Business Confidence dips again, now at 3 year low

It’s not just Vancouver house sales that are heading down.

Business confidence in Canada dipped for a fourth month in a row and is now at a 3 year low.

This according to a survey from the Canadian Federation of Independent Business.

The last time it was lower was in July of 2009, when it stood at 58.6.

CFIB chief economist Ted Mallett says the index’s current position in relation to gross domestic product puts it very close to the zero-growth mark, suggesting Canada’s economy is nearing a standstill.

On Tuesday, Statistics Canada reported the economy had grown a disappointing 0.1 per cent in May, leaving the pace of the recovery at slightly below two per cent on an annualized basis.

The CFIB says confidence declined in July even in resource-rich provinces like Alberta, which saw a drop of three points to 70.3.

So taking out a home equity loan to fund your underperforming small business?  Maybe not such a good idea unless the revenue is there.

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AfroFrancophone
Guest
AfroFrancophone

Yup… Another nail in the coffin… Tough times ahead… Have you noticed that even the MSM is getting bearish? That in turn puts even more pressure on consumer confidence… Nasty downward spiral.

JR
Guest
JR

I wonder how much right now (yes right now not a year ago) what percentage of BC’s GDP is based on construction. It has to be astronomical. Everywhere I drive in the lower mainland there is construction! The problem is now that there has been so much over-development there will likely be little need for more residential or commercial new construction for at least 5 years. If GDP is not increasing umm who is expected to occupy all these new buildings?

rp1
Guest
rp1

#2 @JR: “If GDP is not increasing umm who is expected to occupy all these new buildings?”

Foreign students?

registered
Member
registered

1 AfroFrancophone Says:“Have you noticed that even the MSM is getting bearish?”

MSM profits are predominantly advertising driven and marketing budgets are the first slashed in uncertain economic times. Canary in the coal mine.

VHB
Member
VHB

August norms:

		
year	sell	list	sell/list
2001	2566	3315	77.4%
2002	2468	3287	75.1%
2003	3290	3693	89.1%
2004	2537	3986	63.6%
2005	3649	4366	83.6%
2006	2998	4500	66.6%
2007	3384	4408	76.8%
2008	1568	4331	36.2%
2009	3441	4544	75.7%
2010	2202	3750	58.7%
2011	2378	4685	50.8%
Mean	2771	4079	67.9%
median	2566	4331	75.4%

To get under 2008’s 1568, we’d need to average less than 71.3 sales per day for August. Well, 61 on August 1st means we are off to a great start!

vanpire
Guest
vanpire

@JR:
Have you driven along HWY 1 lately?
Now that’s a gigantic non-residential construction project. They are trying to make it last forever, judging by the snail pace of progress there, but eventually this will be finished too. Thousands of jobs right there.
Oh my…

VHB
Member
VHB

Here is the August month-end projection. Things are obviously volatile until a few more days’ data come in. But keeping those sales < 70 is where we need to be to beat 2008!

I think we're a lock for double digit MoI this month.

Aug-2012	
Total days	22
Days elapsed so far	1
Weekends / holidays	0
Days missing	0
Days remaining	21
7 Calendar Day Moving Average: Sales	77
7 Calendar Day Moving Average: Listings	193
SALES	
Sales so far	61
Projection for rest of month (using 7day MA)	1617
Projected month end total	1678
NEW LISTINGS	
Listings so far	258
Projection for rest of month (using 7day MA)	4061
Projected month end total	4319
Sell-list so far	23.6%
Projected month-end sell-list	38.8%
MONTHS OF INVENTORY	
Inventory as of August 1, 2012	18708
Current MoI at this sales pace	11.15
Anonymous
Guest
Anonymous

“what percentage of BC’s GDP is based on construction. It has to be astronomical.”

Yes it must be. There are construction labourer jobs on Craigs list at $15 to $18 per hour asking people to just show up to the job site to be hired. That is unusual even during the past several years of the bubble.

Lagos
Guest
Lagos

@JR: The problem is now that there has been so much over-development there will likely be little need for more residential or commercial new construction for at least 5 years.

Don’t worry, there will be plenty of jobs repairing all those buildings they’re workin on now. Get ready for post-boomtime leaky condo crisis part 2!

patriotz
Member

@Lagos:
LOL.

But I’ll add that production of housing (or anything else) is not based on “need”, but on profit.

There are still plenty of empty dwellings in the US, yet developers are building today in almost all markets, including Vegas. Why – they are able to make a profit and that’s what they’re in business for.

Likewise you will see developers building in Vancouver regardless of how many empty dwellings there are. As well a lot of owner-occupiers will be building secondary suites and laneway houses, because they will produce needed cash flow.

Laibach
Member
Laibach
Vote Down The Facts
Guest
Vote Down The Facts

@patriotz: “they are able to make a profit”

How are they able to make a profit?

Boombust
Guest
Boombust

If some people are hoping that construction jobs will continue to prop up the economy after this bubble implodes, they need to remember the early 80’s economic downturn…

Back then, we had Expo construction, the Expo Skytrain, the Coquihalla Hwy, Northeast Coal/Tumbler Ridge, BC Place Stadium and the Alex Fraser Bridge, to name a few.

These were (and still are) enormous projects. But, they did squat to keep this province from experiencing the worst post-war recession in history.

Plus ca change, plus c’est la meme chose.

Crikey
Guest
Crikey
Not sure that I’ve seen this article mentioned, here: “New website forces realtors to compete for your listing” http://www.vancouversun.com/business/real-estate/website+forces+realtors+compete+your+listing/7009434/story.html I think this is a wonderful idea. Whether we like it or not, most of us could eventually use a service like this (or otherwise, just do everything without a Realtor at all…). Or, we can all continue paying (for example) $40,000+ for the privilege of selling a crappy East Van house with a Realtor. From the article, a quote from a Realtor convincing us all to do just that (please try not to laugh): ‘One cannot replace the relationship built in trust between the realtor and sellers/buyers’ Then there’s this gem from the article: “Vancouver-based realtor Michael Tudorie said he would not be interested in joining a service where realtors bid each other down to get deals”. So let me… Read more »
blamegame
Guest
blamegame

@Vote Down The Facts: I don’t understand your question. They build homes and people buy them. The difference between the cost of all inputs (construction supplies, land, labour) is less than the selling price of the home. That’s called profit.

You understand that even in a housing bust where prices drop 50% there are still some buyers right? And land and labour prices tend to go down so builders can sell for less and still make profit. The buyers that are still around may prefer a new build to one that is several years old in a subdivision littered with foreclosures.

If you are a builder, you build as long as you can make it work. If you can’t make it work you find a different job to do.

Clockbike
Member
Clockbike

“Vancouver real estate market in full retreat”
http://business.financialpost.com/2012/08/02/vancouver-real-estate-market-in-full-retreat/
Source: Financial Post.

jesse
Member
@JR: http://www.bcstats.gov.bc.ca/StatisticsBySubject/Economy/EconomicAccounts.aspx Year / Construction / Residential buildings / Non-residential buildings / % goods sector / % all industries 1997 6,617 2,096 1,180 23.3 5.9 1998 6,101 1,837 934 21.9 5.4 1999 5,881 1,542 1,094 20.2 5.1 2000 5,795 1,539 896 18.5 4.8 2001 6,021 1,669 806 19.6 4.9 2002 6,328 2,030 889 20.0 5.0 2003 6,927 2,332 919 21.4 5.3 2004 7,675 2,740 1,071 22.4 5.7 2005 8,115 2,950 1,066 22.3 5.7 2006 8,936 3,242 1,255 24.0 6.1 2007 9,097 3,314 1,159 24.5 6.0 2008 9,501 3,428 1,319 26.0 6.3 2009 8,617 2,889 1,354 25.9 5.8 2010 9,673 3,116 1,283 27.3 6.3 2011 10,323 3,148 1,280 27.6 6.6
M-
Member
@Crikey: When you hire a realtor to sell your house, you’re not setting the commission just for *your* realtor. You’re also setting the commission for the buyer’s realtor. If the commission’s not sufficient for the buyer’s realtor, they won’t bring their clients to you, or they won’t push your place, or they’ll talk your place down after seeing it. The buyer’s realtor wants to get a good commission off of their marks. If you’re a buyer, and your realtor helps you to buy a place, the realtor doesn’t say “I helped buy that place”. No. The buyer’s realtor says they “sold” the place. So when you sign up with a realtor to sell your home, you’re really trying to get a buyer’s realtor to get their mark to spend as much money as they can on your place. And that… Read more »
VMD
Member

G&M today: Toronto condo market loses steam as investors bolt

Toronto condo market losing ground
The stock of unsold condos in Toronto is growing as the market loses some steam.

Urbanation, which tracks the Toronto market, is expected to report today that the number of unsold units hit a record at the end of the second quarter.
At the same time, sales of new units sank to their lowest since about mid-2010, down more than 20 per cent from the first quarter and a whopping 50 per cent from a year earlier, although last year’s numbers were particularly strong.

Notably, the so-called absorption rate declined to the lowest since late 2008, the depths of the financial crisis.

That’s because investors are dropping out, said Derek Holt and Dov Zigler of Bank of Nova Scotia.

UnagiDon
Guest
UnagiDon

@Crikey: FSBO and low-commision realtors are viable options in some parts of Canada, but not in Vancouver. Check out:
http://propertyguys.com/location/
The closest office is in Coquitlam. Nothing in Van, Richmond, West Van, North Van, etc. Why not? Greater Toronto has tons of offices.

The reason is that localrealtors steer buyers away from these FSBO and low-commission listings. (See, e.g., the article’s comments by anon554277897 and DrCopper.) Van RE is very much like a cartel.

Vote Down The Facts
Guest
Vote Down The Facts

@blamegame: “I don’t understand your question. They build homes and people buy them.”

Exactly. Patriotz says that production of anything is not based on “need” but profit. My contention is that the producer has some expectation of demand at a price that yields a profit. They don’t just produce and hope for the best – they take the “needs” of the market into consideration.

Crikey
Guest
Crikey
@M-: “it won’t work out as well for the sellers as they might expect; the buyer’s realtors are the ones that you really need to be paying.” It won’t work out as well until we reach the critical mass of enough people doing it the more competitive way. At that point, it will be even more obvious than it already is that a buyer’s realtor is greedily ignoring any lower-commissioned listing. Good luck with realtors continuing to keep customers that way. Most buyers know how to use the “internet” and know what they want, and thus can’t be convinced otherwise by a salesman. The few remaining older buyers that rely completely on realtors, and can hardly use the internet, are disappearing. As for your anecdote of how you made more money by paying a higher commission, I know anecdotes of… Read more »
blamegame
Guest
blamegame

@Vote Down The Facts: Well I guess it’s semantics. You have a different definition of ‘need’ than patriotz does. I’d tend to lean towards patriots definition though, the buyer would be someone who ‘wants’ a new house and can afford it, I think it’s a stretch to call that a ‘need’.

VMD
Member
Simpatico
Member
Simpatico
@UnagiDon: Our experience in selling our personal residence just as the bubble burst in Portland, Oregon in 2006…we went FSBO, despite the discouragement of every realtor who was a personal friend or acquaintance, and sold our house for asking price, saving the entire commission. The FSBO there offered great service, great signs, templates for flyers, 3 hr. training, video on staging and selling, mls listing, all legal docs, excellent RE appraisal. However, we weren’t greedy, so we sold in less than 3 mos. and ended up being the highest sales price in the area for the following 4 years. Later, many of our neighbors also went to FSBO. Folks, staging and selling one’s home is not rocket science, and it’s better to earn the money yourself especially when prices are falling. Whatever the RE monopoly, we learned that when the… Read more »
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