Labor Day is here! It's unbelievable how fast the summer has gone. While cold weather is still a long way away, the nights are getting noticeably cooler, and I'm starting to see some leaves changing color here and there.
The real estate market is also changing, and the question of whether or not rates are set to rise again are at the forefront of many investors' minds. They are waiting with bated breath for this week's interest rate announcement from the Bank of Canada on Wednesday, September 6.
Will they pause or hike one more time? Statistics Canada published their report on economic activity on Friday, and finally, the data is starting to reflect what I and so many others are seeing on the streets.
Economic activity fell by an annualized rate of 0.2% in the second quarter of 2023, led by a drop in new construction, a slowdown in consumer spending, and a hit to resource industries affected by wildfires, well below the Bank of Canada's estimate of 1.5% growth.
Data like this is always backward-looking and would have measured the economy before the latest rate hike in July.
The July jobs report also showed an uptick in the unemployment rate to 5.5% and a slight fall in core measures of inflation that filter out volatile price moves.
The official definition of a recession is 2 or more quarters of a contraction in economic activity. With one quarter already officially logged in the books, and a rate hike in July that is so far unaccounted for, combined with other data showing a sluggish economy, I would be very surprised if the BOC decided to hike rates at this next meeting.
Despite all this, house prices rose nationally by 1.1% in July, the 4th consecutive month of increases. I would expect to see that drop off over the fall months.
What's more surprising is that the current monetary policy and system that we are under are forcing ordinary Canadians to become armchair economists to just be able to survive in today's landscape. You can no longer just go to work, put money in a savings account, and retain your purchasing power. Maybe I'm just idealistic, but I believe there has to be a better way.
Real estate, done properly, is one way to beat the Bank at their own game. The best part is technology like Addy Invest is making these types of investments available to ordinary Canadians who would otherwise be unable to participate.
The AI revolution, while in its infancy, is deflationary by nature and has many implications in the investment and business world. And cryptocurrencies like Bitcoin offer a way to escape the centralized banking system that holds us captive.
We are in exciting times. Whatever forces come out on top over the next few years, I strongly believe that direct ownership of hard assets will be a winner.
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I'd love to hear your thoughts on this! Have a great week while working past those obstacles on your climb to success. Let's Grow Together!
Real Estate Investor and Entrepreneur
Jonathan Beam is a real estate investor in the Niagara region who is passionate about helping you achieve financial freedom through real estate. He works with new and experienced investors to formulate a plan that fits your specific situation and provides market guidance and consultation on the best places and strategies to pursue within the Niagara Region. Book a free, half hour no obligation consultation to see how he can help you to achieve your goals. His travels are available at www.realestateandrepeat.com
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