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Regardless of your position on the war in Ukraine, beyond the appalling human destruction and suffering that has occurred, the Ukraine war was lost before it began for all concerned. Regardless of the military outcome, a change has occurred in the world order that reaches across the globe.  Russia is the world’s pariah and the impact of sanctions will be felt here in Canada. This is bad folks. The question simply becomes how bad does it get?

We spoke in January about the upcoming increases in mortgage rates and how this affects real estate affordability. Government fiscal policy aimed at curbing inflation, and slowing down the hot real estate market.  The Ukraine war accelerates inflation, as we have seen at the gas pumps and in the grocery stores. If the war was to escalate, we could see a global recession, supply chain interruptions, less corporate investment, reduced travel, etc., much of what we just experienced with Covid. Greater inflation puts both a squeeze on income and the ability to make mortgage payments. It becomes more difficult to qualify for a new mortgage. It adds to the cost of new construction and ultimately new home prices.

This environment of higher interest rates has begun. Conditions exasperated by a shortage of housing due to increased immigration and population growth, essentially demand outpacing supply. I don’t foresee the immediate market correction that some analyst have predicted. Time will tell, but I believe we will see more of a market pause until some of the issues that surround us, sort themselves out.  With a generation of Canadians priced out of the real estate market, we will see a shift in living arrangements; multi-generational households, co-operative housing, rental suites within homes, etc.  Difficult times will call for creative solutions, and with that comes creative mortgage solutions.

Creative is what I do. We welcome your comments.