Let's take a look at some good news regarding BC for a change. Those of us around in the late seventies and in particular the early eighties can tell you what a "real recession" looks like:
No one was going to university after high school because a bachelor's degree with honors was good to get the counter position at McDonalds. The guys getting ahead were the ones willing to go north and apprentice a trade in Tumbler Ridge. British Columbians are far better off today than then, with no offence intended to any of our clients unfortunate enough to have lost their job or feel on the bubble today. Let's look at today's numbers:
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Interest rates at 2.5%
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TV News Stories showing most people do not realize there is a provincial election next month
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Unemployment expected to peak at 7.5% later this year
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Inflation running at under 2.5%
Now how does all this pertain to real estate? Although consumer confidence is shaken based on what's been happening in the US and the nightly Constantly Negative News (CNN for short) on TV, you can expect real estate in BC to do relatively well. First off, our banking situation in Canada does not allow for the type of lending collapse seen in the States. Canadians as a group are more prudent and our banking system does not encourage outlandish lending practices. Therefore, do not expect anywhere near the foreclosure rates seen in the States to become prevalent in BC. The US literally has thousands of banks all competing for business with relatively minor regulations compared to Canada. The pressure to lend money on behalf of the bank simply does not exist in Canada. Most Canadian bankers will proudly state they are not in the business of taking risks. They only lend to a sure thing!
BC also has a basically balanced provincial budget
with a triple A credit rating, provincial debt to GDP ratio of 14%, and the lowest rates for both personal and corporate income taxes in Canada. Compare that to the National debt to GDP ratio of the United States of around 70%. Add to that over 70,000 people annually moving to BC, all who require housing and most heading to Vancouver, Victoria and the Okanagan.
Take a look at some recent designations awarded to Vancouver:
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Most Livable City in the World, Economist
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Best Airport in the World, Conde Nast Traveler
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Best Quality of Life in the World, Mercer Consulting Group
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Lowest Overall Corporate Tax Burden in all of North America - KPMG
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Best City for a Business Trip, Economist
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Greenest City in the World, Grist.org
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One of the World's Cleanest Cities, Forbes Magazine
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Best Destination for International Meetings, International Convention Association
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One of the World's top tourist destinations, Euromonitor International
Watch for real estate sales to pick up as renters begin to look once again at purchasing, both due to lower prices and incredibly low mortgage rates. Currently, borrowers are looking at about $400 for every $100,000 in mortgage. With minimal down, renters can now own with payments about the same or lower than their current monthly rent. As mortgage brokers, we can feel the pent up demand for home ownership as the number of pre-approvals we process is growing quickly as we move into the Spring Market.
Now is definitely a good time to look at a refinance or purchase, whether buying your first home, moving up to a larger or more expensive home, investing in a revenue property or buying into the market for the first time. As always, I am here to help.. Give me a call or drop me an email if you would like any information regarding mortgages. Love to hear from you!
And... in case you haven't heard already the Bank of Canada dropped their rate by a quarter point yesterday so you should see a drop in Bank Prime rates to 2.25% in the next few days.