As fatuous and self-obsessed as BC has become, this pathetic blog reluctantly devotes another post (Part Deux) to the west coast real estate implosion. Why does this matter in Halifax, Montreal or the flat part? Because the housing excess of the Lower Mainland, if it blows the wrong way, might cover much of the nation in spray. You can bet, for example, that widespread losses for newbie investors in Vancouver will impact Toronto within weeks, and ripple out from there.
After all, this is a $20 billion annual real estate market in a city a third the size of the GTA. Housing represented $51 billion in economic activity last year in this region alone and employed more than 8,000 people. Like California before the property bubble burst, the province has allowed a shocking proportion of its GDP to be concentrated in one sector, which relies so heavily on horniness, greed, envy and delusion.
In case you missed it, the country’s about to flip into austerity mode. Ontario drops its budget on March 27th, which will raise fees (also called taxes) and slash spending on useless stuff like bridges and teachers. Two days later F does the same at the federal level, setting the scene for reduced public pensions and a helluva lot fewer civil servants (hope you didn’t just buy in Ottawa).
In fact, almost every government in Canada is in hock. Unemployment is inching ahead. The economy is crawling. And yet personal borrowing continues to rise, because people are not paying attention or have been drugged by pixies. Immigrant pixies. So against this backdrop, an implosion in housing values in the very place where real estate is worshiped as a deity, and carries such economic weight, will be felt everywhere.
So it’s with heavy heart that I report it’s started. Vancouver may not be screwed yet, but there’s a whole lot of hot foreplay going on.
Indications are the sales collapse we told you about two weeks ago continues. March is rapidly turning into one of the worst months in recent memory. The comparison with last March (which was the peak of the 2011 market) will be shocking. Detached sales will likely tumble by over40%, with condo deals off by a third. Many areas which were HAM heaven a year ago are being set up for a 50% rout in sales.
How bad will this be? Well, think 2008. And as you know, sales crumble first, prices later.
“I went to a party tonight,” says a well-connected realtor, “and you can tell most people don’t believe that it can ever fall here. They sure don’t get out much.”
But maybe they should. The rest of BC’s already entering into real estate rage. Listings have exploded and prices started to collapse through the Okanagan valley, with places like Kelowna in a funk. “No jobs in this town anymore, and now I can’t sell my damn house,” one blog dogette reports. “I live on one of the so-called prestige streets up in the hills. I have never, ever seen so many For Sale signs. And not one says SOLD.”
And if you’re looking for a beautiful, new, rambling granite-and-stainless clad Boomer McMansion overlooking the ocean or sidling up to a golf course full of hideous wrinkly people, then come to Vancouver Island for a boffo choice. In fact, in the small communities of Qualicum and Parksville there are about 120 of them for sale between $600,000 and a million. But don’t hurry. Almost nothing is selling. In Victoria, you can pick trough 123 properties listed for around a million. Listed, but lifeless.
And in the Kootenays, crickets. Prices have dropped 5% while sales have plunged 27% in the first two months of the year. Compare that with Vancouver, where sales are off about 16% for the same period. According to new numbers from the BC realtors’ cartel, sales have faded by 7.6% so far in 2012.
This should surprise nobody. But it will stun everyone. Because the average price in Vancouver actually increased last month, there’s a false perception declines are impossible. Every day that thought is held, the danger to homeowners there, and across the land, augments.
And we haven’t ever heard what F has in store for us yet…
Finally, I’d like to share with you one of the reasons people are so thick. We’re herd animals. We like clotting into groups because the company gives us confidence and reinforces our actions. When everybody’s doing the same thing, how can it be wrong?
Bob Rennie knows this. He’s a marketing guru and condo-flogger supreme, who’s gambling that this Saturday morning he will pull off a sales spectacular as ‘Marine Gateway’ goes on sale, just a 9 minute trip from the jet fumes of Vancouver airport. To help keep the herd from stampeding and liquefying its weaker members, the ‘Rules of the Game’ below have just been sent to the 11,000 people who pre-registered to get their hands on one of the 418 condo units.
It’s been designed to encourage a riot. A fitting end.