The personal finance playbook for trade wars is being written on the fly, but two key principals to emerge so far are the importance of having cash savings and avoiding new financial commitments as much as possible.
We’re seeing some pickup on the second point in the latest housing market numbers. Sales of resale homes on a national basis were down 10.4 per cent in February compared to a year earlier and down 9.8 per cent from January. These are the biggest declines in almost three years.
A reader of this newsletter recently asked: “How will what is going on in the U.S. affect house prices in Canada?” We now have an answer. The economic uncertainty of the trade war is keeping some people from buying homes. In February, slack demand meant a 3.3 per cent year-over-year decline in the average resale home price to $668,097 from $690,903.
Housing markets were still buoyant in some cities last month, notably the comparably affordable cities in the West, Quebec and the Atlantic provinces. But unless the trade war is settled, the argument for waiting to buy a home will look stronger in the coming months. Why take on a new or larger mortgage if you have any concerns about your job or income? And, why put your home on the market to move up when you might have to accept a discounted price to get a sale done on your current property?
As noted in a recent column, housing price declines in a trade war could provide a generational opportunity for first-time buyers to buy a home. Anyone selling should sit tight, if possible.
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