Skip to content

Painful Truth: The glass is half-empty

Look on the gloomy side, it’ll keep you from falling flat on your face
The Legion Veterans Village project is seen under construction in Surrey, B.C., on Saturday, November 6, 2021. THE CANADIAN PRESS/Darryl Dyck

During the past few years, the three most prominent theories about the trajectory of Canadian real estate prices have been as follows:

• Prices will keep going up and up and up, because of strong fundamentals, like a growing economy and immigration

• Prices will flatten out gradually, but continue to grow at a more normal rate or;

• Prices will stall, and perhaps decline slightly, but will certainly not crash.

These are the opinions of real estate professionals, bankers, economists, and so on.

Not one of them will ever suggest that housing prices are now an unsustainable mess that is only pumped up by completely irrational exuberance, speculation, and outright fraud, and that a price crash of 40, 50, or even 60 per cent is possible.

Maybe they do not make such dire predictions because they are much, much more knowledgeable and smarter than I am. I have to acknowledge that.

Or it might be that they are, as successful people, members of the cult of optimism.

Pessimism is actively discouraged and looked down on in our society. If you loudly and repeatedly suggest that the worst case scenario is likely to happen, you will get a lot of pushback.

No one likes a Negative Nancy.

But you know what? Sometimes things go wrong. Very wrong, despite everyone involved being positive and maintaining a sunny attitude and “manifesting” and so on.

Hey, remember a few months back when almost every political pundit was certain that Russia was just saber-rattling and had no real intention of invading Ukraine, because it would be a really stupid move?

Remember when Bitcoin was worth $60,000? Remember when that nuclear reactor in Japan got hit by a tsunami? Remember when that new virus in Wuhan was going to be no big deal?

READ ALSO: Painful Truth – Tech for an aging society

Remember all the times someone has said “I bet I can do that!” and five minutes later people were calling an ambulance?

People would not venture much if they were not confident of success. But that means that humans, in general, have a bias towards overconfidence. We screw up because we much prefer thinking that things will work out, rather than assuming that they won’t.

A lot of people, when forced to consider the worst-case scenario, automatically assume it won’t happen.

And it’s true, worst case scenarios don’t happen all the time, or even that often.

But they don’t never happen.

This is why it’s good to keep some dyed-in-the-wool pessimists around. You need them in many fields, from economics to nuclear reactor design. If not for pessimists, there would be no guardrails, no seatbelts, no fire insurance.

When someone tells you about a great investment opportunity that can’t fail – sure, similar things have failed before, but this time it’s different – may I suggest you consult your most curmudgeonly friend?

Ask them what they think.

And maybe listen.

Have a story tip? Email:
Like us on Facebook and follow us on Twitter.

Matthew Claxton

About the Author: Matthew Claxton

Raised in Langley, as a journalist today I focus on local politics, crime and homelessness.
Read more