As things continue to tighten up with inflation on the rampage and the Fed trying to throttle the economic engine, the question of whether all the exciting progress in America’s Vancouver can continue under these conditions.
The last time we had a recession it was a pretty big one. That downturn was much different than what we see now. There had been a buildup of bad loans in housing that led to the near collapse of the financial markets. In fact, several really big banks effectively failed, national giants like Wachovia and region giants like Washington Mutual succumbed to the weight of a bad portfolio of loans.
That is not the case here. Lenders have been under much tighter federal guidelines regarding mortgages, and this scenario is more about runaway federal spending than unstable banking. COVID 19 saw the US government make the largest deficit enlargement since WWII and that has simply pushed too much money into the already bloated system. I feel like we are in for a soft landing on this, but of course anything can happen.
The stock market has been pretty fat for several years and a major correction was not only inevitable, the powers that be knew it was coming. It should be noted that money flows and when it leaves one market it flows to another. Many investors are currently holding cash and generally holding cash is temporary. That cash will flow somewhere and real estate is often the place it lands when Wall Street takes a beating. Large projects like the real estate development happening right now in Vancouver is ideal for parking cash in a volatile paper market. Real estate like its name implies, is “real.” There is a hard asset backing the paper.
Seattle faired quite well during the recession in 2009-2012. Real estate values there slowed down and even suffered some equity losses, but compared to the rest of the state and west coast they got off with not much more than a scratch. Seattle had such a roaring economy going into the recession and billions of dollars had already funded large developments that were underway when the wheels fell off the economic cart.
Vancouver could be poised for a similar scenario in this upcoming recession. The city is ripe for quality development and close to a billion dollars are already funded for projects working through the system. We still look like a sure bet for financiers looking to park cash to weather this new bear market on Wall Street. Our city leaders would be wise to speed up the bureaucracy and get these projects approved ASAP. Once funded they have a great chance to be completed and will provide good quality jobs during the downturn that will help soften the effects locally. It totally worked in Seattle last go round, it will work here this time.
I am about as optimistic as possible considering the financial climate is rather gloomy overall. Vancouver USA is great place to live and invest, and it seems investors lately are proving me right.
I’ll have the updated statistics for urban condos mid week; I am out of town today.