Unfortunately there’s not a whole lot of good news to report these days. As i’ve said before, the longer this drags on, the weaker the recovery. PM Trudeau was out today, saying “distancing measures will be in place for weeks, maybe months.” In other words, he has no idea.
Meanwhile, jobless claims have now climbed to 1.55M people, or about 8% of the total labour force, and set to rise further. We’re gonna need bigger cheques!
Obviously budget deficits are out the window, and the Bank of Canada is now determined to help fund this spending. The BoC said last week they’d begin purchasing $5B per week of Government bonds until the nations recovery is “well under way.”
According to Bloomberg, Governor Poloz and those at the helm of the BoC officially gobbled up $1B in government bonds today, its first foray into QE (quantitative easing). Although, they prefer not to call it that.
Indeed, the situation is pretty dire, we’re not only fighting a pandemic/ economic crisis but also a complete and utter obliteration of the oil market. If you thought things were bad in Alberta before, close your eyes. At $5, a barrel of Western Canadian Select currently costs the same as your Starbucks latte. For context, it costs about $7 just to ship the oil to a refinery. Oil and gas extraction represents about 5.5% of Canadian GDP.
Lastly, a quick update on the housing front. Banks are being swamped with mortgage deferrals. According to the CEO of CIBC, “For our consumer clients we’re seeing 20,000 deferrals per day, on average, on mortgages and credit card payments.”
From what i’m hearing some banks will allow you to defer up to four properties, maybe even more. However, you have to have enough amortization room to do it. In other words, if you bought within the last few months you won’t qualify.
I expect to see sales really fall of a cliff in April. March sales figures will look great for media headlines, officially up 46% year-over-year in Greater Vancouver. Keep in mind, March 2019 was the slowest March dating back to 1990.
For those that are interested, i’ll be tracking weekly sales and new listing activity in Greater Vancouver. Check back here periodically.