The future is not bright for Canada's economy.
A slew of indicators point towards dark times ahead as our nation grapples with abnormally high interest rates (all being relative) and a toxic relationship with real estate.
As more and more Canadians clench their fists, and wallets, in order to pay down ballooning mortgage obligations they were unprepared for, there looks to be little recourse for opportunity to do anything else but sit, wait and hope.
I personally never imagined a time where investment into the real estate market could look like a 'bad thing'.
Looking back at 2021 until now, that could not be more true.
We really did collectively believe that this gravy train of exploding value would go on forever.
But this mania will hurt us more in the long run than benefit us over the last few decades.
And it doesn't look like there are any manageable solutions in the forseesable future.
Aside from many Canadians just simply taking losses in the hundreds of thousands, even losing their homes all together, this balancing act has only jus begun.
We should all take heed of this tulip market that is Canadian real estate.
China is going through its own real estate concerns, some investments losing as much as 90% of their initial values.
Yes - 90%.
Diversifying our investments is an absolute must going forward.
Be it financial instruments, digital assets, or even businesses.
We must find other ways of building wealth than solely relying on a market place that has now become unaffordable for the majority of people who need it most.
Affordability looking more and more like a distant dream, we must dig deep into our reserves and find the resolve to change, and evolve.
Or we may find ourselves grappling with an even darker reality in this beautiful country.
A real estate market recovery is going to require enormous intervention.
But more so than anything else, a recovery of this shattered belief that investing into Canadian real estate is a good bet, will take years, if not decades to realize.
Do you still believe in this market?
Until next time.
Alex, Peak Demand
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A summary of the article is included below.
Link to Financial Post Article: https://financialpost.com/news/canada-economy-worst-yet-to-come
Summary: The article discusses the looming economic challenges for Canada, highlighting heightened recession risks due to its high household debt and reliance on the housing market. Economists predict a tough phase ahead with a 'bumpier landing' compared to the U.S. The article outlines expected economic slowdowns, with growth hitting a low in the first half of the next year. It also touches on consumer spending slowdowns and potential recessions, emphasizing the critical role of the housing market and upcoming interest rate decisions by the Bank of Canada.
Recession Risks: Canada faces heightened recession risks in comparison to the U.S. This is attributed to its significant household debt and heavy reliance on the housing market, both of which make the economic terrain more treacherous.
Economic Slowdown: The article predicts a marked deceleration in Canada's economic growth, particularly in the first half of the upcoming year, influenced by higher borrowing costs and other economic pressures.
Consumer Spending: There is an expectation of a considerable contraction in consumer spending. This reduction is likely to be most pronounced in the first half of the year, which could further exacerbate the economic slowdown.
Housing Market: The Canadian housing market, a vital component of the economy, has shown signs of weakening more than anticipated. This could have far-reaching impacts on the overall economic health of the nation.
Interest Rates: The Bank of Canada's future interest rate decisions are a focal point of discussion. While rate cuts are anticipated, the specifics regarding when and by how much remain a topic of debate among economists.