Jobs friday and the state of the deferral cliff
Jobs numbers are in for September, and it was a nice bump in employment accross the country, with BC gaining 55,000 jobs from August, and Victoria up 2600 jobs from August in the 3 month average. On a year over year basis, the big winners are health (all those contact tracers) and technology, while big losers are still food, accommodation, and tourism. The unemployment rate is down to 9.1% (3 month average) in Victoria, down from an estimated peak of about 18% in April.
It’s obvious that the stability of the recovery depends entirely on our ability to keep controlling the COVID case numbers. Ontario is backtracking on their economic opening by shutting down all sorts of indoor activities like dining, gyms, and movie theatres. Right now we are hovering on a fairly flat trend in BC but it’s a delicate balance. Just a few unlucky gatherings and that could explode and lead to more restrictions and the associated jobs losses. It’s going to be a winter of tightrope walking.
We’ve also got some new numbers on the deferral cliff that CMHC is concerned about. As of the end of August, here are the percentage of CMHC insured loans still in deferral.
BC is doing a lot better than the catastrophic situation in Alberta, but 4th highest is nothing to write home about either. However I wouldn’t read too much into these numbers just yet. CMHC CEO Evan Siddall stated that these are the percentages in deferral as of the end of August. Most deferrals are for 6 months, and the virus didn’t really hit until mid March and into April, so I believe most deferrals by the end of August still had 2-4 weeks left before they expired. Much more telling will be the numbers at the end of September and October, which should be much lower but represent the really serious cases where owners could not resume paying their mortgages and are at risk of having to sell or go into foreclosure.
Back in June I estimated how many Victoria owners may be in trouble based on employment statistics at the time, and concluded up to 13,000 Victoria owners with a mortgage could have lost their jobs at the peak in April. Redoing the math based on current jobs data, the estimate for the number of households with a mortgage currently unemployed drops to 6200. Those are mostly in industries that are likely to remain depressed for many months or even years, so that could represent serious trouble.
However, so far there is no sign of increased distressed selling in the market. If there are substantial home owners in trouble out there, they are seemingly managing so far with the help of income supports that have been effectively extended until next year. New listings are down to only marginally above last year’s levels, while sales continue to stay high. Even the formerly weak condo market has tightened substantially in the last week with a surge in sales.
Sales should be decreasing very soon, but it’s obvious that market activity has blown through estimates of pent up demand and sales are still high. The market, although artificially inflated on the back of unprecedented government spending, continues to humble any attempt at forecasting. We’ll just have to wait and see.
New post: https://househuntvictoria.ca/2020/10/15/does-a-suite-risk-capital-gains-tax-a-professional-perspective/
Just saw on twitter that the Bank of Canada will be discontinuing its purchase of Canada Mortgage Bonds as of Oct 26, 2020. https://www.bankofcanada.ca/2020/10/bank-canada-announces-changes-programs-support-key-financial-markets/
Presumably banks will tighten lending if they haven’t started already.
That being said the BoC says “The Bank remains committed to providing liquidity as required to support the functioning of the Canadian financial system. Any discontinued facilities can be restarted if necessary.”
The graft graph would be interesting.
Yikes…….I meant graph not graft
Re: Victoria Employment in Selective Sectors
I would like to see a secondary graft of % of “employees” in
a. Federal Government Employees
b. Provincial Government Employees
c. Municipal Government Employees
d. Crown Corp. Employees
e. RCMP employees
f. Military members
g. everybody else left in health, social services, public administration etc. that isn’t in this group.
Not quite.
This means that those most likely to be in trouble may be least likely to qualify.
“To qualify for the BC Tax Deferral Program, homeowners in British Columbia must be at least 55 years of age.”
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Or anyone with children under 16. So basically most households can defer their taxes
Province covers it:
“To qualify for the BC Tax Deferral Program, homeowners in British Columbia must be at least 55 years of age. The province will pay, on your behalf to the municipality, part or all of your residential or farm property taxes. Interest rates are calculated every six months and range from 1% with the regular program to 3% for families with children. You can repay the loan at any time. If you think you might want to take advantage of the deferral program in the future, keep your account open with a balance of at least $25.” – https://www.federalretirees.ca/en/my-money/financial-information-tools/property-tax-deferral
With the proviso that the CMA level employments stats are noisy, Victoria employment in public administration declined by ~25% after the great financial crisis (yellow line below). Could happen again when the weight of the deficit starts really becoming felt. Probably not mass layoffs but an extended hiring freeze and declines through attrition is definitely a possibility.
Combined with 20% deferral rates on insured mortgages. It’s really really bad in Alberta.
Does deferring property taxes actually impact municipal budgets or does the province cover the amount to the municipality while it is deferred?
“… one quarter of all Albertans are technically insolvent.”
https://calgaryherald.com/news/local-news/one-quarter-of-albertans-now-say-they-cant-pay-all-their-bills-survey
It will be interesting to see what happens with property tax rates next year given that more people are deferring property taxes and only 1/3 of municipal revenue comes from taxes. The City of Vancouver has already laid off 1500 employees. The City of Victoria is facing a 17.5 million dollar budget shortfall due to covid effects:
I don’t think the tax base is plummeting. In any case, municipal property tax revenues don’t depend on the assessment base. They decide how much they want to spend, and set the mill rate to raise the required amount of money from the given assessment base.
Ouch, looks not great.
Alberta considering cutting 11,000 health related jobs. Public sector employment not looking quite as bombproof now. With the massive hole in municipal budgets due to plummeting tax base, it wouldn’t be a surprise to start seeing layoffs here.
I went downtown yesterday and was pretty shocked to see how many restaurants and small businesses have already closed. Around the Hudson at Douglas and Fisgard, it looked like about 50% had closed. The Victoria Public Market used to be bustling at lunchtime, now lots of the vendors have closed and minimal foot traffic. It was also the first time I saw someone wearing a bullet-proof vest (a street person). Less and less reasons to live near the core.
Never thought I’d see the day. 2020, you are special.
Be careful Introvert, the cliff could give way.
Thinking about driving up to the deferral cliff to check out the view. Anyone wanna come along?
August @CMHC_ca deferrals by select major cities (as usual we don’t qualify)
Vancouver – 11%
Kelowna – 12%
Calgary – 18%
Edmonton – 21%
Regina/Saskatoon – 14/15%
Winnipeg – 11%
Toronto – 12%
Ottawa – 7%
Montreal – 10%
Quebec City – 7%
Halifax – 10%
St John’s – 14%
Not that I know of, although some sites like REW list recent sales prices when the sale completes. Drop me a line though Leo.spalteholz@gmail.com with what you’re looking to learn and I may be able to help you out.
Hi I have a general question and was advised theres a lot of knowledgeable folks here.
I’ve been trying to find recent sales data. (i.e. x house sold for x amount, rather then statistical averages). I know BC assessment shows amounts but seems to have 3+ month lag, looking for something more current.
Does anyone know if a database like this exists for Victoria?
That would be great. Many people looking to move from oil.
tinyurl.com/y2hocbkz
“Critics of the declaration believe the proposed strategy is dangerous and unworkable, asserting that it would be impossible to shield those who are medically vulnerable, and that the herd immunity component of the strategy is undermined by the limited duration of post-infection immunity.”
As opposed to how easy it is to run a global economy while efficiently feeding and clothing almost 8 billion people in an environment that violates almost every human social behavior that has evolved over the last 10,000 years.
https://en.wikipedia.org/wiki/Great_Barrington_Declaration
Such a no brainer. Good reminder though, I should run the numbers and publish an article on this. Returns from energy efficiency investments are often higher than anything else.
Not sure if this is widely known, but the province just doubled several home energy rebates, including $6k (up from $3k) to convert from a fossil fuel furnace to a central air heat pump. Also, in April, the City of Victoria began providing $2k back. CRD kicks in another $350 I believe. So all told if you’re in the CoV you’re getting over 8K in rebates for a central air heat pump! Well, until the $ runs out that is.
Talk about a hot market in the middle of Covid.
Barrister- welcome to the world of oppression. I’m not going to elaborate, it would fill a book.
365 sales to date: Up 93% YoY
498 new listings: Up 55%
2392 active listings: Down 13%
Will be publishing a new article on suites, just waiting to confirm some info.
Vancouver holding pretty steady so far. Likely similar in Victoria based on what I’ve heard. Large landlord said vacancy close to the university is same as last year because UVic reduced their on-campus housing availability, but it’s up in the general market.
Vacancy is almost certainly up substantially, but when you’re starting at 1%, a big shock still only gets you to a level where rents might be increasing less, or stable, not necessarily decreasing. Looking forward to the CMHC rental report.
Can not speak for anyone else but I am really ready for Covid to be finished. Maybe it is the rain and overcast skies but my ability to be cheerful seems to have just faded almost overnight. Am I the only one feeling this?
I hope everyone had a great Thanksgiving weekend. While these are particularly trying times for many people most of us do have a lot to be grateful for living on this beautiful island.
Leo – generally we are not waiting for Phase 3 trial results prior to producing a vaccine. Gates and co are investing large sums of money in production capability for some of the more promising (7) vaccine candidates knowing full well that some may not be approved and that money is down the drain.
https://www.weforum.org/agenda/2020/04/bill-gates-7-potential-coronavirus-vaccines
Marko- I think most people, at least the ones I’ve talked too, are not anxious to rush out and get the vaccine the first day it is offered. I’ve even heard that front line workers such as nurses, are reluctant to get it because they are aware of the potential for a negative reaction to it. Our medical system will probably administer the vaccine to elderly people first, especially in care homes and the people caring for them. Hopefully this goes well as there is the potential for a negative reaction in some people resulting in their demise. Ask yourself if you would let your elderly parent get the vaccine. If they are in a care home they may not have a choice. Like all medications, negative side effects can be expected. Vaccines are not infallible. I’m 65 and very healthy, and probably will not get the vaccine unless it is mandatory.
Weren’t you a nurse Marko? Why are you asking this on a message board?
.5% is not a small amount.
Condo sales settled back down again last week.
And they’re only short term impacts. In terms of employment recovery, Canada is outperforming the US. We’ve spent a bit more relative to GDP on the recovery, but it’s close (15% vs 13.5% of GDP until July)
Well, someone here clearly is, and able to maintain a contrary viewpoint in the face an overwhelming amount of peer reviewed science-based research.
At the very least, now that we are nine months into this in Canada our health officials have had the chance to get the advice they need to make reasonable recommendations. Hopefully most people not interested in reading the peer-reviewed literature are going to follow public health guidelines rather than an armchair internet stranger armed with a dated WHO document, a commentary not reviewed by peers, and economists in the US who are against the economic impacts of shutting down.
This is my last COVID post as I realize this is a housing website.
I encourage everyone to watch this video where several notable public health experts question the approaches many countries have taken. We should have had a balanced approach from the beginning. I hope we never lock down again & we allow some degree of normal life to resume:
https://youtu.be/jtiInz1DWuA
Yes, Barrister, you are completely right. The ONLY goal should be to prevent hospital overwhelm. Rise in cases or even a temporary spike in mortality must not cause panic & a second lockdown. I also want to point out that the initial models (imperial, etc) extremely over-estimated the mortality numbers and caused immense collateral damage from the resulting lockdowns.
I thought that the original idea back in the spring was to flatten the curve to prevent hospitals from being swamped and overwhelmed. BC. whether by luck or by design, has pretty well managed to flatten the curve, in spite of fluctuations, if the measure for success is preventing the hospital system from being overwhelmed.
Most of the economy is up and functioning with the notable exceptions of tourism and restaurants.
Sorry Leo, but no strong evidence that any of these measures work.
Contact tracing:
https://inference-review.com/article/on-the-futility-of-contact-tracing
Masks:
https://drive.google.com/file/d/1-bQve-xvNnXBpyASzTfSKW4SLzYHz1_p/view
https://www.youtube.com/watch?v=QNI2ocgosgA&feature=youtu.be
Let’s keep deluding ourselves though.
Here’s the problem with vaccines. They do not give you immunity, they only stimulate your immune system to produce specific antibodies to attack the virus when a person is exposed to it. If that person has a weakened immune system to begin with, the vaccine is not as effective and the person remains vulnerable. There is no magic bullet when it comes to vaccines. I suggest reading the chapters on the Immune System and the Reticulo-endothelial system in Guyton’s Medical Physiology for an explanation of how this miraculous system works when it is healthy.
Not really though. One doctor said not to depend on only lockdowns, that countries need more sophisticated strategies. Hard to argue with that. Everyone needs a contact tracing, physical distancing, and masks plan to control spread when the lockdown ends
What Leo said. And:
Even if you could identify the vulnerable with sufficient accuracy (you can’t), it’s not possible to segregate all of them from society. And a big chunk of the most vulnerable were already segregated in LTC – how did that work out?
Even WHO is discouraging lockdowns now.
LongTermBull you really missed the boat on the anti-covid measures topic. It was all discussed back in March. Our schools are open, businesses are open. There are no draconian measures in place. There is no credible doubt that controlling COVID leads to better economic outcomes.
Lockdowns, school closures, and other draconian measures will cause massive collateral damage. We have lost our collective minds and have bought into hysteria. COVID fatality rate as per CDC currently stands at:
-0.003% for 0-19 year olds
-0.02% for 20-49 year olds
-0.5% for 50-69 year olds
->5% for <70 year olds (but remember this group includes very sick/frail and many in care homes with short life expectancy)
Protect the vulnerable, while letting the rest of us live our lives. We can design a more targeted and balanced approach. COVID is NOT the only public health threat in Canada.
Please listen to these credible individuals:
https://podcasts.apple.com/ca/podcast/3-14-covid-19-dr-john-ioannidis-trial-eligibility-dr/id1429998903?i=1000493413913
https://podcasts.apple.com/ca/podcast/3-13-covid-19-schools-covid-19-scott-atlas-covid-19/id1429998903?i=1000492442911
I think confidence is pretty high on the vaccine front. But it’s not going to be the election surprise Trump promises that’s for sure.
I’m banking on another 12 months of social distancing + masks at least.
Is an effective vaccine even some sort of guarantee written in stone?
Then factor in that the vaccine probably won’t be as bulletproof effective as the ones science arrives at after 20 or 30 years of study.
Then factor in that some large percentage of the population will delay taking the vaccine (out of caution over potential unintended consequences associated with rushing the vaccine’s trials and approval).
Then factor in that another large percentage will choose not to take the vaccine ever.
Not a chance by end of this year. The leading vaccine candidates are only planning to publish their Phase 3 results by end of the year. So best case production starts in 2021, no widespread availability until mid/late 2021.
Experts are projecting the distribution of a vaccine here in Canada possibly by the end of this year, certainly by early 2021. Not everyone needs to be vaccinated either – herd immunity is accomplished when only a percentage of the population receive it. There’s light at the end of the tunnel – hang on for a few months longer, especially with the knowledge that most of the world has it much tougher than we do 🙂
Thanks for the kind thoughts Frank. I dont even go into Home Depot, order on line and have them deliver it to the trunk of my car. People wearing masks is disconcerting, people not wearing masks is absolutely frightening.
Barrister- You’re not alone. I find dealing with people in masks disconcerting. Also, my gym, a city facility, was a large part of my social interaction with a large number of people. Even after reopening, there are usually 10 or fewer people at any time. The workout area can facilitate 80 people under current restrictions. Lack of other forms of entertainment is also isolating, you can only go to Home Depot so many times. Hang in there.
I am finding that Covid is actually starting to affect my moral a bit. perhaps more than a bit. While I am not the most social of people it was nice to occasional pop out to a pub. There are moments when one almost feels like one is just sitting around waiting for the world to end. Being in the highly vulnerable category there is a real number of restrictions that reduces your world. Some of that just comes with age anyways but covet has stripped a lot of the simple pleasure like cards with friends.
Deryk: That is great to hear and it sounds like you are building a small paradise out there and having fun doing it.
Hi Barrister, Thanks for asking. We absolutely love our place out here in Sooke. We are semi retired in some ways although being artists we will never actually stop doing what we love. I market my work around the world. ( Just sold a piece to a collector in Ireland for example). I also sell my work at a gallery in Vancouver. (Artworks)
Sooke is a lovely community and it is close enough to Victoria that we can zoom in there to get anything that we need. (Our Electric vehicle costs us about $2.00 in electricity for the return trip. Cheaper than the bus:)
Everyone has different needs and for us….Sooke is perfect. The air is super clean. Lot’s of hiking trails to lakes etc. Interesting little micro brewery’s and honey places tucked away up in the hills. Lighthouses. Lot’s of work to do in the garden. Lot’s of artists live out here. No pulp mills. Amazing sunsets.
We will be creating a little art gallery on the lower level of our house one day when this pandemic is over. In the meantime we are getting it ready and adding more and more things to the garden for people to enjoy and explore while they make a day of it.
Well they seem to have managed to contain the most recent surge for now, but it could go sideways at any time.
Ha ha I wonder how long that will last….doubt BC can stay in a bubble of low cases #s for too long.
https://www.theglobeandmail.com/canada/british-columbia/article-bc-civil-servants-ordered-back-to-the-office/
I think that Chris summed it up well,
.
A surprisingly busy time out in the market – with Marko and his team’s assistance (who are getting run off their feet with all the activity) we are condo shopping for rental/family purposes, we originally were looking downtown but the pickings are slim. We’ve got our eye on a couple units in the same building in Saanich but some listing agents are holding a few days on accepting offers, looking to drive bidding wars, which I’m not keen on participating in. Such a truly bizarre time!
Deryk, how are you enjoying your new place?
Barrister’s pattern is likely a fair representation of where a lot of people are at in terms of eating at restaurants and general shopping.
It must be so difficult for many businesses. So much to worry about for people who have any business or are trying to feed their families with a regular job.
“The Big Short” movie and the “99 Homes” movie …… watch them to refresh your memory of how things can change, and see how you feel.
I’ve never been so unsure about which way the wind will blow.
Time to hunker down in every way I think…… and people might want to be extra focused on maintaining the ability to hang on long term during what could be an unusual and complicated ride ahead.
Quote from “99 Homes” movie: “Do you think America gives a flying rats ass about you or me? America doesn’t bail out the losers. America was built by bailing out winners by rigging a nation Of the winners, For the winners, By the winners”.
I suspect that Covid will be around until at least 2023 in terms of its impact at least. It is near impossible to predict how these things are going to go but I suspect that we are looking at some long term changes in industries like entertainment and hospitality.
I am listening to the rain and thinking that outdoor dining is about to become a lot less appealing. On the other hand do I really care if restaurants close down. I stopped to think about my shopping needs recently and realized that I buy either online or either Cosco or Walmart for my clothing. So if half the stores downtown disappear do I really care and the answer is that I personally dont. I used to eat out about three times a week but I am unlikely to go back to it. While I am the exception rather than the rule one has to wonder to what degree work from home and other shifts will continue years after the plague.
Was talking to BDC and they said 90% of their commercial book is in deferral right now.