US Recession may affect Canada

I’m submitting the title of this post for the understatement of the year award. The United States of America is the worlds largest economy and Canada’s largest trading partner. With recent US job data not looking so hot, problems in the credit market and a housing slump that has left vacant eyesore properties in the hands of banks, 2008 is not looking like a really great year for the US economy.

Bank of Canada governer David Dodge commented earlier today on the potential fallout for the Canadian economy:

“The downside risks to Canada from slower U.S. growth in the first half of 2008 are probably greater than we estimated in October,” he told reporters on the sidelines of a meeting of the Bank for International Settlements in Basel, Switzerland.

The big question is how bad those downside risks turn out to be. If the US enters a recession (or is already in one) will Canada be able to avoid the same fate? What sectors of the economy are likely to thrive, where will we hurt and what happens to our super-hot housing market? It’s shaping up to be an interesting year.

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Michelle
Michelle
12 years ago

is this recession going to matter to canada, canada is becoming more and more rediculious, try living in edmonton alberta and feel the prices of rent and property go up constantly….Vancouver prices and cost of living are rediculious, but the average person makes more money there in whatever field……you should see Edmonton, the wages in this province are very low and the price of housing and renting are going up and up….there is probably more homeless in edmonton than any other canadian city. This country is becoming utterly rediculious, I hope that we run out of oil so the gas and oil companies have to change there ways to help this planet and global warming, I can't wait for the day when we have no oil left, I will just laugh….people will have to ride there bikes and take the… Read more »

benny lava
benny lava
12 years ago

Anyone need this sign?

aetakeo
aetakeo
12 years ago

Benny Lava … As in "Minor Bun Engine Benny Lava"?

Great song.

*g*

Dude
Dude
12 years ago

Comment by Anonymous

2008-01-08 20:51:41

Good info. However, Vancouver in real terms is rated much higher in the scale. What really matters is after tax income to housing prices.

We have two consumption tax. We have a much higher tax rate. And our mortgage interest is NOT tax deductible. Taking that into consideration, Vancouver should be much higher. I would say top 5 in unaffordability in the world. Most of the cities listed above Vancouver have lower tax rates.

Anonymous
Anonymous
12 years ago

Globe & Mail: Housing market cools in December

http://tinyurl.com/yw9n5t

“The sharp decline in December housing starts suggests that a more significant downturn in housing activity may be in the cards for 2008,” said Ted Carmichael, chief economist at J.P. Morgan Securities Canada.

Michael Randallbard
Michael Randallbard
12 years ago

Gold up 37% since August!!!!!

All time high tonight again.

Better get some folks its going to $1,600.00

Those who listened to me a year ago are VERY happy.

krrish1
12 years ago

No recession seen in Canada

Canada will slow — rather than stall — escaping a recession this time, much as it missed the 2001 U.S. recession.

'recessions' — to say that the backdrop is 'recession-like' is akin to an obstetrician telling a woman that she is 'sort of pregnant,'"

"You either are or you are not."
http://www.cbc.ca/money/story/2008/01/08/merrilll

Strataman
Strataman
12 years ago
Reply to  krrish1

Media reports quoted Dodge at a financial meeting in Switzerland as saying the "appreciation of [the] Canadian dollar against [the] U.S. dollar is clearly having a slightly greater downside impact on our domestic inflation than we had estimated last October." He also said the risks to Canada from slower U.S. growth in the first six months of this year "are probably greater than we had estimated." Greater then we had estimated, slightly greater then we had estimated, oh well the usual see Benny Lava note, we are already doing the same thing! Thanks krrish1 as you pointed out you really can't trust what they say, crap October was TWO months ago! Just goes to show the comments from experts are self serving and meaningless! On the other hand I have to commend you for changing from what many believed you… Read more »

patriotz
patriotz
12 years ago

How many booms and bust has Vancouver been through?

3 since WWII I think:

late 70's – real but not nominal due to high inflation.

early 80's – the Big One.

late 90's – about 20% nominal, 30% real.

After a big rise post-WWII (which happened all over N. America for obvious reasons) I think price growth was pretty steady until the inflationary era threw things out of whack in the 70's.

Pre-WWII there was the Great Depression of course (in which the city picked up Champlain Hights due to tax defaults) and I think there were some bubble/busts pre-WWI too.

aetakeo
aetakeo
12 years ago
Reply to  patriotz

The Edwardian houses in the West End built between 1895-1910 were mainly built during a speculative boom – and then many were converted to rooming houses….

Anonymous
Anonymous
12 years ago

Thought this was an interesting read, dated Oct 17: posted: http://efinancedirectory.com/articles/8_Areas_in_… 25 Most Unaffordable Housing Markets Important Note: This list uses a median income multiplier to determine relative affordability. Please read accompanying article below for explanation. Nation Market Median Multiple US LA-Orange Co, CA 11.4 US San Diego, CA 10.5 US Honolulu, HI 10.3 US S Francisco, CA 10.1 US Ventura Co, CA 9.4 US Stockton, CA 8.6 Australia Sydney 8.5 US San Jose, CA 8.4 UK London (GLA) 8.3 UK Bournemouth-Dorset 8.2 Australia Perth 8.0 US Riverside-S Bernardino, CA 7.9 Canada Vancouver 7.7 US Miami-W Palm Beach, FL 7.6 US Modesto, CA 7.6 UK Cardiff 7.5 UK Bristol 7.3 US Fresno, CA 7.2 US New York, NY 7.2 Australia Hobart 7.0 New Zealand Auckland 6.9 UK London Exurbs 6.9 Australia Melbourne 6.6 US Sacramento, CA 6.6 US Sarasota, FL… Read more »

patriotz
patriotz
12 years ago

Real estate, the final frontier:

MacDonald Dettwiler and Associates Ltd., the company behind the iconic Canadarm, is selling its space and satellite business to a U.S. buyer, betting its future on the far more terrestrial but profitable world of real estate data.

Actually the lead-in is not quite correct, that Canadarm was developed by Spar Aerospace and later sold to MDA.

One more step toward the real estate economy.

Re-diculous
Re-diculous
12 years ago

How many booms and bust has Vancouver been through?

Re-diculous
Re-diculous
12 years ago

Dosh:

"… in fact prices have NEVER been higher than they are now. ……get into anything you can afford NOW and watch your asset grow"

….Oh, that's it!….I thought: "buy low, sell high" was a lttle tired….Do you give investment seminars?

Strataman
Strataman
12 years ago

dosh read Benny Lava's little contribution. So if you were down there you would have said….? Seriously what would you say if you were an American realitor right NOW?

Ed Bear
Ed Bear
12 years ago

Benny Lava – Nice collection! That would be great next to some graphs of house prices in different areas.

Time to start collecting Canadian quotes now, I suspect.

benny lava
benny lava
12 years ago

It's always a great time to buy, because market predictions are always so optimistic (and accurate!). From the Big Picture: August 2005: “All of the doom and gloom forecasts of a housing debacle are not only irresponsible, but also downright wrong.” –David Lereah, National Association of Realtors April 3, 2006: NAR: “We can expect a historically strong housing market moving forward, earmarked by generally balanced conditions across the country and fairly stable levels of home sales with some month-to-month fluctuations.” June 27, 2006: NAR: “Right now we are on course for a soft-landing in housing.” October 25, 2006: NAR: “The worst is behind us, as far as a market correction – this is likely the trough for sales. When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market.”… Read more »

Ed Bear
Ed Bear
12 years ago

"Hot housing market should slow after peak 2007"

According to the realtors, modest growth is expected.

In related news, an unbiased professional representative of the Franklin Mint projects excellent returns on Star Wars Collector's Plates next year. "Now is a great time to buy!", he weighed in gravely.

scullboy
12 years ago

Buy high, sell higher?

Gosh I wish I'd thought of that! Dosh man, what can I say. The world's collapsing into a recession, prices are plummeting everywhere else, the non construction industry in BC is in the crapper…. but it's never been a better time to buy?

Dude it scares me to think about your client list.

Drachen
Drachen
12 years ago

Dosh:

"prices have NEVER been higher than they are now."

So essentially your wealth building method can be paraphrased as "Buy at a record high, hope prices go up!"

Call me strange but that doesn't seem like a very good plan.

We all know you're an agent Dosh, I really don't think you'll find any greatest fools here aside from those who just come here to deride our opinions (and they're already leveraged to the hilt). Don't waste your time.

Dosh
Dosh
12 years ago
Reply to  Drachen

Yeah? Well show me a better investment. Even the most dismal forecasts from real estate economists are predicting at the very least a 4% increase in property values. I expect we'll see a lot higher than that, but if I only get 4% appreciation I won't be crying in my beer.

patriotz
patriotz
12 years ago
Reply to  Dosh

Even the most dismal forecasts from real estate economists are predicting at the very least a 4% increase in property values.

I was trying to think of the best comeback for this remark from a large number of choices, but I think I'll just let it speak for itself.

Strataman
Strataman
12 years ago
Reply to  Dosh

whom would you call a real estate economist? Like would you please name ONE that is not paid by the industry either directly or indirectly,(which eliminates any MSM economist writing for a media paper that has real estae adverts and any bank economist who would loose their carreer pretty damn quick if they told what they really thought). So name one? Say an academic economist that is funded by impartial university research? Name the man! (woman)! Think my criteria is too stiff? Then name a US bank economist that called the US housing collapse BEFORE it happened? Name ONE? 🙂

Dosh
Dosh
12 years ago

The facts are these:

despite a downturn in the US market Vancouver is as robust a market as ever, in fact prices have NEVER been higher than they are now. Complaining about that is like wishing you could still use a payphone for dime. Its simple. Stop throwing your money away, get into anything you can afford NOW and watch your asset grow.

Anonymous
Anonymous
12 years ago

Hey Drachen:

1) Well that wasn't so much about ME being gay. Admittedly it was vulgar but *shrug* what can I say it's a slow day and I get bored. Plus apparently I am a little twisted.

2) We're probably all geeky enough to know what Occam's razor is. I don't know why, I just don't find that explanation satisfying. I really think there's something more at work there but darned if I know what it is.

Drachen
Drachen
12 years ago

Scullboy:

"I think I have figured out why Sat’s posts make no sense."

1) There's no real need to be vulgar, we get it, you're gay…

2) Occam's razor, when faced with several different hypotheses which could account for observed phenomenon the simplest possible explanation is the most likely to be true. ie. He's just stupid, illiterate, wilfully ignorant but, unaware of his shortcomings he truly seems to believe that he has something useful to add to the conversation.

Newcomer
Newcomer
12 years ago

"Now just why do you think public sector spending (except for the Olympics, of course) will keep going when the private sector goes into the tank?"

The public sector is slow to react. It has budgets well in advance. I don't think it is immune. It's just that, in the next one or two years, other, more market-responsive sectors are going to feel it more.

Triage
Triage
12 years ago

According to Merril Lynch the US recession is already underway. I have a feeling we'll be seeing the impact locally in 2008.

scullboy
12 years ago

I think I have figured out why Sat's posts make no sense.

He's actually on his back, legs in the air, getting viciously tag teammed by Cameron Muir and Rennie. His computer has voice recogntion software and picks up random words. As he flails about in extacy, his hands hit random combinations of letters which auto-correct into slightly less random words.

When either Rennie or Muir finish up, they tag the other guy, clean up a bit, then hit "post" and VOILA! Instant SatV post!

It certainly would explain a lot. Just make sure Rennie and Muir have double bagged it, Sat… .those two have screwed a lot of people…..