Canada’s employment numbers are growing however almost all of it is in the government and not the private sector. This is bad news for the economy in general because there will come a moment where the government has to curb its’ excessing spending habits. At that point, they will also be forced to cut government jobs and unemployment will increase.

The current government seems to have no problem with massive overspending. During the past 8 years there has not been one balanced budget. This has caused pressure on inflation and drives it upwards. On the other hand, they are keeping interest rates high to combat inflation. These two economic policies are clashing and will keep our current problems lingering for quite some time.

Then we have the immigration issue. Immigration numbers are higher than they ever have been. This perhaps wouldn’t be a problem, however the planning around it has been lacking. With such aggressive population increase comes the questions: 1) How do you plan to employ these people in such a short time, 2) Where do you plan to house them, and 3) How do you plan for social services for them such as medical and schooling etc.

With such explosive population growth comes the need for extra doctors, nurses, classroom space, etc, etc. If you take health care for example, we all know the system is under strain. You need to plan for public sector resources based on population as a key metric and this hasn’t happened. On the housing side of things there is a severe shortage of housing.

The problem with housing at this point is twofold. Government spending has contributed to inflation. The supply chain issues from Covid are no longer around, however businesses are not lowering prices as everyone in the supply chain is enjoying larger margins from higher prices. The government in turn is using its traditional “raise interest rates” policy to combat inflation but it has a problem. They don’t have a plan to fix housing supply and whatever plans they have will take a decade to catch up. Consumers are still facing near record prices with most goods they purchase and there doesn’t seem to be any end in sight to this regardless of how long they keep interest rates elevated.

The final problem we face with housing is buyer qualification. You could add a massive increase in supply this year however unless there are lower prices and lower rates to qualify with you still have a major problem of providing Canadians with home ownership. Buyers are still trying to qualify with stress test rates in the 7% range making it difficult to qualify and keeping payments high. A slow moderated drop in rates combined with an increase in housing supply is key to helping solve this problem. We can only hope that a sound national housing strategy is developed here quickly to help stabilize the housing market.

If you need more information regarding mortgages or if you need any advice on your personal situation please contact our office at 604-556-3893 or email at alex.kotai@ymscanada.ca.

For more information on our mortgage products and your preferred Abbotsford Mortgage Broker please visit our website at www.ymscanada.ca.