|I am still in the camp of thinking this downturn will continue on for some time (6-24 months) and in my last update I mentioned some of the main reasons why in detail but essentially:
Many credible left AND right economists in the US and Canada (Not the fake talking heads on the 6 o’clock news who always get it wrong) are predicting this for a wide variety of reasons I won’t get into them all here but the main one is an idea that this will help curb the rampant inflation and that it’s the best mechanism (increasing rates) to do so. It’s also in our Government’s respective institutions (Federal Reserve, Bank of Canada) MANDATE to minimize inflation.
Feds/Bank of Canada
In recent interviews with both Jerome Powell (Chair of the Federal Reserve in the US) and Tiff Macklem (Governor of the Bank of Canada), they made it very clear that future interest rate hikes were very much on the table and did not seem to hold any reservations entertaining increases into 2023 and on. We have no idea what to expect here but the politics are going to be the main driver here and there doesn’t seem to be too much optimism on the other side.
“Cooling Off Period”
Well, we haven’t heard much about this lately and I am hoping that’s a good thing!
If you recall – this was a measure by the Provincial NDP Government to allow buyers to walk away from deals essentially with a “Right of Recision” period even after the deal is supposed to be firm… modeled after Australia introduced a 10-Business-Day-Cooling-Off-Period recently which allows Aussies to simply “change their mind” about 2 weeks after the deal was supposed to be firm (minor inconsequential fee)…now pause for a sec and put the shoe on the other foot and you start to think about what a drastic measure this is and how this could undermine transactions as we currently know them today. It’s lunacy and adds instability to the market – instability drives down prices like most things.