Recession Outlook: Inflation, Interest Rates, and Unemployment

Toronto's best mortgage brokers, Cannect Home Financing, return for episode 47 of Make Money Count. In this episode we discuss the latest employment numbers in the U.S. and Canada. These strong numbers might be bad for the respective economies. If this sounds like it's backwards to you, don't worry you are not alone. Have a listen to the episode to get the breakdown from the experts.

We examine the historical rises of real residential property prices over time. The typical cause for the periods of strength has been cheap money. While we are definitely not seeing that right now. There are still many other solid macroeconomic trends that could keep the housing market afloat during these high interest rate times. Immigration, lack of supply, and yes, strong employment numbers could try to keep the market from falling further.

Questions from this episode involve seeking capital from alternative lenders and borrowing money to invest in real estate. Pricing from alternative lenders is starting to go up. Lenders are seeing what is going on in the economy right now and they are nervous, even with well-qualified borrowers. These are situations where borrowers should be calling Cannect to make sure, as Justin says, they don't put themselves in the box the banks create for them. When it comes to accessing equity to buy real estate, make sure you think about the type of real estate you are buying and your time horizon. With interest rates this high and still on the rise, this is more important now than ever.

If you're looking for a stable investment to get you through these economic hardships, take a look at the Cannect Mortgage Fund.

 

0:00 - Introduction
0:47 - What is the downside of a strong US job market right now?
3:22 - The Canadian job market is higher than expected as well. Inflation is still hot.
4:21 - The economy needs increased labour participation, and even unemployment, in order to reduce inflation.
8:51 - The trends of real residential property prices in Canada: the rises are from cheap money.
9:32 - There are still many favourable macroeconomic trends for Canadian real estate.
11:27 - Alternative lenders are starting to get stingy with pricing, even for well-qualified borrowers.
17:00 - Looking to buy real estate? Consider the type of real estate you are buying and the time horizon.
21:36 - No matter how high mortgage rates get, taking equity out of your home to pay down credit card debt will save you money and help your credit rating.

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