By Riki Unrau

It is no secret that Canada’s economy is woefully tied with the cost of oil. We East Kootenay residents have seen the hard truth of that first hand in recent months with ever increasing layoffs in the region.

If that weren’t enough to sour your day, then the latest predictions from CMHC (Canadian Mortgage & Housing Corporation) might do the trick.

On November 30, CMHC’s Chief Executive Officer Evan Siddall presented a scenario wherein house prices could fall 26% if oil drops to $35 USD a barrel and stays there for five years. To put things into perspective, it is currently just below $45 USD per barrel. This number is down 50% from last year forcing employers to make drastic cuts to their bottom line. While some analysts say oil could rise by 2016, others say it could fall farther still.

The reason for the potential fall in house prices is directly linked with unemployment. The lower cost of oil will increase unemployment thus reducing the buying power of Canadians.

“High unemployment tends to be a greater risk to housing markets than rising interest rates, as joblessness can lead people to try to sell quickly or to default on payments. Canadian households’ current high level of indebtedness make them more vulnerable,” Siddall said.

However, with the new Liberal government’s intent to invest in renewable energy, we could see a surge in the job market in the near future. Thankfully, it has become apparent to our new government that our oil dependency has the potential to cripple our economy and they are making moves to avoid such a crisis.

While all of this is still speculation based on the analysis of our current situation, it is important to take note of the possibility. Reducing personal debts and putting away money for a rainy day is paramount to riding out a potential storm on the home front.

– Riki Unrau is a Mortgage Broker with Invis Williams and Associates, located at 828C Baker Street, Cranbrook, BC V1C 1A2 – 250-919-6402. For more try: rikiunrau.com

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