Sacrifices…Then and Now

by Neil ODonnell

Our grandparents and great-grandparents lived through really hard times. The World Wars, The Great Depression, the Cold War, etc. Some of us remember the energy crisis of the 1970s and the crazy inflation interest rates of the 1980s. No one who has lived through any of those things would describe them as fun or great times. Now it looks like we are about to embark on another such period of time because of the poor decisions of our gov’t over the last 30+ years coming to a head now at the hand of Trump in the US.

At the time of writing this the Federal Budget hasn’t been dropped so I can only guess what it will contain. However, from all the signals and partial pieces of information that has been leaked it looks like we could be facing a $80B+ deficit. Now I’m sure we’re all hoping that at least some of that is to be spent on jobs here in Canada. What I am sure about is that IF we see that size of a deficit it will impact inflation and things will get more expensive.

So what does that mean for one of your largest investments…your home?

First lets look at what we do know.

We are looking at industry specific tariff deals with the US. This will pit parts of Canada against the other as we have to balance the Auto Sector (ON and QUE) against Canola (SASK and AB) for example. This will make it harder for a true TEAM CANADA approach.
Trump is not in favour of any type of Free Trade. Based on the comments from Carney about quickly looking for new markets, I expect Trump has already told Carney and our Gov’t that they will be cancelling the Free Trade Agreement next year. Perhaps the only way to save the Free Trade deal will be to cave on Supply Mgmt and give more access to our banking, lumber, mining and energy sectors. I can see Trump using his leverage to make these types of demands.
The provinces, while saying that want free trade between provinces, haven’t actually done much in that direction which is also stifling our economy. Also, as the tariffs get rolled out by sector it will make it even harder for provinces to resist the protectionist tendencies and actually remove the trade barriers within Canada.
We have a very large number of mortgages that were taken out during the craziness of the COVID real estate market and are now coming up for renewal. The values of most of these homes have gone down potentially creating a problem for those home owners. We know the Gov’t doesn’t want to see people losing their homes so most likely they will change the mortgage rules to allow for a longer amortization timeline. Moving from the standard 25 yr to 40 or maybe even 50yr amortization. What most people don’t know is that the Gov’t has already done that for any investor who wants to build affordable and/or rental housing. Through CMHC you can get a 40 or 50 year amortization for those types of properties if they qualify. So, it could be a very real possibility. Look at car payments. It use to be 60 months was the most you can get, now its 96 months. Why? Its because people can hand the $550 month payment so to maintain that they had to extend from 60 to 96 months. Mortgages may be next for this trend. We’ll have to wait and see.

I know, I’m a Real Estate Broker, so why do I spend so much time paying attention to the economy, trade, etc. It’s because this directly impacts the value of your home, whether you are buying or selling. Knowing the impacts of what is happening in the world allows me to better help you prepare for selling and what you can expect. It also helps me predict and help you plan when it’s the best time for buying or selling.

So here is what I see coming for the rest of this year.

This time of year is normally slow as we get into the bad weather of Nov and the Christmas season in December but this year will be slower. The budget will cause more anxiety in the workplace as we will see potentially Federal public sector job losses. This will mean on top of the anxiety currently being felt in Steel and Automotive we will now see public sector employees afraid for their jobs. That means less buyers actively coming into the market.
So, if you don’t have to Sell your property it will be a good time to sit tight and wait for the markets to get better.

If you are looking to BUY, now is a great time as there are lots of properties for sale and prices will remain soft. Also, interest rates have come down and most economists expect that trend to continue as the Bank of Canada will look to stimulate the economy where they can. So, now is a great time as Buyers have leverage and are in the drivers seat. I just helped a young couple buy their first home and we were able to get the property almost $50k below asking.

If you are a parent and have kids that are close to getting into the market this would also be a good time to seriously think about helping them into their first home. The lower the price the better as the market will come back and the prices will go back up. It could be later in 2026 or 2027 but it will happen. So, taking advantage of these lower prices will help set them up for their future and keep them out of the rental market. Rentals are usually the first step before owning (I rented before getting married and buying our first home) but all the rent you pay is paying someone else’s mortgage. You may as well pay your own mortgage and you getting the benefits.

If you’re in sectors that are not impacted by the Tariffs (Health Care, Teaching, Police, Fire, Most Public Employees, etc) then you are in a great position to Buy as well. IF you are looking for a bigger home (example, townhouse to full detached) we are seeing that the lower priced townhomes are holding their values more than larger 2 storey detached family homes. SO, you can upgrade to a large home for a better deal than at almost any other time in recent years.

It looks like the rest of this year and most of next year will be challenging as we try and get new deals with the US and some form of stability to our economy. This will make it harder for some but it will create opportunities for others.

If you want to talk about your situation and what your home is worth, or what you can buy please let me know and I would be happy to sit down and discuss with you. Knowing your numbers allows you to make the best informed decisions for you and your family. That is what I care about the most, helping you and your family. Thank you again for your time and I hope you and your family are well.

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Neil ODonnell

Broker

+1(289) 682-9152 | neil@everyavenue.ca