelowna or Canmore or Edmonton .. and I think a further 20% down is unlikely ..
The issue is that Canada`s housing market has many segments and those segments can be further subdivided into many areas. Nobody is going to be an expert in all of those different local market segments.
It sounds to me, and it really is `sound` because I don`t invest in many of these markets, that condominium complexes and other real estate market segments are `frothy` in areas around Vancouver and Toronto where a large portion of our Canadian population lives. These two (and maybe also include Montreal and Ottawa) comprise a large portion of what we call euphemistically the `Canadian Real Estate Market`.
But other markets such as luxury condominiums in Canmore are still severely depressed although possibly stabilizing. Calgary`s condominium market is also hard hit and may fall even a bit more over the coming months, while in Edmonton things appear to turn around for the better.
Regarding the statemement that the masses are always wrong, that is incorrect. Even the masses may see the obvious. The difficulty with contrarian investing is that you don`t go against the masses out of principle or by definition. It is more about anticipating the unexpected which may prove to be the most profitable.
Yes, the market may be `frothy` in the opinion of many, but that does not mean the obvious crash is nearby. The market may go up a bit longer, it may go sideways for a long time instead of crashing or... certain local market segments may crash while others will do fine or even excellent. In fact, as a contrarian you may want to say, "Things will likely be different than the masses expect, the question remains where will the most profitable opportunities occur?" That is something not even the contrarians can answer with certainty.
Reality is that the investor should be aware of trends, because it may help identify opportunities, but the true key point is to buy assets at the right price with enough price cushion and cash flow to get by the rough spots. Something that is again a lot more difficult to do than say.
