Tourism down

The Globe and Mail is reporting that tourist visits to Canada, particularly Toronto, Montreal, and Vancouver have dropped significantly this year.  Fuel prices, a high Canadian dollar and a slowing global economy are all being blamed for this downturn:

The latest Statistics Canada numbers on travellers are from May 2008 and show that in the first five months of the year, nearly one million fewer visitors entered the country compared to 2007, a decline of more than 10 per cent.

In May alone, nearly 200,000 fewer tourists entered the country compared to the same month in 2007, a drop of seven per cent.

By contrast, more Canadians are choosing a vacation abroad.

Between January and May, nearly 2.5 million more Canadians left the country than did during the same period in 2007, a jump of almost 13 per cent.

A strong dollar means more Canadians leaving, and not enough tourists — mainly Americans — are arriving, said Mr. Klassen.

“Our travel deficit is ballooning,” he said. “It’s a huge concern.”

If fewer people are coming to visit Canada, does that mean fewer foreign buyers for our real estate markets, particularly the most expensive ones?

18 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
Kopyright Klepto
Kopyright Klepto
12 years ago

Jesse,

Reading it again — I see what you are getting at. I certainly did not interpret this way, but perhaps I was applying my own logic to their statement. I'm happily getting a sub 9% annual return on my investments at the moment, but in no way does this encourage me to take on boat loads of real estate debt and associate leveraged risk as an alternative!

don
don
12 years ago

don't forget all those foreign language students that I'm sure are a big part of the rental market. because of the strong dollar, they are starting to go elsewhere too …

jesse
jesse
12 years ago

"I think this was meant to encourage people to put in money to pay off their debt rather than into other investments. Seems like sane investment advice to me. I’m not sure what your beef is." KK, the correct way to construe this argument is that, if you already bought, it is indeed better to pay off your debts as quickly as possible unless you can do better than 8+% return. The incorrect way to read this argument, which is what my beef is with, is that you should take out debt then proceed to stop investing and pay it off as quickly as possible. The argument is fatally flawed because it implies the debt is backed by an asset that is fairly valued. I would have no problem with the argument if this was explicitly stated but it was… Read more »

Kopyright Klepto
Kopyright Klepto
12 years ago

Draken wrote: "Out of Provence buyers make up less than 5% of the market. Buyers from outside of Canada are under 2%. Not enough to have any real impact on upwards or downwards pressure. Real estate is local, the market will turn based on factors on the ground here, not foreign buyers." Please don't take this the wrong way, but I find this argument quite humorous. When I moved to Vancouver 2 years ago, I could clearly see that prices were out-of-whack with local incomes. I moved from Toronto, and my salary remained stable (and my wife's dropped by 20%) but a similar 3-bedroom townhouse near transit was 50% more expensive here. Oh, and rents were about the same. One of the common reasons asserted for the higher prices was the high numbers of wealthy out-of-province and out-of-country buyers. I… Read more »

Kopyright Klepto
Kopyright Klepto
12 years ago

Kesse wrote: "Criminy, how in God’s name can I do better than 8.9% risk adjusted? Better max out my mortgage!"

Jesse — I think this was meant to encourage people to put in money to pay off their debt rather than into other investments. Seems like sane investment advice to me. I'm not sure what your beef is.

His other comments seemed focussed on suggesting to people not to buy above their means — which has been one of the key factors helping to blow up the bubble.

Anonymous
Anonymous
12 years ago

"Don’t worry Skullboy with your lifestyle you won’t last 40yrs, so might as well take out the largest mortgage you can."

Numbersman….. that's a gay porn star name from the 70's so whatch ya talkin' about? Keep it to yourself!

VanLoverBoy
12 years ago

Of course tourism is down in Vancouver, and makes total sense. As more and more people move here (because its the best place in the world to live) there are naturally less and less people who can visit.

Numbersman
Numbersman
12 years ago

Don't worry Skullboy with your lifestyle you won't last 40yrs, so might as well take out the largest mortgage you can.

scullboy
12 years ago

SO essentially B.C. has two industries left to collapse:

Grow – ops

Construction (it's not over just quite yet).

Sadly, Krrrrrih's mom is not yet an industry unto herself, though rumour has it her ability to keep the construction workers smiling has become a global phenomenon.

I was walking past the W building the other day. Damn! That sucker a HUGE! My friend said between that and the Shangri-la it looks like Vancouver's trying to build the Death Star. I I just kept thinking "Jesus, that looks like about enough capacity for 5 years of migration".

For the *LIFE* of me, I can't imagine being stupid enough to give up 40 years of my life for a tiny little place in that great big building, surrounded by the WORST NEIGHBORHOOD IN CANADA.

jesse
jesse
12 years ago

"Hotels here are whining about vacancy rates……"

Do what the airlines are doing and reduce available capacity while raising prices. LOL.

Carioca Canuck
Carioca Canuck
12 years ago

Well…the Calgary Stampede attendance was down 25,000 people (2.5% ) this year…..and had it not been for the last two days of blistering sunshine we had, it would have been down 100,000 (10%). Didn't see any out of province or US plates this year….or RV's either.

The Capital Ex in Edmonton will not even publish their figures, citing competitive issues.

Hotels here are whining about vacancy rates……

Moldcity
Moldcity
12 years ago

please consider buying a condo.

If everyone buys an extra condo there will be no housing market crash….This is the perfect oppourtunity for people seeking an investment that offers no returns and loses value over time!

Drachen
Drachen
12 years ago

Didn't we have this discussion before? Out of Provence buyers make up less than 5% of the market. Buyers from outside of Canada are under 2%. Not enough to have any real impact on upwards or downwards pressure.

Real estate is local, the market will turn based on factors on the ground here, not foreign buyers.

That said however Tourism is a big industry in Vancouver, the loss of those tourist dollars will probably have a far greater impact than the loss of US Real Estate purchasers.

jesse
jesse
12 years ago

VHB, the "sound timps" get even better:

– Save 20 per cent for a down payment to reduce extra fees, consider taking money from your registered retirement savings plan through the Home Buyers Plan, and forego making non-registered investments because you would need an 8.9-per-cent return to do better than paying down a 5.75-per-cent mortgage if you're in the 35-per-cent tax bracket.

Criminy, how in God's name can I do better than 8.9% risk adjusted? Better max out my mortgage!

Chincy
Chincy
12 years ago

Ok so in Vancouver and BC, Tourism is struglling…forestry is dead…fishing is dead…evidently a large technology employer is getting rid of 350 Sales positions downtown (ouch) and all of the 50,000 construction newbies making $30/hr for pounding nails will soon be laid off…so for the bull's out there, what's the industry in Vancouver that will support these insane house and condo prices??

Anonymous
Anonymous
12 years ago

If fewer people are coming to visit Canada, does that mean fewer foreign buyers for our real estate markets, particularly the most expensive ones?

There is no direct relationship between foreign tourism and foreign investment in RE, except in Whistler and perhaps a few other resorts.

However the same factors that are leading to a decline in US tourism – the high CAD and weak US economy – will impact RE in BC negatively, both though decreases in foreign purchases and weaker fundamentals for BC buyers. But foreign purchasers are really not a significant factor in BC RE anyway, except in the aforementioned resort areas.

VHB
VHB
12 years ago

Hey bubblicious,

I love the total non-sequitur at the end of that Province article. The first 80% of the article is all about the doom and gloom in the US and that Canada might not be immune (this is in the MSM!! In Vancouver!!) Then, at the end, we read this:

"Meanwhile, portfolio manager Adrian Mastracci of Vancouver-based CKM Wealth Management offers sound tips for homebuyers:

– Consider a condominium or townhouse as a starter home."

Right. Always a good time to buy a home. Now that the first 80% of the article has scared the bejeezus out of you, please consider buying a condo. p l e a s e . Somebody. Anybody there? Even a little condo? Something Somebody . . .

BUBBLICIOUS
BUBBLICIOUS
12 years ago

Mortgage crisis building in Canada

Too many housing starts means crunch 'may come soon,' says report

http://www.canada.com/theprovince/news/money/stor