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Recession after this Pandemic?

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  • Apr 6th, 2020 4:55 am
[OP]
Member
Mar 26, 2013
347 posts
18 upvotes
Toronto

Recession after this Pandemic?

There are rumours that Canada may go into a recession after this pandemic? And possibly the housing market being cheaper in Southern Ontario. Opinions?
32 replies
Deal Addict
Apr 21, 2014
2191 posts
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Alberta
lovetolearn wrote: There are rumours that Canada may go into a recession after this pandemic? And possibly the housing market being cheaper in Southern Ontario. Opinions?
Recession is possible depending on how long this goes on . Definition of a recession is 2 consecutive quarters of negative GDP growth. Housing market crash ? Doubt it. Interest rates are being held low.
Deal Addict
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Dec 12, 2006
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Messed Up Area
With the debt relief being so called offered by banks I see good chance, why?

-Smaller businesses even with government bailouts will not survive. Commercial real estate will become vivid.
-People will become more obsorbed into savings ( current investment market ) and not shop.
-the number of Canadians living paycheck to paycheck will only be short lived with debt relief as they will spend the $ not on debt when normal operations resume.
-Tourism businesses will be hit hard and unable to temporary operate and shut down.
-Mostly everything in world is based off USD and they are going to be hit hard so will affect our end pretty hard.
-Many bought houses well above there means, and if lowered hours after this will be unable to afford there houses, many have already complained making over 100k and being sent to EI which pays max 54k for year, as no one will be guareenteed there full hours as it will be a slow start to economy recovery. GTA will see many houses hit market and owners taking a huge lose.


Too many Canadians where already in debt before this, short lived EI max of 9-10 months then what are people going to live off of( The EI system will be drained and new requirements needed in future of increased EI taken off patchecks ).
Last edited by theguyz on Mar 24th, 2020 5:53 am, edited 1 time in total.
Deal Addict
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Mar 23, 2011
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I think it's almost a guarantee. There will be jobs lost that may never return. It will take some businesses a while to recover and people will have less money to spend as a result of being laid off.
Even if this passes in a month (doubtful) this will have lingering effects for years.
Alex
Newbie
Nov 24, 2019
41 posts
27 upvotes
theguyz wrote: With the debt relief being so called offered by banks I see good chance, why?

-Smaller businesses even with government bailouts will not survive. Commercial real estate will become vivid.
-People will become more obsorbed into savings ( current investment market ) and not shop.
-the number of Canadians living paycheck to paycheck will only be short lived with debt relief as they will spend the $ not on debt when normal operations resume.
-Tourism businesses will be hit hard and unable to temporary operate and shut down.
-Mostly everything in world is based off USD and they are going to be hit hard so will affect our end pretty hard.
-Many bought houses well above there means, and if lowered hours after this will be unable to afford there houses, many have already complained making over 100k and being sent to EI which pays max 54k for year, as no one will be guareenteed there full hours as it will be a slow start to economy recovery. GTA will see many houses hit market and owners taking a huge lose.


Too many Canadians where already in debt before this, short lived EI max of 9-10 months then what are people going to live off of( The EI system will be drained and new requirements needed in future of increased EI taken off patchecks ).
EI pays 55% or max $571 a week so its more like 25k a year.
Deal Expert
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Apr 21, 2004
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abc123yyz wrote: Recession is possible depending on how long this goes on . Definition of a recession is 2 consecutive quarters of negative GDP growth. Housing market crash ? Doubt it. Interest rates are being held low.
We are probably going to be in a recession, hopefully a mild one, once we see a good handle on the CV19 cases.
Deal Addict
Oct 6, 2015
2463 posts
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Real estate will be the biggest loser. The markets in Toronto/Vancouver have been supported by legions of people taking out as big of loans as possible, to buy multiple housing units. With the cashflows from those housing units gone, and the liquidations that will result from such, those people are all bankrupt. There will almost certainly be a foreclosure moratorium on principal residences for a considerable period to allow the economy to adjust, but far less sympathy will be had for the "investor" types.

Toronto/Vancouver real estate will revert to 2-3X income, if not go lower.

Unfortunately that's going to cause a world of hurt to the retirement plans, and even labour mobility. As people will be stuck in significant negative equity in many cases.

So yes, a prolonged recession is implied.
Deal Guru
May 29, 2006
10050 posts
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Kiraly wrote: I'm not so sure. 100 years ago we had WWI followed by the Spanish flu pandemic, and what happened after that? The roaring 20s; a decade of unprecedented economic activity and prosperity.
I hear ya, but the world is very different now. debt levels are crazy, taxes are crazy, our grandparents and parents had far better take home pay compared to costs then we do today

plus government has grown too large
Deal Addict
Aug 16, 2008
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Markham
abc123yyz wrote: Recession is possible depending on how long this goes on . Definition of a recession is 2 consecutive quarters of negative GDP growth. Housing market crash ? Doubt it. Interest rates are being held low.
I think this highly depends on the demographic/distribution of home owners. The subset of homeowners who are highly leveraged may have trouble staving off defaulting on their loans, especially if covid keeps them unemployed. They collapse, the market collapses, along with housing prices. I'm almost done paying off my loan, and this whole situation still has me super nervous - debt or no debt, I also get taken down along with everyone else.

I've heard many are interested in capitalizing at this time with the lower interest rates. Those rates are set to keep the market afloat. It boggles my mind the amount of risk people are willing to take. Whether you're a pleb employee or a business owner, salaries and revenue are way down with not a clear timeline for when things will get better.
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Oct 6, 2015
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unowned wrote: I think this highly depends on the demographic/distribution of home owners. The subset of homeowners who are highly leveraged may have trouble staving off defaulting on their loans, especially if covid keeps them unemployed.
Which unfortunately describes most buyers of the past 2 decades.

They collapse, the market collapses, along with housing prices. I'm almost done paying off my loan, and this whole situation still has me super nervous - debt or no debt, I also get taken down along with everyone else.
You won't lose your house, but your house, while not worthless, will be "worth less".
I've heard many are interested in capitalizing at this time with the lower interest rates. Those rates are set to keep the market afloat. It boggles my mind the amount of risk people are willing to take. Whether you're a pleb employee or a business owner, salaries and revenue are way down with not a clear timeline for when things will get better.
I wouldn't expect "interest rates" to remain low once lenders figure out that a lot of the loans don't have much, if any collateral backing them.
Deal Expert
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Aug 18, 2005
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Burlington-Hamilton
We were already in a global debt bubble. The recession was already coming, and the virus is just the trigger.
What if there were no hypothetical questions?
Sr. Member
Sep 28, 2013
640 posts
333 upvotes
A recession is defined by 2 consecutive quarters of negative GDP growth. Oil prices alone would've pushed Canada into recession - you can pretty much guarantee it now that Corona is involved. The impact on housing remains to be seen; prime rates have come down significantly and the government has loosened regulations so that's counterbalanced against a declining macro backdrop. Recall that through 2008-2009, there wasn't much in terms of a pullback, if at all. Prices are a lot higher now, but a recession shouldn't be as protracted. Toronto home prices are generally for high income earners who are more insulated from layoffs, Calgary housing is likely to get destroyed. Let's see how it all plays out.
Deal Addict
Oct 6, 2015
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angrybanker wrote: A recession is defined by 2 consecutive quarters of negative GDP growth. Oil prices alone would've pushed Canada into recession - you can pretty much guarantee it now that Corona is involved. The impact on housing remains to be seen; prime rates have come down significantly and the government has loosened regulations so that's counterbalanced against a declining macro backdrop. Recall that through 2008-2009, there wasn't much in terms of a pullback, if at all. Prices are a lot higher now, but a recession shouldn't be as protracted. Toronto home prices are generally for high income earners who are more insulated from layoffs, Calgary housing is likely to get destroyed. Let's see how it all plays out.
No, its the high income earners that will be decimated in Toronto. Especially in the financial sector. The banks are going to be ruthlessly looking for cost cuts. And its not like banking really requires a lot of high-end skills that are hard to find.

They were able to reflate in 2008/2009 by dropping interest rates to zero. But how would they do that now? Drop them to -5%? Why would anyone lend at -5%?

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