When viewed against the global financial-market chaos of recent weeks and the U.S. housing-market price collapse, the changes we are seeing in Canada’s real estate markets are very modest; no cause for panic.

Nevertheless, many of us remain concerned. Are the changes early precursors of a U.S.-style meltdown? While no one possesses a crystal ball in these turbulent times, I continue to feel positive about the value of our collective residential real estate investments, over the longer term.

On average, Canada’s house prices are down about five per cent over the past year, a modest decline given that it originated at historic highs.

In Greater Victoria, a single-family home, at an average price of $550,000 in September, declined by about six per cent during the same twelve-month period. Put another way, our average house prices have settled back to roughly the level of exactly two years ago - certainly not a market collapse, especially given that local prices had increased at approximately twice the national average rate over the previous five years.

Compare this to the U.S. experience. National home prices have dropped, on average, almost 21 per cent from their peak. One in six U.S. homeowners is estimated to be holding a mortgage that is greater than the value of his home. Latest figures indicate that 6.4 per cent of all U.S. mortgages are in either delinquency or foreclosure. Among the U.S subprime loan portion of mortgages, that rate soars to 18.8 per cent. In Canada, the delinquency rate on all home mortgages remains steady at a very low 0.65 per cent.

Clearly, our Canadian and closer to home, Victoria markets, are going through a period of cyclical adjustment – not collapse.

Why are we so much better protected? The answer is simple. Our mortgage-lending practices have been, and continue to be, very conservative, compared to the “easy-money-for-anyone” approach used for many years by U.S. lenders.

Our banking system, backed by solid guarantees of CMHC and other insurers, is protected from defaulting mortgages, in which the owner’s equity investment was less than 20 per cent of the home’s value at the time of purchase.

The good news therefore, is that our Canadian residential real estate market is well protected from a catastrophic U.S.-style meltdown. Nevertheless, as our residential markets have softened and may continue to do so for some time, our strategies as homeowners, and home sellers or buyers, must adjust accordingly.

We all have to live somewhere. Owning a home is a wealth-builder, whereas tenancy provides no chance of adding to net worth. Over the long term, home ownership has clearly proven itself to be an exceptional, tax-protected investment. It is not a coincidence that over 80 per cent of our net worth as average Canadians comes from the equity invested in our personal residence.

As homeowners, we should never panic during periods of market adjustment, nor stampede ourselves into trying to sell when we see the market softening. Buying and selling a home is an expensive process; accurately timing the highs and lows of the market is near-impossible.

A far better strategy is to concentrate on paying down mortgage-debt as quickly as possible. By so doing, you are guaranteed one of the best after-tax returns available on any investment - risk free!

If your home is debt-free, relax, knowing that the market will eventually turn up once again. It’s just a matter of when.

As a seller who must sell regardless of market condition, be realistic. Adjust your strategy accordingly. Although some realtors still deny it, we are now clearly in a Buyer’s Market. Ignoring that fact may cost you.

Your listing will be competing for fewer buyers, against many more sellers than existed just a few months previously. In Greater Victoria today, there are 40 per cent more homes listed for sale, and 20 per cent fewer sales than 12 months ago.

Pricing your home at the real market level, rather than several subsequent price adjustments, will increase your odds of achieving good results. Select the best-possible real estate agent to represent your interests. Beware those who suggest listing your home at a much higher price than other market estimates you have received. Staging your home for sale – always important, is even more so in a highly competitive market. With fewer buyers and more homes on offer, your home needs to stand out among the pack.

As a buyer, you are in the driver’s seat. You can take your time to shop around, compare all options and achieve great value.

If you are a first-time buyer, don’t wait another year, thinking you may do better in future. If you can afford a home today, shop today. Timing the market, any market, is strictly a gamble. Always keep in mind that residential real estate is your home first, and an investment second.

For those wishing to trade-up from their present home, a softening market such as ours may present an excellent opportunity. The prices of higher-value homes tend to drop by a greater percentage than those of the more affordable, lower-value ones. In selling a home for $350,000 and upgrading to a $500,000 home for example, you are likely to pick up a significant differential-value advantage.

Every market presents both opportunities and challenges. Most important however, short- term trends in values should not cause panic or overreaction. They should be viewed in the context of longer-term investment values.

Greater Victoria, including our Peninsula, will always have an advantage over the rest of Canada. More people always wish to move here, which bodes very well for the long-term value of our homes.

Your comments and questions are welcome; those of general interest will be addressed in a future column; all others by e-mail. Write to editor@peninsulanewsreview.com

A semi-retired corporate executive living in Sidney, Peter Dolezal founded, and for five years operated, a successful real estate company in Vancouver. His best-selling book, The Naked Homeowner, is available at Tanner’s Books and in all Victoria bookstores.