Commercial Activity Impacted by Pandemic in 2020 Q2

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.

Teach Yourself to Learn

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.

BC Housing Market of COVID-19 Reopening Dashboard

The BCREA Economics team has created the COVID-19 Reopening Dashboard to help REALTORS® monitor the evolution of the BC economy as the province gradually reopens. This dashboard focuses on the sectors and activities that have been most significantly impacted by the pandemic and the province’s subsequent state of emergency.

To monitor the province’s progress toward a “new normal,” we benchmark each indicator to February 2020, the month before the pandemic was declared. This dashboard will be updated each month.

The Housing Market
As BC households and the real estate sector adhered to physical distancing measures, home sales and new listings dropped dramatically.

For more information, please contact: Gino Pezzani.

Brave New World

This summer is turning out to be a summer like no other I can remember. Everywhere, there is an element of hope, of wanting to believe that society is coming together and that we are on the road to remembering what summer feels like without any thought of social distancing.

There are all the familiar notes of summer pulsing with life: the sound of giggles wafting from tanned children, piles of ripe fruit sitting in colorful displays at the entrance of grocery stores, music pouring out from picnic radios, and evening sunsets that linger late into twilight.

Certainly, we cannot overlook the reality of recent, tragic events of the pandemic; but I am asking that we all face this summer with the bravery to move into a new normal that simultaneously acknowledges what we went through while looking to what we are capable of doing.

We are capable of connecting— the past few months proved we are able to connect online, by video, by phone, and by mail. We are capable of reaching out to those in need and lending help. We are capable of learning: everywhere, there are free online classes and new summer novels to savor. Most of all, we are capable of loving, of reaching out to friends and family in this brave new world of having realized what matters most.

This summer is ours to enjoy. These hot days are ours to bask in the glory of possibility… don’t forget to wear sunscreen.

Cheers!
Gino Pezzani

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