2009: The road ahead

There’s an article in the Vancouver Sun today filled with cheery forecasts for 2009, The title is “Good economic news: 2009 is only 12 months long“.  Here are a few select quotes, but it’s worth reading the whole thing.

“The thing to keep in mind about 2009 is that it will end,” Jock Finlayson, executive vice-president of the Business Council of B.C. said in an interview, “and we’ll get on to 2010, which is going to be, hopefully, a much better year.”

..and Helmut Pastrick says:

“I think [2009] is just going to be one of the worst years we’ve seen in many years,” Pastrick said.

He said it will perhaps be worse than the province’s last recession in the early 1990s, though probably not as deep as the 1981-82 downturn.

On Housing:

The decline in provincial housing sales and new-housing construction starts will be the most noticeable impact of B.C.’s slowdown, Pastrick said.

TD Economics has pegged total sales in B.C. at 60,600 units for 2009, a decline of nine per cent from its estimate of 66,800 sales by the end of 2008, which is itself a 35-per-cent fall from 2007.

What about employment?

“I think we’ll see a rising tide of layoffs in industries like retail and tourism and housing,” Finlayson said.

TD Economics estimates that B.C. unemployment will average 5.3 per cent in 2009, up from an average of 4.5 per cent in 2008.

However, Pastrick said job losses in construction might become steeper later in 2009 as housing units already under construction come to completion and big capital projects such as the Canada Line rapid transit project are completed.

All this sounds just a little bit familiar…

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#91 EB, you're exactly right. The turnaround date is not per-determined, in fact it could be years out. I believe in the acumen of Asian businessmen and the society at large as astute, but they are not miracle workers. This is the same argument I use against those who insist BC/Vancouver will sail through this recession unscathed. Like The Great Mogambo has said, "We're all Freakin Doomed'. For the time being I agree, it's not pretty and everyone is going to get a look.

10% of Electronic Arts staff got layoff notices today. It was kind of EA to wait until after Christmas. They are also amalgamating there 3 facilities into just one. How many ancilliary jobs go with those? Isn't the economic effect something like 3-1?

Further afield



But there is no doubt that the entrepreneurial zeal that exists in that region of billions of smart people will turn around at some point.

That depends pretty strongly on a turnaround for the Western consumer, who is tapped out and is likely to remain so. The vast Asian wealth accumulation came from selling the labor of the poor very cheaply to allow the west (primarily the US consumer) to accumulate more debt. The western middle class hasn't seen an increase in income in decades and only financed the past 10-15 years on credit cards and home equity withdrawals. They're done.

It will turn around? Tell that to Japan. It doesn't have to do anything.


#89 I just got back from Hong Kong and Singapore http://biz.yahoo.com/ap/090102/as_singapore_econo… I have lots of friends in business there. The news from real people with real jobs and business intrests is that things are not rosy and getting a lot worse region wide. You are probably just a lot smarter than all the people there to know something they don't. Good for you. Of course there were a lot of people out last night , it was New Years Day. I was out, and I hate going out. But even so, my many friends in the Chinese community here are seeing off 10-20% in the quarter. As far as investing in the stock market there (China) I quite agree if you can keep a three to five year time frame in mind. Stocks are cheap, buy there are getting cheaper,… Read more »


Hey EB, you're about 6 months behind. The stock markets already crashed to factor in all the bad news. Better buy some stocks now while they're cheap. All indicators says we'll be back into a bull market phase within the next 6-12 months. The stock markets welcomed the new year with a bang. Get in before it's too late.


"Trade finance is collapsing," said Victor Fung, the chairman of the Li & Fung Group, the giant supply chain management company that connects factories in China with retailers in the United States and Europe. "We've got orders we can't ship right now."

Fung estimates that 10,000 of the 60,000 factories in China owned by Hong Kong interests have closed or will close in the coming months.

Tell me some more about Asian financial brilliance? A lot of AZNs have developed a very high opinion about themselves, resting mostly upon exploitation of the gross wage disparities which result from Asia's teeming billions of poor folk. Japan is out of that picture of course – they've been getting poorer for decades now. China is now hitting the skids. It was all an illusion.


Supraboy is full of crap in general, we'd all be best to ignore him.

#73 realpaul, you say that you cannot get a 25 year mortgage beyond 40 years old; are you sure of that? Because that implies that 0 down 40 year mortgages are (um, were) only available to those under 25 years old. How many 0/40 mortgages can there be out there, I wonder, and for what average amount?


I was out at a Chinese restaurant tonight. Oh boy, was it ever packed. I looked around, ordered a Tsingtao beer and felt like a poor man compared to everyone else's table. They were ordering bottles of red wine. If you people think the Vancouver housing market is going down, you better think again. If the economy is really that bad, why are the Chinese people packed with people with money. I have a feeling that the real estate market going down is only a myth. I open up the Chinese real estate newspapers and I see the majority of houses in Vancouver listed for over a million. Even crappy Vancouver specials in Marpole are listed over a million, and they're at least 10 years old too! They won't sell for anything less and they have lots of cash to… Read more »


#84 Nobody, thanks for the laugh. You need to get out more. promise not to give anyone your advice in real time. #83 Stevee , you would only have to take out a second ( or come up with some serious mommy cash like a Supraboy) if you had zero equity in your property as in the example you refer to. Key concept, zero equity, NONE OF YOUR OWN MONEY IN THE PROPERTY. In the example the First Mort was written for $400K. Three years later the prop is appraised at 300K. You put 5% down originally ( 20K) . The differance is $80K. This 80K is the negative equity. Adversly if you had a 400K 1st and put 25% down (100K) then when the appraisal came in at 300K you would still be optionable. This would not be zero… Read more »


"Ex: You pay $400K for your digs , 3 year term , 25 year amortization. Your 6.5% 3 yr var., comes due and the bank orders an appraisal which comes back at $300K. OUCH. You’ve paid down the $20K LOC thank you and owe $380K. You have $80K negative equity."

Banks never go through re-appraisal unless you switch over your mortgage with other banks even if some one chose to change bank or other mortgage company then rest of comment from paul goes to America because he knows VANCOUVER REAL ESTATE NEVER GO DOWN

Arit,you have to go through your family doctor to disscuss dementia which show you unreal things b.c. medical does not take action unless your doctor refer you to next step.



Thanks for your insight re Arit's question. Now if you, or anyone else for that matter, has a moment, I would like to clarify something (for my own personal education). Do you mean to say, in your example, tht if the person taking out the mortgage sees their home drop by $80,000 in value, that when refinancing they would have to take out a second mortage, likely at a much higher interest rate, to cover that loss ($80k)? Thanks in advance.


#80 yer welcome arit. The math doesn't look that good for many of the 5% down types who are underwater now and looking towards a refi in the near future.


#68 Anonymous

Jury is currently out on future Condo values/sales

Advice your parents never gave you.




All I can say is Wow!

Realpaul: Thanks for the explanation!!!

Luckily, evil_arit was defeated by arit so my example is only hypothetical.

But it is not hypothetical for most people I know. Most of them will be underwater before 2015. So all of them will be in a similar situation as realpaul has explained.

So they will be slaves, slaves of the bank. Forever. Once the owed amount starts growing, and the salaries stay flat, there is no exit but lose the home or keep paying ever-growing monthly payments. It's horrible…

Nobody, what Doctor would you like me to see? And what treatment should I be treated for?

Best regards,



hahahaha- Arit, when you go to see a doctor please also take Paul with you.Thanks.


#75 HUH?


#73 I know you're not stupid but the bottom line on example #73 is that you're down $160,000 THOUSAND DOLLARS ALL IN. I just wanted to point that out because I know the example is a bit numbing for some.


#72 Arit, in that specific scenario it would be a very bad time to refi. If you think this is you it would probably be better try to float over the curve with renegotiating sooner for a ( downside bigger monthly payments , upside maybe sleep better) longer fixed rate now ( 10year)instead of having to refi at the bottom of a cycle. This is just an example and not meant to be construed as advice.


Bank is not going to say what to do but you have to think about it if you wanna stay or run? if you like to stay there are lots of provision,if you want to run nobody need any provision by the way if you like to stay you are already paying your payment why the bank should look for excuse? Anyway if you have these type of question you should see a doctor instead mortgage specialist.


#71 your facts arent quite right.


#66Arit Bad news man, it matters a lot. Ex: You pay $400K for your digs , 3 year term , 25 year amortization. Your 6.5% 3 yr var., comes due and the bank orders an appraisal which comes back at $300K. OUCH. You've paid down the $20K LOC thank you and owe $380K. You have $80K negative equity. The principle repay chart says that after three years of payments all you've been paying is intrest and you barely own the doorknobs. If you're a re-fi virgin don't look this up it's too scary. You owe the whole shebang and it looks like you've been renting from the bank instead of owning, it doesn't look good. You say, sign me up, bank says not so fast, you have negative equity, no can do, legal stuff with the Bank Act. Amortization means… Read more »


M- Thanks for the explanation. That clarifies a bit. Maybe someone can tell us the answer to your question: "When you renew your mortgage, I do not know if the bank will simply renew it, or if they look at the “current” value of the house to see if you’re still above water. " Let's use an example for visualization. evil_arit bought a house in May 2008. The house was bought for 500,000CAD with 5% down (25,000CAD) and 25 years amortization, term of 5 years and interest rate of 5 percent. Not even the worst case scenario, obviously. So the mortgage taken is 475000CAD. The monthly payment is 2762.62 After five years, evil_arit still owes 420,410CAD to the bank. But now we are in May 2013! And the house is worth, as expected, only 250,000CAD. What happens next? What does… Read more »


Arit: when you sign up for a 25-year mortgage in Canada, it's usually a 5-year term that people sign up for. The amortization is 25 years, so if interest rates and payments stay the same, it'll be paid off in 25 years. However, the term of your contract with the bank is probably only 5 years. When that 5-year term is up, you need to renew your mortgage (hopefully with only a 20-year amortization this time, since you've paid part of the house off already). Maybe you'll set up the mortgage with a different bank, or maybe you'll stay at the same bank. When you renew your mortgage, I do not know if the bank will simply renew it, or if they look at the "current" value of the house to see if you're still above water. If you're below… Read more »


"The olympics will make me rich in Vancouver."

If telling yourself that losing 50Z% of the value of your "investment" will make you rich that's great.

If you think the price will go up then encourage the bears to wait, then you can sell it to one of us for 25 million dollars.

Seriously who doesn't want a 1000 sq ft poorly built Richmond townhouse near no.4 and westminster?


tell that to Beijing… The olympics will make me rich in Vancouver.

I'm guessing your shtick is to say things that are completely contrary to reality to try to get a reaction. Beijing is dreaming of a eventual payoff in the midst of a major downturn. Their real estate market started to collapse just before the games and are still going down. Their economy hit a seven year low after hosting the games:


The official optomistic line is that prices will start going up again after an 'adjustment'



brokerealitor "When Joe/Jill Buyer can get a Mortgage with 10% down and thier monthly mortgage payment & taxes are closely equivalent to current rental costs, Duh, BUY!" Disagree as far as strata titled properties ge, agree for SFH. The shi** has not yet hit the fan as far as mismanaged strata's the next five years will see massive increases in maintenance fees (100%). Specuvestor strata's have proudly kept fees not even increasing at the cost of living! New buyers will have to pay retrocative fees to cover the mass mismanagement. Don't buy a condo unless your mortgage + two times current maintenance fees + 10 % contingency, is less then your rent. Example Rent = $1500.00 (landlord pays 250 maintenance). Buy only if mortgage = 1500 – 250 (expected maintenance fee increase) – 150 (10 %). Same building same suite… Read more »