The month of no good very bad numbers
April is the month where every economic indicator drops off the cliff. In the coming weeks as different economic indicators are released you are going to see a lot of squiggly graphs followed by a quantum jump or drop. April was peak lockdown for Canada, and so it will be peak economic impact in most areas, with real estate no exception.
Starting with sales, which finished the month down some 59% from last April. Because last April was already a weak month due to lingering mortgage stress test impacts, the seasonally adjusted data is truly astonishing. For the past few months I’ve started producing the seasonally adjusted sales data using the data analytics platform R. Well the seasonal adjustment algorithm I use (X13-ARIMA-SEATS) is normally great at showing the trend in the data, but this time it immediately assumed the April values must be outliers and essentially threw them out. After puzzling over why the chart wasn’t showing a big drop, I fiddled with the code and extracted the raw adjusted data which shows the true magnitude of the decline. You’ll notice the rest of the chart is a bit noisier than usual though.
Seasonally adjusted sales are lower than during the financial crisis
New listings are similar, down some 53% from this time last year. Here we see even more of a divergence from the bottom of the Great Financial Crisis, where despite the very bad news on the TV the market went on more or less as usual for anyone wanting to buy or sell. During the lockdown, no one was keen to have people coming through their house, and most of those who could hold off from selling did so.
The huge drop in new listings prevented inventory from increasing like it usually does from March to April. That means on a seasonally adjusted basis it continued the declining trend that has been in place for about a year.
What of prices?
Last month I told you to pay no attention to monthly sales prices as the single family average jumped 10% to an all time record. That’s because that figure didn’t reflect what was going on in the market. Well this month the average dropped nearly 10%, and it is equally meaningless, as it was caused mostly by mean reversion and changes in sales mix. In many segments there just isn’t enough selling to really know what the price will be, but so far there is little indication of substantial movement in the entire market. Remember the real estate market moves slowly and though sales can crash or explode quickly, prices tend to move over months or years, especially on the downside.
There are two ways to think about prices:
- The market value for the place you are looking for OR
- The price you can actually buy a house for.
In normal markets, those two are essentially the same, which leads to the common misconception that whatever a house trades hands for is equal to market value. It’s true that in a normal market those two prices are pretty similar and you’re not likely to get any great deals. If the seller doesn’t like your offer, they will move on and find another buyer. Only in extreme markets do we tend to see people buying at prices that significantly diverge from market value. That’s because market value (which I wrote about in more detail here) depends on a competitive market with buyers and sellers not under undue stress and a reasonable exposure to the market. That falls apart in extremely hot markets like 2016 when we saw a lot of above-market sales, and during a locked up market like we saw in April, where we have neither a competitive market and a lot of sellers under duress. I wouldn’t say there’s been a huge number, but there have certainly been sales at prices that I don’t believe would have happened 6 weeks ago. I won’t go over it again, but during these times it’s important to watch individual listings more closely than overall market pricing.
Market value shifts more slowly, and generally moves up when the months of inventory in a market is below about 5, stays roughly constant around 6 to 7 months of inventory, and declines above about 8.
The collapse in sales has spiked seasonally adjusted months of inventory to 8.5, around the same level as we saw from 2010-2013 when prices were drifting downwards at about 2-3% per year. What effect will it have on prices? It likely all depends on how long it stays this high. As I discussed last week, the fact we are starting from a low base means we have some increased resiliency built into our market but this is certainly a sharp deterioration of conditions.
Overall, prices are still roughly flat to slightly up over the last 2 years.
April’s market was all about fear and uncertainty. That is slowly easing as the province becomes more confident in their ability to control the virus and starts easing economic restrictions. That’s why I don’t believe that we’ll be going back to the extreme lows of about 50 sales a week we were seeing around Easter. Year over year sales declines will likely continue to be very large for months to come, but absolute sales will likely increase into the summer.
What it will take for the market to shift towards buyers is more listings. While sales have come back a bit, listings continue to be at rock bottom levels, and that has surprisingly brought the sales to new listings ratio higher than this time last year.
I expect sellers to start listing again in May, but so far buyers have come back sooner. As I’ve said before, the bigger impact of this situation is not the market activity collapse during the acute lockdown period, it’s the longer term impacts on unemployment which will depress demand. We won’t know how that unfolds until late summer when the temporary economic supports start to expire.
Thanks.
No still pending. Definitely not business as usual though. Very likely some kind of hybrid approach with graduate students on campus and undergraduate mostly online.
New post: https://househuntvictoria.ca/2020/05/11/covid-unemployment-and-real-estate/
Didn’t UVic already do the same?
Mcgill University announces fall courses will be offered primarily online. Rental prices will take a hit throughout Canada if other universities follow
https://www.mcgill.ca/newsroom/channels/news/mcgills-fall-2020-semester-322097
“Large compared to where I grew up. But let’s call it a small city. Do you think it’s reasonable to question whether a small city with big drug and homeless problems should be so expensive?”
Have you considered that maybe part of the reason is because it is arguably the most desirable place to live in the country? And is it really that expensive when a couple making $75k – $80K a year each can purchase a SFH in the core in this city? Minimum wage is $30k a year now, so really it’s just 2.5x minimum wage. Think about back when minimum wage was $8 bucks an hour, was making $20 bucks an hour to be able to afford a house really that unreasonable?
Major currencies (US, JPY, EUR) get away with huge money printing, borrowing and low rates, but not the minor players. Let’s wait to see if Canada finds actual buyers (other than the BOC) for the $200 billion of borrowing (bonds, at tiny interest rates) needed to fund this year’s deficit. In the last 10 years plenty of currencies have had huge falls >50% (e.g, Russia, despite high interest rates) and “petro-currency” Canada may be next. For some perspective, the total of RSP and TFSA invested by Canadians is $60 billion.
Patriotz, Sure it is reasonable to question that. Show me why it would not be reasonable.
No disruption of production, in particular China was able to grow its supply of goods at low cost. Things are very different now. That’s not a prediction by me of high inflation, just pointing out that the situations are not the same.
Large compared to where I grew up. But let’s call it a small city. Do you think it’s reasonable to question whether a small city with big drug and homeless problems should be so expensive?
Lots of people predicted runaway inflation after the QE during and after the financial crisis as well. It never materialized. I think higher interest rates than the low rates we have had over the last 10+ years would be a good thing, but I don’t see that happening in the foreseeable future.
Geezus. How many kids do you have?
I still think that spring/summer hockey is totally over blown.
Kids need a break.
Here’s an illustration of the huge level of QE (“money printing”) that’s going on in the US in 2020. Money supply (M1/M2) expanding at huge annualized rates . This is intended to counteract the deflationary forces of the CoVid related economic contraction, but if it doesn’t reach Main St. all it does is increase stock/bond (and perhaps house) prices, and set us up for big inflation down the road.
Great CoVid site with interactive charts for data junkies… (Click “select countries” to customize) https://ourworldindata.org/grapher/covid-daily-cases-trajectory-per-million?country=CAN+DEU+SWE+AUS+NZL
Victoria is a large city now??
Ignore Patriotz, he gets testy if people point out the obvious and goes into controlling mode telling them what they should write.
News flash: Large cities don’t have just one problem. And instead of implying that people who think that Victoria is too expensive are off their rockers, try to be more positive. Talk about the nice weather and stuff. Otherwise the finger may point back at you.
No idea about groceries but I estimated I have saved about 8 -10K with no kids spring hockey and lacrosse etc..
That’s all part of the plan… change density, sell, piss off neighbours, buy their property & repeat.
Infinite money.
Talking about shopping, just add a bit fun observation about the toilet paper. Since started having Covid symptoms 5 weeks ago (have recovered since), I was given a private bathroom, with my own toilet paper rolls. By today, I am half way through the 4th roll since my privilege started (the rolls were from different brands and feel different, that is why I remembered).
With this newly gained knowledge, I wonder why people were so rushed to buy/stock that much of them early on? 😉
Good to know it’s not just me (although my case does seem to be the worst).
I’m reining in our grocery spending this month! Beans and rice, rice and beans. No ice cream.
Probably spending $150 per month more on groceries. I bet in the past 5 years we have bought ice cream at the grocery store maybe 3 times. But not now. We eat ice cream for desert maybe 5 days out of 7. Cashier at Save-on-Foods said, without me mentioning it, that she can not believe how much ice cream is being purchased. A form of comfort food I guess. Also eating more sweets than usual. Gained a couple of pounds as well. Spending a lot less on gas. The same on liquor, and much less on restaurant food. Also, trying recipes out that I probably wouldnèt have before. Garden is looking great too.
It really depends on individual’s personal situation.
If one has secured income or/and good pension set for life, then why not to enjoy it and support local (and non local) businesses at the same time? If not, one might need to keep a balance between saving and spending, so one can support local businesses now and also for a long time to come.
freedom_2008, I actually never really looked in detail on much I spent on those “pleasures” until now, I knew it was ball park in the $1000 range but didn’t really think about how much I can cut out and still not feel like I am skimping on life. Now that I am thinking about it, I am just as happy and can do without most of that stuff so will probably will keep it dialed back after things open up again, which I guess doesn’t bode well with supporting local businesses.
KS: Avoided Pandora, downtown still looks pretty bad.
If one used to spend average $40/day or night extra for bars and restaurants before Covid time, that’s not really savings, but lots of Lost “pleasures”. Should we feel sorry for ya? 😉
Don’t really know if we’re spending more or less I stopped tracking spending in detail a couple years back. probably a bit more, also because we are ordering more takeout and shopping at the local market to avoid the lines.
Did you drive down Pandora barrister?
Yes, but that’s only relevant to the portion of money laundered through real estate, and that speaks to my point that it is high real estate prices that is the real target, and not the underlying crimes. The hope isn’t just that the beneficial registry catches money launderers and stops their associated crimes, the main hope is that it reduces the prices for Real estate. The govt is targeting anything that might be raising RE prices, so money launderers get attention. Same with foreigners and satellite families – targeted merely because they may be raising RE prices.
Anyway, if real estate prices fall on their own from CoVid, if my theory is correct, I predict that the public and the govt’s interest in money laundering and the other boogeymen will vanish. Thanks for the discussion.
We are spending a bit more maybe but not a lot. On reflection probably spending a bit less. Not really enough to make a difference.
Drove through downtown today and in spite of the nice weather and early spring. Large parts of it look like a shit hole. If this city council is not extremely careful it is possible that we could cross a threshold where the downtown becomes hollowed out.
Yep, ours increased, too, but less than 50%. Also I stopped checking price at the cashier as I do sometimes before, so when they put in $13 for a bag of potatoes (at root cellar), I didn’t say nothing even I knew it should be $7. Once you have gloves and mask on, you are at war and it is not the time for little details, plus the money went for a good cause to support local businesses.
Not much change in restaurants bills, as most places we like are still open for taking outs.
On the spending -less side, filled car gas in Feb 28 at Costco, still have about half tank left today 🙂
Plan to buy e-bikes soon, as no more money needed for travel for this year and likely the next year as well.
Our grocery bill is the same. Go to Costco once every 2 weeks before and after restrictions were imposed for most of our grocery needs. Also was working from home already so did not eat out all that much. Spending about the same on takeout. Spending more on liquor though.
Saving on insurance by not renewing one of our vehicles that ran out April 1st and I have only visited the gas station once since the restrictions began. Saving on gym fees and pre-school classes for our youngest 2. Also 0 ferry costs for visiting grandpa and grandma in Vancouver.
So overall spending a lot less.
I saved $1200 last month due to the lack of options in eating out and no places to buy drinks other than the liquor store.
Fool house spent, on groceries in 2020:
Jan $750.70
Feb $814.66
Mar $1,005.15
Apr $1,027.43
No known change in buying behaviour, but our monthly restaurant bill has fallen about ~50%.
Holy smokes, our grocery expenses have really gone up lately. Feb-Mar-Apr were all higher than normal months for us, and in April we spent 50% more than average! We haven’t been stocking up like crazy — at least I didn’t think so.
Is anyone else experiencing this?
Barrister, when did the police get told not to enforce the law on Pandora? I swear I seen drug busts there on the news in the past year.
Not long ago many people on this board was having a hysteria of how the problem was housing, cost of living, etc…, and now people finally agree that it is a drugs problem that we have in this city.
“Why can’t do just have a few of them patrol up and down Pandora and Johnson?“
Crackdowns disperse the problem over a wider area while a select few people get sent through the revolving door criminal justice system at great expense.
Our housing problems in a nutshell.
Tons of dumpy single family properties in Victoria that would be infinitely improved with some more density.
It just mean that we really got rip-off on the deal, and at first drugs problem would just move indoor till it spilled out on to the street even bigger than the present.
The Uplands house looked solid to me.
Quick 360 tour of the house shown that it has been extensively updated at least once somewhere around mid 90s. No foundation crack to be seen in the craw space, very minor/aged mud and lath cracks in a few place, wiring and lighting are updated, Poly-B water main tubing with compression fittings (good solution for Poly-B) indicated that it was updated in the mid 90s (minor water seepage through wall that can easily be reseal), popular 90s central vacuum system, heating is updated to top notch 10 zones copper and PEX-AL-PEX (popularity started in the 90s) with high efficient condensing boiler. A quick count of single panel windows and doors suggests that one might want to upgrade to double panel that could cost 20-25K, and if the roof and gutter need to be address then that may cost another 15-20K.
KS 112: The police are told not to enforce the laws on Pandora. Little point in having more patrol.
I am getting the feeling that this summers tourist season is pretty well dead and I dont know how many the businesses can hold on till next year. A city council that seems almost exclusively focused on attracting more druggies to Victoria seems to be under estimating the potential economic carnage.
Given where Our Place is, that site on Pandora is ideal, which is probably the Leverage Kang and Gill had. IMO the police are pretty much useless in Victoria. I can’t believe the city pays cops at over time rate to do walk through at bars on weekends.
Why can’t do just have a few of them patrol up and down Pandora and Johnson?
I cant believe that the city paid that for some land that they had allowed to turn into drug haven. If I did not have so much faith in our public servants I would be hoping that the police would start looking for corruption.
Hope we can manage to get a sane slate of candidates to run.
926 and 932 Pandora Avenue
Is the address a secret? What does BC Assessment say?
I am sure the neighbors would love that Leo 😉
The city should buy up some residential zoned properties, rezone to higher density, and sell to a developer.
Infinite money printing machine.
Marko u should write to the tc and get them to do a story
Does not appear that any physical improvements were made to the property. It is a development site (building is going to be torn down).
It’s a disgrace that there are people making 150k/year plus a lot of 100k/year plus salaries at city hall so they can pay 2x market value. This is getting to the point where enough is enough, it is beyond ridiculous.
Did the Developer do any development of the property?
Late 2016 thought (market was approaching peak)
“Head – Strategic Real Estate” making over 150k/yea”
That’s is the problem right there Marko, that’s what u get when you pay 150k a year for someone to be the head of your “strategic real estate group”. That’s same as the all-in analyst compensation at my firm assuming top performer.
Not sure how hard the city negotiated, I am sure it’s not ideal for a developer to build anything across the street from Our Place. City should have done a partnership with Kang and Gill, some type of design-build-lease with an option to buy structure since clearly the city has zero idea on how to solve the homeless problem at the moment.
Imagine Saanich having lax building codes. Ha!
I’m not disagreeing at all. It’s the reason for the price discrepancy, that’s all.
Barrister, but one is on a 7000 sqft lot in South oak Bay with no water views while the other is on a lot twice as big in uplands. I dunno unless south oak Bay rivals uplands in prestige I don’t see why it’s worth 500k more. Especially since the older house in uplands is updated and looks well taken care of.
Barrister: $3.7M in 2016.
Marrko: When did the developer buy this property; if it was in the last ten years the city got robbed.
Have to love this….so the city of victoria has a real estate department with “Head – Strategic Real Estate” making over 150k/year and they just dropped $8,885,000 on a property on Pandora that the developer paid $3.7 million for….I think everyone deserves a bonus.
Of the two houses. it is hard to pin point the value without a pretty detailed set of inspections of both. This particularly true of the 1933 house. How old is the wiring, is it all update, age of roof, engineering report for the foundation. What updates on plumbing and age and state of heating system. All the usual. But new does not necessarily mean either high quality or trouble free particularly if this is planned as a long term home.
I’ve covered the report, it’s garbage in garbage out modelling
https://househuntvictoria.ca/2019/05/10/5-bajillion-dollars/
The beneficial owership registry is a concrete thing they are doing right now. Not just talk
One is landscaped/treed, character, tasteful with hydronic heating (for 500K one could do wonder plus add infloor heating in every room), and the other is characterless white scheme square box on 1/2 size lot, lack of landscaping with neighbour walls for view.
To me the 1933 house is much more value, and I would consider it over the new house even if both house price are on par.
One was built in 1933, the other is brand new.
There won’t be any crack down on money laundering here, just more, talk, reports, panels and hearings.
And if you believe the govt ML reports (which I don’t) , you’d know that Alberta supposedly leads the country in ML, with twice the ML that BC has. So by your reasoning, Alberta RE prices should be very high already. https://edmontonjournal.com/news/local-news/b-c-report-estimates-billions-of-dollars-laundered-in-alberta-each-year/
Patrick, think of it as BC helping out our friends in Alberta. If we crack down on money laundering here, then the money launderers move to Alberta and help support their suffering housing market. Win win.
Another way of looking at it is that the government discovered money laundering was a large problem in BC thanks to the panel finding it played a large factor in real estate prices. Making it harder to spend dirty in money can be a good goal on its own. Cracking down on the underlying crime is the police’s job. Not sure how the government can solve crime by passing legislation.
Also the underlying crime might not even be happening in BC.
Well yes, and and indication of that is that the only bad thing I’ve ever heard the govt say about money launderers is that they are driving up RE prices.
It’s easy to find articles about how the crackdown on money laundering will lower RE prices.
It’s hard to find articles that say a crackdown on money laundering will lower the rate of the underlying crimes.
Here’s the articles I found, these are quotes from the govt or govt press releases…
“Billions in money laundering increased B.C. housing prices, expert panel finds”.
https://news.gov.bc.ca/releases/2019FIN0051-000914
“Our government is tackling the housing crisis head-on and taking action to combat the money laundering has been allowed to drive up housing costs for British Columbians for far too long.” https://news.gov.bc.ca/releases/2019FIN0051-000914
2020: By cracking down on money laundering, stopping fraud, targeting speculators, closing loopholes, and making renting more secure, government is working to make housing more affordable for British Columbians.” https://www.princegeorgecitizen.com/b-c-budget-2020-no-new-relief-for-renters-or-homebuyers-1.24078870
Therefore, it seems to me the primary motivation for BC to take a huge interest in money laundering isn’t to crack down on the underlying crimes. It is to feed on the public’s belief that RE prices are high because of money launderers, and the govt is helping to lower RE prices. When have you heard the govt talk at all about the underlying crime rates, and which of the crimes are more important to concentrate on? They’re telling you in these articles that the goal of the ML crackdown is to lower RE prices, and not even mentioning the underlying crimes.
Can I have a few more chime in on my question below? Is south oakbay a more prestigious neighborhood than uplands now?
Can someone tell me why anyone would pay $2.8M for this house:
https://www.realtor.ca/real-estate/21541087/586-oliver-st-victoria-south-oak-bay
when they can get this one for almost $500k less?
https://www.realtor.ca/real-estate/21637956/3350-upper-terrace-rd-victoria-uplands
Things were looking up in Dec 1933 for real estate.
The $1.7M in sales volume for 1933, approximately $33M in today’s dollars, compares to $4.5B sales volume in 2019.
Stock market discounts all gone.
Mortgage rate down to almost free.
No amazing deals in the condo market yet.
Looks like it’s time to go all in BTC.
Leif: I am in Rockland and not the Uplands. Nice house on Upper Terrace though. A little bit over priced in my mind but I have not been in the house. (Mind you I think most things are overpriced and they still sell.)
Well when you put it this way society should be thanking those money launderers for helping the economy!
Reality is though the entire attraction of the crime is being able to use the money. If we made it hard to launder so people could only bury it in the backyard many of the crimes would never happen in the first place.
So what if a lot of the money is from money laundering?
The underlying crimes (drugs, thefts etc.) damage society, and should be punished, but the laundering of the money actually mitigates the crimes and allows the money to re-enter the economy, often with taxes paid too.
$1m in cash doesn’t help our economy, that’s dead money until it re-enters the economy and gets circulated again. For example, if someone made $1m cash as a “bookie” with technically illegal sports betting, that’s a minor crime. If he buries that money is his backyard he’s also hurting the economy. Now if he digs it up and launders that money and buys a house, he’s helping society, not hurting it. And if he pays tax along the way, even better.
Most people here on househunt hate money launderers for self-serving reasons, – mainly because they believe they are driving UP the price of Real estate. That’s the “real crime” for them. An illustration of that is that I haven’t seen much discussion here of a need to increase investigation of the underlying crimes (theft, selling drugs, prostitution, illegal gambling etc). Where are the calls for govt task forces, hearings, and expensive reports for investigating those crimes?
Well if they lost their job due to COVID. That could be a part time job (they can work 20 hours/week) or a full time co-op job.
But yes, a small minority of international students would qualify for CERB.
That is a really funny statement. Students’ main job is to study, most (if not all) Canadian students don’t even qualify for CERB (that is why government offered $1250/month support to them for this summer), how international students could qualify is way beyond my (possibly limited) imagination ….
Yes, any resident should be eligible. And that should include most foreign students and temp workers, and should likely be expanded to include all of them. This is “helicopter money” being borrowed by the govt (printed by the BOC) and there are plenty of examples already where it isn’t going to those most in need. But so what, it’s more about circulating money that will only be in their hands for a few weeks before it is spent in the Canadian economy on goods and services, which is the value of it. Because it doesn’t matter if a landlord or restaurant receives money from a temp worker or a Canadian citizen. Since the program is limited to people/businesses affected by CoVid, odds are high that the money will all be spent quickly in Canada, helping our economy.
Pretty sure Barrister lives in Rockland.
Anyone saying non-citizens in this context gets zero credibility from me. Permanent residents have all the rights of citizens except for a few exceptions such as voting.
/puts hand up
Hey barrister did you finally list your house?
https://www.realtor.ca/real-estate/21712749/3495-upper-terrace-rd-victoria-uplands
Not sure if it’s yours or not but the description you have written before seems to match.
I think the eligibility criteria are based on taxable income made in Canada in 2019. Why wouldn’t they be eligible if they are paying into our tax system. Also a lot people working in Canada on a temporary work permit are in the process of getting permanent residence. I worked in Canada for 2 years under a temporary work permit until my permanent residence application was approved (it took 3 years for the application to get through the system).
This part is misleading. Temporary workers that are only here for a seasonal job would probably not qualify and international students that did not have enough Canadian taxable income in 2019 do not qualify.
Also saying non-citizens would technically include permanent residents, and I assume that group is even bigger.
No no. The main value of SFHs are the land, check out the lot size and then compare again.
LeoM
You mean is happening??
207-1525 Hillside Avenue, Victoria, BC, V8T 2C1
$324,900 2020-02-20
$319,900 2020-02-25
$314,900 2020-03-09
$311,000 2020-03-18
$307,500 2020-03-23
$304,600 2020-04-06
$299,999 2020-04-09
$295,000 2020-05-05
Overall Change= -$ 29,900.00
Percent: -9.20
203-1000 Park Boulevard, Victoria, BC, V8V 2T4
$649,900 2020-02-20
$599,900 2020-03-03
$575,000 2020-03-09
$569,000 2020-04-21
Overall Change= -$ 80,900.00
Percent: -12.45
106-103 East Gorge Road, Victoria, BC, V9A 6Z2
$569,999 2019-09-03
$549,900 2019-09-17
$519,900 2019-10-03
$488,000 2020-02-24
$459,000 2020-03-18
Overall Change= -$ 110,999.00
Percent: -19.47
708-103 East Gorge Road, Victoria, BC, V9A 6Z2
$537,800 2020-02-20
$499,800 2020-02-25
$484,900 2020-03-16
$474,500 2020-03-20
$446,800 2020-05-04
Overall Change= -$ 91,000.00
Percent: -16.92
ks112 – requirement for $500k of renos to modernize?
Can someone tell me why anyone would pay $2.8M for this house:
https://www.realtor.ca/real-estate/21541087/586-oliver-st-victoria-south-oak-bay
when they can get this one for almost $500k less?
https://www.realtor.ca/real-estate/21637956/3350-upper-terrace-rd-victoria-uplands
No.
I said it wasn’t do-able if one has lost their job.
As in what was once do-able is no longer do-able.
Not sure how an all clear, could help out in this situation if there so many false negatives and everyone that tests negative you would still need to do a follow-up test.
It sounds like this test would be better suited to get a potential quick positive for people that have a high likelihood of having Covid-19, to get them into isolation quickly.
Lol James Soper, you are saying that a James Bay home should be affordable to the point where one person making 80k a year can carry the mortgage?
Can this possibly be true??!!
https://thinkpol.ca/2020/05/08/government-extends-cerb-international-students-foreign-workers/
If they ran a battery of tests, think of everything we could get rid of.
What’s happening in Vancouver will happen in Victoria too.
“Metro Vancouver condo prices plunge in April as COVID-19 pummels struggling market”
https://thinkpol.ca/2020/05/08/metro-vancouver-condo-prices-plunge-april-covid-19-pummels-struggling-market/
Assessed value is $1.092, or if you go by MLS it’s 1.11 (because they use last year assessment).
If you look at houses in the area, you’ll see just a few doors down at 48 Menzies St sold a year ago for more ($850k), even though it’s assessed at 900k (it’s also a 4 bedroom 2 bathroom, smaller plot of land though).
Not if one of them has lost their job.
There’s more government intervention to keep prices high than the opposite.
They were about to loosen the stress test before this all unfolded.
Interest rates have barely budged in over a decade despite very low unemployment.
So far, in 2 months, with absolutely mind boggling support from government. Like compare what’s happening now w/ what happened in 2008.
The amount of money being thrown around is absurd, and we’re only 2 months into this.
Don’t know how you continue that for another 10-16 months.
A 3600 mortgage is doable for a couple each earning 80k a year.
ks112:
I don’t know Ks112. If the Zolo data is correct about the size of mortgages, just in James Bay, perhaps Victoria might be skewing the data.
That monthly payment reflects an $800,000 mortgage. Yikes.
Marko Juras:
Perhaps the new price reflects the new market??
https://www.zolo.ca/victoria-real-estate/533-rithet-street
I don’t think the price adjustment had to do anything with the market as a whole; it was listed too high for the market when it came out at above $1 million.
I agree but the fact that it hasn’t dropped with all the government interventions is crazy. 1950s box have been trading hands in Burnaby for $1.5 +/- for two years when imo they should be somewhere around 800k to $1 million.
It’s like saying stock market crashed with COVID19…..well it did from the super short peak in February/March peaks but TSX is not down even 10% from where it was trading the bulk of last year.
QT
Well, if you’re patient enough, apparently the core will become more reasonable.
905 Lawndale Avenue, Victoria, near the Fairfield/Oak Bay border
2020-03-04 : $968,800
2020-05-04 : $899,900
533 Rithet Street, Victoria, BC, V8V 1E4
$1,110,000 2019-11-04
$998,000 2019-11-18
$899,000 2019-12-03
$849,000 2019-12-20
$839,000 2020-01-13
$829,900 2020-02-06
Overall Change= -$ 280,100.00
Percent: -25.23
Now you’re talking like a real estate board Marko.
45% higher than what? Quick check says in was one of the worst Februarys in 2 decades. Is it even above avg?
Detached market in Vancouver hasn’t had rising prices in 2 years now it looks like.
Yep. But the issue is we simply have no data on what percentage of properties have unclear ownership.
Land owner transparency act data collection is scheduled to start in June for all transactions. We will know more about all this by end of the year.
For sure it’s primarily a lower mainland thing
Patrick is correct that owning real estate through a corporation is usually done for legitimate tax planning reasons. Whether this is in a numbered company or not is irrelevant – the only difference being that a name search was done and chosen for the latter and this extra step and cost generally provides no utility for a non-commercial entity that doesn’t need a brand name.
The main issue in the money laundering report was the disclosure of beneficial ownership. This is applicable to those who hold RE in trust for a third party which is, imo, more prone to money laundering than corporate ownership.
We were likey going to see price appreciation this year in Victoria until COVID hit and that’s with the foreign buyer tax, spec tax, and everything else applied.
As for Vancouver it has dropped, but not substantially in those market segments that are within the grasp of people working in Vancouver. Sales in Vancouver in February were 45% higher than February 2019 so it was definitively stabilizing. Yet still It’s not like you can go to Burnaby and buy a fixer upper for 800k which in my opinion would be somewhat “affordable” to young professionals and then you could chip away at fixing up the place.
The first CoVid antigen test has just been approved (emergency use) by the FDA . An antigen test has the advantages of low cost (<$10) and rapid results. They are specific (low false positives) but not that sensitive (so high false negatives). So a negative result would be followed up by the standard PCR that takes longer. But that accuracy Is expected to improve with other antigen tests coming. This may lead to tests every day for high-risk workers (hospitals, dentist offices, Nursing homes, auto assembly, meat packing, airline passengers etc). Why not test everyone in high-risk situations every day if it costs <$10? The tests could be administered at drive-thru sites so every workplace or restaurant doesn’t need to become a hospital lab. We accept the time and cost of airport security screening, this testing may become the cost of the new normal to get things going again. Getting that “all clear” test would be posted to your phone and give you an all clear access to high-risk situations, including restaurants, flights etc.
FDA PR: https://www.pharmiweb.com/press-release/2020-05-09/coronavirus-covid-19-update-fda-authorizes-first-antigen-test-to-help-in-the-rapid-detection-of-t
“The U.S. Food and Drug Administration has issued the first emergency use authorization (EUA) for a COVID-19 antigen test, a new category of tests for use in the ongoing pandemic. These diagnostic tests quickly detect fragments of proteins found on or within the virus by testing samples collected from the nasal cavity using swabs. FDA:” This is just the first antigen test to be authorized and we expect more to follow”
This latest FDA authorization is for an antigen test, which is a new type of diagnostic test designed for rapid detection of the virus that causes COVID-19. Each category of diagnostic test has its own unique role in the fight against this virus. PCR tests can be incredibly accurate, but running the tests and analyzing the results can take time. One of the main advantages of an antigen test is the speed of the test, which can provide results in minutes. However, antigen tests may not detect all active infections, as they do not work the same way as a PCR test. Antigen tests are very specific for the virus, but are not as sensitive as molecular PCR tests. This means that positive results from antigen tests are highly accurate, but there is a higher chance of false negatives, so negative results do not rule out infection. With this in mind, negative results from an antigen test may need to be confirmed with a PCR test prior to making treatment decisions or to prevent the possible spread of the virus due to a false negative.“
She was being rhetorical. There is no inherent difference in transparency between 1234567 BC Ltd. and Big John’s RE Holdings Ltd. The former just sounds more sinister.
Down or not, the price reflect the demand because many people only want to live in the core, and can’t entertain the idea of living in the ghetto… “can’t stand Langford… Not to mention…it’s Langford.”
Patrick :
The provincial government disagrees.
“Right now, businesses operating in our province can hide their ownership behind numbered companies and offshore and domestic trusts,” James said.
“This is hurting communities throughout our province that are dealing with the consequences of criminal activity and high home prices, and it needs to stop.”
https://globalnews.ca/news/6087012/bc-hidden-home-ownership/
What does that have to do with construction jobs disapearing?
Hey Marko, what happened in 2015-16 to cause a huge run up in prices here?
Bunch of people came over from Vancouver.
Why do you think they came?
Foreign Buyers in Vancouver.
Ergo…
Right, and there’s nothing special or sinister about a numbered company that gives it anonymity or secrecy. Because if the numbered company instead calls itself ABC Enterprises, there’s no difference than the default name e.g. 123456789 Inc,
Real estate transactions in particular see numbered companies when it makes sense for a company to exist solely for the purpose of holding real estate. Why bother with a name? It’s usually for legitimate, routine tax reasons, and not to do with hiding ownership.
I said in Victoria thought….
There have been years where I’ve been involved in 100+ transactions and not seen a number company on a contract. It’s not super common, in Victoria.
Canada is continuing high immigration during CoVid…
https://www.cicnews.com/2020/05/canada-increases-immigration-australias-intake-declines-0514315.html#gs.5lpjv4
“ Canada inviting even more immigration candidates during COVID-19 pandemic
The coronavirus pandemic has understandably affected both country’s immigration systems, however Canada is still trying to come as close as possible to achieving the economic class targets outlined in its immigration levels plan.
In April, Canada issued 11,700 invitations to apply for permanent residence under its federal Express Entry application management system, compared with 7,800 the previous month, and 8,000 in February. In addition, Canada’s provinces continue to provide permanent resident pathways for immigration candidates during this period.”
Marco : “Foreign buyers and investors have never made up a huge % of SFH purchasers, in Victoria as much as people want to blame them for the run up in pricing.”
The data was never robustly collected, with numerous holes, and “Canadian” numbered shell companies could buy & transfer residential property, skipping the PTT.
In Vancouver, there have been agencies/realtors devoted to Chinese business; speaking Cantonese or Mandarin was a requirement.
I’m wondering if that might be a barrier and skew your perception, unless you are fluent, because the data seems full of holes.
Not saying you don’t know your business, but wondering if it’s possible that only folks catering to Chinese clientele were aware of the scale.
Marko Juras > I understand the things are down but they are down from such highs that it is still super expensive. For the same price here you can get a newer place in Oak Bay
…. or you can simply get a better deal as prices drop in Victoria, as well.
904-630 Montreal Street, Victoria, BC, V8V 4Y2
$1,249,800 2020-01-13
$1,098,800 2020-02-17
$998,800 2020-03-26
$978,000 2020-05-04
Overall Change= -$ 271,800.00
Percent: -21.75
429 Oswego Street, Victoria, BC, V8V 2B8
$1,165,000 2019-09-03
$1,049,999 2019-11-07
$999,000 2020-01-24
$899,000 2020-02-26
Overall Change= -$ 266,000.00
Percent: -22.83
I lived in Burnaby for a year and it’s not special imo……untouched 50s home still well into the 7 figures. I understand the things are down but they are down from such highs that it is still super expensive. For the same price here you can get a newer place in Oak Bay -> https://www.realtor.ca/real-estate/21821235/2111-sutherland-rd-victoria-south-oak-bay
The Case-Shiller comparison data published by ThinkPol Media (Openhousing.ca) shows a different story than the skewed benchmark pricing data. It isn’t just the high value properties with large declines anymore. Data just released show Van condo values were hit particularly hard in April.
https://thinkpol.ca/2020/05/08/metro-vancouver-condo-prices-plunge-april-covid-19-pummels-struggling-market/?fbclid=IwAR21f2tQvT3YxSkAqLKn3tnN7vt4OvE-bTz4lGwlVs3U5RQxJXmKhx1e1zg
50s box in Burnaby is still a crazy $1.3 to $1.6 mill….that’s great that a $8 million dollar home is $6 million but doesn’t really help the average Joe.
That’s exactly what they were saying about Vancouver a couple of years ago. Did they start making more land?
https://twitter.com/mortimer_1
Still seeing people moving here….not sure that COVID19 will make Victoria less attractive in terms of relocation in the long term. First time buyers these days are usually in their mid 30s with pretty solid jobs. Investment, I agree; however, I think this factor will be more pronounced in condo market weakness versus the SFH market.
I just looked at my buyer database again and had to go back to 2017 for the last time I represented a buyer on an SFH acquisition where they didn’t move in.
Foreign buyers and investors have never made up a huge % of SFH purchasers, in Victoria as much as people want to blame them for the run up in pricing.
In my opinion immigration (if it drops substantially) long term will the biggest factor on real estate in all of this…..but yea, not sure if lack of potential immigration will impact SFH core prices. I’ve helped 7 Croatian families (country of only 3.9 million) buy in Victoria (small place) in the last 24 months and all 7 have been in Canada for less than 5 years. None of the 7 managed to swing a SFH in the core, closest is 2 SFHs on the Westshore.
The pressure on real estate 300,000 +/- immigrants put on every year has to be a huge factor. It’s not just immigrants it’s that they are highly skilled and often buying real estate within a few years on arrival as is evident by farms not being able to find employees to pick produce.
“After this massive amount of housing being built currently makes its way through the construction pipeline. Are they going to continue to build new units if immigration doesn’t pick back up?”
James Soper, you are misunderstanding one fundamental fact regarding the Victoria housing market. There just aren’t a significant supply of new or old product coming on in the core, especially SFHs which is what most on this forum are interested in. Even if you got $1.5M ready to go you probably still can’t get exactly what you want (assuming non-uplands and no water views) when it comes to getting a SFH in the core.
That is the attitude that got us to the current historically high level of consumer debt, which is a bigger problem than the pandemic in the long run IMHO. It won’t go away with a vaccine.
Pretty darn fast, by the looks of it:
https://www.timescolonist.com/news/local/clearing-surgery-backlog-will-take-at-least-17-months-and-cost-millions-province-says-1.24131366
Also, dentistry is set to reopen “mid-May onwards,” according to the B.C. government’s Restart Plan:
https://www2.gov.bc.ca/gov/content/safety/emergency-preparedness-response-recovery/covid-19-provincial-support/bc-restart-plan
Car sales have sunk. Construction is fine now.
After this massive amount of housing being built currently makes its way through the construction pipeline. Are they going to continue to build new units if immigration doesn’t pick back up?
Most people I know in govt aren’t buying houses. They already have houses. All the doctors and lawyers (who aren’t doing that great through this) as well. People that are buying houses are generally people that are moving here, or are first time home buyers, or buying as an investment. If hospitality/Retail staff aren’t able to rent + lack of students, that kind kills that demand.
oh and I would take a grain of salt with those figures of people deferring their mortgages. It doesn’t mean they need to get a mortgage deferral to keep their house, it just means they think they are better off getting a mortgage deferral than not so they got one. People take advantage of free money its simple as that (and yes I know the mortgage deferral you have to pay back blah blah blah, but it is still super cheap cash flow deferral)
Kinda of similar to how apparently the owners of the Kegs and also the Bard banker/Irish times went to city saying how they can’t survive another month of shut down and wanted help. Like seriously? you’ve been in business for like 20 years (making most likely consistent excessive economic profit because of the virtual monopoly they have in town) and you can’t survive for 2 months even after you laid off your staff?
Basically, baristas and coffee shop owners aren’t buying houses in Victoria. Same with most people in the tourism sector, I dare say. Insofar as many of these folks are renters, who may have troubling paying their rent, they will affect the RE market from that angle.
Interesting to see all those “Retired; bought with cash.” That’s called wealth, and it plays an important role in the market, IMO. And unlike jobs and incomes, wealth is harder to identify and track.
oopswediditagain, getting a $35K job back once the economy re-opens is one thing but transitioning from a $35K job to a say $65K job is another thing. just because the 25-34 year olds grew some ambition in the last month, won’t necessarily translate them into getting into a higher paying job right away..
Viking Air did lay off quite a few people in late March I believe, those are decent paying jobs that won’t be coming back for awhile.
Sorry to sidetrack a bit. I know someone who used to work in StatsCan as a field interviewer. The 10 day Labour Force Survey (for the job/unemployment numbers you are using here) is done each and every month, via calls/ house visits (online after the 1st month, for 5 more months). He said most people are reasonable and understand this is a very important (and mandatory) survey, but there are some people who don’t want to do it, and are very mean and rude to the interviewers. The interviewers get yelled at, not answered/slammed doors/phone calls, missed and kept changing appointments, … My friend is retired now, but he said If not for those very friendly people to make it up, not many people can last long on the job.
So please be kind and responsive next time, when you receive visit/call from StatsCan, especially the local field interviewers (they have badges and can be checked and verified, also StasCan always sends a letter to the household beforehand). Thank you.
ks112 > What about them? Are they a big player in the housing market in Victoria, are they all in dire financial situation?
I guess you have to consider who the big players are in the housing market and I doubt that you’ll get much argument from anyone in stating that it is the first time home buyer. Without them, you just don’t have a move up market.
How much money do these Millennial buyers make? Leo S answered that for you back in June of 2019. Are they going to be a driving force? It would seem that they weren’t that interested last year. Perhaps a couple of months in isolation may have increased their ambition or maybe they are the ones most affected by the unemployment numbers that we are seeing.
https://househuntvictoria.ca/2019/06/12/victoria-millennials-y-u-no-own/
Overall similar drop in employment across several cities across the country with Montreal and Vancouver having larger drops.
Interesting, Victoria shows a 2% increase in employment in Sciences (which would encompass much of high tech field), vs 10% drop in Vancouver. Also no decrease in trades whereas Vancouver has a decrease.
Bigger drop in Education/Government employment here though (-7% vs -2.5%)
Note 3 month averaged figures so the percentage is not reflective of full drop.
Library jobs will be back shortly. Doesn’t really matter how much they get paid. The only real drag on the market are those jobs that won’t be back in 2-3 months
Tourism, some chunk of retail, food, and related (trucking).
Unionized and stable and I guess it depends on your position. Admin and librarians are fairly well-paid. At the GVPL the CEO gets 165k/year. At least 21 employees over 75k, half of those over 100k. https://www.gvpl.ca/wp-content/uploads/2019/07/GVPL-SOFI-2018.pdf
Sorry, 10%-15% is the number the big banks are quoting for Canada-wide deferrals. The survey linked below suggests a bit more of a dire situation for Vancouver though:
“Only 68% of home owners said they could pay their full mortgage payment last month, and only 55% said that they will be able to do the same in May. On property tax, 25% said they will pay less than half of their 2020 tax bills, with six percent planning to pay nothing, according to the Research Co. survey.”
https://www.squamishchief.com/vancouver-mayor-warns-of-drastic-measures-without-federal-and-provincial-government-help-1.24116805
Who knows how accurate that survey is.
On Marko’s list, I’m not sure if we can assume some jobs are as safe as they once were.
E.g.
Government/Uvic (huge hole in tax base will probably force layoffs) (7 of 28 = 25% of Marko’s list)
Bank employee (I’m with TD and I asked yesterday when they’re opening up their Millstream branch again, and they said maybe they won’t). (2 of 28 = 7% of Marko’s list)
The rest look solid, although it will be interesting to see how quickly medical professionals such as doctors, dentists etc will ramp back up to full income.
Yes we do not have data for the number of mortgage deferrals by region
10-15 percent of Victoria home owners applied for deferral? Where do you see that? If that 10-15 percent is Canada wide then Alberta and some of the other provinces probably skewed the data.
also is working at the library really a high paying job?
The one friend I have in hospitality my father and I hired him to work on our construction site the day after he got laid off.
Vast majority of people I know are fine. Thing is outside of construction our economy doesn’t produce much. At this point and time multiple friends in IT, no impact. Tons of friends in health care, no impact. Government, no impact. Military, no impact. I just quickly scanned through my last 50 buyer deals and I can’t see more than 2 having been hit hard. Some of my buyers in the last 12 months…it’s pretty stereotypical.
etc…..
People have likely deferred for all sorts of reasons including helping out family members who have lost their lower-paying positions. Some higher paying positions have also been affected in an interim manner where lay-offs went into effect but there will likely be a recall to work later. For example, municipal and library jobs.
Makes sense, but on the other hand, why would 10-15% of current mortgage holders just have applied for deferral if this only affected low paying jobs? Could we not assume that at least 10-15% of new mortgage applicants would be similarly negatively affected?
Keep in mind that many of these people could have a higher paying spouse, and the couple could have been in a position to buy but no longer are.
I expect that by the end of the summer we will be a lot closer to normal for economic activity. As the province opens slowly a lot more old people will die but hopefully without swamping the medical system. I am concerned that some industries such as tourism and restaurants will have a very difficult time of it.
If I had to guess I suspect that SFH will only have a small drop but that condos could take a real hit.
Agreed. Complicating factor is that LFS surveying is pretty sparse, so data at the municipal level is pretty bad. Victoria unemployment rate is 7.2 in April, but I believe that’s still a 3 month averaged figure.
Leo, looking at the labour force survey and taking into account the fact that BC hasn’t shut down construction, i just don’t see any material losses of decent paying jobs here in Victoria. It’s mainly the hospitality and retail staff that are SOL and I doubt those are the ones that were going to be in the market to buy anyways. Maybe a large portion of the people looking buying a condo so they can do air bnb’s will think again that’s pretty much all I see happening on the demand side. Curious as to your thoughts?
Well I suppose maybe there’s a few more starving realtors and car salesman rooming the streets.
The official number of unemployed has always understated the number of people not working. If you’re not looking for employment they don’t count you. CERB covers many people who would not be counted as unemployed by the standard definition, e.g. self-employed with loss of income, employed but working short hours, or caregiving.
Trevor Tombe knocks it out of the park on the analysis as usual https://twitter.com/trevortombe
My statement was in general, not Victoria specific. Haven’t dived into the Victoria data yet
Leo my question was which high paying sectors in Victoria are hard hit.
So 7M CERB applicants and 5.5M people unemployed or with zero hours worked. Leaves 1.5M unexplained but could be lots of legit reasons for that including people working half the month. I don’t think fraud rate is that high.
Record high consumer debt was already a big problem and mortgage deferral will make it even bigger. As I’ve said, I think we were already in trouble before this pandemic and I don’t things are going to be just fine once it’s under control.
You will probably be better off deferring your mortgage and putting those funds in the shares of a Canadian bank……
Although the huge number of mortgage deferrals points to problems among many homeowners, mortgage deferrals are being offered to over 90% who ask, and expect to be given for at least 6 months and perhaps indefinitely after that.
This should prevent a huge spike in delinquencies or foreclosures until 2021 – hopefully there’ll be a vaccine and economic recovery by then and it won’t be a big problem.
This contributes to the “deep freeze” where everyone is in a “wait and see” approach to everything – the virus, their job, and buying/selling a house.
We’ll find out tomorrow. April jobs data out.
Leo just curious which sectors that pay decent in Victoria has experienced large layoffs? Salary freezes sure, not sure about actual layoffs.
No doubt that lower income jobs have been hit the worst. But still substantial layoffs across all sectors. Biggest question is what percentage is still laid off 3 months from now.
I thought it was a foregone conclusion I was providing anecdotal evidence when I referenced “personally”….
Anyways, maybe I spoke too soon, I just got off the phone with someone I deal with at one of the big 4 accounting firms in Vancouver, and apparently most of the big 4’s are forcing unpaid leaves and starting layoffs in some groups (Corporate Finance, M&A etc..) as deal flow is pretty much none existent currently.
I just compared my March CC bill to my April one (my billing cycle is on the 20th so its a perfect pre and post COVID comp). I saved around $1200 due to the lack of lunch, dinner and drink options…. I think I may look at adjusting my habits after things are open in couple weeks, it is a bit ridiculous.
We’ll call it the Barista Theory of Real Estate — which holds that when baristas are in big trouble, RE is in big trouble.
I’m looking forward to Leo’s analysis on this question. My gut sense is that there are enough people not only who didn’t lose their job but who are sitting on some cash, waiting for an investment opportunity to arise — and this will prop up the market a decent bit.
Yeah, it’s kind of crazy, but there are gonna be those who come out ahead (in some cases, way ahead) from this pandemic.
And I’m guessing the same old thing will continue to happen: the rich(ish) get richer and the poor(ish) get poorer.
Somebody I know in the trades was on EI when this started and in the process of changing careers by working on getting his class 1. Due to ICBC cancelling drive tests he was forced to put that on hold. After sitting home for 6 weeks he got tired of waiting so started looking for a job last week and got hired within a day as a mechanic. He started this Monday.
Anecdotal, but I’m seeing the same among my family, friends, and neighbours. Public servants, professional services & med. service, and construction folks are all finding ways to keep working… even if a bit subdued. No doubt there are some extremely difficult situations happening out there… but I think the average Victorian is making out alright. I’m personally saving money by not commuting…
“What about the owner of the coffee shop? or the owner of the retail store where neighbourhood barrista spent their money? or landlord who housed neighbourhood barrista?”
What about them? Are they a big player in the housing market in Victoria, are they all in dire financial situation? Me personally, I have on friend that is a chiropractor who went on CERB (he will be back to work in couple weeks looks like), that’s it, rest of them are all business as usual. Maybe others have a bunch of friends whom are done hard by this, but I just don’t think there is any significant pain felt in Public sector, healthcare, tech, or trades so far. Employees in those sectors probably account for most of the folks buying homes here.
I will never understand the desire to live there, or, to pay that much for that kind of auditory torture.
All I ever hear is chickadees, towhees, and maybe the odd owl. Most evenings I can sit outside among the trees and hear my own pulse. I think my goal is to one day, actually forget how to get to downtown 🙂
Never made that statement but okay.
I just said he was on drugs for talking about pent up demand when 10 million people had lost their jobs in 2 weeks.
It’s now been a month and the US is at what 30 million? 40 million? Hard to keep track of how many they’ve lost.
In this article he says to keep an eye on those missing jobs.
Sleeping? This is the place of never sleeps, with all the noise from shipping yard, float planes, car and people traffic day and night. Only good for AirBnb and VRBO, when and if they come back to life.
Janion units passed $1000/sqft back in 2017 and never went back. Recent sales at more like $1150/sqft. I thought the AirBnB restrictions in Victoria would slow it down but they didn’t.
Not that they’re flying off the shelf these days…
My bedroom closet is more than 1/3 that size. I hope they like sleeping whilst standing up.
Assessed $281,800 and asking $319K for 260 sqft. But here’s an opportunity waiting for you…
Looks like he’s taking his price point from unit 220 which sold for $320K in February.
https://www.bcassessment.ca//Property/Info/RDAwMDExSFZFMw==
I love it. Leo validates Soper’s least favourite economist.
So many.
I think we can keep up close to this level of support for a lot longer than many think.
What about the owner of the coffee shop? or the owner of the retail store where neighbourhood barrista spent their money? or landlord who housed neighbourhood barrista?
Finally a place with shopping bearby, heathed floors, and high-gloos cabinetry
MLS #424732
Markdown syntax works.
So right angle bracket (aka shift period).
Everyone keeps talking about unemployment, how many people who make say $60k a year or above has actually lost their jobs due to COVID? These are the people who will be in the market to buy homes. It really doesn’t matter if your neighborhood part time coffee barrista is on CERB. And for the ones that haven’t lost their jobs, are they really that scared to spend going forward?
“Right, check out this on TC yesterday: “The Greater Victoria School District 61 said 33 full-time teaching positions are being cut and $6.3 million will be lost as a result of international student enrolment dropping by almost half in 2020-21.”
Just a hunch, but based on teacher demographics I would guess a significant number of existing FT teachers will opt to retire early, or drop down to TOC teaching, freeing up some jobs. There may still be some layoffs, but I doubt it’ll be a slaughter. I personally know a few teachers nearing 60 who have thoroughly enjoyed the forced taste of retirement and don’t want/need to return to the disease factory…
edit: can someone tell me how to quote another comment please? thanks in advance
Sorry, but a bit tired seeing this complaint over and over.
Dr Henry has repeatedly stated the impact to seniors in her daily briefing, plus multiple times with charts showing the fact. What more do you need?
If one lives long enough to age 60 and still doesn’t have good sense to pick the message or just wouldn’t listen, then there is nothing anyone can do .
Actually we like the way BC handling this pandemic, they give us the science and the direction, but treat adult like adult and trust us. Not like in Ont who treats adults like children, or in AB who puts politics over the top.
Local Fool said:
LookingAtOptions, I think that both of you are right in regards to stimulus. You’re bang on regarding the market’s interpretation of the QE but Local Fool is correct in stating that the money isn’t about stimulus. All governments are doing their damndest as Patrick has outlined to ensure liquidity in the markets to avoid another Credit Freeze such as in 2007/2008.
The Markets may be having a heyday with this liquidity and their perception of where it’s heading but on Mainstreet any money that people are receiving is, by majority, going to pay debts .. mortgages, rent, car payments, cellphone payments.
Two very diverging reactions. We shall see how the markets react to numbers coming out over the next several weeks.
Well, I am glad that you weren’t one of those realtors telling your clients to buy first and then sell your home afterwards because the market was red hot. Your experience has clearly taught you that your client doesn’t want to hear your opinion on market direction.
Right, check out this on TC yesterday: “The Greater Victoria School District 61 said 33 full-time teaching positions are being cut and $6.3 million will be lost as a result of international student enrolment dropping by almost half in 2020-21.”
https://www.timescolonist.com/news/local/international-student-enrolment-plunges-teachers-facing-layoffs-1.24130292
Because the government is taking out “loans” (bonds), lots of them!
They buy govt bonds and other financial instruments, paid for by the created money. E.g. they create $5bn of money, and buy $5bn of bonds and those offset in their balance sheet. That lowers interest rates and increases money supply. It helps asset prices for bonds and stocks for sure, I’m not sure if it helps Main St.
But who other than the Bank Of Canada is going to buy the minimum $200 billion of new bonds Canada govt will need to issue for this years deficit? If the bank of Canada is the only buyer and they are monetizing the debt, our dollar could fall. Big currencies like US, Japan and EU can get away with this, but not the peripheral players like Canada without tanking our currency (against the US dollar anyway).
Canada govt has pumped $150bn of support to people and companies affected by CoVid, and this economic support is expected to last only about 3 months. The economy is running on these “fumes” at the moment. But they won’t (can’t) keep up this level of support for long, so things are going to start to reflect the reality of 25% unemployment.
Let’s hope the virus problem goes away before that happens.
How does the central bank print money if no one is taking out loans?
Canadians are already so highly indebited that it’s going to be much more difficult to increase the money supply.
Since the start of the pandemic, for the 785,000 people on Vancouver Island (health authority region includes part of mainland )
…
These statistics are among the best in the world, and show how remarkably well our BC public health, govt and health care systems have performed so far, and we all hope this continues!
Source Bccdc.ca
My POV is that the current economic recovery, the longest ever, was already running out of steam and we were headed into a cyclical recession. So we will get a deeper and longer recession. Could be a lot like the 1980’s recession which BC really didn’t start climbing out of until 1986.
Looks like the province is going to slowly reopen. I understand that it is important to be reassuring but I would rather see a much stronger message to to vulnerable groups which is just about everyone over 60 that they have to continue to social isolate. The simple fact is that if this virus starts tearing through Oak Bay the hospitals will be swamped and considering the backlog of diagnostics and surgeries that we already have this could put us on the edge of a disaster.
Since I am in one of the highly vulnerable categories, the thought has really struck home that even going for a walk will be more challenging when, increasingly, most people start to ignore social distancing.
At this point I am glad that I am not stuck at home in a small condo.
Each to their own, just like every where else some are crappy and some are nice. However, I think that the price are a bit high in the present market condition.
Example:
2619 Savory Rd on 11761 sqft, lake front, treed lot – https://www.realtor.ca/real-estate/21790814/2619-savory-rd-victoria-florence-lake
209 Ashley Pl on 20038 sqft treed lot – https://www.realtor.ca/real-estate/21826259/209-ashley-pl-victoria-florence-lake
539 Treanor Ave on 10018 sqft treed lot – https://www.realtor.ca/real-estate/21778212/539-treanor-ave-victoria-thetis-heights
I don’t think anybody is saying we are not currently in an economic crisis. The unknown is whether the economy will bounce back quickly or stay in a long depressed state. You seem to believe the future will be the latter. Not sure why you seem so convinced that this is fact.
As for the stockmarket, it seems like most investors have priced in about 2 years of profit lost for the average company. Based on how many profitable years a company has left, if that is 10 years than their value should drop around 20%. For a company that still has 20 years of profit left, their value should drop around 10%.
There have been so many intelligent concerns on this blog in 13 years and they haven’t panned out at all. I understand his concerns, but the market doesn’t seem to agree with his concerns at this POINT AND TIME and he probably isn’t the only person in the world that is worried about things going forward given the COVID19 fallout.
Fortunately, most of my clients can think for themselves and aren’t so dumb to think that I actually have any clue as to where the market is heading. They call me to help them buy or sell, not to take out my magic ball and tell them which way the market is going.
I personally think the TSX should be at 10k right now, but it isn’t and I am not going to pretend I am smarter than the entire system and everyone else is a fool. As it stands right now the market does not believe there will be a complete collapse and I certainly will not attempt to short it.
I am sitting on all cash hoping the market tanks 10-20% but it isn’t happening. That’s just the reality.
Local Fool said:
March 20, 2020: Federal Reserve QE Buys Hit Record To Stem Coronavirus Stock Market Crash
…
“Federal Reserve quantitative easing has quickly ramped up to a record pace to steady the plunging Dow Jones Industrial Average and surging long-term Treasury yields. By week’s end, asset purchases meant to stem the coronavirus stock market crash will exceed the pace seen during the financial crisis.”
https://www.investors.com/news/economy/federal-reserve-boosts-quantitative-easing-yield-caps-next-dow-jones/
And what is quantative easing?
“The mainstream point of view suggests that the effect of quantitative easing (QE) is pretty straightforward in the stock markets. When there is an expansionary quantitative easing (QE) policy announced, the market becomes bullish and stock prices begin to go up. On the other hand, [later on] quantitative easing (QE) tapering contracts the economy, then the markets become bearish and stocks tend to go down in value.”
“The logic behind this is said to be relatively simple too. Well, according to mainstream economists, quantitative easing (QE) uplifts a depressed economy. Therefore investors see it as a sign of better times ahead and make a beeline to buy the stocks expecting growth in the markets. However, the corollary of the same theory would also mean that investors will react negatively [later on] to a quantitative easing (QE) tapering program”
How can there be any doubt that record amounts of quantative easing have not played a big role in reversing the recent stock market crash?
Consequently, how can anybody pretend that a market that is stable, but only thanks to record amounts of quantative easing, means that we are not experiencing an economic crisis?
And especially, how can anybody say there is no economic crisis when historically levels of high unemployment, high numbers of long-lasting and ongoing business closures, low consumer spending, mortgage non-payment (deferrals), etc, etc, are widely reported fact?
This is a good article on the stock market valuations by the way: https://www.nytimes.com/2020/04/30/opinion/economy-stock-market-coronavirus.html
Every country is in such a race to print money it’s almost hard for Canada to keep up.
Yeah I think much of the supply side depends on the length of the down market. 2-4 quarters is fine and past experience has shown that owners are in general quite good about doing whatever it takes to not sell into a down market. The risk comes if the recession and price declines drag on for much longer than that and you end up seeing more supply hit the market. Then it could build on itself.
I think this is why you often see rental incentives in the form of first month free rather than reduced rents as well.
Same, hugely underappreciated factor but very hard/impossible to measure or predict.
Good question. We’ll see if the stock market is right about that one. Some of the biggest investors in the world have been caught completely flatfooted by all this. The only thing I know is that I don’t know so I just hang tight.
You really love your straw men, don’t you? Go ahead and show me any predictions I have made here.
Hoping for lower prices does not equate predicting lower prices.
If you are talking about people that apparently made predictions here years ago, then it really makes no sense to reply to me or any other unrelated person as if we are them.
But if it helps you sound off to completely wrong people for therapeutic reasons, just say so. 😉
Oopswediditagain said:
Thank you mate, that is a well-worded reply. If you aren’t in property sales already, you should get into the business!
Sorry James but buffet and Charlie are well passed their primes now
Fascinating Sidekick. Glad you worked it out.
Because people are dumb.
When Buffett is selling, it’s time to get out.
Sort-of on the subject of credit…
I’m refinancing now after finishing up my build. Had pre-approved financing in place set to close April 15th. Lender (First National) came back and demanded a new home warranty as a new condition of financing.
As an ‘owner builder’, I’m required to personally provide the 2-5-10 coverage should I sell. I’ve now learned that it is possible to purchase 2-5-10 insurance from the same vendors that provide 2-5-10 to contractors, however, the price is crazy: $5K (minimum) and a 25K (minimum) bond held for 5 years. And, this only covers subsequent owners…not the owner-builder (if they happened to mess up).
Needless to say I wasn’t going to purchase this insurance, so the financing fell through. I talked to 3 providers of this insurance and they all said that it was really rare to sell one of these policies, but some owner-builders had been tripped up by lenders requiring it. So Marko, there’s a new topic for your weekly youtube vid.
As for credit, I noticed that mcap has frozen my heloc (not that it matters). My new mortgage (assuming it closes) is at prime. That is for a 50% LTV, well qualified family. I’d say lenders are most definitely being very cautious. Also had to prove that we still had jobs even though documents were only 6 weeks old.
Alexandra: Think I will stick with my little old character house, at least it is real mahogany on the trim and solid oak on the floors. Like me it is old,
Obfuscation seems to be your pattern of response, Marco. LookingAtOptions has outlined an intelligent concern regarding the economy and not only did you not acknowledge it, you belittled the individual rather than reply to the concern.
Let me respond for you.
Yes LookingAtOptions, I have some grave concerns regarding the direction of the market but I’m not at liberty to express that opinion on an open forum because my clients may have been advised differently.
You’re welcome, my friend.
I (think) I’m paying attention – and so far, I don’t think any of that money is about stimulus.
I can’t stand Langford. We drove through the Bear Mountain development on Sunday and even in the “nicer” parts, one could high-five their neighbor from the kitchen window. Not to mention…it’s Langford. 🙁
A teacher’s salary is also completely predictable if one has a continuing contract.
Don’t forget the awesomeness of your house being six feet apart from your neighbour’s house!
If I could predict things as well as you guys I certainly wouldn’t be on HHV complaining about real estate prices . Probably be somewhere on a boat in Croatia trying to figure out where to sail for lunch 🙂
Ohhh well…..bright spot is I should be able to buy my house back at 50% off when the economic catastrophe unfolds.
We don’t know what 30-50% unemployment means yet. If it’s temporary and goes down to 10-15% over the summer then the country might not collapse. If not then I’d say 2020 is it for Canada.
Thoughts on 1821 Hollywood Cr?
So have you honestly, truly, not heard anything at all about the crazy amounts of government stimulus that Trump (who measures his own success based on the stock market) promised and has been dumping into the stock market?
If you haven’t heard about that huge government stimulus, then you aren’t paying attention.
If you have heard of that huge government stimulus, then your argument above, asserting that there’s no economic catastrophe because the stock market is doing ok, is completely dishonest.
Also, if there is no economic catastrophe happening, why does a government have to dump craploads of stimulus money into the stock market?
We’re not in the midst of an economic catastrophe, eh? I can’t believe we’re even having this conversation.
Check out mls 424729…..965 Walfred. At only $749,900 you can own this absolute piece of ugliness. Flat looking kitchen, absolutely no depth to the fake? wood floors, no ambience , no class, no character. What are we trying to sell? What are we becoming? Who are we fooling?
If you are a credentialed professional like a doctor, accountant or lawyer just starting out banks lend based on projected earnings. Even if you are a resident with student loans you may qualify. https://www.bmoharris.com/main/personal/mortgages/housecall
Sorry didn’t read the original statement closely enough. I agree it is not based on what you think you will be making, it is based on what the lender thinks you will be making.
That’s nice, but it has nothing to do with the question.
When I applied for my first mortgage that included a rental suite, the lender used 90% of what they expected me to make off the suite to determine how much of a mortgage I qualified for.
|Ok, so which lender qualifies mortgages based on what you think you’ll be making a couple years out?|
I misunderstood the direction you were implying income would go. My point is that if you have the opportunity to buy a house with current income, you should do it, even if your future income is expected to decrease. But yeah, I get your point.
Ok, so which lender qualifies mortgages based on what you think you’ll be making a couple years out?
National Association of Realtors chief economist David Lereah published his latest sky-is-the-limit book, Why the Real Estate Boom Will Not Bust – And How You Can Profit from It.
Within months, U.S. house prices peaked after a decade-long runup, beginning a descent that would wipe trillions of dollars off Americans’ net worth and nearly bankrupt the global financial system.
The housing bust came just months after Lereah branded housing-boom skeptics such as Yale professor Robert Shiller “chicken littles.” Bock, bock.
“However, you can’t buy a house based on what you think you’re going to be making in a year or two.”
Actually, you can. And looking at historical appreciation in Victoria- almost without exception: you should have done so if you ever got the chance…
The catastrophe is right now. The reason for stock prices being what they are is that those who are buying are betting on a recovery of corporate earnings in a year or two. They are betting on Wall Street not Main Street. Whether working people will be better off doesn’t factor into it.
However, you can’t buy a house based on what you think you’re going to be making in a year or two.
Re-opening plan for coming weeks. Should be in place around long weekend.
Anyone have predictions/thoughts about credit availability in the near term?
We know the regulators like to clamp down on lending when prices become “too high.”
Under what conditions would lenders start tightening their belts of their own volition?
If the economic catastrophe is SO CERTAIN why isn’t the TSX at 8k and the Dow Jones at 14k?
Because it isn’t.
May is normally peak sales and peak new listings. This year likely to be different.
It’s people like that which are the reason I said I wouldn’t be surprised in a short term pop in sales.
Retirees have always existed, and most of them get their cash from previously selling elsewhere. If they sold before covid-19, great, they can briefly contribute to a pop in sales. If they haven’t sold yet back east, it is now becoming more difficult for them to do so.
If prices go down at all, you of all people certainly understand that it will take quite a while for that to happen.
Wow! I can’t believe you are implying viability of a “gambler’s fallacy” with a straight face.
And, in which of the last 13 years did the economy suffer a sudden economic catastrophe unmatched since the great depression?
You’re also completely incorrect in thinking only renters have been waiting for a correction. There is such a thing as owners like myself who understand our society’s need for reasonably affordable housing. You should know that not all of us worship short-term limitless greed at the expense of the younger generations and the realistic longterm viability of national economic health.
It’s a decent idea, I guess. Luckily, we haven’t had to deal with turnover often: our current tenant has been with us for eight years and counting, on a month-to-month agreement.
Finland is demonstrating pretty good success with what they call the “Housing First” principle:
The city with no homeless on its streets
https://www.bbc.com/news/uk-england-46891392
Tons of other reasons I would put ahead like economic uncertainty, lots of supply coming to market for various reasons (former AirBnB units), etc.
I don’t think the attractiveness of or proximity to downtown all of a sudden has collapsed because of COVID19 and working from home. For me the ideal location given my profession would be Christmas Hill in terms of getting around; however, I would still pay 20-30% more for a condo in Cook Street, Vic West, certain parts of downtown, etc., even thought it is less ideal in terms of my work.
Thing is if you are in your mid-60s, for example, and you have the cash to purchase what do you do? Wait years for this to play out. At 65 you have maybe 15 good years ahead of your realistically.
Since this blog started predicting a price correction already 13 years of passed which is kind of a long time if you’ve been renting waiting for a correction.
Is the (market) sensitivity gauge broken?
Does everyone remember when, before covid-19, any small interest rate move up or down was enough to fan tons of speculation about rising or falling effects on real estate, including on this very site? Fast forward to present day. Now, with overnight historically high unemployment, historically high mortgage non-payment (deferrals), historically low consumer spending, historically high shuttering of businesses, etc, etc, etc… some real estate associations out there are still projecting same-as-usual confidence in real estate and some of them even rising prices.
It may be an odd comparison, but it reminds me of the sensitivity there used to be around Barack Obama. The times he wore a tan suit, or asked for grey poupon, or wore a bicycle helmet, or his wife wore a shoulderless dress, the outrage meters exploded and the news cycle gorged for days. Fast forward to now, and most outrageous things Trump does on a regular basis are yawned at, ignored, or defended by the very same media sources. Asking for grey poupon would not merit a nanosecond of news coverage for Trump.
So are the sensitivity gauges now broken, universally? The joke is on all of us, they were never sensitivity gauges to begin with, they were propaganda machines all along.
2008-2019: “interest rates headed down 0.25%, surely this means rising sales and prices!”
2020: “Overnight economic armegeddon the likes of which haven’t been seen since the great depression. Is that all? Hmm. House prices might even rise!”.
Many large mouthpieces for news can’t help themselves but to become propaganda machines for their own cause (“power corrupts”, etc), and real estate associations are no exception.
When will the public realize that representatives (and most members of) real estate associations are just propaganda machines?
Thank you Marko.
Yup, so much talk of pent-up demand, but what about pent-up supply? I wouldn’t be surprised if we see a brief pop in sales as some people (like the retired couple you mention) impatiently make quick buys…before the inevitably of the worst economic catastrophe of our lifetimes, and since the great depression, slowly starts to kick in (whatever that may be).
Thanks Barrister. I thought that you might be getting at that. People in the condo complex called “Pacific Monarch” on Pandora have had to put up with this problem for a very long time.
Interesting, but no science to back it up.
Try this:
https://www.youtube.com/watch?v=LK8sxngSWaU
Opps: I suspect that the Real Estate boards are actually putting lipstick on roadkill and not a pig.
Alexandra: Take a walk down Pandora and you will quickly figure out why the Gorge will take a hit.
I resigned myself from a Job last year April. I have been out of work for just over a year. As I left on good terms I could not get Employment Insurance with out admitting some things as to why I had to leave (Essentially throwing them under the bus).
I also feel that I do not need Income Assistance as my Wife does make enough for us to live on (Due to living way way below our means). Lucky for us, the house is paid off, the really old car is paid off and working, never had credit card dept (used for points only), we live a frugal existence, etc…
But here is the thing, I am not eligible for any of the Governments new Pogey. I can’t lie, I can’t get by this: “You did not quit your job voluntarily“. Even though I did it basically a year before the Covid-19 thing was even on the Global Radar. I just can’t bring myself to lie, even though I feel I sorta could here.
It’s just not in me.
Just before March I did enroll myself into WorkBC/GT Hiring solutions. I did the on sight 1st group meeting around March 9th. I feel that this is not a loophole as I helped pay into it for years. They even mention that at the orientation. About two weeks after this, as I am really trying to get back on track and not go it alone, lock-down happened. So they are now scrambling to try to get things done through online means.
Anyways, through this I can sign up for further help. Wage Subsidy (I know sounds like the Cerb but this is different and was around before), Skills Training, Short Term Orientation Certificate Program, Single Parent Employment Initiative.
The paid schooling would be nice, but I felt that the Wage Sub. was better as this is a way to learn on the job and get paid (Employer can be reimbursed 50% of my wages for up to 24 weeks of my orientation and training period).
So not everyone has to work the system, there are options. I feel that the ones getting CERB who shouldn’t are just making it worse for those who really need it in the future. That’s really uncool.
Hey guys, it’s been a little while since I’ve posted. I was enjoying the travel aspect of retirement right up until March when we came back from Arizona. I’m not going to add my two cents to the Covid debate but I’ll certainly comment on the Black Swan (Gov’t response to the virus) impact on real estate.
I’ve been lurking over the last several days at the postings here and it seems that most everyone can sense that prices are going to fall. I guess the bigger question is whether this is going to be the bubble pop that Hawk, Local Fool, Victoriaborn, myself, some others and perhaps the pragmatic Patriotz envisioned.
Personally, I’m a pretty strong believer in sentiment. Obviously, the kind of unemployment that we are facing (possibly structural) will have a huge impact on the real estate sector but I think that sentiment will play a much bigger role in this downturn.
I think that everyone can understand the kind of sentiment that FOMO had on real estate prices. Well, that FOMO is only generated by the media, friends and family and the continual bombardment of Real Estate conversations. There will always be demand for housing but the huge price gains and “prices only go up” mantra was exaggerated to the extreme.
The exact opposite sentiment is going to start playing out over the next several months. I can see that Barrister is acknowledging that recently. Barrister probably went through the housing bust in the USA and I have a pretty clear recollection of the 1980’s housing debacle. The real estate news will be decidedly negative despite the various real estate boards attempt to put lipstick on this pig.
The amount of mortgage deferrals was staggering and as prices start to slide down there will be a lot more people in trouble. The newspapers will be carrying hardship stories of people losing everything, heartbreaking stories of families being evicted and a constant bombardment of price drops as the months tick by. Buyers will be reluctant to say the least.
I was in my 20’s when I practically kissed the family that gave me a 35% loss on the home that I had purchased 7 or 8 months prior. I got out with $10,000. After a year of renting I purchased a brand new rancher – 50% off. The desire to own a home didn’t die. The desire to get the best price on a home was ignited.
10 years ago, I was sitting in my office looking at real estate in Florida and Arizona. Condos were priced under $50,000. Why???? The only reason was because so many people had developed an aversion to real estate … well the average Joe anyhow. Greed will drive these kinds of bubbles and fear will always blow them up.
We are in a recession, the only question is how far will it go. Good luck to all.
OK, if condos being less desirable for work-at-homers is only a small factor, what do you think the reason is for your observation that …
“Condos super slow in terms of showings and offers. Also the offers I do get are low”
Barrister, why in particular will the Gorge area home sales/prices be affected? Thanks.
That discounted rent may become the base for allowed future rent increases. No hard answer unless and until RTB decides, but if I were a landlord I wouldn’t want to be the test case.
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/during-a-tenancy/rent-increases
It is a factor, but a small one imo. As I’ve mentioned before in past years even when I have clients that work from home pre Covid-19 people will pay an arm and a leg to be downtown/James Bay, etc., and Fairfield and Oak Bay for SFHs. I just don’t see people being like okay I work from home now I’ll buy in Duncan for 50% less, assuming they can afford Victoria.
Walking around in Happy Valley not quite the same as Oak Bay.
The one thing that is hurting downtown right now the homelessness issues. I’ve walked through downtown a couple of nights and it is super sketchy.
Probably saw the story about the car being shot by an arrow…..wtf -> https://www.timescolonist.com/news/local/man-arrested-after-arrow-shot-into-car-with-infant-inside-at-victoria-intersection-1.24129902
With people working at home instead of offices in the core, I expect that “shoe box” condos in the core are going to be hardest hit, both for rentals and sale. Because many people chose to live in a core condo because it was close to work. If they’re working from home, they can choose anywhere.
Google mobility trends currently shows a 41% drop in people’s mobile phones located in workplaces in BC, a real-time indication of this, since most workplaces are in the core. https://www.gstatic.com/covid19/mobility/2020-04-26_CA_Mobility_Report_en.pdf
Thanks Marko
Why don’t you tell them all to come here instead?
Leo doesn’t track you and force ads down your throat all over the internet.
I feel sorry for the people who have homes and families around the Gorge. Property values are going to take a hit.
I am basically thinking 500 sales for the month. No obvious price adjustment in SFHs under $1 million and condos I think we might see some price pressure, not just noise.
All sorts of people buying even in this environment. Right now I have clients in their mid 60s looking in the $1.2 to $1.5 range and they are totally aware that there could be price pressure but out of town and their thought process is we have the cash, want to be close to grandkids that are in Victoria, and they just want to settle in and start enjoying life here. Willing to accept that whatever they buy could drop afterwards but don’t want to put life on hold waiting fora price correction that may or may not result.
Haven’t seen done this personally but my parents have been renting their basement suite for 25 yrs and mostly to students as they are in the Oaklands area. There has been several times were parents have paid 6 or 12 months in advance to secure the suite, but no discount. Just as an incentive to choose them over someone else.
Sold over ask at 715k
Good point, it can be hard to tell just by looking at the screen. 🙂
Patriotz I’m pretty sure James was being sarcastic when he said people forgot about the great depression just fyi.
They are taking advantage of government policies which boost RE prices though low property taxation. If we had imputed income from property ownership this wouldn’t happen. The current BC government has taken a few small steps in this direction through spec tax on satellite families.
And you know where the pushback is coming from – so that’s where you should be pointing the finger.
I heard plenty about it when I was growing up. There’s a lot of difference between the boomers and their parents, and that has a lot to do with the latter living though the Depression and WWII.
LeoS, do you know what 2713 Foul Bay Road sold for? Interesting… it’s an Oak Bay house on 6000 square feet listed for $699k just a few days ago,
(BC assessed value $685k).
Any of you landlords ever thought about giving a discount to tenants for prepaid rent? Say if they pre pay 6 months in lumpsum then u knock 10% off the rent or something?
Out of the 7.5m ppl.on cerb. I would throw in a guess that 75% of them actual got laid off, are actively looking to go back to work but cannot.
It took no time at all for people to forget the great depression, so I can see where you’re coming from.
If anything it does the opposite, since it takes money out of the economy.
Hey everyone, if you’re interested, join Vancouver Island Housing Market on Facebook. Share your thoughts and data on where the market is going. I’ve been following Leo here for years, his blog is one of the best.
Good point Introvert – and she will certainly do that – and Leo she won’t lose a wink of sleep over it. If anything she will feel better.
Ethics aside, when you give poor(ish) people $8,000 of “free” money, they tend to spend every dollar of it, which helps the economy.
Give Leo or me $8,000 and he’ll buy eight grand worth of VGRO and I’ll throw it at my mortgage. Neither helps the economy much.
Those just have company totals, no information at all about what specific employees are working or paying. That gets allocated at end of year but there’s no easy way to figure out who was working and when. They might deduce something from the entire company, but nothing about an individual. Of course they could ask for payroll records if they suspect something.
Yes, for those that voluntarily quit and received an ROE saying that they quit voluntarily, these the CRA should be able to catch with an automated process. However, I think you are also eligible for CERB if you have to quit your job to take care of someone (like children stuck home from school). Also employees in a lot sectors would probably ask for an ROE for shortage of work even if there technically might be enough work for them and (lot of) employers would probably oblidge. Self employed workers don’t receive ROEs so the only way for the CRA to check them would be to audit them to see if they issued any invoices for the time period. From my understanding the CRA is already really backlogged so I don’t see them doing many of these audits.
Sure. So how many are laid off if not all the 7.5M CERB recipients?
7M? 6M? Less?
I was hoping they might have an automated system in place that cross checks the ROE and if you didn’t get laid off or fired then they charge the CERB back to you unless you detail otherwise. Is that unrealistic you think?
You guys are missing the point. What I am trying to be say is that the amount of ppl getting cerb should not be confused with the actual amount of ppl laid off. The actual amount of ppl laid off will be less.
For many people, sadly that translates to “you gotta be proud of the free money you got”.
Not only with CERB, but with many perks/help our government provides, if there is a loophole, many people feel no guilt taking advantage of it.
I’m talking, for example, about people with multi-million dollar homes, but no declared income, who take poverty subsidies or other handouts. Or people whose elderly parents from the ‘old country’ try to make themselves useful by regularly lining up at the food bank for free stuff, leaving the BMW parked a block away – and then bragging about their loot to friends.(Yes, it is happening).
In a way I don’t fully blame these people, especially when they come from foreign or domestic backgrounds and places that can have you seeing your cousins living in extreme poverty unlike anything most Canadians have ever seen — where it’s a dog eat dog world and if there’s ever a loophole or freebie, you’d be ridiculed for not taking advantage of it.
My point is, Canadian government is far too trusting, is too naive in thinking everyone has the same ethical outlook that they do.
There are far too few repercussions for people that exploit loopholes and lax enforcement of rules. For many people “You gotta live with your own decision” means you gonna live with a big smile on your face and be proud of your free stuff — and then tell your friends how to get in on it.
For those people, a lesson not taught by our government (through enforcement) is a lesson never learned.
I very much doubt they will. They will do some cross checking with income, but they’re not gonna go to the lenths of checking with the employers of 7.5M people to see if the reason they were laid off was COVID. But I bet there will be some random audits and that’s a hell of a risk to run + you gotta live with your own decision if you don’t get caught.
“CMHC chief economist says while the agency is still working on its forecasts, best-case scenario would be Canadian home prices returning to pre-recession levels by the
end of 2022.” – Steve Saretsky
End of 2022 is a nice way to say 2023.
That is, more than 2 and a half years, away, but according to CMHC chief economist, that is still only the
Best.
Case.
Scenario.
I wonder what the (obviously worse) “most likely” scenario is, and also what the “worst case” scenario is, from CMHC’s professional point of view.
Yah my wife’s friend quit her job a month before the CERB was even announced – she lives at home no cost – her work wanted her back she said no and then the CERB came out and now she’s getting it. I hope they get these people.
3316 Aldridge St – “Attention Investors, Contractors and flippers!!! When opportunity knocks will you answer?”
Listed $699k, previously $745k , maybe even $765k.
Bought 2 months ago for $670k.
This flipper is trying to get out without a loss. Seems unlikely.
These periodic remittances don’t include any information on which employees they are being withheld/paid for. I think you have too much faith in how capable/informed the CRA is.
ROEs contain the breakdown of how much was earned in each pay period over the last year. So if the “cheater” receives an ROE in the next year, and the CRA can cross reference this with Service Canada then they could see how much was earned in a certain time frame.
Speaking of that…
https://www.railjournal.com/passenger/high-speed/air-france-ordered-to-curb-competiton-with-rail-in-france/
“Conjuring” is right. As Adam Smith recognized way back when, RE does not create wealth because it does not add to productive capacity. And when TBTF starts being used, I don’t find it very reassuring.
https://www.cbc.ca/radio/frontburner/too-big-to-fail-covid-19-and-canadian-real-estate-1.5555419
Employers are normally required to remit withholding taxes, CPP and EI to CRA monthly. They know a lot more than what’s on the T4.
Good point.
I’m sure there’s some fraud, but I also doubt it’s mostly coming from people that are simply taking advantage of free money because they want to. The majority will be desperate people that for some reason don’t qualify but are taking the risk to get by. CRA should catch most of that, but I’m really less concerned about desperate or very poor people getting $8000 than I am about big corporations getting billions with little accountability or restrictions attached.
I know of people in trades or self-employed that saw a reduction in income and then completely switched to only doing cash jobs for now and applied for CERB. As soon as CERB ends I assume they will return to non-cash jobs and hopefully their work picks up again.
CERB fraudsters will almost certainly be caught and made to repay.
But CRA admits there is no penalty: “While there will not be any penalty for Canadians if you have received a payment in error, you will have to repay the CERB benefits for which you are not entitled” (https://www.canada.ca/en/services/benefits/ei/cerb-application/questions.html)
As a point of comparison, I notice the BC $1000 aid program states ineligible applicants who receive the funds “may be subject to interest and penalties.”
To someone who needs the money and is OK tolerating (imo very little) risk of a penalty, CRA is essentially offering a free $8,000 loan. As long as the recipient is willing to say they made a mistake and they pay it back by Dec 31, 2020, it sounds to me like there will be no negative consequences for the fraudsters.
UVic is currently projecting to be online in the fall with high confidence. There is a remote possibility of having in-person labs, and grad students are likely to be on campus as there are fewer of them and they tend to be dependent on labs.
However in the end it’s not up to the university, they will take the direction of the province.
CRA will definitely be kept busy the next year
One Canada Revenue Agency (CRA) employee said she deals regularly with people who aren’t qualified to receive the benefit but are getting it anyway. She said she spoke with a senior collecting a pension who applied for CERB on behalf of herself and her two disabled adult children. “I noticed all three of them, living in the same household, are getting two $2,000 cheques,” she told CBC News. (The second cheques are retroactive payments.)”So, $12,000 all on the same day. None of them were eligible.” CBC News is not disclosing the CRA employee’s identity because she said she fears punishment for speaking publicly about what she’s seen.
Qualtrough said there are various measures in place to guard against abuse of the system. Federal staff are using social insurance numbers to check for overpayments and cross-checking between programs to ensure people aren’t being paid through more than one program. “There’s also just ways we can tell, based on people’s T-4s when we do the taxes next year, that if you are getting income during a time for which you’re also claiming you had no income, or you had less than $1,000 [in income], we can figure that all out,” Qualtrough said.
https://www.cbc.ca/news/politics/cerb-covid-pandemic-coronavirus-1.5552436
There is a reason CERB is being run by revenue Canada. A program later on can be created to match earnings from employers to those receiving CERB. Those stupid enough to cheat will be found. Maybe 2021 but be ready.
From what I have heard there are no checks and balances in applying for CERB. Anyone on this forum can take 5 minutes and apply, all you need to do is answer a few questions (how truthful is up to you). So I would say the CERB figures are highly inflated, you are also including part time workers who choose not to work because they get more money with CERB and staying at home than working. Maybe judgement day will come at next year’s tax season but it will be very hard to check in my opinion. Last time I checked the T4 forms were annual so how can the CRA prove that someone didn’t have income from March to say June?
Unemployment will be interesting because even if everything goes back to normal tomorrow I bet only slightly more than half of those laid off will be immediately recalled. Covid 19 provides a good opportunity to cut fat and underperforming employees.
It’s definitely overused, and it crops up every time a traumatic or otherwise significant group event occurs.
It can be really broad, such as when we contemplated the “new normal”, when the ozone layer was having issues, when 9/11 occurred, when trips to the moon were becoming “routine” etc. It happens all the time when an otherwise nice little town suffers a grisly murder or some other horrible, out of the realm of normal, thing.
Perhaps the best known local example is how everyone thought Victoria had changed forever when Michael Dunahee was snatched from Blanshard Elementary in 1991. No one would ever feel safe in Victoria again, with letting their kids play in a public place. Now, many of you won’t even know who that is unless you look it up, and kids long since happily play in these same places yet again.
What do all these things have in common?
New normal in society eventually returns in most respects, to the old normal, which in turn is based on the fundamental attributes of who we are as a people. Ya, people are still afraid of this virus, and that fear and uncertainty is what you’re seeing, but these aren’t durable conditions.
This social distancing thing, kootie walls, lineups and occupant limitations in front of businesses, are not going to remain for all time. Sure, many people won’t see that or agree with that right now (if they did, the phrase “new normal” would never come up)…but in time this whole escapade will be largely forgotten from the public’s consciousness.
From Ben Rabidoux:
Another 230,000 Canadians are receiving CERB benefits compared to last week. Now up to 7.49MM….over 1/3 of the entire labour force
I didn’t say prices were going to rise. If you read my post, I said there are two forces at work. The down force being the collapse of the economy, and the up force being the low interest rates and other factors I mentioned. I happen to think that the trend is going to be downward when these two forces are summed up, but prices may hold up for awhile and then fall, especially if things go bad for the virus.
“As I’ve said before, the bigger impact of this situation is not the market activity collapse during the acute lockdown period, it’s the longer term impacts on unemployment which will depress demand. We won’t know how that unfolds until late summer when the temporary economic supports start to expire.”
Agreed. The world works off credit. No job, no credit. No credit, no mortgage. No mortgage, no house. The demand side is important and the shock the RE market is experiencing is a demand shock. Sellers can take their homes off the market, but depending on their reasons for selling, they can’t generally wait forever to list. If prices are “sliding”, that lights the fire to get it listed. Economic conditions impact buyer confidence – presently, it is low. Unemployment figures will be out Friday – brace yourself because it will be worse than anyone imagined.
I predict that easing too early, as is what is happening in other parts of the world, will cause a spike in infections [and deaths] which will result in retracing the lockdown to where we are now. Even in the easing phase, consumers will not be rushing to restaurants, shows, etc. This will take 2 years and even then, the “new normal” [an over-used phrase] will be very different. Governments will have to re-examine immigration, student visas, residency, etc. Finally, which businesses are still standing will be the question – these are the employers. No job, no credit. No credit, no mortgage. No mortgage, no house.
It’s people who are buying who support prices, not people who aren’t. If people aren’t moving up, who’s going to buy the move-up properties?
Great discussion of outlook on the market with Bloomberg analyst
https://www.cbc.ca/listen/cbc-podcasts/209-front-burner/episode/15774625-too-big-to-fail-covid-19-and-canadian-real-estate
Yes, which is why I described it as factors affecting prices over the next year. What happens down the road would be dependent on what happens to the virus.
If someone sells and moves up, that would be an upward net effect on prices. If they don’t do it, it would be neutral. Which is why I said it supports current house prices. The upward effect on prices comes from lower rates improving affordability.
Marko
Like to come to the source. What is going on out there with sales and prices.
That’s just kicking the can. More debt. Bigger reckoning down the road.
As opposed to selling it and buying another one. Since most people in this position would be trading up, what’s the net effect?
There are factors both ways affecting house prices over the next year.
Obvious down factors are economic – job losses and bankrupt businesses.
But the govt policies strongly support house prices (lowered interest rates improving affordability, mortgage deferrals preventing foreclosure sales, huge money printing increasing the money supply). And then the pandemic makes selling a home unattractive ( sellers prefer to stay put in their familiar home , and sellers are reluctant to have people in their homes ).
Here’s a US article explaining “why home prices are rising during the pandemic”…
https://apple.news/A_q4DQ31cTdiQR29zRzvQxw
https://www.wsj.com/articles/why-home-prices-are-rising-during-the-pandemic-11588671002
From Calgary economist Trevor Tombe
My understanding FWIW is that it’s primarily a function of population density, air quality and the ability of authorities to implement procedures to safeguard care homes. On March 8th, the president of the Lombardy region in Italy paid 150 euro per day, per bed to nursing homes for accepting Covid-19 patients to ease the burden on hospitals. That probably didn’t help.
https://www.bbc.com/news/health-52351290
https://www.politico.eu/article/the-silent-coronavirus-covid19-massacre-in-italy-milan-lombardy-nursing-care-homes-elderly/
I think this likely myself, however, there are plenty of negative knock-on effects that are hard to predict as James and Patriotz noted below. There will also be a bit of positive in that people won’t be spending their money outside of BC for travel/vacation purposes but looking to stay local I’d think which should have some economic benefit once things open up a bit.
I am just in the process of renting a legal duplex unit we have available and I have reduced the price 10% from last year. I probably could have rented it for the same price, but right now I’m far more concerned about getting a good, stable tenant who plans to stay at least a year than I am about price. I am also concerned about the Airbnb units that are coming online knowing that they may have to offer big discounts to maintain interim occupancy.
Anyway, we have had lots of interest from people with stable government and medical field positions so the reduction in price was worth it imo. I’d expect other landlords might feel the same and this will lead to some reductions in rental prices over the next 1-3 years – especially for unattractive rentals (location/finishing/soundproofing/legality). If students don’t return in September this is going to be a big issue for many of these types of rentals if they have a vacancy in the next year or so.
If, as a consequence, house prices start to stall or fall those with stable employment are going to be in a very good position to buy.
And first time home buyers.
In other words, renters. If people aren’t going to be able to pay as much rent that’s going to have an impact on the rental market which in turn impacts how much investors will be willing to pay. It also affects how much homeowners with suites will be able to pay. As well the pandemic affects whether people will want to be landlords in the first place.
Add to that the demise of airbnb and all the units going on the rental market or put up for sale.
Former fed chair Ben Bernanke discusses “Money-Financed Fiscal Programs” aka “helicopter money”.
https://www.brookings.edu/blog/ben-bernanke/2016/04/11/what-tools-does-the-fed-have-left-part-3-helicopter-money/
Yes this is something I’m very interested in and will be looking into the April unemployment data to see if it is the case.
Phil Soper from Royal LePage advanced the same theory.
Explain how any other countries had it get out of control then? Why did Wuhan/Milan/NYC happen?
Proof?
From what I’ve read it doesn’t with any other corona viruses. Most people have no antibodies w/in a year.
It doesn’t really make any sense that they’d exist at all at this point if you couldn’t be re-infected with them.
One thing is certain. They will move mountains to avoid deflation. As for the Canadian dollar I’d bet on weaker rather than stronger, but it also depends how much other nations follow the inflation, currency devaluation route.
About 3 people die per day of CoVid in BC. Overall, about 100 die per day in BC of all causes. Let’s hope the death totals stay low. Because these low CoVid death totals are a big and necessary confidence factor for BC consumers to return to the economy.
Is it possible that the effect on house prices will be limited because the economic impact of Covid-19 is mostly hitting people who wouldn’t be able to purchase houses anyway (i.e., people who are able to work from home don’t have decreases in income)? This assumes that the economic situation globally is different than in 2008 or other financial crises — and that’s not something I’m familiar with
Incompetent central banks can also cause inflation. Much harder to stop it. I think the central banks and govt will see inflation is the only way out of this debt mess. Not sure where the Canadian dollar will end up though.
“Greater Victoria School District planning teacher layoffs due to lack of international students”
Had considered the effect on universities but didn’t think about high schools. Not great for 33 full time positions. Another factor is the loss of additional income to all those who put these students up in their homes.
https://www.cheknews.ca/greater-victoria-school-district-planning-teacher-layoffs-due-to-lack-of-international-students-666721/
I don’t buy it. Any competent central bank can cause inflation if they want to. The only constraint on causing inflation is the willingness to engage in direct monetary financing (i.e. printing money).
All speculation at this point. They tested a hospital and 27% of staff had antibodies, then they say “up to 25%” of the population might have the antibodies too which seems extremely unlikely. Until they release the serology test results it’s just an estimate. https://www.usatoday.com/story/news/world/2020/04/28/coronavirus-covid-19-sweden-anders-tegnell-herd-immunity/3031536001/
Meanwhile their deaths rate at 265 per million is more than ten times higher than our death rate (23/million in BC).
It will certainly be interesting to read a full postmortem on the Sweden approach compared to their neighbouring countries. Way too early to tell which approach is better. I haven’t seen any analyses yet that compare economic impact in Sweden to Norway.
Sure. It’s pretty clear from the press conferences that the officials in BC are well aware of that.
It does with all other corona viruses and there are no indications that covid-19 is different.
I didn’t say that. When they were considering lockdown measures, they made an assumption that there were far more asymptomatic cases than reported, which turned out to be true. This impacts the R value and the number of required ICU beds. Models used by other countries made different base assumptions which lead to different projected outcomes.
I think Sweden’s base assumptions, through good luck or good judgement, were more accurate than many others.
They may also have assigned more weight to the cost of imposing heavy restrictions than others. Cancelling surgeries and restrictions that cause 25% of the workforce to cease working does not equal zero deaths. I.e. the cost of implementing the precautionary principle is not zero.
The idea that Sweden’s modellers have some magical ability that other countries lack is fantasy. The only way to assess herd immunity is through testing. There are no other options.
On another note, Quebec is really screwing up Canada’s curve.
https://twitter.com/BenRabidoux/status/1256996379991433217?s=20
Sweden’s models have been vastly more accurate than other countries. Their models suggested that the actual infections were grossly higher than reported, so they estimated their medical facilities would be able to cope with only mild social distancing conditions. They were correct.
Models from other countries have until recently been very incorrect. See unused temporary medical facilities and cancelled ventilator orders (Dyson) for evidence.
The normal retort here is that we would have needed those things if social distancing hadn’t worked as well as it did. Not the case – a leaked report in the UK said the medical system would be over-run despite radical distancing restrictions.
The key phrase there is “estimated to be 20%” because haven’t measured it, they’ve “modeled” it. Aside from the fact that herd immunity for viruses is typically >60%, making them a long way to go even if they are 20%. But Sweden has the same case rates as Quebec, they’re not high like the larger European Countries (Italy, France, Spain).
It has not yet been established that being infected with covid-19 once protects people from reinfection.
If you look at Stockholm, where almost all the Swedish cases are, the immunity rate is estimated to be >20%. Combine that with moderate social distancing and they are not far from “herd immunity”.
We probably all know that there are plenty of professional predictions that deflation is possibly coming.
“Goods and services cost less, saving consumers money. But deflation prompts shoppers to put off purchases on the expectation that prices will fall further if they wait. That can lead to a toxic cycle in which lower spending…further pushing down consumer purchases and prices.”
It is still hard for me to fathom it will happen to a great extent. Maybe it’s because it goes against anything I’ve ever experienced.
So, until now I had not considered too much about how deflation can directly hurt a mortgage/debt holder. I mean, if you are fortunate enough to be relatively sure you will continually be employed, and you have a mortgage on a home but aren’t planning to sell anytime soon, why should you care about deflation? Even if the resale value of the home goes down for several of years, who cares since you’re employed and not going to sell your home for many years, right? (If you want to know how many years – or decades- a rut like that has been known to last, go ask Japan)
Thing is, not only do prices fall during inflation, but also salaries (which I know, is hard to imagine). And,
while all those things fall if deflation comes, there is however one thing that surely won’t fall: your balance owing on mortgage/debt!
In other words, even if you haven’t gone out and borrowed any new money after covid-19 began, in a deflationary reality your pre-existing mortgage/debt instantly gets bigger in relative terms.
“Deflation also can make it harder to repay mortgages and other debt, which become costlier in inflation-adjusted terms.” (I guess they could also say deflation-adjusted terms).
Let’s assume that for most people that their mortgage/debt in a deflationary world would be manageable. Even so, if deflation comes there will still be some number of people that maxed out their mortgage/debt recently before covid-19 arrived, and that suddenly have a lower salary and lower overall property value. The pressure would really be on them. It’s not hard to imagine, considering that Canadians are some of the most debt-laden people among first world countries.
To the extent that those mortgage/debt holders in trouble would exist if deflation comes, they are the people “on the margins” that would become must-sellers, and could trailblaze a path to lower housing prices, even if the others, comfortably well-off owners, refuse to sell at discounts. Remember, housing prices are only set by those who sell, not those who refuse to sell.
https://www.usatoday.com/story/money/2020/05/03/coronavirus-us-deflation-falling-prices-new-economic-risk/3070084001/
I vote for Hair salon, they (the hair) are getting really l..o..n..g…..
Just joking. Of course the non-elective surgery should be opened up, now they have empty hospital operation rooms and beds. Elementary school education is not really a big deal, but probably too much load for the parents. Maybe should allow kids to play together, with older ones supervise the young ones, like in mine or generations before me.
Saw someone in UVic basement office the other evening, with computer screen open and lights on, possibly a grad student who needs to get research work done.
Note the low prevalence in Manhatten compared to the rest of NYC.
https://projects.thecity.nyc/2020_03_covid-19-tracker/
Schools. Would help the parents to be more productive instead of having to home school. Also should help prevent disadvantaged children from not falling too far behind which could limit their future opportunities. I heard from my son’s teacher she is not able to get in touch with some of the children in her class that are in the “system”.
Also kids don’t seem to be very susceptible to getting the virus so should also be less inclined to spread it
US : Updated stats suggest that cities, urban areas, population density, transit use are not significant in virus transmission risk.
Differences between US metro areas much more significant.
https://www.cnu.org/publicsquare/2020/04/29/don%E2%80%99t-move-out-city-reduce-virus-risk
(Actually, within a metro area, suburbs have slightly lower rates overall (73% of urban core totals) but with several exceptions.)
Original article, worth a read as well:
https://www.cnu.org/publicsquare/2020/03/23/plague-don%E2%80%99t-count-cities-out
Often attributed without evidence to Mark Twain. However this saying, which I think is more to the point, is undoubtedly from Karl Marx:
Sure it does. It rhymes with mystery, sophistry, and that bubbly affliction you get when you run in ill-fitting shoes. 🙂
Seriously, anyone who says history doesn’t repeat itself thematically hasn’t spent five minutes studying it. Markets are nothing more than a reflection of human psychology, and that doesn’t change regardless of the era being referenced.
” If history rhymes”
History doesn’t rhyme.
This is pretty much the main reason why low cost diversified ETF’s are the way to go.
To look at it a different way, for that chart to be meaningful as a predictor, all the other variables in society must be exactly the same: level of globalization, technology, human knowledge, fear, data transmission & availability, population and life expectancy, the ability of governments to monitor the economy and deploy monetary policy etc throughout the entire periods before and following in those charts. None of these things are similar and the future is unknowable.
If you sold, that was probably a mistake. Bottom was at the end of March (probably) but I don’t care because timing the market is dumb anyways – there is no overlap on the “timing the market and investing” venn diagram.
Even Buffett under performed the S&P 500 since 2008. Buy, hold and prosper.
I was also exposed to COVID since I also traveled and someone coughed near me once. I think I’m immune because I ate lots of fried rice before leaving on my trip.
Barrister… May not help the economy, but getting the non-urgent medical services would be great. Such as non-emergency surgeries, diagnostics and dental.
Serious question: What things do you think should be opened up first. I know parks are nice but what would help the economy the most.
I don’t know if there was supposed to be a smiley, but they don’t interface directly with the public on this kind of thing, for pretty obvious reasons.
Have you alerted WHO that your coctail of vaccines prevents COVID19? Could save thousands of lives.
On the vaccine debate for COVID 19 treatment…
In the last 16 months due to travel I have had multiple intramuscular vaccines:
MMR booster
Polio booster
Twinrix
Rabies (additional treatment still required after potential exposure, even after 2 shots already)
Japanese Encephalitis
Much to my surprise the MMR & Polio boosters were free! Though rabies and JE were expensive.
I believe I have been exposed to COVID 19 in my travels and one or a combination of the above vaccines prevented serious illness.
There’s actually a large cohort in Canada that only got one dose of MMR, instead of two. The measles vaccine is between 85-95% effective. So if you were born before 96-97, you likely only had 1 shot and could still be susceptible to measles. Check with your doctor.
Everyone is in lockdown right now.
Who’s actually visiting Sweden right now while they’re open? No one.
100% accurate COVID-19 test kits coming our way. And, hopefully our government and health officials take note from other countries instead of blindly patting ourselves on the back.
https://www.biospace.com/article/releases/vietnam-announces-new-covid-19-test-kit-eliminating-gross-error-made-by-incorrect-collection-of-samples/
“RT-PCR diagnostic kit under the name RT-PCR COVID-19 Thai Duong, which besides the use of diagnostic target genes, contain an internal control to detect human DNA in samples. Clinical samples which have been incorrectly collected will give insufficient DNA result and will be excluded. This way, there will be a significant improvement of the percentage of false-negative results…
The new test kit has proved to have a 100% sensitivity, 100% specificity, and agreement ratio as 100% following the process recommended by WHO. The test kit will be available for use at the end of April 2020…”
https://www.japantimes.co.jp/news/2020/05/01/asia-pacific/vietnam-coronavirus-outbreak-contained/#.Xq-CWJ-YWV4
“As of Wednesday, 213,743 tests had been conducted in Vietnam, of which 270 were positive, according to health ministry data.
That ratio of 791 tests to every confirmed case is by far the highest in the world, according to data from health ministries compiled by Reuters. The next highest, Taiwan, has conducted 140 tests for every case.”
The reasoning is that NZ economy may end up suffering way more, due to having to stay in lockdown from the outside world, while Sweden would be able to open up much sooner.
New Zealand actually may be able to pull this off because they have less points of entry than most other countries, so have less overhead to verify each entrant gets tested and goes into quarantine. Their tourism industry may take longer to recover (although they do have plans to open up to Australians), but most other industries should be able ramp up again.
I thought this was a good,current interview with Ben Rabidoux on Canada’s housing market. Worth a listen.
https://rationalreminder.ca/podcast/96
At 22000 cases that’s about .2% of the population.
Even if they missed 90% of the cases, you’re still just 2.2% of the population. No where near herd immunity if that is even actually possible with this virus.
Honestly, how is NZ going to be worse off than Sweden when Sweden did nothing?
You don’t have to go very far back (2013) in Victoria to see what happens to that societal urge when prices aren’t going up.
This compares the current bull to bear stock market (from end of GFC to present) with the stock market of 1918 pandemic to 1933. If history rhymes, we have farther to fall. That little black uptick at the end is our stock market “recovery” in March.
We’ll have to wait a while to see how it plays out.
RemindMe! 1 year “Did New Zealand’s gamble pay off, or did Swedish pragmatism carry them through the pandemic?”
Actually, many of them are just sitting back without pressure for several months more.
Some of the more prudent ones may realize they should try to sell now while they are not forced to sell, instead of waiting to be joined by others —and possibly lower prices later (if I were in that position i would try to sell sooner while I am still in control)
However, many of them seeking professional help are being told to not do anything at all, at the moment. They are being told by bankruptcy experts to go away, come back in several months (and to dig deeper into their HELOCS too in the meantime).
Some of the unemployed that can’t pay the mortgage are being advised by Canadian personal insolvency/bankruptcy experts not to do anything yet, for at least the following reasons:
1) courts are closed
2) 6-month mortgage deferrals are still delaying reality until September (and further if there is an extension to that)
3) They cannot be sure about their employment status until things get going again. That is when many will realize they’ll be okay after all, but some will realize they’re truly out of choices and can’t get out of their debt. Until then, the details for a bankruptcy proposal, for creditors, may be too murky for some mortgage holders.
Also: foreclosing on a home already used to take a bank12-18 months, but to whatever extent foreclosures happen from now on , courts are going to be even more backed up and slower than usual.
I’m not saying prices will go down when we see the full extent of the must-sells, I’m just saying that a lot of the must-sells are waiting out the inevitable for several months more.
Here is a relevant hour long interview from three weeks ago, with a guy from Ontario’s (and probably Canada’s) leading insolvency advising firm:
https://m.youtube.com/watch?v=oTT2DC2KZCE&t=2090s
Uncertainty never causes the housing market to stop functioning, not the least because someone always has to sell.
It does tend to reduce the amount people are willing to pay, but that’s what a functioning market is all about.
They may not need to with good testing.
There is no such thing as an absolute must buy, but there are powerful societal urges to buy that gets it pretty close. Those certainly build up over time if sales are very low. But listings will also build up if kept artificially low for a period.
Good point, especially if the MMR vaccine is already providing some protection (not detected as CoVid antibodies), as suggested by the articles Beancounter linked to.
It’s not that they’ll forget how to lockdown their people, it’s that they won’t be able to afford to a second time.
Doesn’t make sense that the countries doing best at containing the virus will suddenly forget how to do it at a later date with better testing, better protocols, and better drugs available.
Oh, yes. Uncertainty could cause the housing market to stop functioning for a time, thereby having a greater impact than the more direct effects of the pandemic.
Any URL ending in .png, .jpg, .gif or similar will auto-expand. I don’t think it’s possible to embed an image from Twitter though because they hide the true URL and do some tricks to avoid embedding.
Yes, although I expect it will drop some come May. Sales will almost certainly be higher than April, and inventory won’t jump that much. Gets a little complicated with seasonal adjustment, but I suspect we’ll be lower than 8.5.
Good find. Not many Canadians get (or need) the MMR as an adult since they had it already as a child, but they’d likely give them to adults now if this turns out to be true. Especially given the Hong Kong vs NYC comparison mentioned in the article you linked to.
So, I keep hearing about pent up demand just waiting for restrictions to ease in order to flock into the market and buy. However, isn’t demand driven by things such as confidence and a belief in certainty? As opposed to the “must sell” there really isn’t a “must buy” because someone can always rent to have a place to live and if they have money burning a hole their pocket, they can just choose a different investment vehicle. What if there are actually more “must sells” out there doing everything they can to hold their listings off to when restrictions ease in order not to look desperate? Could there be a listings surge that is greater than the flock of buyers? What if buyers decide to be patient? Could FOMO turn into fear of paying too much? Will a perception of value buys be there quick enough to draw in buyers to compete to buy home? With opinions consistently forecasting a recession for the next year or two: why flock into an illiquid asset like RE that may have depreciating value in the near and medium term unless there is a discount or value found?
Interesting if this turns out to be true, as MMR is already known to be safe (unless you are in the anti-vaccination camp):
https://www.globenewswire.com/news-release/2020/04/29/2024271/0/en/MMR-Vaccine-May-Protect-People-Over-50-from-COVID-19-According-to-World-Organization.html
https://www.thesun.co.uk/news/11446949/mmr-vaccine-could-protect-coronavirus-bcg-trials/
Could explain why young children are almost completely unaffected by this pandemic.
Sweden will likely have sufficient herd immunity to ride out a second wave of COVID without much difficulty.
New Zealanders are patting themselves on the back for flattening the curve so well, but are highly vulnerable and could be devastated by a second wave.
So high enough to start having an effect on prices.
Sales will increase, but so will listings.
The numbers and data don’t support that “ not nearly enough to swamp the system” statement. BC has 4,000 available hospital beds. Hospitalizing 1% of the BC population age 20-59 is 30,000 people. Hospitalization rates (see quote 2) of people age 20-59 With CoVid aren’t negligible, they average 4%, so 120,000 BCers under 60 would need to be hospitalized and fit into 4,000 beds. But wait, that’s just the young people and doesn’t include the over 60s need hospital beds too. Obviously the only way the health system can make that work is to slow down the rate of infection.
Allowing a high % of people (50-80%) everyone to get infected would overwhelm the health care system (see quote 1) This isn’t me saying that, it’s the BMJ (British medical journal) based on the best demographic and hospitalization data available, including asymptomatic cases. This is because hospitalization/fatality rates aren’t negligible in people under 60 (as you state without supporting data) , they are significant. (See quote 2) People entering hospital are getting life saving treatment simply by IV fluids and nasal oxygen, and many would die if the hospital was overwhelmed and couldn’t give it to them. The fatality rate rises when hospitals are overwhelmed, for example Italy ran out of ICU beds/ventilators. If the hospitals are full and 4% of people in their 40s require hospitalization, a big % of them will die too.
https://www.bmj.com/content/369/bmj.m1327
Quote 1: The team warned in their paper, “Our estimate of the proportion of infected individuals requiring hospitalisation, when combined with likely infection attack rates (around 50-80%), show that even the most advanced healthcare systems are likely to be overwhelmed.These estimates are therefore crucial to enable countries around the world to best prepare as the global pandemic continues to unfold.”
Quote 2: Hospitalization rates by age : It reported that 0.04% of 10-19 year olds would probably require hospital care—as would 1.0% of people in their 20s, 3.4% of people aged 30-39,4.3% aged 40-49, 8.2% aged 50-59, 11.8% in their 60s, 16.6% in their 70s, and 18.4% of those over 80.
Our BC Public Health team have mentioned several times that they aren’t yet doing widespread antibody testing, and one reason is the poor accuracy of the existing tests. Some tests will return false positive for other harmless “cold” viruses because they have low specificity. Or return negative despite antibodies being present (low sensitivity).
Swiss based Roche has a new antibody test just release called “Elecsys” which has 100% sensitivity (ie no false negatives) and 99.8% specificity (low false positives). That’s when the test is taken at least 14 days after the infection starts. This test is just today (May 3) announced as FDA approved (and has a CE mark which helps approval in Canada) and should be available worldwide on standard equipment, so let’s hope it (or another just as accurate) will be used in high numbers soon in BC.
Then we can answer important questions like “have I”, “have my employees’ or “how many people in my city “) been exposed and are likely immune to CoVid19? This is critical to safely restarting the economy so let’s hope the govt puts a lot of resources towards this. https://www.roche.com/media/releases/med-cor-2020-05-03.htm
LeoS: It is possible that the herd immunity number might be greater than suggested by the anti-body test alone. There is always a certain percentage of people who have a natural immunity to virus and, hence, they never create additional antibodies. Whether that percentage is very small or large is difficult to know and does vary obviously with each virus.
But in all likelihood your numbers are close to correct but it is possible that their is a much greater immune percentage.
I guess from where I am sitting the next steps are reasonably obvious.
There are four basic facts that should shape our response at this point:
1) There is no cure and no vaccine at this point and not likely to have one any time soon and maybe never. (If we are lucky maybe in a couple of years).
2) We can not lock down the economy for any longer or the consequences are going to be even worse.
3) The good news with Covid (if any virus can have good news) is that the vast majority of deaths occur in people who are sixty and above with a small number in people who are under 60 but generally whose health is also compromised. It calls for a strategy of protecting the most vulnerable which clearly are seniors while at the same time opening up the rest of the economy.
4) The objective of “flattening the curve” in order to prevent hospitals from being overwhelmed is still correct. The goal is to spread the number of infections out over a number of months to avoid being swamped. The real goal is to minimize the number of deaths by being able to provide good medical care. The problem is that we have cancelled elective surgeries and diagnostics for the last six weeks, elective does not mean unnecessary. Deaths will occur and may have already occurred because of delaying these procedures. The large number of Covid cases never materialized in BC. What that means is that there is a vast pool of potential hospitalizations still out there if the virus spreads amongst the vulnerable.
Looking at it another way, if all the students at U Vic came down with Covid we would get only a handful of hospitalizations and maybe a rare death. If all the students went home and infected their forty and fifty year old parents there would be a greater number of hospitalizations but not nearly enough to swamp the system. It is when grandpa and grandma get infected (or that semi-nursing home called Oak Bay gets infected) that the hospitals really get overwhelmed.
From the above facts, I suggest there is a way to both reopen the economy and to minimize the harm from Covid. Sadly, we still face many Covid deaths ahead of us. First defend the nursing homes as much as possible. They are the single greatest cluster of potential hospitalizations. Realistically, we cannot prevent some if not most of the nursing homes getting outbreaks of Covid and having significant number of deaths. But the main objective is to prevent all the nursing homes from getting it in the same month or two. Back to flattening the curve.
Secondly, we need to take measures where workers over sixty are restrained from re-entering the work force right away and ideally create mechanisms where they might retire early. The hope being that at least a portion of them would be able and willing to self isolate. You might not be able to totally reduce the eventual number of Covid hospitalizations but at the very least you would spread them over quite a few months and hence flatten the curve.
For the vast majority of people under 60, life can and should return back to normal.
(By way of discloser I am both over 70 and in the vulnerable crowd. So please no nasty emails about me being uncaring).
Seems like New York City is at about 20% on that measure and the state at 12.3%. So even the hot spots are only a third or halfway to herd immunity.
Just a little bit of ice, nothing to worry about, underway soon.
Quite true. But I think the reluctance of landlords to report could be one of:
1) Ignorant landlords who don’t understand that it’s the net income that’s taxable.
2) Not so ignorant landlords who think they might be exposed to capital gains when selling the property.
I know that ordinary basement suites would likely be exempt from (2), but there are a lot of de facto duplexes and triplexes these days that wouldn’t.
You would think that during a pandemic and economic catastrophe of historic proportions, the perpetual real estate cheerleading pieces would be more cautious, lest they be laughed at by even more people than usual. Nope. Apparently in the real estate industry greed trumps shame.
A recent front page of the business section in a Canadian newspaper is one for the ages, captures the shameless perpetual real estate industry spin machine perfectly.
Top headline: Canadian economy ripe for historic fall
Second story headline: Increase in home prices expected.
(Click on the image in this Twitter link, to see in full)
https://mobile.twitter.com/BenRabidoux/status/1250792892089729024
(How do I embed an image here?)
It’s but a flesh wound
Don’t worry folks, citified says that market activity in April was pretty good. https://victoria.citified.ca/news/hardly-the-market-crash-some-feared-victorias-april-2020-real-estate-activity-beat-expectations/
I mean it’s only the worst seasonally adjusted sales since we have data.
Of course sales will increase through summer, but that’s some serious spin for April’s numbers.
From my experience, tax from income off a suite is usually pretty minimal. When we were renting out a suite, some years the tax was actually negative because I was able to expense more than the income.
Especially this year if all the stories about tenants not paying rent are to be believed, landlords could be in situations where they have more write-offs than income from rentals.
It’s quite clear that this is their strategy, and they’ve told everyone that. For example…
https://www.npr.org/2020/04/26/845211085/stockholm-expected-to-reach-herd-immunity-in-may-swedish-ambassador-says
“ Sweden’s ambassador to the U.S. believes the country’s controversial strategy of imposing only limited restrictions — and not locking down the country — is bearing success, with the capital, Stockholm, on course to reach herd immunity in the next few weeks.”
Trouble is, others see it as playing Russian roulette, and that they aren’t near achieving herd immunity. The whole idea of herd immunity for CoVid is a theory with many unanswered questions. And no one has done the amount of testing required to measure herd immunity, and are relying on statistical models. The antibody tests aren’t that reliable, and it isn’t known if presence of antibodies means you’re immune.
Interesting article int he globe and mail about BC case study, selling in a pandemic.
Thought I’d share.
“I told the guys, ‘enjoy the time off, because we will hit the ground running come end of May.’”
https://www.theglobeandmail.com/real-estate/vancouver/article-a-bc-case-study-in-what-its-like-to-sell-a-house-in-a-pandemic/
Former landlord – that’s unfortunate let’s hope the bc government is just saying that. It would be a good way to make up some tax revenue – the country is gonna need it.
Patrick: I dont believe that the Swedes were trying for herd immunity.
Quebec has 30K cases so far, 1000+ daily cases and 100+ deaths a day. That’s 25X our BC numbers, and would stress if not swamp our system. https://www.ctvnews.ca/health/coronavirus/tracking-every-case-of-covid-19-in-canada-1.4852102
And this economics professor university of Montreal has used statistical techniques to estimate the true numbers are much higher in Ontario and Quebec. https://nouvelles.umontreal.ca/en/article/2020/05/01/far-more-cases-than-officially-reported/
“ As of April 22, the economists estimate, the actual infection numbers were 256,130 in Quebec (more than 12 times as many as officially reported) and 220,602 in Ontario, (more than 18 times as many).”
Sweden is nowhere near herd immunity. If you look at their case numbers, hospitalizations and deaths, they are about at the same level as Quebec, and well below European countries like Spain, Italy and France. This is because they did restrict businesses & restaurants that are open, as well as following distancing guidelines, and switching people to working from home. Basically the same thing we’re doing, just not as strictly.
This was backed up at today’s press conference, where Dr. Henry said a similar thing when someone asked if we can learn from Sweden with regards to herd immunity.
Everywhere in Canada the infection rate to date is estimated to be low, only a few % as far as I know. So there’s really not much difference in the potential future cases if it was 5% or 2% or 1%.
http://angusreid.org/covid-epidemiology-study/
I wouldn’t take the report infected numbers too seriously. I know myself likely had Covid 4 weeks ago, from helping an infected but not confirmed person before he found his source (close contact with a confirmed fellow UVic student). He was very sick but mine was mild, and both recovered now. At end of March and beginning of April, the test was tightly controlled so not the person nor I was given the test, thus not in the reported cases. The poor young man was in hospital with all the symptoms and asthma but was sent home because his age (28). He struggled very hard at home (took it day by day – in his own words) for the first 10 days, and should really be in the hospital care then …
Only reliable antibody test would find out close -to-true number of already infected people.
CIBC’s housing market and price forecast through 2021
http://business.financialpost.com/real-estate/pandemics-economic-hangover-will-hit-home-prices-by-2021-cibc-economists-predict
There has been an oft-repeated argument that if comparing annual flu to covid-19 deaths, the world’s reaction to covid-19 has been highly disproportionate. There were already several good responses to that argument, but until now I had never seen anybody calling out the flu death numbers’ methodology as bunk to begin with.
A new Scientific American article by an emergency-room physician makes a good argument as to why those comparisons have always been garbage:
“in four years of emergency medicine residency and over three and a half years as an attending physician, I had almost never seen anyone die of the flu.”
Based on the CDC numbers though, I should have seen many, many more…Was I alone in noticing this discrepancy?”
…
“I decided to call colleagues around the country who work in other emergency departments and in intensive care units…Most of the physicians I surveyed couldn’t remember a single [flu death] over their careers.. For too long, we have blindly accepted a statistic that does not match our clinical experience.”
…
“The 25,000 to 69,000 [flu death] numbers that Trump cited do not represent counted flu deaths per year; they are estimates that the CDC produces..based on assumptions of how many cases, hospitalizations, and deaths they believe went unreported”
…
“In the last six flu seasons, the CDC’s reported number of actual confirmed flu deaths—that is, counting flu deaths the way we are currently counting deaths from the coronavirus—has ranged from 3,448 to 15,620”
…
“The CDC should immediately change how it reports flu deaths. … is dangerously misleading the public and even public officials about the comparison between these two viruses.”
So, comparing the numbers based on same data collection methodology, the U.S. so far has TWENTY TIMES the number of counted covid-19 deaths than there are counted U.S. flu deaths in a “good” flu year. AND, that is only so far – we are only 40% into the calendar year. AND, those horrific U.S covid-19 deaths numbers are still only AFTER historically extreme population isolation measures.
R.I.P. , flu-deaths vs. covid-19 deaths “are not so different” argument!
Is there anybody who doesn’t agree that argument is now completely dead and buried, and that any further use of that argument by any government officials (or anybody) is now dangerously misleading and irresponsible?
https://blogs.scientificamerican.com/observations/comparing-covid-19-deaths-to-flu-deaths-is-like-comparing-apples-to-oranges
Freedom, perhaps put in another way, we have had so few cases that we are still risk of swamping the hospitals when we open up if we are not extremely cautious.
As long as the elevations of later peaks don’t overwhelm our health care system, the curve flattening archives its purpose, even if the total numbers of infected and hospitalized are the same at the end, with or without lock-down.
https://globalnews.ca/news/6878768/b-c-renters-told-to-apply-for-subsidy-even-if-landlords-tell-them-not-to/
Sounds like the Province won’t be sharing the renter’s subsidy with other institutions (like the CRA). So landlords not declaring their rental income shouldn’t be exposed by this.
Hopefully BC is opening in Mid-May.
Manitoba has good CoVid stats like BC and they are opening (phase 1) up on May 4… I think if this happens in BC (mid May) we’ll be much closer to what’s open in Sweden. And we will have only been closed two months at that time, with a flat curve, low case count and organized public health tracing to show for it.
https://winnipeg.ctvnews.ca/manitoba-premier-announces-plan-to-reopen-the-province-beginning-next-week-1.4916749
The non-essential businesses to open in Manitoba during phase one include:
* Non-urgent surgery and diagnostic procedures;
* Therapeutic and medical services;
* Retail businesses, including clothing and sporting good stores;
* Restaurant patio or walk-up services;
* Hair salons;
* Museums, galleries and libraries;
* Seasonal day camps; and
* Outdoor recreation and campgrounds.
“We are still restricting gathering to no more than 10 people,” Pallister said.
Not too surprisingly, many (perhaps most) of these positions are “anywhere’, which means you’re competing with 3rd world workers.
“Work from home” is mostly associated with that kind of MLM type. Working remotely will get you better jobs, mostly tech or tech-related for sure. Also https://weworkremotely.com/
Poloz’s term is up, so in steps Mr Tiff Macklem to fill his shoes as the new governor of the Bank of Canada.
This part seems promising, to me:
As for dealing with COVID and its aftermath:
Sounds, to me, like very low interest rates for another decade, friends.
Tiff Macklem named new Bank of Canada governor amid COVID-19 pandemic
https://globalnews.ca/news/6892312/tiff-macklem-named-new-bank-of-canada-governor-amid-covid-19-pandemic/
Apologies again everyone, the MOI chart posted in the original version of the story was incorrect. The real SA MOI in April was 8.5. Article updated above.
The TC, like so many other newspapers, is in trouble. Ad revenue has dried up. And the paper is accepting government hand-outs in an effort not to lay off a third of its employees:
Dave Obee: How your newspaper is adapting and delivering in difficult times
https://www.timescolonist.com/news/local/dave-obee-how-your-newspaper-is-adapting-and-delivering-in-difficult-times-1.24128266
Meanwhile…
Postmedia to lay off 80, permanently close 15 newspapers amid COVID-19 fallout
https://www.bnnbloomberg.ca/postmedia-to-lay-off-80-permanently-close-15-newspapers-amid-covid-19-fallout-1.1428207
Damnit. I made a mistake on the months of inventory chart. A change in the sales I made temporarily to investigate the funny issue in the seasonally adjusted data carried over to the months of inventory. Updating article now.
The govt hasn’t ordered Dentist offices closed, so there’s nothing stopping this young Dentist from keeping her practice open. On March 16, the Dental College ordered Dentists to stop routine care, but they are allowed to be open to treat acute problems (pain, infections etc). And it’s expected that Dentist offices will open in mid May, making it two months that Dentists could only treat acute problems – that doesn’t seem like a career-ending event (my Dentist takes more than 2 months holidays per year anyway)
The point being we can’t blame the govt for shutting down the economy when in many cases it is voluntary decisions by the businesses themselves (like this young dentist) to be fully closed and not partially open.
Attn: Data junkies!
Google tracks locations of all android phones (that allow them to in phone settings) so is able to report interesting data telling us where people have actually gone during this crisis. It’s assumed that where your phone is on and active, that’s where you are..brilliant!
For example you can see the Canada report, and it includes B.C., and you can see that in BC, our locations at retail/restaurants (restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters) has fallen 49% as of May 1, 2020 (they chart and update this daily).
That’s number, ( 49% down for B.C. )is bad, but it isn’t 100% down, and while the absolute number doesn’t mean much (because maybe people are in that location for other reasons), it can be compared to other places. For example, we are doing better than Canada overall (which has fallen 57%) or Quebec (-78%). And better than Italy which is 92% down. So this indicates to me that BC has indeed remained partially open, and didn’t go through the same degree of lockdown as the rest of Canada , BC grocery visits down 22%, better than Canada down 39%.. But B.C. visits to parks is up 25%, whereas it is down 6% overall in Canada. This is objective, real-time data pointing to BC being open already more than most other provinces.
If you want to see data on a country truly locked down, there is Italy. Retail/restaurant -92%, grocery -72%, parks -85%
Google mobility reports (worldwide)
https://www.google.com/covid19/mobility/
Google report for Canada (and BC)
https://www.gstatic.com/covid19/mobility/2020-04-26_CA_Mobility_Report_en.pdf
Google report for Italy
https://www.gstatic.com/covid19/mobility/2020-04-26_IT_Mobility_Report_en.pdf
Yes that’s right. Like the mechanic says – you can pay me now or you can pay me later. After what would have been the end of the mortgage they will still be paying off that extra principal and interest.
It may not affect their cash flow in the present but it will affect their equity in the present. And that will affect their buying power if they want to sell and buy another property, which almost everyone does at some point.
This doesn’t appear to be correct. Stock investing affects valuation which affects how much a business can borrow to grow or innovate. Stock trading allows businesses to raise capital to pay off debt, launch new products and expand operations. Stock prices influence consumer and business confidence, which in turn affect the overall economy.
In addition, if you use your savings from reduced consumer spending (from working at home or otherwise) to invest in capital producing/appreciating assets this is, imo, a better use for the economy and the environment. Things you can invest in apart from stocks include your own business (I used the savings to also hire employees), rental housing if you are inclined that way, and education/training.
Patriotz the debt burden will be more but the payments will not be. So 6 months of payments gets added to the back end of the mortgage with some accumulated interest. Other than the fact they will be paying their mortgage a bit longer it’s not going to affect their cash flow (assuming the economy is fully open and they go back to work).
Back on their feet all right but they’ll be carrying an even higher debt burden which will reduce their future disposable income and buying power.
I don’t think a reduction in consumer demand for gasoline is going to cost many jobs. How many people actually work selling it these days. As for consumer goods, where are they made? Hardly any in Canada.
Service sectors do employ a lot of people. But the ability to pay for services comes from primary production. As long as that keeps going, people will have money for services. There may not be the same services delivered in the same way. That’s domestic services not export services (tourism, etc.). The latter are a real loss to the economy.
IMHO the real problem is the one we had all along – the reliance on increasing consumer debt. There was going to be a reckoning for that one way or another.
Patrick: I really hope that you are right. I mean that most sincerely. You are absolutely right that between some real luck and the lock down we have had a extremely low rate of infection and death in BC. And if we stay in lock down there is a reasonable chance of keeping the numbers this low. The problem is that the monster is out there and just as hungry as it ever was before the six week lock down.
Actually, I just talked with my dentist today who is a personal friend and dropped by to chat from eight feet away. He is over sixty with a couple of health issues. You are right he would have closed down regardless of what the government did initially and he will stay locked down whether the Province officially opens up or not. On the other hand his daughter is also a dentist and will go back to work and also would have stayed open. What is absolutely clear is that if you are under 55 without any pre-existing health problem then the risk really is marginal. That was the case six weeks ago and it is still the case today.
I also suspect that we have not flattened the curve but actually totally delayed and shifted the peak till later. Hopefully we can reopen soon and then actually flatten the curve by protecting the nursing homes as best we can. Most nursing homes will experience this infection and the resulting deaths but with luck we can spread those infections over a number of months and not all at the same time. Hopefully the message from the government will be very loud and clear that those over sixty are still at high risk and need to maintain themselves in a bubble. Some will listen some wont but hopefully this will also slow the number of hospitalizations and further spread them over a number of months.
We will see how it works out but I am starting to wonder if Sweden might not have got it more right than wrong.
Well I’m sure the large majority of that 15% will be back on their feet come 6 months from now and they won’t be in trouble on the mortgage side or be forced to sell. But delinquency rates will be something to keep an eye on.
You either shutdown early and the lockdown lasts less time, or you don’t, and you end up like Italy & New York where you’ll spend months on lockdown.
This is also directed towards the moneymustache article. Does investing in companies (except at IPO) actually help them grow? unless their issuing more stock, they don’t actually get any net value from someone buying their stock. The CEOs benefit because their compensation is tied to it, but the company itself doesn’t.
The realm of possibility is pretty huge.
Do you think that if the govt didn’t lockdown the economy, that many people would still be going to restaurants, bars, attending sporting events, going to the dentist and hair salons? A lot of these businesses closed themselves, for example the NBA shut down when a few players tested positive, on decision by the owners, not from a govt lockdown. Same with restaurants, open table data shows most closed on their own individual decisions, prior to govt lockdown orders. If you were a dentist, you’d probably have closed your office on your own too, rather than spend 8 hours a day with your hands in someone’s mouth. I think they made a wise decision, and flattening the curve was the correct decision.
In Vancouver Island Health region, we have spectacular results , today (May 1) now only 3 people hospitalized, 0 ICU, 4 deaths total. 121 cases total, 101 recovered already leaving 20 current cases. This is because we let public health do their job, and did what they said. So no, I don’t think this was a “disastrous decision.”
I haven’t thought enough about this topic to have a good response – other than I’ve noticed that people adapt when motivated and government has survived through all sorts of economic conditions.
At this point, I’m not even sure that covid will force a different future, just hopeful that some things will change for the better and faster than pre-covid.
Totoro said:
I agree, a rethink would be good in some ways. I’m just pointing out that it would seem the transition will be painful, if indeed it happens to any significant extent.
So, let’s say that going forward many of us spend much less on gas, consumer goods, various service sectors, etc, etc.
What will replace all those lost jobs?
And, what will replace all that tax revenue from what used to be a higher monetary velocity?
The government of Canada cannot pay for our first world quality of life with votes and wishful thinking. I think a lot of us take for granted how much it costs for this country to provide everything it does.
Will it be time for much higher sales/income tax rates?
Or, will our roads/education/healthcare/welfare/police/etc funding be slashed? (It was already lacking!)
Or, does the government just print money and devalue the CAD?
Or…?
Not sure what your search history is that Google would think you would be interested in that. The job openings I see searching for remote work jobs are mainly in IT and sales.
I invested the savings I had from working at home. Those investments benefit the economy as they help other businesses grow, keep me from receiving any social transfer payments, and I pay tax on the proceeds. You’ve got to think buying consumer goods is not the way to keep an economy afloat given the cumulative environmental cost and rate of population growth. Might be time for a rethink.
If the popularity of working-from-home stays high to some extent, not only are many of the employees from those businesses you mention going to be laid off, but the implications for loss of tax revenue are scary.
E.g. I used to buy a lot more gas (which is hugely taxed – that one is a big discussion it itself!) and also spend a lot of my income for coffee and lunches downtown. I used my car often enough to require a certain level of maintenance and replacement, etc, etc.
In turn, those business owners/employees would not only pay income tax on those earnings from my modest purchases, but they would also take the money I gave them and then go out and buy coffee/lunch/gas/merchandise/etc themselves… thereby continuing the money flow cycle, and letting the government take their cut in sales and income taxes several times over along the way. (I think that flow of money through different hands is partly what is meant by “velocity of money”. Money going through more hands, means higher velocity of money.., but i digress.)
And now, what if I’m going to stay working from home, generally wear old tshirts instead of a shirt and tie, and make a bologna sandwich for lunch? Sure, I am going to personally save a bunch of money. But, a whole lot of people are going to not be earning money anymore, not be paying sales/income taxes, not “paying it forward”.
The irony is that those same people are going to need to be bailed out by tax dollars, which due to the problem, the system will have much less to work with than before.
It’s not as if before covid-19 the various levels of government even collected enough tax revenue to pay for our Canadian quality of life. It wasn’t even close, given our governments’ debt levels.
But now, they’ll collect even less taxes and they will support even more unemployed people?
That’s not how it works, not for long anyways.
What big changes will have to be made to reconcile (or at least acknowledge) this, or else will governments just let things go until there is no choice but for it all to break down? (Say hello to the Canadian peso?)
What a mess.
I am curious how much of those 15% would have been delinquent if not for the deferral.
Relatively new to this blog and house hunting in Victoria. Verb stats out for April and show the sfd benchmark up almost 5% yoy. Quite amazed at the benchmark of $883k. While I get this is somewhat of a manufactured number, can it be said the typical house you are buying in the core is in any way a better house than last year or in years past.
Yes.
I read that 25% of all businesses in the U.K. are shut down at the moment. Of course some/most may re-open. But when and to what? I haven’t heard the equivalent number for Canada but it may be similar. That provides some context to explain 15% mortgage deferrals. But still shocking that the deferrals are immediate, and it points to those surveys of many people having “no savings” being accurate after all. If things don’t recover (vaccine, treatment, flattened curve), this could lead to huge defaults and foreclosures, and a crash in Canadian (and perhaps world) home prices.
Some employees may be willing to take a lower pay to get a job working from home, because they see it as a benefit. I started looking for remote positions because most employers here in Victoria weren’t able to pay me what I was looking for. I probably am making a bit less than most of my peers at the company, but that is mainly because they are paid in USD. In my experience there are 2 reasons why a company will look for remote workers. One to save costs on office space, second to find talent that might not be available in a location that they have an office.
More remote working will lead to less travel for commuting, but will probably increase business travel including flights (maybe not in the short run though). As a remote worker I (used to) travel more than when I was not remote, to get to offices where my co-workers work. For some things face to face contact is still more efficient, like brainstorming which is hard to do with a group of people on a conference call. At the kickoff of a new project or initiative the company usually try and get the team together.
That’s higher than it ever got during the US housing bust / financial crisis.
https://fred.stlouisfed.org/categories/32440
It is not out of the realm of possibility, in hindsight, that this attempt to flatten the curve by locking down the economy was a disastrous decision.
It was only two months ago that we’d debate whether an uptick of delinquent mortgages from 0.10% to 0.12% was significant. Now here is 15%… 150X higher!
I’d just go elsewhere.
15% of all mortgages held by Canadian banks are now deferred (according to Ben Rabidoux on twitter).
Most of those will be for 6 months, so about September when they expire
I agree with that, and in the example I mentioned, the employer requires the guy to work in the office. I think the employer is going to need to pay that guy more. Which is another way of saying he could save money if he let the guy work from home and paid him less, and I wouldn’t consider that “wilfully underpaying him.”
“I guess the reason is that he isn’t doing exactly the same job., i.e. being in the office makes him more valuable to the employer. If that wasn’t the case the employer wouldn’t spend the overhead cost for an in-office position.”
Or maybe he is an older worker nearing retirement who is not comfortable with the idea of working from home, and the employer is just making a reasonable effort to accommodate him. Maybe he’s a good guy and the employer likes him. Maybe the employer has a conscience and isn’t comfortable kicking the old boy to the curb 5 years before he’s due to retire.
All things being equal, there is no reason to pay someone more for deciding to work in the office when they have the option to work from home.
I guess the reason is that he isn’t doing exactly the same job., i.e. being in the office makes him more valuable to the employer. If that wasn’t the case the employer wouldn’t spend the overhead cost for an in-office position.
“The guy working in the office is going to want (and deserves) to be paid more than the guy working at home, which is my point.”
If guy working in the office is required to work in the office, then yes I agree they deserve to be paid more. If guy is working in the cube farm by choice and is doing exactly the same job as girl working from home, then why does guy in the office deserve more pay?
Why would he want & deserve more $$? He actually costs the company more money since they have to pay for more office space.
B.C. teachers just ratified their new collective agreement (98% in favour).
2%-2%-2% wage increases retroactive to July 1, 2019, when the previous deal expired. Some other positive tweaks here and there. No concessions.
Kudos to the NDP for reaching a deal without drama and even the threat of job action.
Right, but at some point the market weighs these things and that’s how salaries get set. For example, a company might have two identical positions, but only one of them can work from home. The guy working in the office is going to want (and deserves) to be paid more than the guy working at home, which is my point.
It would be “willfully underpaying” the office worker to pay him the same as the work at home guy, which as you’ve stated “isn’t a good strategy.”
“Should we expect employers to realize that, and offer new employees the work-at-home job for $60k?”
I think it depends. In a competitive environment where the position is in demand, I don’t think this would be possible. In the short to medium term, maybe it is. Depends what the unemployment picture is like.
Having said that, I don’t think that willfully underpaying your employees is a good strategy. I’ve never understood employers that do this. I feel like the turnover would cost a fortune, and it puts pressure on more experienced workers to pick up the slack that results from a constant influx of new hires, which just begets more turnover.
Let’s say someone had a choice between the same job – either in office at $70K per year, or work-at-home for $60k per year. I’m guessing from the comments here that many people would choose the $60k work-at-home job. Should we expect employers to realize that, and offer new employees the work-at-home job for $60k?
GWAC: Not really finding it exhausting but a bit of an adjustment. It is nice having the city be relatively quiet at the moment although I dont think it will last long. Miss going out to dinner or playing cards with the neighbours but it is still possible to get together with the neighbours in the backyard for a glass of wine.
“It took me a couple of years to stop feeling guilty for leaving my desk during the 9-5 but I eventually realized that my productivity was project-deadline based, not hours in the chair based and with a cell phone you can be anywhere.”
I too have been working from home for years (although in a nominally 9 to 5 job), and the guilty feelings creep in occasionally. Funny how ingrained the 9 to 5 thing is. Shoving kids into educational factories for 13 years probably doesn’t help.
“What then happens to the commercial real estate sector? And all those employed by it? Retail? Dumpster bin. Restaurants? Forget it”
Build more condos! As for food services, I rarely made lunch when working from home until Covid-19 forced me to. I used to eat lunch at the little restaurant around the corner, the bakery, grocery store, whatever. If more people work from home, maybe some restaurants and coffee shops will move to the suburbs? I feel like eating peanut butter and banana sandwiches for lunch everyday would get old and people will want to eat out.
One view on what would happen.
https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/
I wasn’t quite correct about that. Here is what CRA says about employees working at home:
Last sentence is the big difference between an employee working at home and having a home business.
Depends on your field. There’s a bunch of remote work options for IT. Some companies are remote only.
Exactly. Offices no longer needed? What then happens to the commercial real estate sector? And all those employed by it? Retail? Dumpster bin. Restaurants? Forget it. Oil and gas? I wonder when they’ll be paying people to fill up their tank. Most advanced economies these days are heavily dependent on consumption, and even those jobs which allow people to work from home, even though separated from the “front-lines” by several degrees, are going to be affected. Let’s say you write software for systems used by restaurants or retailers or even realtors. Or maybe you engineer microchip technology to be used in mobile devices. When consumption decreases across the board (you start saving more), you are going to see the downstream effects down the road. Budgets tighten, which means projects get cancelled, which results in business slowing down, which results in pink slips.
I think the changes coming will be net positive for the planet in the long-term, but there will likely be a lot of pain in the process. With that said, I really hope we bring a large chunk of manufacturing back close to home . This culture of cheap, disposable, horrible quality products has gone on long enough. Also, this would provide much needed economic opportunities. And talk about better for the planet. All this cheap stuff that has no durability so to be thought of as disposable and made with total disregard to labour laws, human rights, and the environment would be the best thing to happen to the planet in a long time. Heck, if I can buy tupperware that costs 50 bucks but lasts 50 years instead of 50 days then I’m all for it. I hear common complaints that the latest and greatest mobile phone or computer or tv would cost 50% more if produced here. Well, do you really need a new phone every six months or a tv in every room of the house including the fridge door?
Employees working at home can deduct some home expenses as follows: https://rsmcanada.com/our-insights/tax-alerts/can-home-office-expenses-be-deducted-during-covid-19.html
If you’re just an employee working at home you can’t do that. It has to be your own business.
One factor that helped the “work from home” move is that employers and employees were already familiar with the company and work methods etc..
This might be different if you’re unemployed and looking for a new job – finding a great new work from home job to begin with might be harder than getting your existing employer to transition you to work at home. Right now, if you google search “work from home” you’d be looking at multi-level marketing type sales jobs.
I switched to work from home in 2007 – just a desk in my bedroom – and never looked back. It allowed me as a small business owner to increase my net significantly. It took me a couple of years to stop feeling guilty for leaving my desk during the 9-5 but I eventually realized that my productivity was project-deadline based, not hours in the chair based and with a cell phone you can be anywhere.
Not all businesses are suited to this and there is definite value in a central workplace when you have more employees who may not be as motivated without coworkers and supervisors present, but it can be an extremely time and resource efficient move.
As for housing. Working from home never made me want a bigger house or a more remote location. Covid has made a small farm way more attractive to me now.
Reading things on here and other stories. I would run from any REIT that has anything other than rentals for living. Going to be a lot of empty spaces for a long while.
Not sure how others are feeling but life is exhausting right now.
I think that’s a very interesting and valid observation.
We’re having the same observations/contemplations at work as well as Mrs. Fool’s work. Many employers have been skiddish at the notion due to productivity concerns, but this situation has essentially forced that hand and demonstrated that in (most) cases, things work just fine. Totally used to teleconferencing and videoconferencing where before it was deemed “essential” to have face-to-face.
It could be something transformational – it would sure be nice to have a less crowded downtown and road system. My gasoline bill has also dropped by about 2/3, which is nice.
I don’t disagree with you, except I miss my morning commute (by bike), and I don’t shop on Amazon. Definitely been saving more money, by eliminating a bunch of expenses. You’re definitely not alone in this regard. Our office is doing the same, and we have over 500 people working for us, so they are looking at massive savings if they can consolidate our office buildings.
This would be why the economy doesn’t recover though. Lots of money is spent by people who work & own coffee shops and restaurants, gas stations, airlines, hotels, car sales, office suppliers (like office furniture) and all of the people that work for those the companies that supply those companies, oil & gas, coffee roasters, farmers, car manufacturers, steel plants (so coal) and all down the line. What’s beneficial for you isn’t for the economy at large. I really don’t think you are the outlier, and it’ll affect a lot of people.
I’ve been working out of a garage for 10 years straight now….I smirk every time I drive by huge real estate brokerage offices.
I am getting to the point thought that I could do without a garage. Kitchen counter and laptop could do.
There’s a lot of momentum to overcome. It’s hard to get past the butts in seats mentality of work but this crisis has forced the experiment on everyone. Some will go back to their previous patterns after the lockdown is over, but others will have invested in really figuring out how to change the work in order to make it better remotely, and may continue with that either all or in part afterwards. I highly recommend reading this piece and listening to the podcast https://ma.tt/2020/04/five-levels-of-autonomy/
IMHO if remote working on this scale made economic sense for the employers, it would have already happened given the high RE prices in Canada’s cities.
Note also that apart from BC, Canada’s major cities are amalgamated and extend far from downtown already. As for BC, I don’t think Victoria or Vancouver (cities) are going down the tubes any time soon.
This could be an example of some of the bigger/long-lasting changes that come out of this crisis.
One hope of mine is that gratuitous and frequent air travel (for business and for pleasure) never returns to normal.
Yes, and to get all that (weeding the garden, walking the dog, improving the yard, enjoying the home office, room for everyone to be there 24/7) means a change in what some people will be looking for in buying a home. A change to bigger homes with big offices, gardens and yards located in fresh air outside the city
For example, this trend in NY and surrounding states….
https://www.cnbc.com/2020/04/30/wealthy-new-yorkers-flee-manhattan-for-suburbs-and-beyond.html?__twitter_impression=true&recirc=taboolainternal
[pre-coronavirus] Wealthy buyers didn’t want the big classic estates and mansions because they were too much work to maintain and they wanted to be in the cities.
But in the post-coronavirus market, sprawling homes with multiple rooms and living quarters, large land parcels and remote locations have become an asset rather than a liability.
“I think some of the big estates here will be very attractive again,” Magnuson said.
Magnuson and others said the most desired amenities among wealthy buyers are a pool, a large home office and strong internet and cell services.
“After going through this in the city … people want a place where, if they have kids, they can get out and do something. They can go out for a bike ride, and go for a run or walk and live their daily lives without feeling inundated by their neighbors,” he said.
When you rent below market value to great tenants….just got this from a tenant.
“……cooking, using the over a lot more, definitely using more hydro working from home. Just wanted to let you know that I’m adding $50 for this month’s rent to cover for my extra use of hydro. Hope that’s okay with you……”
I replied with don’t worry about it, saving more than $50 with the lower interest rates 🙂
One of the things I find interesting is that companies are now seriously looking at the idea of giving up office space on a big scale because of the massive cost savings. This covid -19 lock down has convinced one of the major banks to discontinue it’s big office spaces. People are now working from their kitchen tables at home and it is proving to work very well. One has to think that other companies will be forced to follow suit. Those companies that don’t change will be left at a distinct disadvantage because of the huge costs of office space.
What I’m saying is that cities will change as people move to much cheaper satellite communities with no need to commute. Communities much lower city Taxes and much, much lower house prices.
It’s an interesting idea worth considering. Think about it. As office spaces close, what will happen to the coffee shops and stores nearby?
What will happen to the city tax base as these companies switch to a working at home model?
I absolutely see a downward spiral as our cities across the country start to crumble and are left to those who hang on.
As some of you will know, we jumped ship a year ago now and are enjoying our life in Sooke. It’s a stones throw from Victoria. Our electric car costs a total of $1.75 in electricity to drive into Victoria and back out to Sooke round trip. We work from home.
Jonas: You might be the outlier since many people that I have talked with cant do their jobs from home. It would be interesting to know what the changes will be in that regard. But you are right that this will accelerate a number of changes.
The only thing I would point out is that some of your advantages are also lost business for other people such as the travel industry. In terms of real estate it might well shift so demand away from the core of cities. it will be interesting to watch as it progresses.
Great article Leo.
The vertical drops on the sales charts is a “Wile E. Coyote vs Gravity” moment https://youtu.be/wRSHzenjiNA
Great comment Jonas.
https://househuntvictoria.ca/2020/04/30/the-month-of-no-good-very-bad-numbers/#comment-69367
Thanks for another great analysis. I am not sure what Victoria will look like after we open up.
Cadborosaurus said:
High-five, Cadborosaurus! In my opinion, the more of us that make noise about this (and cite examples, even) , the better the chance they will actually realize it is a consumer protection issue and do something about it.
To any others reading: if the issue bothers you at all – please write to the email above. Those are the people our taxpayer dollars pay to supposedly protect real estate consumer interests.
Just think, those numbers being published represent assessed values for July 2018. That means consumers are now being pitched assessed value numbers that are NEARLY TWO YEARS OLD. (Yes, I know that those assessed values were originally released January 2019, but it still doesn’t change the fact they represent a snapshot of July 2018).
Like I’ve said before, there are at least two companies that are capable of serving this data locally. One of them, which has only a small number of developers and is located downtown Victoria, has already fixed the problem a while ago. What the hell is taking so long for the data provider which gives us and realtors the PCS information???
Wow Leo S, another great analysis!
For what it’s worth, here is an interesting Twitter comment from mortgage broker Ron Butler (his specialty is Toronto area, but good food for thought across the board):
“In the midst of a once in a century, worldwide catastrophe; predictions are tough.
So when the sudden pick up hits in June everyone [will start] shouting about V shaped recovery.
But here’s a prediction, the month of June will surprise people with a strong uptick in RE transactions. NOT like it will beat last June but the 50% to 75% drops won’t continue. Might start in the middle or the end of May but we will see it happen.
And it just makes sense. I speak to our team and other mortgage brokers every day. And there is a ton of pre-approval action. So once enough people feel confident in going into a stranger’s house: sales happen.
But how long does that last? 4 to 8 weeks? Bit more? Likely. Then what happens? That’s harder to say.
…
But I think all the bad stuff comes into play
Long term 12% unemployment
Loss of confidence
2.5 months lost income
Long term business damage
Need to create Savings
Possible return of Covid
It’s all terrible and it will gnaw away at 2020 and 2021.
…
So when the sudden pick up hits in June and everyone starts shouting about V shaped recovery
Don’t buy in, Fate has a different idea in mind for us”
Will be interesting to find out if he’s right.
Discussion about economic recovery seems overly pessimistic to me. A commenter in the last post said Canadians will have a hard time accepting a lower standard of living… but I disagree. If you’re one of the lucky ones able work from home, you might have found social distancing resulted in a significant effective increase in pay and quality of life. For context, my wife is out of work (teacher), and I’m working from home (consulting).
Once I got used to the home office setup I happily eliminated many expenses I considered necessary…. goodbye coffees/lunches, business dinners, daily 1.5 hr commute & downtown parking rates, business trips… I uninsured my 2nd vehicle and will probably sell it soon.
My employer’s asking about willingness to return to the office to gauge future office space requirements. The whole team wants to work from home >50% of time– resulting in big savings for us. I’m glad to be writing off a chunk of household expenses thanks to the home office setup…
Not to mention the benefits of staying closer with loved ones. we’re laughing together more often, I can leave my desk mid-morning to weed the garden with my teenager, the dog is getting more walks, the house and yard are looking better than ever, I get to wear sweatpants to meetings (!), etc. All these lifestyle improvements cost the company nothing in terms of productivity, and actually reflect a personal cost savings for me. (Though I admit I’ve spent more on amazon during the past one month than I have in the previous six years).
All these personal anecdotes just to clarify that the ‘lower standard of living’ our family’s been forced to adopt has been surprisingly easy to adapt to, and actually beneficial for us as individuals. I haven’t felt much FOMO about the cancelled vacation (more $ saved — we hung around the house for the week and I taught the boy some woodworking instead).
In fact, I’m hard pressed to identify anything I really miss about the ‘old normal’ that cannot be reproduced via technology (e.g. the funny guy in the office is still funny on the daily conference call).
There’s precisely zero part of me that looks forward to a return to rushed mornings, traffic, parking, airports, overloaded schedules, combing my hair, etc. Maybe I’m the outlier, but I doubt it. I think a lot of people are having similar realizations, and we may adapt to ‘smaller lives’ with less difficulty than we thought.