Canadians, perhaps this year is a good year to consider downsizing?

[MoonShadow]

http://globaleconomicanalysis.blogspot.com/2015/07/bank-of-canada-admits-recession-shades.html?_sm_au_=iVV7Vs7DDPfvrStN

The above blogpost makes it sound like Canada is peaking (or has already peaked) with the largest bubble ever.

[nereo]

There is always "doom-and-gloom" predictions for every country, every single year.  It does appear that we are in a recession here in Canada (even though the Bank of Canada governor says "the R word... is unhelpful").  The cost of fossil fuels over the next 6-24 months will have a huge effect on our poorly diversified economy.  If the cost of oil stays <<$60/barrel, Canada will suffer.

That said, I think every year is a good year to evaluate what you have and downsize where you can.  Recessions rarely hurt people or businesses who routinely run cash surpluses and have low operating costs.

[music lover]

There is always "doom-and-gloom" predictions for every country, every single year.  It does appear that we are in a recession here in Canada (even though the Bank of Canada governor says "the R word... is unhelpful").  The cost of fossil fuels over the next 6-24 months will have a huge effect on our poorly diversified economy.  If the cost of oil stays <<$60/barrel, Canada will suffer.

That said, I think every year is a good year to evaluate what you have and downsize where you can.  Recessions rarely hurt people or businesses who routinely run cash surpluses and have low operating costs.

Poorly diversified? That's just a myth not backed by the facts. As a percent of GDP, it's 3rd at 8%:

12.34 Real estate and rental and leasing
10.86 Manufacturing
07.96 Mining quarrying and oil or gas extraction
07.03 Health care and social assistance
06.90 Public administration
06.55 Finance and insurance
05.41 Wholesale trade
05.41 Retail trade
05.38 Educational services
05.21 Professional scientific and technical services

[nereo]

yup.

[nereo]

Poorly diversified? That's just a myth not backed by the facts. As a percent of GDP, it's 3rd at 8%:

12.34 Real estate and rental and leasing
10.86 Manufacturing
07.96 Mining quarrying and oil or gas extraction
07.03 Health care and social assistance
06.90 Public administration
06.55 Finance and insurance
05.41 Wholesale trade
05.41 Retail trade
05.38 Educational services
05.21 Professional scientific and technical services

Apparently what my previous response had in brevity, it lacked in depth.

In response Music Lover, your statistics both highlight my point and give an incomplete total picture.
Yes, oil, gas and mineral extraction make up 8% or 1/12 of the entire economy, as measured by GDP.  That is a very large percentage, particularly because the price of crude oil can swing by 50% or more in just a few months.  That kind of a swing can be the difference between the economy growing by ~1% and a recession.  Few other industries can have that dramatic of a change in that short amount of time.

Now, showing oil and gas extraction as a % of the GDP is only part of the picture.  Oil and gas make up about 15% of all of Canada's exports (and that percentage has been increasing steadily since the 1980s).  A drop in global demand and/or prices, particularly overseas (where almost all of Canada's oil is shipped) creates a large trade imbalance.  To further complicate matters, Canada is in the odd situation where it both exports (about 1.6MM bbl) and imports (about 0.8MM bbl) huge amounts of oil given there are only ~35MM people living here.

So yes, our economy here in Canada is heavily influenced by all things Oil.

[Gerard]

I was surprised to see how little of Canada's economy is generated by taking things out of the ground, and the numbers are even more surprising for employment, even for Alberta -- see http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/labor21c-eng.htm for example.

But, but, a lot of those jobs in other industries are involved in supplying extraction industries, or selling to or caring for the people who work in extraction industries and bring home the big bucks. Industries like liquor, housing, cars, and the sex trade collapse when oil/mining shuts down.

There's a psychological component, too. Newfoundland was devastated by the cod moratorium in 1992. But fishing was/is actually a smaller part of the provincial economy than agriculture. It's just that local self-perception involves cod.

Back to the original question, yeah, downsizing might be a good idea, even though the housing/banking slump has been "just around the corner" for seven years now.

[fb132]

I still don't see the housing market cooling off in cities like Vancouver or Toronto.

[nereo]

There's a psychological component, too. Newfoundland was devastated by the cod moratorium in 1992. But fishing was/is actually a smaller part of the provincial economy than agriculture. It's just that local self-perception involves cod.

Alright, I have to jump in here one more time because I'm deeply intrenched in fisheries (mis)management.  What was facinating about the cod industry was how many people it employed, and how few of those jobs paid well.  Throughout the 80s Newfoundland landed about half a million tonnes annually (roughly 55 million fish per year).  The dock-side per-pound cost of Cod was never very high - in 1990 the price per ton hovered just over $200, or about 12¢/lb, but it required an enormous amount of labor to process (catching, unloading, scaling, fileting, salting, packing, shipping, etc) so much fish.  The best estimate is that 30,000 people lost their mostly low paying jobs after the '92 moratorium, or about 12% of the total labor force.  Compounding this was the fact that most of these workers were unskilled and remained unemployed or underemployed.  The fishery has shifted to catching crab and lobsters which fetch much higher prices and require far less processing.  Whereas cod fetched 12¢/lb in 1990, lobster fetches between $2-4 and snow crabs $1-2.  Whereas cod landings were often in excess of 500,000 tonnes, lobster (about 60,000 tonnes) and crab (~50,000 t) combined are roughly 20% of what the cod were.

To quote one fisherman I worked with "today the guys fishing lobster and crabs are much better off, but fishing crab employs a lot fewer people.  Almost no one got rich fishing cod, but for a lot of people that was how they made their living." 

[Gerard]

Alright, I have to jump in here one more time because I'm deeply intrenched in fisheries (mis)management.  What was facinating about the cod industry was how many people it employed, and how few of those jobs paid well.  [...]  The best estimate is that 30,000 people lost their mostly low paying jobs after the '92 moratorium, or about 12% of the total labor force. 

Thanks for that; it's smarter than what I said. I'll try to find a better example than cod/NL of an industry that has a disproportionate symbolic value to a region's economic self-perception. Coal/steel in Nova Scotia in the past, maybe? Electricity in Quebec?

[MoonShadow]

I still don't see the housing market cooling off in cities like Vancouver or Toronto.

Okay, but do you have support for this opinion?

[fb132]

I still don't see the housing market cooling off in cities like Vancouver or Toronto.

Okay, but do you have support for this opinion?

http://www.vancitybuzz.com/2013/11/why-vancouver-real-estate-is-not-going-to-crash/ 

There are articles I can bring up, but why bother? Provinces like Alberta may start going rocky on the other hand...if it hasn't yet.

[MoonShadow]

I still don't see the housing market cooling off in cities like Vancouver or Toronto.

Okay, but do you have support for this opinion?

http://www.vancitybuzz.com/2013/11/why-vancouver-real-estate-is-not-going-to-crash/ 

There are articles I can bring up, but why bother? Provinces like Alberta may start going rocky on the other hand...if it hasn't yet.

Hmmm, so landlocked and a mecca for financial types.  Sounds like Hong Kong during the 1980's, and their housing prices haven't exactly 'crashed' since the Chinese took that island back from Britain, so I can see your point here.

[nobodyspecial]

I still don't see the housing market cooling off in cities like Vancouver or Toronto.

People keep moving here and prices keep going up.
A recression or a rate rise isn't going to affect the $5M neighborhoods - they don't need to sell.
But the average $1.25M single home with a working couple with a mortgage that is 50% of their take home are a lot more vulnerable to a job loss or rate rise to 5%.
Whether that would be enough to force enough places onto the market to drop the demand for condos and rentals - who knows?
At the moment new condo towers are popping up every week, rental vacancy is 0% and the city's population is supposed to double in the next decade.

If you like your Canadian Real Estate gloom unremitting there is always greaterfool.ca

 
 

[daverobev]

Vancouver kind've makes sense as there is less room to grow.

Toronto makes no sense to me, except how bad the traffic is. If they would/could just improve transit drastically... there is so much space in all directions (except into the lake, of course).

We were down to Point Pelee last weekend (very very nice), and again it hit me how large this country is. And how much waterfront there is, and how low population even the high population bits are.

I want to move down that way because the winters would be so so so much better than here (near Ottawa). Wife disagrees (family here).

Sigh.

Trip to France every winter instead, then... lol.