Scolding the consumer isn't working.

Bad, bad consumer.

Apparently the scolding isn't working.

On the weekend, The New York Times headline said it all: "Americans stop buying; trade deficit declines"

And for an economy that is 70% dependent on consumer spending, that's a huge problem.

Americans have been the world's champion consumers. Just lend them money and they will spend it. A least that's the way the world economy is supposed to function.

But when Americans stop spending it brings a hush to the entire planet.

The malls go quiet... trucks slow down... ships are idled... and finally factories are shut down. Clerks, drivers, stevedores and assembly line workers all go home.

From the Times, "For the first eight months of the year, the United States trade deficit with China is down by about 14% or $20 billion, compared with one year ago. The nation's trade deficit with Japan has shrunk by almost 20%, and its deficits with Mexico, Canada and the European Union are down more than 40%."

Any wonder the BC government is looking at a massive deficit?

"The huge shift stems mainly from the staggering collapse in trade. With credit markets frozen and Americans facing the highest unemployment in more than 30 years, the United States suddenly stopped shopping overseas at anywhere near the volumes that had become normal."

This despite the fact the US federal government is going into massive amounts of debts trying to get consumers to spend again.

They've given their citizens tax rebates, incentives, loans, and bribes. They've run a federal deficit three times higher than the previous record. And they have put at risk a sum of money equal almost to the entire US GDP.

Still those hardheaded consumers won't consume like they're supposed to.

Suddenly, it's the 'Age of Thrift.'

And if the consumer credit party is over, what will replace it?

Is it possible for North American businesses to grow and prosper under these conditions?

Sure it is.

North America has great businesses with great brands. And as the dollar falls, the solution is to gain global market share in some sectors.

But 70% of the economy is consumer spending. Until that changes, the North American economy is hostage to US consumer spending. When consumers stop consuming, the North American economy's wheels stop turning.

And in the contradition lies the ultimate solution.

Americans will have to cut back on their spending and it will be time for the rest of the world to do some of the buying for a while.

And since the United States has less than 5% of the world's population, it is the logical next step.

But rebalancing the world's economies won't happen overnight. Nor even in a couple years. It will take a long, long time.

In the process, North America has a very painful readjustment ahead of it. A readjusment that will affect all sectors of our society.

And real estate values are going to be very much a part of that 'painful' readjustment, even here in North America's most bubbly real estate city.

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Bob Rennie... the newest Bear?

Bob Rennie, dubbed Vancouver's Condo King, is known across Canada as the real estate wunderkid.

Considered the #1 Condo Project Marketer on the wet coast, Rennie has been the penultimate real estate bubble booster. Last year he even revealed his 101 Reasons You Should Buy Today in the Vancouver Marketplace.

What a difference a year makes.

In a stunning article in BC Business Magazine, Rennie has penned a column titled "Lowering the boom: Are the good times over for Canada's most privileged generation?"

It's a question Rennie answer's in no uncertain terms.

"The financial crisis that broke loose a year ago is not just a temporary setback; it’s one of those defining generational events that alter behaviours and attitudes forever."

Rennie forsee's a dramatic shift in our consumer society.

"Many of us have long presumed that a big inheritance was going to be coming down the pipes – a legacy from Ma or Pa that would clear the deck of any debts and solve all post-retirement problems. Yet this market meltdown, which has seen a huge erosion of our mutual funds, pensions and stock portfolios, has affected grandma too. Her portfolio – as conservative as it is (or was) – got whacked, and now she’s being forced to dip into her savings. Our inheritance."

And what does Bob see as the future for real estate?

"The early warning signs of the new, more frugal world order are everywhere... in the real estate world, we’re going to have to recognize the new reality and start looking at boomers differently."

Rather than Boomers shooting the moon on real estate purchases, Rennie correctly sees a massive scaling down, "selling the house and finding something smaller and more affordable, either to pay off their debts or to increase their cash position."

That, by the way, is one of the doomsayer predictions of the real estate bears: Boomers downsizing.

The theory is that, as the market begins to flood with all the huge 'McMansions' for sale by aging Boomers, the much smaller 'echo' generation will not be able to absorb all the inventory.

Result? A severe decline in prices.

It's a stunning about face for Rennie, whose company is currently marketing the Woodwards development in the seedy downtown east side. 'Be bold or move to Surburbia! The wait is finally over...' goes the marketing slogan. It appears Rennie is not quite as bold (or as bullish) as the ad copy and predicts a massive demographic shift in priorities.

"We’ve experienced the biggest financial collapse in our lifetime. We will have to institute dramatic changes in how we entertain ourselves, where and how we travel, what we drive, where we live and how we ultimately pass on wealth to our children."

Not only doesn't Bob see the economic recovery taking hold in the same way as the rest of the real estate community, Rennie is downright pessimistic about what he does see.

"For those praying for a return to yesterday, forget it. It’s gone."

This is an earth shattering statement from someone like Rennie.

Bob clearly knows that the bubble is about to burst and that the ever-expanding real estate growth of the last decade is going to come to a crushing end.

I just never thought I would ever see the likes of Bob Rennie publically admitting it.

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Mission Accomplished

That's what their calling it. A result of he busiest July ever for Vancouver Real Estate, both in Greater Vancouver and in the Fraser Valley.

And according to the Vancouver Sun, first-time homebuyers are driving the market.

Faithful readers will recall several posts I made earlier this year about how all the propaganda being pushed out by the Real Estate Associations was targeting first time homebuyers in a desperate attempt to grease the wheels of a real estate machine that had begun seizing up.

And now?

Paul Penner, president of the Fraser Valley board, notes the effect of luring the first timer's back. “That volume creates a significant ripple effect as the sellers of those homes move up,” Penner said in a news release.

Jake Moldown, president-elect of the Vancouver real estate board, concurred.

He said first-time buyers who entered the market during the boom a couple of years ago now feel comfortable moving up the property ladder.

“They understand what a mortgage is and they’re comfortable with their payments, and now they’re looking to step up,” Moldown said.

So it's Mission Accomplished for the real estate associations.

But I have said it before, and I will say it again... cheap interest rates are the one and only reason real estate is selling.

We have created a mini bubble, which was the whole point of the Bank of Canada flooding the market with 2% and 3% mortgages.

It's as if the nation has completely forgotten about collateralized debt obligations.

This boom you are seeing is the last silver bullet that our central bank and government can fire. It has staved off the wholesale collapse we have seen in the United States.

When we look back at the stock market collapse of 1929, no one could foresee the subsequent collapses of 1932 and 1937.

Investors are banking on the belief that the economic recovery has started. But just because believe something doesn't make it true. People believe that there is a recovery... and that it is the result of stimulus efforts by the feds.

However the results from the second quarter show the economy still contracting... albeit at a slower pace, just -1% annually, rather than the -6.4% recorded in the first quarter. This is heralded throughout the world as proof that the crisis is receding.

It if weren't for stimulus spending, the contraction [in the 2nd quarter] would have been closer to -4%.

It's how the government has been staving off collapse in the general economy.

In 1930 the world had thought the economy had recovered. Seventy-nine years later, most people cannot remotely fathom how a populace couldn't have realized that they were in the grips of 15 years of difficult economic times.

The stage is being set for our generation to understand it... succinctly.

On Vancouver Condo Info, there was an interesting comment posted by a mortgage broker:

“I am lender and have first hand knowledge regarding speculators holding out. Most of them have VRM (variable rate mortgages) of 0.75% to 0.90% below Prime. So currently their mortgage rate is between 1.35 to 1.50%. How many of them lock up into 5 year term when the rate was 3.5%? Very few. It is very hard for a person to lock up with a 2.0% rate increase rightaway especially if they are thinking short term to sell. I have none of my clients lock up. So if the Prime goes up next year by big numbers, you will see lots of blood.”

Yes, yes we will.

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How US Treasury Sales Immediately Impacted Canada This Week

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It has been another banner week for the US Federal Treasury and Treasury sales. This week alone the Fed had to convince “investors” to buy up $150 billion worth of debt! This follows three weeks where the US auctioned off $87 Billion, $127 Billion and $138 Billion. This is an astonishing amount of debt for investors to absorb (and there's lots more to come).

This insatiable demand for debt sales has now created a historic crash of the bond market with TLT (the 20 year bond fund) losing almost 30% of its value. The ten year rose to 4% and that will take 30 year mortgages well over 6% in the United States.

This last statistic is particularly important for us because as US mortgage rates go, so do Canada's mortgage rates.

As such three of Canada's major banks decided to push mortgage rates higher yesterday despite the fact the Bank of Canada did not change it's rate and the BOC govenor wishes lending rates to stay where they are.

Nothwithstanding, the Royal Bank of Canada, the Bank of Montreal and Bank of Nova Scotia all announced they had increased the rates charged for money for homebuyers. Five year mortgages at these institutions will now cost a borrower 5.85%, four-tenths of a percentage point higher than the previous rate. Likewise, the rate for a three-year term rose 0.40 of a percentage point for the trio of banks, reaching 4.55%.

And why did they do this even when the Bank of Canada had not changed the lending rate?

CBC reported the news this way, "Analysts have noted that the cost of borrowing for longer periods of time more likely reflects the prevailing view of inflation in the next couple of years rather than the current short-term collapse in economic activity. Governments have responded to the ongoing recession by running deficits and printing money, factors that can boost short-term activity but hold out the threat of longer-run price increases. Thus, lenders will be reluctant to extend cash for longer periods without a commensurately higher interest rate."

But the Bank of Canada lending rate is still 0.25%. What gives?

The article goes on to note, "More ominously, the U.S. government got the cold shoulder from debt buyers Wednesday when Washington sold off $14 billion US in long-term bonds. Traders said Washington has been forced to flood debt markets in order to cover its stimulus spending. In bond economics, falling prices equal higher interest rates. Thus, industry experts now expect interest rates on longer-term borrowing to start rising again."

You see? It's all about US Treasury and Bond sales, which is why we follow the topic so closely.

Interestingly... Global News covered the rate increase on their 11:30pm newscast Wednesday night. The last interview of the piece was with a CMHC rep who pointed out that Vancouver prices are still falling and are expected to fall further over the next year, suggesting that future lower prices might more-than-offset future rate increases.

In other words rising interest rates are going to beat down house prices so that anyone buying at the higher interest rate will still be able to afford roughly the same size house because the lower selling prices (and thus mortgage size) will produce a similar monthly payment despite the higher interest rate.

Gee... and on what blog did you hear that prediction first?

And it's an important point, because it will happen.

When rates do skyrocket to 1981 levels (22%), anyone trying to sell their $650,000 home is screwed. They would need a buyer to assume a mortgage that will equate to a monthly payment of $11,700 per month... and that's simply not going to happen.

The only way that house is going to sell is if the price falls to $220,000.

The CMHC rep knows what all of us who were old enough to live through those times in 1981 know... that high interest rates will crush our bubble inflated Vancouver Real Estate market like a flimsy tin can.

So I ask you, what would you rather have?

(1) A $600,000 mortgage at last weeks low 2.99% variable interest rate, or
(2) A $220,000 mortgage at 1981's 22% interest rate?

Both will run you about $2,500 per month in monthly payments.

The difference? If interest rates skyrocket, you won't be able to renew your mortgage if you choose option (1). You will lose your home.

If interest rates skyrocket, as so many analysts now predict, a seller will never be able to sell a $650,000 property unless he slashes the price to $220,000 because no one can afford a $600,000 mortgage at 22%.

And when you consider how many local homeowners, who have bought in the last five years, will have to surrender their homes to banks under foreclosure when owners can't pay the monthly payments required when they have to renew under these rates... the downward pressure of forced bank sales will easily push prices down to $220,000, if not lower.

Remember banks don't keep foreclosed properties, they move them off their books ASAP.

If you buy under option (2), you still have the same monthly payment as option (1) BUT when rates go down again, you'll be laughing.

So why would anyone buy in today's market when virtually all economists are predicting a return to late 1970s style inflation and interest rates?

Why indeed.

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But the BC economy is getting better, isn't it?

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Took the dog for a walk at the beach with a friend yesterday.

He (the friend, not the dog) was keen to take issue with some of my recent blog musings.

"How can you say real estate is not going to do well. People are jumping into the market and the BC economy is getting better, isn't it?"

Uhh... no, it isn't.

Many of British Columbia's lumber mills sit idle. Coal exports are down 40%. The price of natural gas, one of our key commodities, has collapsed and the tourism industy this summer is going to suck wind, big time.

More importantly the industry that had helped fuel the province's economic growth the past 10 years - residential home and condominium construction - is suffering the "nastiest" downturn among the provinces according to a recent report.

Canada Mortgage and Housing Corp. released data this week that showed B.C. has had "arguably the nastiest residential construction recession this cycle" in the country.

But what about the 'Olympic bounce'?

We've already had that, at least in the construction industry. Any added construction oomph from the coming Vancouver 2010 Winter Olympics is gone. Most major projects are nearing completion or have been completed.

So what's the near-term outlook for the construction industry?

Peter Simpson, chief executive officer of the Greater Vancouver Home Builders Association says, "housing starts are abysmal. Builders are hesitant to put shovels in the ground when there's inventory that hasn't sold."

And with interest rates on their way back up, that inventory isn't going to be moved out quickly, creating a further drag on the real estate market.

"We're in a full-scale recession in B.C.," said Jock Finlayson, executive vice-president of the Business Council of British Columbia. "Getting out of it is going to depend on when the global economy, and the U.S. economy, bottom out, and how things look after that."

Hmmm... there's that nasty tie-in to the global economy again. So what's happening out there?

Oil is way up, closing over $71 US a barrel yesterday, the price having shot up over 100% over the last three months. This has sent the Canadian dollar up over 90 cents US and on it's way to par - a development that will kill exports and manufacturing jobs.

Meanwhile, in the US, the economy is about to be broadsided by another huge wave of defaults from Alt-A, Option ARM and commercial real estate mortgage resets (see latest article here). Estimates peg coming residential foreclosures at $1.5 trillion.

As for the global economy, it appears Europe is about to be rocked by banking issues (IMF tells Europe to come clean on bank losses). Seems that, contrary to popular belief, the German banking system was just as irresponsible as the American banking system. Turns out the German state-owned banks, who's boards of directors are filled with the politically well connected, had been a dumping ground for US toxic waste - evidently the 'benefactor' of German trade surpluses.

And Germany wasn't alone in the mad dash to lend to foreigners. Austria is up to its eyeballs in loans made to Eastern Europe. Sweden had done the same in the Baltic States. Spain pumped money in to cajas that were used to finance a property boom fueled by foreign investors. Ireland had engaged in an Florida style construction boom as well. This is only a brief summary.

Now the jig is up. Spain, Ireland and the Baltic states have collapsed into depression. Their debts will never be paid. Eastern European currencies have tumbled, massively increasing their debt burden. They either hyperinflate or default. All of these loans, in addition to the tens of billions of US toxic waste remain on the balance sheets of European banks. And for the most part they are still valued at 100 cents on the dollar.

The message here: Europe's financial crisis is just getting started.

Then there is China, the supposed economic darling who will pull the planet out of recession. Today's China Daily News reports that China's exports and imports shrank for the seventh month in a row in May as the economic downturn continued to dampen global trade (see article here). I have a question for you. Who, exactly, is China going to be selling goods to so that their economy can keep growing?

So much for global recovery.

Far from getting better, we have BC entering a "full-scale recession" with recovery dependent on US and global conditions improving. That will be compounded with rising loan costs, big energy price hikes, reduced consumer spending, more pain for the Canadian manufacturing sector, a US economy that is going to remain stagnant (if not get worse), evidence that Europe is in for some serious pain and no one with money to buy China's goods so that China can, in turn, buy Canada's commodities.

No, my friend... the outlook for BC real estate values remains gloomy. I'd be willing to bet that within a year the prime rate will be double what it is today and Vancouver will have re-taken the lead from Miami in that plunging real estate graph I posted on Monday.

The sun is setting fast on the real estate boom times.

Even my dog can see that.

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Are we nearing the tipping point for Real Estate?

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There's a whirlwind of pertinent news out there right now and it makes me wonder if we are at the tipping point for Real Estate, both in Canada and here in the Village on the Edge of the Rainforest.

The real estate pollyanna's are all agog at the recent sales data which has prompted the British Columbia Real Estate Association to declare that plunging prices in B.C.'s residential real estate market are levelling off.

"The majority of the decline in home prices has already occurred," said association chief economist Cameron Muir, in a report released on Tuesday. "Balanced markets are emerging in Victoria, Vancouver and the Fraser Valley. There's now little downward pressure on home prices in these areas."

Prices have stabilized because of increased demand, with seasonally adjusted home sales raising over the past three months, according to Muir. "First-time buyers were largely absent in the late fall and winter, making it more difficult for move-up buyers to sell their current homes. The chain of ownership is now being oiled."

The chain of ownership is being oiled alright, but is that chain about to fall off the drive shaft?

There have been some interesting posts over on the real estate discussion board 'Real Estate Talks'. One particular contributor, who takes great glee in dissing all bearish viewpoints, has made some interesting observations of late. He has noted several times now that, "My buddies in the business tell me that a lot of seller's are tapped out of equity in the properties that they are selling. Many of the mortgages are very close to the selling prices, ie: no equity left. Although there are a lot of first time buyers purchasing these properties, the Seller's don't have the equity to buy 'up' or buy 'down'. So maybe what we'll see is the prices at the bottom end of the market strong, but quite a weakening in the mid level prices."

And it buyer's fail to move up, Muir's optomism of recovery will fail. And its not just Muir's optomism riding on this.

The federal government has slashed interest rates in a desperate attempt to stave off both a plunging economy and plunging real estate values. That - and a highly manipulative campaign to drive first-time buyers into the market - is what is driving the current sales spurt.

For the government, this is crucial.

We have seen in the United States how much real estate values are interconnected to the financial system. The goverment is desperate to stem the collapse and forestall the decline in hopes that the 'Immaculate Recovery' will occur in the meantime and resuscitate both land values and the economy.

But beyond stemming the collapse, ominous signs of catasophe are looming on the horizon.

Statistics Canada released it's latest survey yesterday and B.C. just recorded the fastest increase in the number of employment insurance beneficiaries since comparable data was first recorded in 1997.

More critically, Economists say the new numbers show a Canadian economy that is shrinking at a pace most Canadians have never experienced with joblessness having become a central element of the downturn.

So what do we have here?

Unemployment is dramatically rising, the economy is shrinking and home sellers (who see the writing on the wall) are dumping real estate holdings at a price the gives them little or no equity after paying off their mortgage just so they can get the debt burden off their back.

Those sellers can see what is coming. And what's coming has been playing out in the financial markets over the past week.

Sales of US Treasuries fell for a fourth consecutive day, pushing 10-year note yields to a six-month high, amid concern record U.S. debt sales will overwhelm investor demand as the economy begins to show signs of stability.

Yields on long-dated U.S. debt are now in nose bleed territory, the return on the benchmark ten-year Treasury now careening quickly toward the once unthinkable "four percent" level as detailed in this report at Bloomberg.

Why is this important? Because yields on Treasury notes are the benchmark which sets the prime rate used for lending by Banks.

Noted investment advisor Marc Faber has been moved by these developments to strongly suggest the U.S. economy is on the cust of entering “hyperinflation” (see the bloomberg story here).

While Faber's views may be a little extreme, there is no doubt we will see much, much higher inflation when the U.S. Federal Reserve embarks on its campaign to normalize interest rates. It must withdrawal all the recently printed money in a manner that will not squash a nascent economic recovery, making high inflation is unavoidable.

And high inflation means high interest rates.

That will kill off the first-time entry buyers, eliminate any 'move-up' buyers, and send Real Estate values plummeting downward again.

And that's before all those who currently hold mortgages start having to renew at the dramatically higher mortgage rates.

Anyone care to wager how many of those first-time buyers, who jumped into the market with those all time low rates because it made home ownership affordable, will be able to renew next year at a 5% higher rate?

There is a very ugly nexus forming in the coming months and it is going to take a miracle to avoid it.

The tipping point is very near.

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There must be a pony around here...

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Ahh... the credo of the eternal optomist as adopted to the real estate industry. You could walk into a house and be up to your knees in manure and a real estate agent would cheerfully tell you... "Gee, this place must come with a pony."

Once again the Real Estate pollyanna's shill about the return of good times, the underlying message the same as always... Don't be left out, you better buy now!

The latest is the Real Estate Board of Greater Vancouver telling us that the Greater Vancouver housing market "has entered a more moderate and balanced state," with sales and benchmark prices both up in April compared to March.

And don't kid yourself, the local real estate community is doing everything it can to whore values higher.

The industy is eagerly pointing at 3% mortgages and homes being up to 15% more affordable than they use to be. The carrot is dangled furiously at people who wanted to buy in the past, but could not. "Now," the pollyanna's proclaim, "they can."

As we have documented here in the past month the crucial first-time buyers are being relentlessly prodded into action.

The pollyanna's hook their prey and trumpet that the Federal government will let them raid $25,000 from their RRSPs, tax-free, to buy a home. The Feds will also donate $750 to help them close. Then real estate industry creates media releases about young buyers rushing into the market in this, perhaps the best (and last) time, to buy into the market.

Even the mighty CKNW, the radio station that bills itself as "BC's News Leader and the station you turn to in an emergency", has turned to pimping for the real estate industry. Surely you have heard the sickening PSA's that tell everyone that 'now is the time to buy'.

For shame. It's peer pressure at it's manipulative best.

And what about the real news? The economic winds are not blowing kindly.

The public service abounds with rumours of slumping revenues, pending cuts in spending, and a much bigger-than-budgeted deficit.

Watch for a new provincial budget on the heels of the BC Liberal election majority that cuts services, raises taxes and slashes funding to municipalities.

What is it they say? Shite rolls down hill? Municipalities will, in turn, cut services and raise - wait for it - property taxes. And the hikes will be significant.

All of this comes on the heels of yesterdays news that bankruptcies in B.C. are soaring and that heavy job losses are taking their toll on individual residents. B.C. has the dark distinction of having posted Canada's third-largest increase in consumer bankruptcies, behind Alberta's 99.8-per-cent increase and Newfoundland's 88.9-per-cent rise.

Mark my words, if the economy does not perform the Immaculate Resuscitation investors in the stock market are being hoodwinked into believing, all those being sucked into buying now are going to be very, very bitter.

Maybe they can console themselves as they hunt around their new house looking for the pony.

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The US Economy & BC Real Estate

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The US Labor Department released its Consumer Price Index for March and U.S. consumer prices fell again triggering the first recorded 12-month drop since 1955.

"The numbers speak to an economy that is in deep recession, but we're no longer in the shock mode of staggering numbers that speak to a serious slide lower in terms of macroeconomic activity," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

It is the manifestation of what is driving the US Federal Reserve to print Trillions of dollars in stimulus money. Deflation has gripped America.

Deflation is a broad-based decline in prices that can undercut an economy by leading consumers to hold off purchases in the hopes of even lower prices.

And when US consumers hold off on spending, it doesn't take a fortune teller to predict what it means for BC.

Unless BC suddenly finds new ways to advance its economy, it will slow to a crawl, unemployment will remain high, trade surpluses will become deficits, and reduced government revenue will make it increasingly difficult for the provincial government to balance the books.

Tourism will tank this summer, the mining industry will suck wind, and the forestry industry will be watching trees grow bigger and taller.

It also means no American and European buyers to descend on Vancouver to fuel an Olympic Real Estate bounce.

The average single family house price in Vancouver is now down 14.2% from it's peak. It could well be down 25% by the end of the year.

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Job Losses Will Be The Story of 2009

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UPDATE: Bank Failure Friday

Bank Failure #22: Cape Fear Bank in Wilmington, N.C.
Bank Failure #23: New Frontier Bank of Greeley, Colo.

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Way back in September, Vancouverites smugly looked out at the evolving economic crisis spreading across the United States with a bit of bemusment. We 'tsk-tsked' the subprime mortgage mess. It was an American problem and we were not directly affected.

When the stock market crashed, we shrugged our shoulders. Canada was economically sound and BC was even better off than the rest of the country.

The attitude bordered on arrogance.

From a July 22, 2008 Vancouver Sun article:

Finance Minister Colin Hansen looked The Vancouver Sun's editorial board in the eye late last week and maintained that, despite all the economic gloom and doom that's going around these days, the B.C. economy is doing pretty well.

From a October 20th, 2008 CTV story:

Finance Minister Colin Hansen introduced his Liberal government's economic relief package in the legislature, saying the province will avoid recession. "None of the leading economists that I have heard from have indicated a forecast of a recession," Hansen said. "Relatively speaking, British Columbia is doing remarkably well."

Oh how the times have changed.

The StatsCan data now puts B.C. at the epicentre of a massive Canadian recession. Gone is the talk of no provincial budget deficits. And the Real Estate industry - its folding in on itself.

For hidden in the job loss numbers is the real impact of what is happening.

Last month, the B.C. economy shed 22,600 jobs. But those numbers hide the full measure of the drastic downturn in B.C.'s construction/real estate sector.

The were actually job gains last month. B.C.'s service sector (the accommodation and food services sector) saw employment grow by 7,200 jobs.

7,200 jobs gained!!!

And these job ADDITIONS disguise the profound devestation that hit the Real Estate sector.

Last month not only did 16,000 construction jobs disappear; but there were 8,500 lost positions in the financial, insurance, real estate and leasing sectors - the support system for the housing industry. And the tally in those areas alone is greater than the overall number of net lost positions in the B.C. economy.

For any newly unemployed journeyman or real estate agent who has been longing to become a waiter, that's great news.

For anyone else, it's a sign of an economy that is shedding high-paying, full-time work for low-wage, part-time employment.

With the American and European economy in full retreat, look for BC's service sector industry to take in on the chin this summer. Which means the job loss hit parade will continue throughout the spring/summer months.

And as we have said before, people who substitute low paying part time jobs for high paying full time ones... and people without jobs... well they simply can't pay mortgages or buy new condos.

The blueprint for fall and winter in BC Real Estate is being drawn now. And it doesn't look pretty.

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