Tag Archives: Economy

“Over 6k of the announced 16K job losses in BC were due to real estate development slowdown in the Lower Mainland.”

“Labour Minister Pat Bell was on CBC radio earlier today. He said that over 6k of the announced 16K job losses in BC were due to real estate development slowdown in the Lower Mainland.”
Patiently Waiting at VCI 8 Feb 2013 3:37pm

It does seem that things are slowing down on various fronts.
These are the kinds of self-perpetuating downward-spiral/vicious-cycle factors that will cause lower prices to beget lower prices still.
Our recollection is that we have roughly 7%-8% of the work-force directly involved in RE construction, whereas more normal levels are 3%-4%.
– vreaa

“I am in LOVE with the natural beauty here, but I can’t find work! The more time goes on, the more sad, lonely, desperate and lost I feel in this city.”

“Wow, this is really defeating. I mean, I am in LOVE with the natural beauty here, but I can’t find work! it’s ridiculous! I live in Surrey and the job market seems horrendous. I’ve applied for about five months straight, and nothing. nada. it’s like you’ve got to be super cut throat to find that you’ve competed with hundreds of other sorry applicants. forget having credentials. really? this is sad. I want to believe that it’s possible to find a way to stay here, but the more time goes on, the more sad, lonely, desperate and lost I feel in this city…which feels absolutely awful as I left Toronto feeling the same way. What the hell kind of life are we supposed to live where your next meal is being paid by the service industry job that you abhor and can’t wait until you find your next soul sucking job? where are the JOBS other than the oil loving alberta? what the hell is wrong with this country?”
Tova at VREAA 2 Feb 2013

“We live in Vancouver and it’s all we can afford” – “As though living in Vancouver and having no money go hand-in-hand”

“Have had a listing on Craigslist for almost a month to sell a nice quality baby car seat. Finally got an offer last night, 50% below asking because “We live in Vancouver and it’s all we can afford.” I put obo on the thing and I don’t care why you’re making the offer you are, but I just thought that was interesting, as though living in Vancouver and having no money go hand-in-hand, it’s a given that you have no money.”
Angela at greaterfool.ca 29 Nov 2012 12:24am

Three Vancouvers? – “A recent report paints a picture of a city riven with inequality and the growing geographic segmentation of its classes.”

“The 21st century is shaping up to be the century of the city. But global cities are not only becoming increasingly-important economic forces of the world economy. They are also becoming increasingly divided and segmented. …
A new report, by David Ley and Nicholas Lynch of the Cities Centre, takes a detailed look at Vancouver’s growing class divides and geographic segmentation. Vancouver is a very different city than Toronto. It is a city of tremendous natural assets and physical beauty, noted for its mild climate, perched on the Pacific coast. It is widely thought of as an affluent city, with some of the highest housing prices in North America. It has attracted a huge influx of immigrants, especially from the Pacific Rim. It is a frequent winner of “livable cities” titles, as the study notes. This city is sometimes referred to as “Dream City” or “Lotus-Land.”
But their recent report, “Divisions and Disparities in Lotus-Land: Socio-Spatial Income Polarization in Greater Vancouver, 1970-2005,” paints a Vancouver riven with inequality and the growing geographic segmentation of its classes. …
City #1 is affluent Vancouver, made up of neighborhoods where average individual incomes grew by more than 15 percent of the metro average between 1970 and 2005, comprises roughly 30 percent of the region’s census tracts and covers three distinct areas: the central core, the North Shore suburbs, and scattered areas with high-priced condos and houses close in proximity to valued amenities, such as waterfronts, views, and green spaces.
City #2 is middle class Vancouver, with income changes of plus or minus 15 percent of the metro average. It includes nearly half (47 percent) of the region’s census tracts.
And City #3 is disadvantaged Vancouver, areas where incomes fell by more than 15 percent of the metro average between 1970 and 2005. These areas account for some 22 percent of the region’s census tracts; and as the authors note, they “are relatively concentrated in the southern and eastern neighborhoods of Vancouver and extending out to the southern and eastern suburbs.”
While City #1 consists overwhelmingly of native-born Canadians and is more than three-quarters white, City #3 has an immigrant majority and is 61 percent minority. It has the highest population densities too, as well as the lowest gross incomes, and despite its lower property values, a lower share of homeowners. More of its residents are employed in working class and service occupations than in either City #1 or #2. …
The study concludes:
As a result, the dominantly middle-income City of 1971 is now divided three ways: one-third lower income, one-third higher income, and one-third middle-income. The middle-income city of the 1970s has become the polarized city of the 2000s. …
Even the city widely recognized as the world’s “most livable” cannot escape the growing class polarization of our increasingly spiky and divided world.”

– excerpts and image from ‘The Growing Urban Class Divide, Vancouver Edition’, Richard Florida, The Atlantic Cities, 14 Nov 2012 [hat-tip Aldus Huxtable]

“Substantial declines in home sales are usually a precursor of home price corrections.”

“Our in-house investment managers in NYC have a global portfolio of around $300bn USD; this was their take on Canada sent to me yesterday:
“It is reported that home sales in Vancouver and Toronto metropolitan areas dropped by 20-33% in September from a year ago. Substantial declines in home sales are usually a precursor of home price corrections. While almost all high loan-to-value mortgages in Canada have guarantees from government backed entities, a housing correction will likely impact consumer finances and aggravate credit card ABS credit performance”
Word is getting out there pretty fast now. Housing market correction = recession in Canada.”

Toronto_CA at greaterfool.ca 7 Nov 2012 10:04am

Price follows volume. The weakness we are seeing in sales will be followed by similarly impressive price drops.
And, yes, a housing market correction will have profound effects on our economy, particularly in areas like the lower mainland where we are sorely overdependent on economic activity either directly or indirectly linked to RE.
– vreaa

“73% of homeowners can’t afford their own homes”; “Mark Carney admits to ‘droning on in public about the dangers of household debt'”; “They offered me close to a million last year (25 years old) just because I’m in Fort McMurray.”

“Canadians will learn an ugly lesson if they keep piling on debt the way they are at the moment.
The Bank of Montreal report that came out Monday and noted that almost three-quarters of homeowners would feel a significant squeeze from even a small rise in interest rates shows just how close Canadians are to falling over the edge of their finances. What it means, in essence, is that 73% of the people surveyed can’t afford their own homes. And a lot of them are already feeling the pinch.”

“This is at a time when interest rates are at historic lows, which means they can only go up from here. That they will rise, eventually, is inevitable. Yet 16% of the people in the survey said they might not be able to make their payments if rates rose by even a tenth.
You don’t have to think hard to imagine what the fallout would be from an event like that. You can picture the headlines — “Canadians driven from their homes by rise in interest rates” – and the panic in Ottawa. The papers – well, some of them, anyway – would be full of stories about innocent families who insist they had no idea they were getting into such a mess when they took out the mortgage on their “dream home.”

“Mark Carney, the Bank of Canada governor, has wagged his finger at big borrowers so often he seems almost sheepish about it.
“Me droning on in public about the dangers of household debt is a way of reminding households that: don’t assume that current levels and the current situation will be there forever,” he said on one recent address.

“As the housing market cools and home prices slip, a lot of people could find themselves making monthly payments they can barely cover for a house that isn’t worth what they thought it was. If you can’t cover the mortgage, you just have to pray the roof doesn’t start leaking or the furnace fail.
And borrowers won’t really have anyone to blame but themselves. The warnings are out there. The examples are rife: all anyone has to do is examine the experience of U.S. homeowners over the past few years. The dangers aren’t a secret, they’re just being ignored.
But people keep borrowing, because it makes them feel good to spend, because they’re too busy to think about it, because they figure they can cover the payments in the short term and will deal with the future when it comes. And because they can always blame it on someone else when the roof caves in.”

– from ‘Hard-pressed homeowners just close their eyes and borrow some more’, Kelly McParland, National Post, 24 Oct 2012

And from the comment section below that article:

“When I was shopping for a house in 2010, the bank told me I could afford $850k. I am a compulsive budgeter, with detailed spreadsheets, played with various amortizations, and incorporated all of my expensive, housing-related and otherwise, and the amount I concluded that I could afford was $500k. That’s a huge difference.” – Jc

“They offered me close to a million last year (25 years old) just because I’m in Fort McMurray. Didn’t go anywhere near that mark.” – doodles

“I was also offered a $750K loan 10 years ago, and only borrowed $500K upon my own analysis (based on property costs < 30% of gross income). The Scotia loan officer told me that I was smart, and that she feared for others that were borrowing all they could get." – cash0

“We wanted to move a year ago and decided we could afford about $400K. Bank offered us $750K. We spent $362K fully expecting to pay higher interest rates eventually.” – chmilz

No surprises; Lenders have allowed borrowers to overextend.
Headlined for the record.
– vreaa

“Young people are leaving B.C. for other provinces at the fastest rate in years, raising concerns about a sputtering economy and unaffordable housing.”

“BC stats from January to March show more than 2,500 have uprooted and left.
Both economists and folks who live here blame the economy, housing affordability, and the high cost of living in BC.
A woman we spoke with isn’t shocked by the mass exodus earlier this year. “No, it’s not surprising at all. I was actually thinking of doing that myself, especially towards the US; you get way bigger houses [in the States] for a small amount.”
One man tells us he’s done it before and could do it again.”
[Leave twice?! -ed.]
‘Thousands of people leaving BC for other provinces: Some Vancouverites not surprised, blaming jobs and expensive housing’, news1130.com, 16 Aug 2012 [hat-tip RESkeptic]

“Young people are leaving B.C. for other provinces at the fastest rate in years, raising concerns about a sputtering economy and unaffordable housing.
The latest numbers from B.C. Stats show that from January to March this year, 2,554 people left B.C. for other provinces. That’s an alarming jump that continues a negative trend started in 2011, when B.C. logged a net migration loss interprovincially of 1,920.
In an interview Wednesday Helmut Pastrick, chief economist for Central Credit Union 1, said B.C.’s negative migration “seems to be accelerating.”
Pastrick said those leaving B.C tend to be young people looking for better employment opportunities, but there also could be a “push and pull” factor of younger families seeking both better jobs and more affordable homes in other provinces. …
B.C. NDP leader Adrian Dix said interprovincial migration is “complicated” and B.C.’s negative trend covers a short period, so he doesn’t want to jump to conclusions.
But housing affordability and B.C.’s habit of exporting raw resources without developing manufacturing jobs are likely culprits, he said.
“If this trend continues in the coming quarters it is not good for the economy or the government’s record,” Dix said. “We have to focus on making things and manufacturing in a consistent way, and training our [workforce].”
B.C. Finance Minister Kevin Falcon was not available for an interview for this story.”

– from ‘Young people fleeing B.C. in big numbers: Are bad economy and pricey housing to blame?’, The Province, 16 Aug 2012

For dozens of other stories in this vein, see the ‘Avoiding Vancouver‘ sidebar category.
The bubble has been bad for our society.
– vreaa