I feel like I'm stuck in a surreal place. Just about every economic indicator is screaming "batten down the hatches." And yet Victorians are snapping up real estate like it's life jackets on the Titanic. Fence-sitters have been seduced by hyper-low interest rates (can they possibly go lower?) and a coordinated communications campaign that speaks to emotions rather than intellect.
We have collectively lost our marbles. I expect to hear in the coming weeks that developers are ramping up work again at previously canceled projects--that's just how disconnected from economic reality our real estate market has become.
In 2009, the federal budget will set a record deficit never before seen in Canada. The provincial budget may follow, or worse, government lay-offs and budget cuts, and the subsequent economic shock wave they will create will work their way through BC's already strained economy.
Household debt in Canada, and I suspect the west coast leads the trend, has skyrocketed to a total of $1.3 trillion or roughly $36,000 for each of the 36 million or so breathing souls inhabiting our nation (I believe this number excludes mortgage debt). That number is more than double the national government debt load.
And to top it off, the BCREA revised their forecast for the rest of the year today to state that prices have fallen as far as they will.
I'm reminded of my days in grade school where the popular kid used to brag about how daddy used to buy him all the cool toys: he'd always bring one of them to school, but you'd never be allowed to come over to play with them all together. Eventually I started to see the bragging for what it was and stopped believing it. Needless to say that kid stayed popular. And I wasn't. Sometimes the world just doesn't make sense.