There's something strange happening with the real estate market across much of Canada. It's hot!
I was quoted in the Globe and Mail in early March that during the 1990 recession, real estate sales came to a virtual stand still. It followed that the same would happen during a pandemic. I thought this was a reasonable projection. I was wrong.
Vancouver, Victoria, Toronto (and other markets, like cottage country) have continued to show strong sale numbers and prices during the worst of this pandemic. Consumer confidence, at least for those with money and/or secure employment, continues to drive this part of the economy.
Maybe I should quit while I'm ahead but I have a few theories. First, in 1990, the baby boomers, of which I am one, dominated the economy and pretty much every other aspect of the western world. We were the progenies of the war generation, the demographic that suffered serious deprivation for so many decades. We were taught that debt and hardship was real and not to be ignored. Thus, the recession hit - we stopped spending. This attitude towards debt and spending was compounded by the insanely high interest rates making money inaccessible to many, if not most. The prime rate charged by Canadian banks in 1990 was 10%.
Today, the generation that is in charge of the economy and every other aspect of our world, are the offspring of baby boomers. I'm inclined to say, with a smidgen of sarcasm, that their judgement in matters of the world is suspect.
Wealth disparity in 2020 is nothing at all like it was in 1990. Today, fewer families are wealthy but those that have the money, have a lot! Or to put it another way, a much larger segment of the population is in debt up to their wazoos and in financial terms at least, they are in desperate straits.
Finally, the young families that have some form of job security, continue to borrow like there's no tomorrow. I mean that literally. They are behaving as though there is "no tomorrow". Given the state of the world, they might be right. This group is a mystery to this baby boomer. But then, I'm pretty sure baby boomers were a mystery to the war generation. And so it goes.