Whenever I see a big problem looming, I have a tendency to scream, ‘the sky is falling, the sky is falling!’ And usually it is falling….at least a bit. I may be a bit odd but I am not a nut*! But, to be fair, my interpretations of the indirect, subtle, not-so-obvious signs is, perhaps at times, a smidge ‘over the top’. Ebola, for instance, freaks me out!

*( hmmmm…… perhaps I doth protest too much?)

Mind you, sometimes the signs are not subtle at all and the problem is obvious. And THAT is what this blog is about.

BC’s real estate market is currently presenting as a huge problem. It may be presenting as a minor solution for some NOT currently swimming in the mortgaged pool but for those who are wet, many are drowning. Hard to say….

Regardless of the above question (is it a problem or isn’t it?), the BC real estate market is experiencing a major upheaval. Some properties are being appraised at half what they were valued at in 2022/2023. And, for some, that shocking change has wiped out equity and destroyed personal financial situations. It is a tragedy for some. But it will affect many.

A friend of mine has a $10M home in Vancouver’s North Shore. Nice place. But it is now appraised at $5M. That is a HUGE drop in value (less than three years). That kind of equity drop tends to influence an owner’s spending patterns. Vancouver has a huge development in the Oakridge (41st and Oak) area named Oakridge Park. There were to be 3300 new homes and over 5000 new ‘jobs’ created within the complex. Pre-sales averaged over $2000 per square foot. Today, as the development nears substantial completion, hundreds of long-waiting buyers are trying to sell (their house purchase on paper) and they are NOT succeeding at a 25% price reduction. Today’s buyers ain’t buying.

A contractor friend has had to finish a client’s project by financing part of it himself because the bank dropped their appraisal to the point that the mortgage offered was not enough. Two years ago, it was more than enough.

But it is NOT just a real estate problem (altho for the many who purchased within the last two years, it is devastating). It is, instead, a dead canary in the coal mine. If Vancouver real estate is suffering, the whole of the BC economy is being wracked with pain. On top of that, we have inflation in food and ‘living expenses’ to the point that one talking head stated that 50% of Canadians are within one paycheque of being too broke to eat, live and drive. They cannot absorb a large unexpected expense….and he used $500 as the definition of ‘large’.

Of course, Trump is partially to blame. He famously said that he was ‘gonna ruin Canada’s economy and THEN take it over.”‘ His tariffs disrupted the economy. His threats put more of our budget into Defense contracts. His outrageous CUSMA demands. His belligerence has made enemies of once-close friends. Trump is definitely one of the issues.

But, perhaps, just as large is our aging population. We just are not ‘putting out’ enough. We’re too old. Over 50% of all the people on all the islands out here are over 70. That kind of aging population does NOT suggest a dynamic economy. Not locally anyway.

Sadly, our provincial government has proven somewhat feckless and inept. They are NOT leaders. At best they are ‘managers’ and they are NOT very good at even that. But, to be fair to the feckless, our provincial economy is inextricably linked to the national economy and Canada’s economy is just as dependent on the global economy. We are all very, very connected.

Is it all doom and gloom economically speaking? Yes, in the short term (3 more years). Somewhat in the medium term (5 years after that) but No in the long term (ten years from now).

“Dave, what the hell do you know?” Virtually nothing ‘cept that is the cycle we seem to go through every now and then and it is definitely shaping up to be one of those cycles.