The fantasyland of a return to real estate boom times is hitting hard against the reality of the actual economy as the latest EI figures are released.
The number of British Columbians collecting employment insurance climbed again in April, rising by another 1,400 recipients. Statistics Canada said that the total number of EI recipients in B.C. hit 82,700 people, up 1.7% from the month before.
This now represents a dramatic rise in EI recipients in BC.
Since October 2008, the total percentage increase in EI is an astonishing 81.6% (37,200 people).
"Between April 2008 and April 2009, the increase in the number of beneficiaries in British Columbia was widespread, tripling in Cranbrook, Kelowna and Campbell River, and doubling in most other major centers," Statistics Canada said in a news release.
"In Victoria, the number of beneficiaries increased by 2,500 to 3,900, while in Vancouver, there were 34,500 people receiving regular benefits, an increase of 20,500 over 12 months."
Statistics Canada said that the province's hardest hit sectors in terms of job losses includes construction, transportation and warehousing, accommodation and food services, finance and insurance as well as forestry and logging.
My email box has been filled these last two days with comments from readers who despair about the latest surge in the real estate market.
"How can prices be going up?", they ask.
The fact of the matter is that our governments are desperate to stall and stave off continued declines in real estate values in the hope that the economy can be resuscitated.
It is the natural reaction of people to protect what they have (and thus the natural reaction of governments). Unfortunately we live in a capitalist oriented system, and the nature of that system is to tear down what isn't working and allow capital/resources to redeploy.
When this process happens every few generations, it triggers a very painful but necessary chain of events.
And it takes the extraordinary politician to allow it to happen.
Regrettably a politician that facilitates it will probably fail to win re-election. Thus we have politicians who meddle and that meddling often exacerbates the situation.
Thus our government has slashed the Bank of Canada rate to an astounding 0.25% in an attempt to prevent capitalism's 'creative destruction'. And the cheap money is doing it's job by stimulating buying to create a temporary effect.
But it is temporary.
The reality of our economic situation is that unemployment is at an 11-year high. Our manufacturing sector been decimated, our major car companies are bankrupt, Air Canada - our national airline - is being bailed out, retail sales are plunging and our federal government’s finances have been utterly trashed leading to the greatest deficit in the history of our country.
In light of all this, is buying real estate property at the current prices really a smart idea?
Cheap money is leveraging the market right now.
Increasing unemployment, closed up factories, rising mortgage rates, soaring energy costs, record household and mortgage debt levels and the inevitable surge of higher taxes is going to take it's toll.
The fall of the real estate market is going to be all the more harder and sharper when it comes.
The story here isn't amazement that the buying frenzy has returned.
The real story is understanding how it is that people can't see what's coming.
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