Vancouver's population growth was fairly robust until 1998 when growth plummeted and has never fully recovered to the above 2% rate witnessed for much of the city's recent history.
In light of accurate statistics to the contrary, why are so many locals convinced that our population growth is high? Could it be because so many new homes are being built? Why are the homes being built if population growth is so low?
This raises the important question dealing with the possibility of an oversupply of new homes. Is there an oversupply? Based on the CMHC numbers in the previous post, I believe that builders are currently overbuilding and the consequences will be severe. Severe, meaning a massive amount of construction industry layoffs and possibly widespread developer bankruptcies.
Just how high could our unemployment rate get if there were massive construction industry layoffs? Quite obviously, very high, as in double digits high. Construction / Real Estate employment as a percentage of Vancouver labour force was 7% in 2001 and it now stands at 11%. If we just lost the increase in percentage the local unemployment rate would increase from around 4.5% to 8.5%.
How prepared are individuals for the prospect of increasing unemployment and job loss? Not very prepared. BC has a negative savings rate, which means the residents of BC spend more than they earn and have done so for many years now and do not even consider sustained job loss as a remote possibility as we have not had double digit unemployment rates for quite some time.
I don't really like being negative on the prospects of our region's economic future but I see very few bright spots and many risks for the future. The construction / real estate business is in a bubble, the manufacturing, film and tourism businesses are being negatively impacted by the currency, the forestry sector is in for a long downturn and now mining companies are walking away from projects for cost reasons.
It is my hope that people would use our current boom time to cushion themselves for the financial impacts that will be coming. Save, don't spend. Plan, don't consume. Pay off debt and build a cushion. Good luck.