Vancouver Economy Under Strain

“Lay-offs from Nokia (Burnaby), CBC, Sears, Rogers, game development companies, paper mills, banks, teachers, public sector staffs thus far in the first half of 2012.”
– VMD, who posts the very informative ‘Layoff tracking thread’ at Vancouver Peak

“The evidence of reduced dicretionary spending is starting to mount; last weekend wife’s running-shoe store had eviction notice; going to island tonight and BC Ferries saying that despite recent trial price cuts traffic still at 21 year lows. So has something changed on the island that people don’t go anymore, was the weather worse than last year? No, they are spending everything on re and food presumably.”
market stats at VCI 29 Jun 2012 8:56am

“Speaking of high property taxes for businesses in Vancouver, it’s pretty impressive how many shops have shut down just recently downtown. One of the Starbucks on Robson is gone (along with the White Spot next to it) as is the bag shop across the street from them, Payless Shoes on Robson and Bute gone, Odoul’s is gone, after the American Appeal shops combined there’s another space sitting empty, Book Off just closed up down near Dunsmuir, of course the old HMV has been sitting empty for a while now. It certainly feels like business is drying up downtown very quickly given how many places have closed up in rapid succession.
I did smirk a bit at the Dollar Store that just opened near Shangri La, though. Doesn’t seem quite as upscale as what I think developers were aiming for in that areas.”

Lord Huggington at VCI 29 2012 at 11:53am

“The federal government’s efforts to cool the overheated housing market are raising concerns among Canada’s biggest banks that the changes might hit the economy harder than intended.”
– from ‘Banks warn Ottawa over lending rules’, G&M, 2 Jul 2012

“The rate of insolvency for those over 65 soared by 1747 per cent from 1990 to 2010.”
– from ‘Are bankrupt seniors harbingers of things to come?’, G&M, 29 Jun 2012 [Partly due to poor preparation; partly to low interest rate monetary policy. – vreaa]

“Not that this has much to do about anything … but I could not help but notice that the new Rush tour is not performing in Vancouver this year. I guess they are too. busy playing in world class cities like Columbus, Buffalo, San Jose and many other important hubs around North America and couldn’t squeeze in a stopover.”
condo paradise at VCI 29 Jun 2012 12:53pm

Related:
“Groceries have been trucked in from Calgary to help the Kelowna food bank weather an unexpected surge in demand. Nearly 11,400 kilograms of non-perishables were delivered this week to the Ellis Street depot, where applications for assistance are up 12 per cent from this time last year.”
News1130, 30 Jun 2012 [hat-tip Patiently Waiting at VCI]

Perhaps related:
“The Chinese economy is slowing and is likely to slow a lot more. Get ready for a hard landing.”
– from ‘Falling Star’, Jonathan Laing, Barron’s, 30 Jun 2012

29 responses to “Vancouver Economy Under Strain

  1. In my company, they have been laying off people and transferring others to Ontario, and the office has lost more than 25% of its employees since 2010. Since the Olympics, the pipeline of major infrastructure projects in BC (Highways, Bridges, transit, etc.) has shrunk dramatically and the engineering/construction industry will see major layoffs in the coming years once the projects under construction are completed. These are lots of high paying jobs that are disappearing.

    • Renters Revenge

      Additionally, with nearly 10% of BC’s GDP coming directly from residential construction, we can expect that a housing slow down will have far reaching consequences not only for the construction industry but also on our overall economy. Coupled with the major project slow down that you mention, it is really quite grim.
      Then again – we may have room for a few more coffee chains and flakey tech start ups… 🙂

    • Don’t cry for them. There are jobs galore in Alberta, and it’s sunny in the winter.

  2. Real Estate – the Next Five Years Parts 2 and 3, by Ramsey Su
    Ramsey continues his series on the real estate market. Part two is entitled ‘The Bernanke Trap’ and deals with the unprecedented lowering of interest rates and how this has influenced refinancing and what long term effects can be expected from this.
    (see above.. sheesh, trucking in groceries to Kelowna food bank)

    Part three is entitled ‘Real Estate Investment – Luck or Skill?’ and recounts the experiences of many California investors prior to the bursting of the bubble. The rising tide lifted all boats for a long time, and early investors struck it rich as a result – such as for instance people who bought property in Silicon Valley before it became Silicon Valley. Ramsey concludes that very little skill was required – it was mostly luck, even though people tend to congratulate themselves for their smarts in hindsight. This long period of real estate investment luck is well and truly over.

    http://www.acting-man.com/?p=18130

  3. Speaking of RE and economies ‘under strain’…

    [UK Independent] – The Shard: Where are all the tenants? It cost £450m to build and will open tonight with a dazzling fanfare – so why are there no takers for the office space?

    “Tonight, lasers and searchlights will shoot across London’s sky from the top of its newest landmark, the Shard. To celebrate the completion of the outer structure of Europe’s tallest building, the London Philharmonic Orchestra will entertain guests including the Prime Minister of Qatar, Hamad Bin Jassim Bin Jabor Al Thani, and The Duke of York with renditions of Copland’s Fanfare for the Common Man and the finale of Stravinsky’s Firebird Suite. Yet there is still no sign that anyone has signed up to take any of the 600,000 sq ft of office space in the building, which stands at more than 1,000 ft. … Irvine Sellar, head of Sellar Property, said he was being “extremely selective” when choosing the people he wanted to do business with on the Shard. …Asked when the flats would go on sale and at what price, he replied: “We are holding back on selling or leasing for some time. We want to evaluate the impact of the building before we make those decisions.” Some reports suggested it was perhaps prospective buyers – some of whom would spend much of the time above the clouds – who were being selective.”

    http://tinyurl.com/7ekehd9

    • And here’s the CompanionPiece…

      [BloomBerg] – Britain’s Hidden Hunger Puts Spotlight on Cameron Budget Cuts

      …”Virtually unheard of during the decade-long economic boom that ended in 2007, food banks are opening at the rate of two a week. Mould said the number of people receiving emergency grocery parcels doubled to almost 130,000 in the 12 months ended in April — about 33 percent of them as a result of benefit reassessments — and the figure may reach 500,000 by 2016. Those referred for food aid, usually by doctors or social workers, are typically not destitute, rather people on low wages or on welfare. “There is a lot of hidden hunger in Britain,” Mould said. “These are people who are working and trying their best to make ends meet. They are often working a concoction of part-time jobs, with zero-duration contracts. Their benefit support is being reduced and that will get significantly worse.” …

      http://tinyurl.com/7kck2r6

    • >Copland’s Fanfare for the Common Man

      Irony is so dead.

  4. Achtung HerrRedakteur!…. CommentDerStucken… Danke schön!

  5. There is a lot of money sitting idle in Alberta just waiting for the word from BC to allow the oil sands products to flow west. No permits and local opposition on pretty flimsy grounds is what’s stopping several multi-billion infrastructure projects.

    • Renters Revenge

      “oil sands products” flimsy grounds for opposition?

      “Unlike conventional oil the heavy bitumen sank to river bottoms while its toxic solvents evaporated into the air forcing the evacuation of local citizens. Most clean-up workers wore respirators. Bitumen is so thick that it can’t move through a pipeline unless diluted with solvents. Bitumen pipelines must also be highly pressured.”
      http://m.thetyee.ca/News/2012/06/22/Enbridge-Oil-Spill/

      • So you only pipe upgraded synthetic crude not bitumen. Identical to natural sweet crude, easier to pump and more profitable. Pipelines are still the safest way to transport oil and unless you want to walk everywhere everyone still needs oil for sometime yet…..

      • Renters Revenge

        Sure, except half the project is about shipping a natural gas condensate (naphtha) east from Kitimat to Breuderhiem. To be used as a dilutent for shipment of dilbit back to Kitimat. So toxic solvents traveling across BC twice. We will take our housing crash, on its own and without risky pipelines that deliver zero jobs to BC, thank you very much!
        http://www.northerngateway.ca/news-and-media/northern-gateway-blogs/oil-and-energy/answers-to-your-questions/

      • there’s product pipelines all over BC and you are sitting on a major crude oil pipeline and storage terminal already! Wake up.

  6. http://www.acting-man.com/?p=18101&cpage=1#comment-2731

    excellent anecdotal stories from commentator ‘mannfm11’. This guy has been on various financial forums for years, and here today we see the source of his ‘wealth’, the fuel for his stock market punts… no surprise, REe capital gains and rental income

  7. A doozie… Realtor (Keith Roy & Associates) cashes out tells others to do the same, the good times are over;

    http://keithroy.com/blog.html/time-to-cash-out%E2%80%931976393

    Time to Cash Out:
    Is the Vancouver real estate market heading for another crash?

    I’m a REALTOR and I sold my own home 4 weeks ago. It wasn’t too big or too small. It’s only 6 years old and still feels new. I sold because in 6 months my home will be worth less than it is today. I think its time to cash out! Let me explain…..

    To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. Far too often the real estate industry, of which I am obviously a part, makes excuses for slow sales periods, declining prices and difficult negotiations. These excuses are self serving. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like the bad ones do. I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.

  8. Deflation, coming to a neighbourhood near you. Average Canadians are in MORE DEBT vs disposable income (153%) then the USA before their economy tanked. The Banking systems are connected, entwined. The States is in debt(Conservativey speaking to the tune of 17 TRILLION DOLLARS) To give you an idea how much 1 TRILLION is, it would take you 36 THOUSAND YEARS to count to it…yes 36 THOUSAND YEARS. Now multiply that by 15 or 16 or 17 TRILLION. The worlds markets/economies are connected and the worlds people will greatly suffer from the ponzi. Banks have globaly manipulated all curriencies and the time to pay the reaper is approaching. China slowdown,Europe melt down, US meltdown(average American has lost 40% equity), banks illegally manipualting interest rates. The game is rigged by the banksters. Canada is not an island to itself, it depends on the rest of the tanking countries currencies to support it. What happens, housing markets take big hits the stock market will tank again, likely between Sept and Dec 2012. Inflation meets deflation=MONEY LOSSES ITS WORTH ASSETS GO DOWN IN VALUE) And eventually hyper inflation. Its called a DEPRESSION once the can kicking merry go round stops. I am not a doomer(check out Steve Keens latest economic data and resume) this is all fact proven through history which is repeating itself. WAKE UP PEOPLE.

    • TNT, i appreciate your post, believe me, we’ve heard the problems associated with debt forever. Debt expansion, one must understand, is tied to controlling fertility rates. The other side of debt, is assets, … Liability vs Assets, our world is a monkey’s balance sheet. The sleeping people are watching their tv’s, television show’s with homebuyers, many single women in their family formation years… walking down the aisle to marry a mortgage.. When the critical population number is hit….some say it has… the air comes out, fast or slow, depending on your neighbourhood dynamics.

  9. Another thing that has saved BC is its low population growth — labour mobility has kept unemployment lower than it would be otherwise, though the unfortunate side effect is that construction activity must decrease to compensate. One only hopes those leaving would have otherwise been employed in the construction industry!

  10. And now, Agent Roy has made it into the Post (with quite a picture to boot!).

    http://business.financialpost.com/2012/07/05/tepid-numbers-spur-call-to-cash-out-of-housing-market/

  11. Renters Revenge

    Comment stuck in purgatory.

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