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The US Sub-prime is a question that comes up just about every week from clients planning to purchase Real Estate here in Victoria, BC. Canada. We have written articles on this before on this topic. One being the “Facts on US Subprime” and “Housing Sales Forcast Skyrocket“.

A recent article in the Times Colonist by Andrew A. Duffy reads;

B.C. ready to weather U.S. recession

Subprime mortgage mess and housing slump make downturn possible, chief economist says

Canada and B.C. in particular are well positioned to weather the storm of a U.S. recession, according to the chief economist of the Royal Bank of Canada.

Craig Wright, in Victoria yesterday to speak with clients who are concerned about the storm clouds hanging over the U.S. economy because of, among other things, the subprime mortgage crisis and a slumping housing market, said a recession in the U.S. is possible but not probable.

“But the uncertainty has ratcheted up quite significantly,” he said. “And while there’s never a good time for financial crisis, arguably heading into this one we are as well positioned as we could have been.”

Wright said B.C., despite two-thirds of its exports going to the U.S., is the least exposed to an American recession because of its more diverse economy and ties with the Asia-Pacific region.

He pointed to a strong high-tech sector, moderate strength in tourism and a robust movie industry, as well as a resurgent mining industry cashing in on record-high commodity prices.

But the big gun in B.C.’s economic arsenal is the consumer and government investment in the province.

He said the building boom in B.C. is stable because it is being driven by fundamentals rather than speculation, and, while it is likely to cool off somewhat, it will remain quite strong.

“I don’t think there will be a bust, more of a slowdown,” he said, adding the bigger concern comes when you look at the government and non-residential spending.

“Right now there are a phenomenal number of [non-residential] projects underway, a lot of them have already started and some will end around the same time near 2010.”

His concern is that while those massive projects are buoying the economy, there will be a huge hole created when they are finished.

“There’s a big lift with spending in preparation for the [2010 Olympic Games], and our worry is not 2010, but after 2010,” he said, noting the Olympic prep work will be worth one per cent of economic growth each year between now and 2011.

Wright advocates a shift in government fiscal policy to deal with any sort of hole, which could be exacerbated given the pine beetle infestation in the Interior’s forests.

He suggests governments with surpluses hold off on loosening the purse strings until the province hits those points of weakness.

He also recommends corporate tax relief in order to boost productivity.

“As we go forward, the Canadian [and B.C.] economic growth rate is about three per cent,” he said, noting that figure is made up of 1.5 per cent labour force growth and 1.5 per cent productivity. “But labour force growth is going to zero with our aging population.

“Over a long period of time that three per cent will collapse,” he said and productivity will have to take up the slack.

“One of the key factors in productivity is investment,” Wright said, adding the Canadian corporate tax regime does little to make the country competitive on the international investment stage. “In an environment in which we need to spur productivity and we need to attract very mobile international capital, hopefully we can see more relief on corporate taxes going forward.”

As it stands, RBC is predicting B.C.’s economic growth will hover around three per cent for the next few years. Wright also said in the short term the Canadian dollar will remain level with the U.S. greenback, although over the long-term it is likely to drop significantly below the U.S. dollar. End of article.

If you have any comments or predictions about the prices in Victoria or British Columbia or if you have questions about Victoria Real Estate in General, you can contact us anytime. 

Cheers, Anders

Anders Treiberg, Associate Broker, REALTOR®

Properties in Victoria Professionals – Royal LePage Coast Capital.   

Anders Treiberg has been a REALTOR® in Victoria since 1990. He has extensive Real Estate Expertise and can be reached on his website  or via email at

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