BCBusiness

BCBUSINESS.CA jULY/AUGUST 2018 BCBusiness 33 S C E N A R I O N O . 1 The Homepocalypse the upshot: In the aftermath of a worldwide trade war or another macro- economic shock, financial markets dive– and Vancouver's bloated property prices drop 50 percent or more Who's CaLLing it: marc Cohodes, the ex–Wall Street trader who recently (and successfully) shorted Canadian lender Home Capital Group, has pre- dicted a 50- to 80-percent correction; the dinner party guest who has a lot to say about this and that proBaBiLit Y: Long odds against I n the months following the Great Housing Crash of 2019, Vancouver looks much the same as it had before. Homeless men and women, faces pulled hard by abuse, sit on Hastings Street selling pilfered wares. The Paci•c Ocean laps against the Stanley Park seawall, which, during a weekday morning, is crowded. A dust-covered, late model Bentley Fly- ing Spur (retail price: $325,490) is parked on the north side of Alberni Street. But the driver's-side windows are smashed, and the street itself, once busy servicing those who know how to pronounce "Hermès," is deserted. From a vantage point on False Creek's southern shore, a short drive from Chip Wilson's abandoned, gra"ti-scarred home, tourists squint at Yaletown's sun-soaked green glass towers, still standing proud among a forest of silent construction cranes— testament to the forces that once shaped this city so profoundly and are shaping it yet again. Vancouver's ascension to global pig—ybank and supercar parking lot had been spectacular. How- ever, its fall was, as Mayor Eveline Xia put it, "a colossal shit show." This is Vancouver, post-Homepocalypse. Or, rather, one amped-up version. It's a future for which many are hoping. Mag- azine articles with titles like "Praying for a Real Estate Crash" or "Bring on the Real Estate Crash" have reŸected and stoked this sentiment, and not without cause. Prices for some new units in the downtown core exceed $3,000 per square foot, putting the city in league with New York and San Francisco. But we've been on the verge of "pop" for almost a decade. Could a major property crash be just around the corner? Elisabeth Gugl, an associate professor of economics at UVic, cites the robust provincial economy as a bulwark. "The fundamentals are strong," Gugl says, "and so any correction is not going to have such an impact." An across-the-board price drop of 70 to 80 percent isn't in the cards, reckons UBC economist Tom Davido©. "I think 80 percent would be exceedingly unlikely," says the associate professor at the Sauder School of Busi- ness, whose research interests include housing. If a massive correction did occur, it would be con•ned to the highest-priced homes, where values aren't supported by local incomes, Davido© adds. In online forums and casual conversation, though, there's a growing, palpable longing for some sort of reversal. But even for those who are heavily invested in schadenfreude, if not property, "be careful what you wish for" applies. The ªirst and hardest-hit industries would involve real estate. In 2016, construction accounted for about 215,000 jobs throughout the province, according to the British Columbia Con- struction Association. But ancillary industries would face major di"culties, too. From realtors and mortgage brokers to lawyers and notaries, the pain would be felt deeply and widely. We've seen this before, south of the border. "The sub- prime crisis in the U.S. was really rough on a lot of people, especially people working in the trades," Davido© says. Unemployment would rise across the board, Retirees who had been banking on equity gains to finance their non-working years would have to rethink that strategy, especially if they'd used their homes as a cash machine to fund everything from roof repairs to trips to Cabo

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