How to navigate the Canadian economic reality

The Canadian economy isn’t looking good anymore. Unravelling global risks and other economic indicators are exacerbating the problem, which has resulted in three downgrades since last year. The collapse of several asset classes is possible; stocks throughout the world and residential real estate are among them. Canada needs to know what’s going on with the economy and what threats they face if they want to survive the next recession and keep their assets and quality of life intact.

The risk of a recession is one of the greatest and most pressing threats that Canadians must take precautions against. When business spending and employment fall for two straight quarters, or six months, economists say that we are in a recession. Since last year, the likelihood of a recession in Canada’s economy has been steadily rising. The Bank of Canada cut its overnight rate to 0.25 percent, the lowest level in decades, while economic indicators like GDP growth, employment growth, and consumer expenditure have all been on the down. This proves that a recession is imminent, therefore Canadians should be on the lookout for warning signals and ready to defend their assets and way of life.

As a nation, Canadians will soon face the reality of an asset bubble that is about to burst. Bubbles in the asset market happen when the price of an asset goes far above its true worth, due mostly to purchasers’ and investors’ expectations of an exponential growth in value or their pursuit of speculative profits. Due to the historically low interest rate environment, several important asset classes, including equities and real estate, have become dangerously inflated. This is true not just in Canada but throughout the world.

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Consequently, a number of these asset bubbles are beginning to burst. In recent weeks, stock markets throughout the world have suffered record-breaking losses, and real estate values are falling in many regions of the globe. When these bubbles pop, asset prices plummet and a recession may be much more severe than before.

To make sense of the Canadian economic reality that is certain to bring about a recession and the burst of numerous asset class bubbles, one must first acquire a thorough familiarity with the present situation’s origins and extent, as well as the areas that may be hit hard by both the recession and the bubble’s deflating. It is crucial for planning and decision-making to have a visual knowledge of this via economic maps.

The next stage is to provide advice on prudent financial strategy, asset, or liabilities acquisitions. Consulting with professional financial advisors is the safest course of action during economic downturns. They may help you make sense of the maze of different types of assets, allocate them sensibly, plan for liquidity, keep expenses in check, spend with discipline, avoid the pitfalls of borrowing and leverage, and save for retirement.

In order to safeguard their standard of living and maintain asset values in anticipation of the impending recession and/or further decline in asset values, Canadians must have a thorough grasp of the economic realities and prudently plan and consult with financial experts.

Never lose sight of the sway that the financial markets have; these arenas are notoriously volatile, uncertain, and full of surprises. Keeping one’s emotions and prejudices in check when trading necessitates constant vigilance on market volatility and its effects on various asset classes. Knowing which macroeconomic factors are under our control as investors and which ones are beyond our control is essential.  Bear in mind which assets provide not only growth and value, but also protection in both the present and future markets. It is equally important to own assets that can provide returns after inflation. When it comes down to it, it’s all about understanding the functions of financial divisions and products that are authorised or controlled by the government. This includes commodities, private and public debt. Knowing and actively following existing restrictions is essential for investors to minimise losses when calculating asset class divisions.

Being proactive in the face of risk is the key to managing Canada’s present economic situation. Canada can better weather the economic storm that could be on the horizon if its citizens arm themselves with knowledge about the risks, consult with experts, keep an eye on the market, and intentionally allocate their assets.

Is it a bad time to invest in Canadian real estate

The Canadian real estate market has been a cause for many disputes and economic analysis over the past few years. Amidst reports of worrying interest rate hikes, negative cap rates, suspicions of over-priced properties, and growing evidence of a potential housing bubble, one question Stanford and up: Is now the right time to be buying or investing in Canadian real estate? Or, is it a bad time for potential real estate investors?

Interest Rates Length

The primary concern for most potential real estate investors in Canada is the length at which interest rates are currently resting. The Bank of Canada increased interest rates slightly in 2018, concluding a mayor’s hearing, to account for a steady rise in inflation — the rate currently stands at 1.75%. This rise in rates demands cautiousness from potential investors when investing in Canadian real estate, since, in many cases, a higher interest rates may lead buyers to seek for cheaper options, leaving fewer options to the investor, with the potential of garnering lower returns.

Negative Cap Rates

Financial firms and experts have reported concerning cap rates (Capitalization Rate) in the Canadian Real Estate market. The picture seen is disheartening, since there are territories in Canada, that, traditionally, have held great capitalization potential, such as Ontario, where the negative net operating income (NOI) has strongly outweighed the potential return for investors, leaving a dishearteningly grim scenario of frightfully low returns.

Overpriced Properties

In 2018, Canadian Real estate reached particularly high pricing in the major cities of Vancouver, LL Vancouver, Montreal, and Toronto. Following this prices, many investors started to resent what was seen as overly inflated prices — with many fear-mongering observations about what potentially constituted a ‘price bubble’, welcoming people to a “side show”, screaming about quick short returns and questions about practicable investing. For this reason, many potential buyer are becoming more and more reticent of investing in Canadian real estate — worrying about getting burned by such high prices.

Housing Bubble

Finally, one of the final conversations fearmongering investors in Canada have considered is the potential of a “Canadian Housing Bubble”. This potential bubble, no matter how undesired, could represent significant capital losses for those invested in the hand process — leaving investors with fewer options, and potential mitigating their portfolio options with regards to Canadian real estate investing.


Considering the length of the interest rates, the negative net operating income in certain Canadian territories, the seeming to overpriced proprieties, and the conversation of a potential for a housing bubble — it may be difficult to decipher with certainty whether now is a good time to implement a Canadian real estate portfolio or whether it is better to wait until prices or practices positively adjust to constitute a pros the fear. With this said, one thing is certain, Thanks to the diligence and the wisdom of potential investors, any decision to invest, or not, will be gleaned from precious information and research in order to reap the most desirable investors.