Homeowners face significant financial risks magnified by US tariffs, writes Peter Watson.
The immediate financial risk facing many families is their home.
For the last half century homeownership was the best investment many families made. Most often house prices appreciated and when they did not that unpleasant time was short-lived.
It is no secret that real estate sales have declined. The Toronto Regional Real Estate Board reported that in March of this year sales declined just over nine per cent, which was the largest decline since February 2009 when we were in the Great Recession.
Unfortunately, our current real estate slump is magnified by the uncertainty of the economic damage that will be done to Canada and to Canadians because of the US trade war caused when President Trump introduced tariffs.
Many are all baked in a state of “uncertainty” and that will magnify our current economic challenges. Financially for homeowners, times are tough, and it is safe to predict things will worsen.
The economic hardship will affect many. Homeowners often stretched their resources to buy a house because it is part of the Canadian dream and has rewarded homeowners financially for decades.
Some families received financial assistance from their parents. In many cases their families were stretching their finances to make this happen.
Parents and their children might suffer financial losses because of the current real estate market. Declining prices with a lack of buyers means while your house is losing value there is no one that wants to buy it from you.
For many families their house is their sacred castle. It is the largest asset they own. Parents might have risked their retirement funds to contribute to their children’s dream of owning a house.
Many will lose money and the dream of owning a house might be taken while leaving them with the debt that still must be paid.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com
