It has yet to be determined, if we are slowly climbing out of, or still descending further into economic misfortune. COVID-19 measures to slow down exponential viral growth in the now-pronounced second wave are here, and B.C. extended its state of emergency. Many have returned to work, but many others have no work to return to.
August 2020 saw record real estate sales locally and across the country in what can only be described as a “Land Rush.” In BC we saw a 5 per cent market increase in June, a 17 per cent year over year increase in July, and August rang out with an incredible 42.8 per cent increase from August 2019.
There was unprecedented demand for property in the interior and northern part of the province over the past two months. Great demand and small supply continues to create multiple offers on medium to lower priced housing. The British Columbia Real Estate Association reported total sales dollar volume reached $7.8 billion a 61 per cent increase over August 2019 numbers. Wow!
We have yet to see the market decline of almost 18 per cent predicted by the CMHC. If sales volumes fall between 19 per cent and 29 per cent as they predict, our housing starts and construction will also drop off taking with it our major engine of economic growth. Many market analysts and economists are predicting that this summers record-setting housing market is a huge bubble about to break. But, not everyone is convinced that this will actually happen.
The demand is so great for land and the security of property ownership, that residential markets may not be as affected as predicted. Owning equity and liquidity in a hard asset like land has been a way to prosperity for decades. The real danger of a large influx of foreclosures lies in the difficulty for lenders to continue to grant mortgages.
The Canada Emergency Rent Assistance Program (CECRA) extended coverage again for September to small businesses to apply for a 75 per cent reduction in rent which in turn allows commercial landlords to qualify for forgivable federal loans. The uncertainty of this emergency funding has again delayed the inevitable consequences of evictions due to closures and revenue losses.
We have been cautioned about our growing household debt levels that were very high even before the 2020 shutdown began. Not heeding any debt ceiling themselves, the Federal Government continues to print money and offset the economic collapse brought on by industry-killing policy and the pandemic shut down.
It could be rising government debt that is the catalyst that wipes out the entire economy and cancels out any future prosperity prospects for all generations of tax payers and retirees. Canada is only one of many countries to be printing money and handing it out as emergency capital to stave off economic collapse during the Covid crisis.
The world anxiously awaits the unknown future of the Untied States, its coming election and the faltering state of the U.S. Dollar. Discussions center around the prediction that the USD’s loss of world reserve standard status could cause global hardship. A solution that is being discussed is going back to the “Gold Standard” that was in place before 1971. The Euro, the Yaun and the Russian Ruble are all contenders to replace the U.S. Dollar unless it can be reset to its gold backed security state.
With so many unpredictable outcomes, we have to take stock of what we do know at this time. The residential real estate market is booming, demand is great and it desperately needs more inventory. A looming insolvency crisis is coming in both the residential and commercial markets and will be bringing lender-owned inventory into the supply. Our household and national debt are at all-time highs and are a compounding catalyst of this economic and global health crisis. The USD is in danger of losing its global reserve status, and global wealth is steering us toward hard asset currencies like gold and silver. Hard assets include landholdings, owning land will always bring with it security and opportunity to rise above whatever our unknown future holds.
Read the full column online at www.agassizharrisonobserver.com.
Freddy Marks, together with his daughter Linda Marks, runs Agassiz’s 3A Group Sutton Showcase Realty. He has been a Realtor in Canada and Germany for more than 30 years, and currently lives in Harrison Hot Springs.