Housing sales in a bad economy

Housing sales in BC last month were one ‘bright spot’ in an otherwise volatile provincial economy according to this article in the Vancouver Sun.

Central 1 said B.C.’s economy appears to be coming out of a recession, but warned in its weekly economic bulletin that “the recovery is generally expected to be weak and volatile.”

B.C.’s seasonally adjusted unemployment rate eased slightly compared to a month earlier — a 7.8-per-cent jobless rate in July compared to 8.1 per cent in June.

That statistic is somewhat misleading because a growing number of laid-off workers have abandoned the search for new employment. Eighteen thousand people withdrew from the labor market in July, Central 1 reported.

“Industry-wise, jobs declined in manufacturing and construction, along with educational, accommodation/food and miscellaneous services,” the credit union said.

David Hobden, an economist with Central 1 Credit Union, said there had been significant job growth in the financial, insurance and real-estate services sectors.

Now the question is how long a lagging economic indicator like housing can keep looking shiny and bright in a dim economy, and are there are any lasting benefits of a strong housing market in a time of job losses?  One short term upside is that people who recently lost jobs and needed to sell have had a good market to sell into, but how much longer will we be able to sustain the recent sales blitz?

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don't worry be
don't worry be
11 years ago

Belief in using home sales/prices as a barometer of the economic health of a country is fairly recent and flawed. If one were to do that to measure the prosperity of a countrys economy Costa Rica would stand out as at least equal to Vancouver Island!

The wind down of the derivitives market has been slowed but not stopped. There is far worse yet to come.

jjss
jjss
11 years ago
NO -LYMPICS
NO -LYMPICS
11 years ago

Anonymous: Re HST: A recent article demarcated the differences. Old parts of the economy may benefit but they don't have the same economic impact they once did….but the emerging parts of the new economy will get hit hard . That's why tourism is nervous…as well as other service based sectors. The HST is insidious and aimed at making a nickle and diming tax grab by the death of a thousand tax grabs. Much of our old economy (manufacturing)has been relocated off -shore…our cost of living has been lowered in the short term by buying cheap offshore imports, but in the long term has relegated Gov'ts to using cheap circus stunts with fiat money at low interest rates. IMHO, its a myth that the HST benefits will trickle down to us. Did you hear about the tax saving stunt Terasen Gas… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

Crashisking:

No, I don't intentionally plagiarize…one unintentional ommission is not a hanging offence. Not interested in pissing match either.

BTW, the POPE runs this site…and has a voting process for people to voice their "aye" or "nay" on other's opinions.

re Olympics, just because it's a done deal doesn't mean one has to ever agree to it nor accept it. I hope that the world wakes up soon to what the Olympics really represent.

There is an enormous amount of info out there…sometimes it's good to share. No one is forced to read it. Often new VCI posters are thankful they didn't take a leap of faith in buying RE after reading the VCI posts. I personally have learned an enormous amount from the various posters and sincerely thank them for their contributions.

Again, critique ? or contribute ?

Anonymus
Anonymus
11 years ago

"The two provincial governments are doing this because (a) they are being bought off by the feds, (b) it will raise a honking new mess of money, (c) it’s the kind of tax politicians love, since it’s automatic and universal and (d) business groups have been lobbying for it, since they get to write off all the tax that consumers are stuck with." ======================== I understand that it is more satisfying to revolt than to be fair minded, but indeed the value added tax is a modern consumption tax, used by all developed countries (except the US that is slowly turning into the most backward country on Earth). Those who ever had to deal with PST know that it is a nightmare tax (just like the US sales & use taxes are), impossible to administer, or even understand. GST/HST is… Read more »

Crashisking
Crashisking
11 years ago

Dear "No-Lympics"

Don't mean to jack the thread or start a pi$$ing contest. I'm not a troll. You like to cut and paste without giving credit, very uncool. I'm no Olympics booster, but they are coming – make the best of it. Few of the buildings will be useless, are you familiar with GM Place and the Coliseum?

I promise to shut up now if you will quit dominating the replies on this site, I think you like the sound of your own voice a little too much.

NO -LYMPICS
NO -LYMPICS
11 years ago

Microcosm:

Near us is a 12 unit townhome development.

( I've mentioned this one a few times )

They sold 10 of the 12 last year…and were stuck with 2 UNsold units up until about one month ago.

Then as soon as those (2) were sold another "For Sale sign" went up 2 weeks ago…and that unit 3rd sold.

Now today, another For Sale sign showed up(4th in a month).

Given the current madness, bet it's sold by next week.

Anonymous
Anonymous
11 years ago

Here's someone who didn't do too well due to real estate.

Anonymous
Anonymous
11 years ago

Bubbles like this one are a cash advance. Money gets injected right into the local economy via transaction fees and those taking paper gains. In the long term that advance needs to be paid back with interest. It's why Vancouver's economy, with its high dependency on real estate and construction, is in for a long drawn out period of malaise, especially since mortgage rates depend upon the rest of the world, not Vancouver.

Even the government is cutting; hiring freezes in education and health care are going to snowball later this year. The City of Vancouver is crapping bricks with the fall in permit revenue and Robertson doesn't want to raise taxes with his eyes on the premiership. Patience.

NO -LYMPICS
NO -LYMPICS
11 years ago

On Global 6 PM news :

Vancouver bidding wars.

2 homes were sold for approx. $200,000 over list.

One was asking approx $900,000 ….sold for approx $1.1 million ……and on Main street(???).

I have also noted that over the past several year there are about a handful of select realtors that are historically interviewed re RE market. This time around they talked to Paul Eviston. ( Whose turn next time ? )

They also report starts are still way down.

Contrast this with one recent RE blogger saying Month to month sales are off almost 50 %

Still insane.

NO -LYMPICS
NO -LYMPICS
11 years ago

Correction:

Post # 29 was from Garth's blog

Crashisking said

" And BTW, you’re a little late, in case you haven’t heard – the Olympics are coming here next year. Are there any other inevitable things you are opposed to? "

You mean, that's what all those overpriced useless buildings were built for ? and here in BC ? I hear all Olympics result in costly legacies and faux economic booms.

Other inevitable things that I am opposed to ?

Mostly trolls with nothing useful to add or debate.

Not much else.

Here….. pull my finger.

NO -LYMPICS
NO -LYMPICS
11 years ago

Insurance companies not honouring new leaky condo warranties: owners Insurers say lack of maintenance by owners is source of some problems http://johngrasty.ca/?p=247 Some owners of recently built leaky condominiums say B.C.’s new Home Warranty Insurance program isn’t working and that companies are unfairly rejecting their damage claims. Dave Ricketts, a principal with RDH Building Engineering in Vancouver, said the owners of some of the leaky condo projects built since 2000 that he’s involved with are contemplating going to court after warranty companies refused their claims. “Some of [the warranty companies] are just putting their own interpretation on the claims and deciding what they think is covered and not covered and others are just saying, ‘well, as an opening gambit, we’re going to say we’re denying everything.’” The new home warranties are provided by four authorized private-sector insurance companies and cover… Read more »

Crashisking
Crashisking
11 years ago

Hey "No-Lmpics" #29, you are plagiarizing from Garth Turner's blog. Make sure you give proper credit if you're going to cut and paste somebody else's work.

And BTW, you're a little late, in case you haven't heard – the Olympics are coming here next year. Are there any other inevitable things you are opposed to?

NO -LYMPICS
NO -LYMPICS
11 years ago

Leaky Condo costs have soared past $3 billion, so far http://johngrasty.ca/?p=288 Leaky Condo reconstruction costs have soared past $3 billion so far, and that doesn’t include the indirect societal costs borne by British Columbians that nobody is tracking. Since only about 20 percent of leaky condo owners met the government imposed “means test” of the Homeowner Protection Office loan program, the $670 million in HPO victim loans made to date represents about 20 percent of the total direct cost of the leaky condo disaster. Local bankruptcy trustees and lawyers are in for another windfall. With remediation costs more than three times what they were 10 years ago we are about to witness the further and extreme plundering of hundreds, perhaps thousands, of British Columbian families at the bloodied hands of Housing Minister, Rich Coleman. The discontinuation of the HPO Reconstruction… Read more »

Rich Asians Will Be
Rich Asians Will Be
11 years ago

#1

"If this economy is so dim then why are buyers outbidding each and paying 2 or 3 hundred thousand dollars over asking"

Buying and selling real estate to each other does not make an economy, nor a "bright" economy for that matter. If you were to throw in thriving diversified commercial sectors, record employment, and rising wages, then maybe the economy would not be so "dim."

Oh wait, inflation adjusted wages have been stagnant for 20 plus years, our unemployment has more than doubled in the last year, and have never had a diversified economy, even during the 7 boom years we just enjoyed. But I am sure the rich asians will be our saviour…lol

realpaul
realpaul
11 years ago

What the 'shadow inventory ' of Swine-couver?

http://globaleconomicanalysis.blogspot.com/2009/0

Disbelief
Disbelief
11 years ago

Even the mighty Seattle up til recently perma bulls were talking of Seattle is not dropping in price and we are like Seattle. Do you still think we are like Seattle well you better hang on to your shorts we are headed down then. I have checked Craigslist and there are over 750 listings for rentals in the lower mainland. There are gonna be some speculators that are gonna be a bleeding if they can't rent it out…

shannon
shannon
11 years ago

http://www.kirotv.com/houseandhome/20357308/detai

If you are at all interested in what is happening in Seattle……

Also, about the Scot buying the house in White Rock #18. Wasn't the bank of Scotland the first to go under? Now we know where all the money went!

Anonymous
Anonymous
11 years ago

Recession over!! So we have a bullet proof banking system in Canada? Citizen Bank shifting focus to it's Visa business … exiting loans and mortgage thus becoming a non-deposit taking bank. " Message from the President and CEO Jason Farris Jason Farris To our members: I’m writing today to tell you about some significant changes at the bank. We’re moving to a more streamlined business model that focuses on our strengths—our successful Visa* credit card and prepaid card business for consumers, and our equally popular foreign exchange services for non-retail clients. As a result, we’ll no longer offer savings and loans products. The bank will become a non-deposit taking bank and thus, is selling most of its residential mortgages, consumer loans and real estate secured lines of credit to The Toronto-Dominion Bank (“TD Canada Trust”). Depositors in B.C. can choose… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

As night follows day, troubles trail deficits. There’s simply no escape, and this time the consequences will be as profound as they were in 1991. As that year dawned, the country got a new sales tax – a value-added thing called the GST, which would go on to raise more than $40 billion a year. Canadians hated it, and in the next election destroyed the government responsible. But the GST was inevitable, following years of record budget deficits which wildly inflated the national debt, crashed the dollar and gave us crushing interest rates. It took years of the money-sucking tax to balance the books and actually reverse the tide of debt. Until now. Since 2005 Ottawa has increased program spending at twice the rate of inflation. Even before the wheels came off the economy last fall, federal spending had hit… Read more »

Wreckonomics
Wreckonomics
11 years ago

When you start to run low on money the prudent thing to do is to cut back on luxuries so you have enough for necessities. Yet we have a government that is cutting millions from healthcare while paying millions for government workers to 'volunteer' for the winter games. With financial decisions like these being made all the way up to top government levels is there any wonder we're in economic trouble?

NO -LYMPICS
NO -LYMPICS
11 years ago

If you have the time:

Argentina's economic collapse

http://www.itulip.com/forums/showthread.php?p=411

How political leaders (of any political stripe), the opposition and the bureacracy etc. can be corrupted to selling out the country to outside interests and wiping out the middle class.

Eerie parallels to US and Canada

NO -LYMPICS
NO -LYMPICS
11 years ago

Dr No:

Those are the real stats we should be asking.

There was a point where peak prices met peak sales numbers.

In the current market, are prices below peak and still below peak even after so -called bidding wars ?

If they are below peak price, that indicates both a trend and a lot of parties underwater who bought at the peak.

Soggy
Soggy
11 years ago

I'm curious about the unemployment stats dropping people who have "given up" on looking for work. Who determines if they've given up? AFAIK you can't give up on looking for work while your collecting ei can you? Do they ask people, or do they just assume they've "given up" looking for work when they run out of aid?

Dr. No
Dr. No
11 years ago

"Houses sold for more than asking price?

Back to old ” relativity “.

Garth’s blog sniffs this strategy out as listings begin below market value,….. buyers feel it is “on sale” ….. then bidding wars ensue, driving the price higher."

This is so true! The west side house that I rent (very cheaply I might add) just sold for $50k over asking – in a bit of a bidding war, but it was still $200K less than it sold for a little over a year ago. The jig is up!