The BCREA Commercial Leading Indicator (CLI) continued to fall in the second quarter of 2020 from 127.6 to 121.9, representing the fourth consecutive quarterly decline. It was the second largest drop in the indicator in over two decades, reflecting the hardest hit months of the pandemic in April and May. Compared to the same time last year, the index was down by 9.8 per cent.

The second quarter of 2020 saw the complete shutdown of key economic industries in BC, while employment continued to decline in manufacturing and in key real estate sectors. In contrast, the financial component had the largest positive impact on the CLI on record, as REIT prices rose and risk spreads narrowed from the previous quarter. The underlying trend in the CLI continued its downward trend into the second quarter of 2020. This suggests that going forward, the environment for commercial real estate activity in BC will continue to be weak.

BC’s economy was slowed by the pandemic in the first quarter of 2020, and by the second quarter came to a halt. Manufacturing sales of both durable and nondurable goods fell by magnitudes not seen since the great financial crisis in 2009. The decline in wholesale trade was driven by lower sales in motor vehicles, and to a lesser extent by lower sales in personal and household goods such as clothing and footwear. Meanwhile, April saw the largest monthly drop in retail sales on record, as brick-and-mortar stores were shut down for most of the second quarter. Although online sales reached new highs during this period, they were not enough to offset the decline.

Employment growth in key commercial real estate sectors such as finance, insurance, real estate and leasing was negative for the second consecutive quarter, down by about 1,700 jobs, which is notably fewer than the 13,500 jobs lost in the previous quarter. Manufacturing employment fell for the fourth consecutive quarter by about 5,170 jobs, almost three times the number of jobs lost in the previous quarter.

The CLI’s financial component was positive in the second quarter of 2020 as the market bounced back from the full meltdown in late February that sent equity markets into free fall and government bond yields plummeting.

To view the full Commercial Leading Indicator PDF:
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For more information, please contact: Gino Pezzani.

This year we have a better deeper understanding about the value of work. Work is precious and doing what you love is even more valuable. Not everybody gets recognized for the value of their work, but thankfully most people continue to provide value for selfless reasons.

And right now, we have a lot of people who are compelled to continue their work, even without proper recognition.

Over the past few months, we have truly discovered that not all hero’s wear capes. This Labour Day we have a new class of hero called “Essential Workers” to celebrate, acknowledge and thank from the deepest part of our hearts.

Healthcare professionals - on the front lines of treating COVID-19 and other medical needs.

Retail, grocery and food service workers - providing us with food and supplies.
Custodians and janitorial staff - working hard to keep our community clean and resistant to germs.
First responders - who continually tend to the urgent needs of the community.
Transportation workers - who drive us, deliver mail, and stock our stores.
Maintenance workers - who are keeping our utilities running.
Community leaders and volunteers - who help people get through this crisis.
Teachers and school staff - who have worked through the summer to re-design educational plans.

What is important about Labour Day is not counting trophies and cheers, but evaluating how your work makes you feel and the contribution you make to the people you care about – even if it is not recognized in the moment.

A sincere and heartfelt thank you to everyone who continues to provide the value we didn’t even know we needed.

A secret agent was sent to a small town in Ireland to pick up sensitive information from an agent named Mike. His instructions were to walk around the town using a code phrase until he met his fellow agent. He found himself on a desolate country road and finally ran into a farmer.

“Hello,” said the agent. “I’m looking for a man called Mike.”

“Well you’re in luck,” said the farmer. “The butcher is called Mike, the baker is named Mike, and in fact, my name is Mike.”

“A-ha,” thought the agent, “maybe this is my man.” So he whispered the secret code:
“The sun is shining, the grass is growing, and the cows are ready for milking.” “Oh,” said the farmer, “you’re looking for Mike the spy. He lives next door."

The Canadian economy contracted by 11.5 per cent from the first to the second quarter, or 38.9 per cent on a quarterly annualized basis, the steepest quarterly decline on record going back to 1961. Consumer spending fell 13.1 per cent as the start of the COVID-19 pandemic caused record job losses and prompted stores to close.  Business investment was down 16.2 per cent and exports fell 18.4 per cent as our trading partners dealt with the fallout of COVID-19 in their own economies.

The good news in an otherwise historically bad GDP report was that positive economic growth resumed with vigor following the record decline in April. The Canadian economy grew 4.8 per cent in May and 6.5 per cent in June, the highest monthly growth on record.  We are currently tracking third quarter real GDP growth at close to 8 per cent, or more than 30 per cent on a quarterly annualized basis. While that is a sharp and welcome rebound in economic activity, there is still quite a way to go before the Canadian economy is fully recovered. In fact, we do not expect real GDP to return to its pre-COVID-19 level until 2022.  That means that the current near-zero Bank of Canada policy rate and the resulting historically low 5-year fixed mortgage rates will be around for quite some time to come.

For more information, please contact: Gino Pezzani.

BCREA 2020 Third Quarter Housing Forecast Update

Vancouver, BC – August 25, 2020. The British Columbia Real Estate Association (BCREA) released its 2020 Third Quarter Housing Forecast Update today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to rise 6.5 per cent to 82,380 units this year, after recording 77,351 residential sales in 2019. MLS® residential sales are forecast to increase 17.6 per cent to 96,860 units in 2021.

“The outlook for the BC housing market is much brighter following a surprisingly strong recovery,” said Brendon Ogmundson, BCREA Chief Economist. “We expect home sales will sustain this momentum into 2021, aided by record-low mortgage rates and a recovering economy.”

With home sales more than fully recovered and now above pre-COVID-19 levels, combined with a decline in the supply of re-sale listings driven by the pandemic, many markets are now seeing sharply rising average prices despite a weak provincial economy. We are forecasting the provincial MLS® average price to finish the year up 7.7 per cent and to increase a further 3.7 per cent in 2021.

For more information, please contact: Gino Pezzani.

Creative minds are always learning. Brain coach Jim Kwik, who has worked with millionaire entrepreneur Elon Musk, shared three of his top learning tips on the Make It website.

• Get rid of your ANTs: Automatic Negative Thoughts telling you that you can’t learn something new - you’re too old, you’re not smart enough, it’ll be too hard, and so forth. Teach yourself to talk back to your ANTs. If you catch yourself thinking, “I can’t learn that,” tell yourself, “Yes, I can learn that.” Expand your mind to fit what’s possible, Kwik says.

• Feed your brain: The food you eat can help your brain stay fit and flexible. Avocados, for example, provide monounsaturated fat, which can maintain a healthy blood flow. Blueberries can help protect your brain from oxidative stress, caused by an imbalance of free radicals and antioxidants in your body, and reduce the effects of brain aging.

• Read: Reading promotes learning. Expose yourself to different ideas by reading a wide variety of books and articles. Set a goal: just 10 minutes a day for a start, then go from there.

One day a young teacher was driving alone, wondering how he was going to afford supplies for his classroom, when he saw an elderly lady stranded on the side of the road with a flat tire.

He pulled his sputtering old truck in front of her sedan and suggested: “Why don’t you wait in the car where it’s warm while I change this tire for you? By the way, my name is Bryan Anderson.”

Bryan’s shirt was smudged with grease and his knuckles were scraped by the time he changed her flat tire, but he refused to take any payment from the lady. He asked instead that she give assistance to the next person who looked like they might need it.

After waiting to make sure she drove off safely, Bryan left as well.

The lady turned off at a small coffee shop a few miles down the road to take the chill off before she made the last leg of her trip home. There, she noticed the waitress with a sweet smile was pregnant.

She paid for her coffee with a hundred dollar bill and while the waitress went to get change, the lady slipped out the door, but wrote a note on the napkin: “No change necessary, just do something for another person who needs it.” Under the napkin were four more $100 bills.

That night when the waitress got home from work, her husband was already sleeping so she tucked the cash into his work bag with a note “For school supplies”. She climbed into bed and whispered: “I love you, Bryan” before falling asleep

Many years ago a young couple with three sons bought a house in the country. The previous owner, who spoke only French, said something that made the couple think that gold could be found on the property. They told their sons, who began digging up the ground looking for wealth.

After a few weeks much of the ground around the house had been turned over, and with no gold found, the father decided to plant some seeds: corn, tomatoes, potatoes, and onions. With his sons’ help, he grew so much that he went on to open a roadside stand to sell the extra produce for a little additional money.

The boys kept digging, turning over the soil as they went deeper and deeper, allowing the couple to plant even more crops.

This went on for several years. The vegetable stand prospered, and soon the couple had enough money to send all of their children to university.

One day the original owner came by for a visit. He’d learned English, and he asked the couple how they’d gotten started in the vegetable business. When the husband reminded him about the gold, the first owner laughed.

“I didn’t say there was gold in the soil,” he explained. “I said the soil was very rich.”

And as things turned out, it was.

It's interesting how a misunderstanding can lead to good fortune, when hard work enters the equation.