I'm sure you've heard by now that the Bank of Canada decided to hold their policy rate steady at 5% on Wednesday last week, as expected.
The interesting thing is that many people are calling this the end of the rate hike cycle, but Tiff Macklem was very clear that more hikes could be coming in the future. While a large part of the announcements is forward-looking rhetoric, we know that this pause is conditional on how the economy reacts.
Another interesting data point is that the August jobs report showed an increase of 40,000 jobs across Canada, while the unemployment rate stayed steady at 5.5% due to immigration.
There has been a clear shift in tone in the media regarding population growth. Articles from the Toronto Sun, National Post, Financial Post, Wall Street Journal, and others all point to population growth as a major issue fueling housing shortages across Canada. Consider that temporary workers and international student admissions are up 71% and 34%, respectively, year-over-year in Q2. (above)
Tightening these temporary resident programs could easily help cool immigration growth, while still maintaining official permanent immigration targets.
While I'm all for thoughtful immigration, this seems nothing short of policy failure. And the government is finally cluing in as they face a humiliating defeat at the next election according to recent polls if they don't change course to help affordability in Canada.
If immigration slows in the near future, what will that do to the Canadian economy? The implications of government policy as it relates to the economy, real estate, and interest rates cannot be ignored.
Investing is all about risk mitigation. In real estate, most risks can be mitigated through insurance, direct ownership positions, tenant screening, and due diligence, but interest rates and economic fluctuations are one thing that we can't control. That is why it is so important to be able to adapt, pivot, and be conservative when using leverage in your investing journey.
The real estate market is changing daily. Will you adapt with it?
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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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