REAL ESTATE: Is there still a middle class in our electric future?

Columnist Freddy Marks ponders the role of renewable energy in real estate

Canadian realtors are working overtime after closing a second month of record MLS sales in September. Mortgage specialists, conveyancers, notary publics, home insurance agents, building inspectors and the other professionals who make the entire complex real estate process happen are keeping pace with the life -hanging decisions B.C. residents are making. A prominently seller’s market still prevails, sold over asking and multiple offers for single family detached homes are being reported. All the while, market analysts are ringing the alarm bells that we have begun the descent into the market correction of up to 18 per cent that CMHC predicted this May.

Buyers in solid enough financial positions continued to purchase and created an extremely competitive market in B.C.’s Fraser Valley; the Agassiz/Harrison area was top of the list for thousands of buyers wanting to remain close to greater Vancouver. Listed properties are still being sought after all the way to the Yukon border even as the snow blankets the province in the Cariboo region and north. National home sales were up 46 per cent year over year this September. Residential migration tell us that rural detached homes offering large lots or acreage, green space and privacy are being sought out. Buyers want acreage as much as they can afford. Owning land offers the freedom to have your own safe private outdoor space, and secluded green space has even more of a draw, as we face a large second wave of COVID-19.

Why are so many people moving amid a national health and economic crisis while others are anchored to the security of their current home? 2020 will be known for many tragic happenings, including the “great displacement and impoverishment of the middle-class Canadian.” Residents forced to move because of business closures, job losses, ongoing work-from-home policy, school closures, generational re-cohabitation, and now add to that list home owner insolvency. What began in April can be likened to a runaway train that has swept up thousands of unwilling passengers on its now speedy course to the next stop – market correction.

National rents stats show a declined of 9 per cent, and second quarter Vancouver rents declined by 17 per cent! Condo inventories continues to increase and soften the multi-unit market as a record number of newly-completed units in B.C. are now ready to sell, completing when the demand is impaired. So, how does the predicted insolvency monster we have been fearing derail all the efforts of money printing and stimulus deferrals? The numbers explain it best; CMHC insured mortgages in deferral at the end of August showed Vancouver at 11 per cent, Kelowna at 12 per cent, Calgary at 18 per cent, Edmonton at 21 per cent, Regina at 14 per cent, and Toronto at 12 per cent. CMHC only insures mortgages under a $1 million pointing to the middle class as the biggest demographic of these percentages. November will be the beginning of the end of home ownership for those who are 90 days delinquent and 6 months deferred. Lenders will have no choice but to begin foreclosures.

Furthermore, The Bank of Canada has now announced that it is putting an end to Canadian Mortgage Bond Purchasing Program (CMBPP) at the end of October. Mortgage Bond Purchasing by the BOC provided the needed liquidity to soak up the excess supply, tighten the spread and lower the bond yields to bringing down mortgage rates so banks could continue to lend money and facilitate all the activity. The exit of the CMBPP leaves long-term collateral damages like double-digit price growth and widens the wealth inequality gap between renters and asset holders even further. The BOC had a primary directive to stabilize the economy with the Bond Purchasing Program and stated the widening wealth gap is a by-product of this best policy approach.

Wealth or income distribution is directly related to how well the economy functions and the everyday uncertainty in which we continue to exist has transformed the existing affordable housing crisis into a Canadian crisis of poverty. Homelessness is a reality that we don’t see reported on as it doesn’t fit the narrative needed to bolster economic confidence. The low income working poor that survive day to day and month to month and are becoming a large statistical group labelled collateral damage of BOC pandemic liquidity stimulus that was designed to ensure that asset holders could weather the storm and keep their homes.

Many people are now losing their homes and apartments after job losses that are now permanent and it is yet to be seen if those citizens are able to find low-income rent or face homelessness. One-third of British Columbians struggle to pay their bills, while one out of five children in B.C. already lived in poverty even before the pandemic began. With our cost of living to only rise, people once considered middle class, with high debt ratios, already living paycheque to paycheque may be hard pressed to avoid becoming the working poor.

There is a lot of talk in Vancouver right now, with crime and public safety related to large amounts of homeless citizens and tent cities as an issue with no quick solution. For a “single”, with no current job options, existing on provincial assistance gets a shelter allowance of $385/month, dramatically reducing housing options. There needs to be more dialogue about what is the actual cause of the homelessness, which is impoverishment. At a time when the federal government deemed the Canadian Emergency Response Benefit needed to be $2,000 a month for the average Canadian to stay housed and well-fed during this pandemic, the current unemployment and social assistance rates fall way short of that figure.

B.C.’s once thriving middle class has been under an economic assault for several years. Record job losses in the forestry/lumber mill and oil and gas sectors began in early 2019 due to environmental pressures and International trade policy. Those permanently curtailed positions that paid middle-class wages once sustained many B.C. residents in a comfortable middle-class lifestyle, and many of those individuals went into the pandemic in already dire financial circumstances after closures and curtailments.

Our incumbent NDP Government just won another four-year term to steer the province financially through the pandemic and into economic recovery. They did not campaign on revamping the forest industry to reopen mills or badly needed oil and gas sector projects and yet they need to create thousands of good-paying jobs and offer retraining for those affected to begin to turn the economy around. Mill production workers, oil and gas workers, and unemployed airline, and hospitality workers need to see quick action and a reason to stay in their communities. The NDPs says it has a plan for B.C.’s future in this global green electronic age. Our federal and provincial governments are moving away from fossil fuel extraction and refinement and want us all to become green energy advocates to meet emission and climate targets. If the way forward is with electricity generated from renewables like solar and wind and hemp fibre production and processing, then these industries must create jobs that can replace and sustain citizens across the province.

In conclusion, electric cars, solar energy generation and smart homes that generate their own energy needs are all great ideas to improve our planet, but this huge shift away from economy-building industrial mainstays during the pandemic has put B.C. citizens and businesses on in an even weaker position with a tougher road back to financial stability. We can only hope that the middle class that the government counts on for economy growth spending will still be around to enjoy the electric future they have planned for us.

Freddy Marks, together with his daughter Linda Marks, runs Agassiz’s 3A Group Sutton Showcase Realty. He has been a Realtor in Canada and Germany for more than 30 years, and currently lives in Harrison Hot Springs. Read the complete column online at www.agassizharrisonobserver.com.

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