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Area economy weathering fiscal meltdown |
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Written by MARK NIELSEN
Citizen staff
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Wednesday, 26 November 2008 |
Crisis? What crisis?
Any economic gloom and doom the city is supposed to be enduring has yet to hit home for the likes of Pine Centre Mall manager Rick Nelson and Northland auto group manager Brent Marshall.
The parking lot at Pine Centre was close to full last Saturday, said Nelson, who's expecting sales will be just a little shy of last year's by the time the Christmas shopping season has ended.
"Last year was a very good year and if we could even come close to last year, we'll be very happy," Nelson said.
The brisk activity comes as a surprise to Nelson only because of what he sees on TV and reads about, "which would tell me exactly the opposite. But in reality, and that's where I live, it's been very positive."
Marshall, who manages the Northland group of dealerships, said sales of Dodge vehicles was actually up 12 per cent in October over the same month last year. Both the Dodge and the Hyundai dealerships remain among the top sellers in B.C. for their respective brands, he added.
Matters have been helped, he said, by the fact that efforts to buoy sales in the struggling U.S. market are being adopted in Canada, even though the economy is stronger north of the border.
"If you buy a new pickup truck at the manufacturer's suggested retail price, they'll throw in a new (Dodge) Calibre," he said. "That's a brand-new four-door car worth $15,000. I've never seen that in my time in the business."
Asked about the fears of warrantees not being honoured if any of the big three North American automakers go under, Marshall said they may merge or change hands but will continue in some form.
"I own a Plymouth Prowler," he said. "Plymouth hasn't been around for eight years but when Plymouth was absorbed by Chrysler, I believe it was mandated they support that vehicle for 15 or 20 years."
In a presentation to Progress Prince George this week, Central 1 Credit Union chief economist Helmut Pastrick said the province will go through a period of slow growth for the next couple of years, but a full-blown recession -- in which the economy shrinks -- will be short-lived if it comes to pass at all.
That came as something of good news to Integris Credit Union's Riverpoint branch manager John Stevens. "We're just not going to be growing as fast as we were in the last two years," he said.
And like Nelson and Marshall, Stevens said the fallout from the looming tough economic times has not yet struck, noting the rate of delinquency on loans and mortgages is still very low while the unemployment rate is still down around seven per cent.
New-found economic diversification has helped immensely, in Stevens' opinion.
"We've moved away from being 80-per-cent reliant on forestry," he said.
RBC's regional vice-presidents Dale Freschi and Don Kehler, who are responsible respectively for personal and small business loans and commercial loans, had similar views.
"Prince George, to weather this storm, is in a way better position," Freschi said. "We're much more diversified."
Prince George Chamber of Commerce executive director Sherry Sethen said a survey of about a dozen retailers is indicating shoppers remain interested in more expensive products, particularly high-end electronics.
"They feel they're getting better value for their dollar," she said. "They're forgoing quantity for quality."
Along with the car starters, video-game consoles and plasma televisions, jewelry is still doing fine, Sethen said. "Even in furniture, they're seeing a lot of things move," she said.
UNBC business school professor Sungchul Choi said the Costco parking lot appeared to be full last weekend but predicted shoppers will become more price sensitive if the tough times become more apparent. Short-term price promotions -- like scratch-and-save campaigns -- will have to be replaced by longer-term reductions, he said.
Pastrick said he's anticipating a 20-per-cent decline in house prices from top to bottom for the province as a whole, but so far the average price in Prince George has done little more than level off if not continue to creep up.
However, the number of sales has been dropping and real estate in Prince George is turning into a buyer's market, said Northern B.C. Real Estate Board director Gary Shannon.
"Right now, we're seeing places go for as much as $10,000 and $15,000 below list price," said Shannon.
As of the end of September, homes in Prince George sold for $242,304 on average, up 1.2 per cent over the $239,392 they went for a year ago. But the number of houses sold by the third quarter of 2008 fell to 715 units from 866 the year before, a 7.1-per-cent drop.
"There still are a lot of houses out there that, for today's market, they're overpriced and they'll sit there for a long time," Shannon said. "For the ones that are priced well, we're getting some activity."
Good deals for investors are emerging, he added.
"Rental vacancy in Prince George is still low, the rents are high and when you can buy a house and turn around and get a positive cash flow on it, it starts to bring the investors back out again," said Shannon.
On the investment side, Commonwealth Financial president Dan McLaren said he's been pleasantly surprised by his clients' determination not to panic in the face of the precipitous decline in the stock market.
"We manage over $50 million in assets and we've not had one client cash out," he said, adding steps such as contacting clients and holding seminars have helped soothe nerves while maturity guarantees have given some the incentive not to bail too early.
It's at the point, in McLaren's view, where there are some good buys in the stock market including some banks who've escaped exposure to asset-backed commercial paper, but are being carried along for the ride nonetheless. Indeed, McLaren said four to six weeks of stronger bank stock performance will signal a resurgence on Wall Street and Bay Street.
"(The stock market) will come back first through the banks," he added. "When people who sold, typically at a loss, decide to put their finger back in the water, they will start with the banks. There's a proven dividend, they've got deep balance sheets. Even the worst-performing banks are not going to go bankrupt."
When a bear market turns into a bull market, 70 per cent of the growth typically occurs in the first 90 days, he added, although in this case it will probably take longer because the decline has been so huge.
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Last Updated ( Wednesday, 26 November 2008 )
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