Peter Watson discusses the challenges facing homeowners in the softening real estate market.
The real estate market is getting soft, and many challenges lie ahead for homeowners.
We notice that houses listed for sale do not sell or take significantly longer to sell than normal. Some homeowners are selling because they are having financial problems.
Many homeowners in Canada are struggling to keep up with their mortgage payments. That often results in people losing their homes. Unfortunately, that is a pattern that repeats itself.
When economic times are strong, there is optimism in the air. Interest rates can be low, combined with strong employment. Home ownership is a dream, and many families stretch their finances to buy a house.
Then, the financial foundation of a once-optimistic family changed. Interest rates can rise, the economy slows, and the employment market softens. This is normal for the economy; however, it is devastating for many families.
Now we have additional economic challenges. President Donald Trump imposed tariffs, which add to the cost of our exported goods to the USA and also threaten the stability of many companies and industries.
This creates a very uncertain environment. During uncertain times, businesses are less likely to make decisions, and that also slows the economy.
Additionally, we are uncertain about how artificial intelligence (AI) will impact our economy and labour market. Being unemployed is a real hardship, but if entire industries adopt AI, then thousands of jobs could be lost forever.
The higher the unemployment, the worse the economy. This results in an “economic snowball” that continues to worsen.
As stated above, these economic cycles are “normal,” and we can learn from past difficult times that there will be an economic recovery. Our challenge is to manage our finances as best we can to weather the storm.
If you are facing financial hardship, I suggest reacting to it as soon as possible. Make the necessary adjustments and strive to minimize your financial losses.
