Every City has it's moniker. Vegas is Sin City, Toronto is Hog Town, Detroit is Motor City..what is our alter ego?We are definitely RE City. How do I come by that?
Firstly as an industry RE is probably the biggest employer in this City. Realtors, Mortgage brokers (independent and bank), Appraisers, residential construction workers, renovators, sub-contractors, RE papers, Notaries, RE Lawyers ...add it all up and I think it beats every other industry hands down. And this is one of the main reasons why this bubble has got to be kept inflated at all costs..future be damned.
In fact I would go so far as to say one of our major exports is Real Estate too. How so? Take a walk past the fancy buildings in Coal Harbour one evening at 9pm, and you will see that only 20% of the lights are on. What's happening in the other 80%. Maybe they spent so much on the apartment that they are trying to save money by living in the dark.
However the truth is, they are absentee owners. I was told that one building was marketed in Hong Kong before it was even marketed here. Most of the units were sold, and several years after opening, many owners still haven't come to look at their units, but have an agent here to take care of it. In fact very country in the world is represented; South Africa, Australia, the Middle East and of course plenty of US owners.
This is the natural result of becoming a desirable city with strong property laws in a safe country. It happened in London and New York and Toronto. Lots of absentee owners. It hasn't happened in Winnipeg yet, or Des Moines.
It is the same as Canucks owning property in Palm Desert, the only difference is Palm Desert is sorrounded by, well endless desert, which can be watered and planted with grass and voila- another golf course to build homes around- and we aren't.
I recently looked at a Townhouse for rent. The agent told me he had investors from Toronto and the Far East who owned several town-houses and apartments EACH, all bought with cash. Unless things get really bad, these don't sound to me like they would be the desperate-sellers-of-the-future.Not only is RE the big cheese here, it is almost the whole cheese. Now that Natural gas has taken such a tumble, the government needs a robust RE market for revenues. Each transaction generates many thousands in direct and indirect taxes and economic activity.
Everyone talks about it. How many dinner parties have I been to where half the discussion is about RE. It is quite bizarre. No one talks about RE in California anymore, or so I am told. But for us, it is all consuming.
.......................................................................................
I see David Dodge is extolling Canadians to save more and borrow less, or face the dire consequences. Eh, David..save and do what with it? Put it in the bank and get 0.25%?? Put it in the stock-market which goes up 50% one year and down 60% the next? Or leave it under the mattress and wait for the government to devalue money even more??
If you want people to save more and borrow less...INCREASE THE INTEREST RATES. I would have thought that was obvious.
.................................................................................................
Ok folks we are heading into the last 10 days of March. the market is starting to wobble a bit. This could be the start of the down-slope. I would not expect another Hail Mary drop like we had in 2008, but a more gradual decline which will exasperate bears and bulls alike.
And that is only a maybe. It depends on what happens with interest rates, with the stock-market and commodities, with the Chinese economy, and with unemployment.
However with the current confluence of factors:
HST
Tighter Mortgage Rules
Post Olympic Fizzle
Lowest ever interest rates
Provincial Government cutting jobs and more to come
Terrible Affordability
If we don't get a down-turn, then we will have to wait for the asteroid in 2012.
