Will the next Recession hit Vancouver hard?

Most economic analysts are leaning strongly towards an upcoming recession. Last year we had two consecutive quarters with declining GDP which was technically a recession, but we quickly bounced back. Last quarter the government reported an anemic 1.1% GDP growth and talk of a recession swirls again in economic circles. National recessions tend to hit the whole country but inevitably there are areas that weather the storm much better. During the so called “Great Recession” that ran from roughly Q4-2008 to late 2010, Seattle faired rather well with housing taking a 10-15% hit on values whereas we saw declines approaching 40% locally. Some areas of the country had a genuine hard crash with real estate values plunging some 65%. It took all the way to late 2012 for most areas to see a recovery of real estate values.

Why was Seattle so well sheltered last time? Seattle’s local economy at the time was red hot and the region continued to produce jobs when many other regions were shedding jobs. Demand for housing in Seattle at that time was so red hot that even the Great Recession was only able to stifle it to a minor correction. But I do not think Seattle is safe this time. Seattle is seeing far less demand now than back then, and there is even a bit of an exodus as people look for more affordable options often right here in Vancouver.

Vancouver has a significant amount of housing pressure as our area is producing jobs, building housing at a faster pace than the Metro Area at large, and is a little more affordable than Portland which is seeing bit of a population decline. We all know what is driving the Portland issues so we won’t beat that to death today. Vancouver’s office market is also red hot as companies relocate here from afar and not so far, looking at you again, Portland 😉

I feel like Vancouver USA is in a very comfortable position, much like Seattle was 15 years ago. I do not expect another crisis as severe as that last one, but I do suspect a medium to large recession is looming. Vancouver will likely be one of those areas that beats the national average on severity and recovery this go round. We have a lot of the same mojo that Seattle was packing in 2008. What will be interesting to see is how our beleaguered neighbor south of the Columbia weathers the next storm, it could be bad for Rip City.

Condo activity in the city center was brisk last week with a balance of sales, closings, and new listings. Inventory levels are about the same, but activity is up and that is a good thing.

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