Blackberry to lay off 4,500 people
I have been asked by many concerned people in Waterloo Region, how the laying off of 4,500 people will impact the Real Estate sector in Kitchener Waterloo.
While this job loss is significant for any company and community, there is no certainty that all of these job losses will occur here in Waterloo Region. Blackberry (Formerly RIM) currently employs 12,000 people worldwide and with the recent takeover bid to turn the company private, this may temper this job loss, especially if Blackberry refocuses on their core business which is business clients.
Waterloo Region currently has a population in excess of Five Hundred Thousand people and a work force of about Two Hundred and Ninety Thousand people. Should all of these cuts occur here in Waterloo Region, then that has the ability to impact 1.5% of the work force.
Waterloo Region’s employment is much diversified with other tech companies, medical, insurance, education and construction so this will also help to temper the job losses.
Twenty years ago we had several companies such as Budd Automotive, MTD and Schneider’s closing plants with employment losses close to 4,000 people. This did not really impact the Residential Real Estate market during that period and I don’t believe that it will this time either.
In addition, the Real Estate market here is very good with the supply currently available at about 3.6 months worth of inventory (Nationally the supply is closer to 6 months). This then leads us to believe that there is room to add more inventories and to have a more balanced market.
The bigger risk to housing markets is not Blackberry but the Federal Government interference in the mortgage rules. With 5 changes in the past five years this makes it more difficult for people to qualify for a mortgage.
In addition to this is the pressure on the bond market largely caused because of the US market recovery. We are seeing bond rates rise and it is the bond market that provide much of the long term money for the mortgage business and subsequent real estate market. As rates become more expensive, people have to pay more or cut back what they can afford.
The one area that I see as a risk when it comes to Real Estate is in the commercial office sector. There is quite a bit of available excess office space now and if Blackberry puts their excess space on the market there will certainly be an oversupply.