Archive for January, 2009

BC and Vancouver Island Recessions, Potholes, Flooding, Gas Prices, And Other Things Amiss

What the hell? I leave the Island for 10 days and it falls apart on me?

I got back on late Sunday night from a week in Mexico to attend my cousin’s wedding and generally unplug from the world for awhile. On that note, an all-inclusive resort with 40 friends and family and really expensive internet connections is a great stress reliever. Before that I spent a couple days on the mainland with (different) friends and (same) family to ring in the new year (kinda lame) and go skating at Richmond’s fabulous new Olympic Speedskating Oval (totally sweet).

So, being unplugged for a week (well, that and not being geographically co-located with the weather system) caused me to miss most of the weather chaos. It would suck to live in Port Renfrew about now, what with the main highway being washed out and all. Sooke Road (aka Provincial Highway 14), for those not in the know, is a complete disaster all the way along. Sooke Potholes no longer refers to the swimming hole on the Sooke River, but I bet there are some on the road big enough to swim in. I managed to ruin a perfectly good rim and tire on my car by hitting a huge one on Tuesday evening. Mainroad Contracting is going to get a nice letter.

Tonight, the kind folks from the Provincial Emergency Program were at the Sooke Council Chambers to offer information and applications to residents who suffered uninsured damage to their homes during 6-8 January, 2009.

Can somebody please explain to me why gas prices have increased by $0.15 while oil prices have decreased to below $40/bbl again? Somebody is gouging, I don’t care what they say.

Last night I attended, with the other directors of the Victoria Real Estate Board, the Canadian Home Builders Association Crystal Ball event, which featured several economists and our Board President, Chris Markham, giving their outlook on the economy and the housing markets for 2009. It was a good event, but obviously a heavy topic. I can’t imagine too many home builders that are thrilled about the recent slowdown in real estate sales.

Über-pessimist economist David Hobden of Central 1 Credit Union gave a grim forecast for 2009 (and 2010 somewhat), stating that the Island and Coast region are already in recession, and will remain so. He forecasts housing value to drop by 10 per cent in 2009. Hobden appeared to want to be anywhere but in that room last night, and his body language screamed doom, gloom, and defeat – it was painful to watch.

Jock Finlayson, BC Business Council executive vice president of policy was slightly more optimistic, and a much better speaker. He delivered his not-exactly-rosy forecast with levity and looked as if he enjoyed informing the room, which he had laughing on many occasions – and his visuals were way easier to read and understand. Finlayson explained that 2009 will be a difficult year, but by mid-year, credit conditions that are slowing the business cycle should improve, along with the U.S. economy, and 2010 should be a much better year. He forecasts housing starts (new construction) to be down by 40 or 50 per cent. Finlayson did a great job of explaining where all this mess came from and how Canada is better positioned to spend its way out of this recession via deficit budgets. Another positive point came in the fact that job losses will not likely be as sharp as in previous recessions because the demographics of recent years (families having fewer children and later in life, and people nearing retirement) will keep heavy losses in check – I’m sure you realize how tight labour markets have been up until a few months ago.

Victoria Real Estate Board 2009 President Chris Markham explained that while sales are slowing, it’s hard to compare 2008 to 2007 because it was an exceptionally strong year. This was emphasized by CMHC market analyst Travis Archibald showing that 2008 sales were actually very close to the 15-year average. The same goes for housing starts. They fell by a large percentage in 2008 over 2007, but are in-line with the historical averages. CMHC will be releasing its full outlook next month.

I think that Vancouver Island, and in particular, Victoria will fare better than the rest of the province, as we have a diversified economy, and stable major employers such as government and military. As for housing, it’s opportunity time out there. Buyers have their choice of many properties, and many would-be first-time buyers from the last few years, priced out by the rapidly increasing prices, will be looking at re-entering the hunt.

So, all in all, maybe the Island isn’t falling apart exactly, and I’m glad to be back. I’m optimistic about 2009, and we’re all in this together, so you might as well be optimistic too.

It’s all you can do.

-Tim Ayres – Sooke Real Estate Professional

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