April 2011 Canadian Economic Fundamentals

[Ally]

Returns without the bricks and mortar





Want to invest in real estate without the hassle of becoming a landlord?




Pretty much every advantage of buying property directly and renting it out can be achieved passively through REITS or funds invested in them.




In a popular blog this week at financialpost.com, fee-only financial planner Jason Heath wrote that real estate is a `secret` tax shelter because few advisors make money recommending its purchase. He focused on direct ownership of rental real estate and the tax deductibility of related expenses like interest.





Read the full article here.

 

[Ally]

Self-Employed mortgage financing requirements




Many self-employed applicants put off home ownership based on their financials, or lack thereof.




However, Mortgage Insurers and Lenders within Canada have made homeownership easier than ever with specific programs for today`s business owner.



Read the full article here.

 

[Ally]

West Coast oil line leads Canadian energy debate






CALGARY, Alberta (Reuters) - A battle over a C$5.5 billion ($5.7 billion) oil pipeline to the West Coast and oil sands tax policy have led a thorny debate over energy and the environment early in Canada's election campaign.





Canada has become the biggest energy exporter to the United States with its oil sands the main supply, prompting Conservative Prime Minister Stephen Harper to tout the country as an emerging energy superpower.





It's a been double-edged sword. The industry has helped Canada's economy withstand some of the worst effects of the recession. But the unconventional crude is the target of environmentalists at home and abroad concerned about high greenhouse gas emissions and the impact of development on the water and wilderness of northeastern Alberta.





The campaign leading up to the May 2 vote has shown deep divisions over energy policy. As usual, energy threatens a political rift between oil-producing Alberta, Harper's Conservative power base, and the rest of Canada.





Read the full article here.

 

[Ally]

IMF warns Canada of growing debt burden




The International Monetary Fund increased its 2011 growth forecast for Canada, but warned that inflationary pressures could build and once again pointed to housing and consumer debt as potential tripwires.




In its World Economic Outlook released Monday, the IMF said the Canadian economy will expand 2.8 per cent this year, an upgrade of 0.5 of a percentage point from its January forecast. That was the biggest upward revision in the report, and was attributed to higher investment by the country`s business sector and the recent surge in commodity prices that has benefited producing nations like Canada. For 2012, the IMF nudged the forecast down a tick, to 2.6 per cent.



Read the full article here.

 

[Ally]

Gas-price hike doubly painful




The long upward march in gas prices since late 2010, which has helped keep Canada`s resource-based economy chugging, is also costing Canadians the equivalent of 7% of their income tax bills in 2011, a CIBC World Markets report said Monday.




While flashbacks to the last price spike in the humid summer of 2008 suggest the short-term impact on the Canadian economy will be neutral, the big difference is if those elevated prices linger ` a real prospect if the current conflict in the Middle East spreads.




`It`s not just a spike but how long it lasts. I wouldn`t say the spike last time triggered the recession but it certainly wasn`t helpful,` Sal Guatieri, senior economist with BMO Economics, said Monday. `The big risk this time is if we see a sustained increase, that will do serious damage in both the United States and Canada.`





Read the full article here.

 

[Ally]

IMF boosts Canada's outlook




OTTAWA ` The International Monetary Fund boosted Monday its 2011 GDP outlook for Canada, citing business investment and higher commodity prices as the key drivers for what`s expected to be one of the best economies among industrialized countries.




And unlike the United States, the IMF said Canada`s policymakers have the country on the right fiscal track, with a `sound and credible` plan to return to budget balance by mid-decade.




Still, the Washington-based global organization, in its latest world economic outlook, warned risks to the Canadian economy are tilted to the downside, led by a strong currency, deterioration in real estate prices, and bloated household balance sheets. As a result, the Bank of Canada is well within its right to take a `wait-and-see` approach when it comes to increases in interest rates.





Read the full article here.

 

[Ally]

Is the Canadian housing market headed for a correction?





Watch BNN's interview with Don R. Campbell to find out.





Watch the full video here.

 

[Ally]

Economy better, but Bank of Canada stays with low interest rate policy




OTTAWA`The Bank of Canada has decided to give households at least another seven weeks of low interest rates while offering no clue as to when it might start its long-awaited tightening trend.




The decision Tuesday to keep the policy rate at one per cent came despite a mostly upbeat assessment of the Canadian economy from the central bank that predicts faster growth and a quicker return to full capacity.




The bank`s next scheduled date for an interest rate announcement comes May 31.





Read the full article here.

 

[Ally]

IMF boosts Canada's outlook




OTTAWA ` The International Monetary Fund boosted Monday its 2011 GDP outlook for Canada, citing business investment and higher commodity prices as the key drivers for what`s expected to be one of the best economies among industrialized countries.




And unlike the United States, the IMF said Canada`s policymakers have the country on the right fiscal track, with a `sound and credible` plan to return to budget balance by mid-decade.




Still, the Washington-based global organization, in its latest world economic outlook, warned risks to the Canadian economy are tilted to the downside, led by a strong currency, deterioration in real estate prices, and bloated household balance sheets. As a result, the Bank of Canada is well within its right to take a `wait-and-see` approach when it comes to increases in interest rates.





Read the full article here.

 

[Ally]

BoC holds rates steady: What the analysts say




On Tuesday the Bank of Canada once again held interest rates steady, keeping the policy rate at 1% while raising the country`s growth outlook in 2011 by half a percentage point. The central bank has not raised rates since September 2010.




Here`s what analysts are saying about the decision:






Avery Shenfeld, chief economist, CIBC World Markets




In March it noted that the economy was beating its growth forecast, and today it put the details on that, moving the timing for closing the output gap up two quarters to mid-2012. It dismissed both the downside surprise in core and the upcoming spike in headline inflation as temporary. But it didn`t sound like it was on the precipice of raising rates in May.




It retained the line that a reduction in monetary stimulus would have to be `carefully considered` rather than warn of a reduction in stimulus ahead. It also cited the C$ as a source of `even greater headwinds` on growth and inflation and sees inflation expectations as well anchored.





Read the full article here.

 

[Ally]

How oil prices could derail world's economy




LONDON ` Sky-high oil prices are beginning to dent oil demand growth, the International Energy Agency said on Tuesday, but added prices could ultimately moderate through a global economic slowdown.




Its view echoed a report from the International Monetary Fund on Monday which said that oil prices and inflation were the key risks for to the global recovery.





Read the full article here.

 

[Ally]

Cottage-hunters shocked by realtor's fine print




Last week, I wrote about the risks of signing an exclusive representation agreement with a real estate agent ` especially if you`re not consulted about the wording.




Julie`s story is a great example of what not to do. She and her husband, looking at cottage properties in the Muskoka area, had made appointments with several realtors.




`The agent pushed a form across the desk that said `buyer agreement` on it. She told us she could not take us to the first showing until we had signed this document,` Julie said.





Read the full article here.

 

[Ally]

Home prices to 'creep up' this year





House prices in Vancouver rose about 10 per cent in the last year ` approaching $1.1-million for a two-storey home ` nearly three times the national average, says a new report by real estate brokerage Royal LePage.




Despite the soaring values in Canada's most expensive housing market, prices nationally are expected to stabilize or only creep higher this year amid `tepid` improvements in employment, LePage said in a report Tuesday.



Read the full article here.

 

[Ally]

Don't be fooled by pause in rate hikes




Central bankers everywhere are busy weighing the potential impact of various shocks, currency swings and inflation spikes on their economies. And most have decided it would be prudent to wait a bit longer before ratcheting up interest rates and potentially undermining fragile recoveries.




None of the decisions comes as a surprise. Nor does the tone of the central bankers' comments, which signal that further monetary tightening lies ahead. That`s true whether we`re talking about high-growth markets in Asia, modestly expanding ones in North America or contracting economies in Britain and the battered peripheral countries of the euro zone. Austerity and a `return to normal,` whatever that means, have become the policy makers` watchwords everywhere.





Read the full article here.

 

[Ally]

High-flying loonie can't hold rate rise back





For now, the strong dollar is giving the Bank of Canada one more reason to keep interest rates on hold. But that cushion can`t last forever, the bank suggests in its latest quarterly forecast.




The central bank`s projections, released Wednesday, include an assumption that the loonie could trade above parity for years, and also reinforce the notion that interest rates will rise, even though that could boost the currency still higher.





Read the full article here.

 

[Ally]

Royal LePage, StatsCan: Canadian new home prices up in February





New home prices in Canada advanced 0.4 per cent in February from January, Statistics Canada said on Tuesday.




The gain exceeded market expectations of a 0.3 per cent climb following January`s 0.2 per cent rise. Prices were up in 11 metropolitan regions, down in four and flat in six.




Year on year, prices were 2.1 per cent higher, up from 1.9 percent in January.Statistics Canada has reported monthly increases from August 2010 through February, though a revision of its series of data now has October 2010 as having no change.




Read the full article here.

 

[Ally]

Home building rises more than forecast




OTTAWA ` Home construction rose more than expected in March, mainly due to an upswing in rural activity, Canada Mortgage and Housing Corp. said Friday.




The seasonally adjusted annual rate of housing starts was 188,800 units last month, up from 183,700 units in February.




`Housing starts moved higher in March mostly because of increases in rural starts,` said CMHC chief economist Bob Dugan. `Urban starts saw little change as the increase in Ontario`s multiples segment was off-set by a decrease in British Columbia`s multiples and a decrease in single housing starts in the Prairies.`




Rural starts were estimated at 25,300 units in March, up from 20,900 the previous month.





Read the full article here.

 

[Ally]

GDP growth in pictures




The International Monetary Fund boosted Monday its 2011 GDP outlook for Canada, citing business investment and higher commodity prices as the key drivers for what`s expected to be one of the best economies among industrialized countries.Here`s the outlook for all economies.





Read the full article here.

 

[Ally]

No rate hikes imminent, BoC signals




OTTAWA ­ The Bank of Canada kept its policy rate of 1% unchanged Tuesday and offered no clues as to when hikes might be in the offing.




In its latest decision, the central bank boosted its outlook for 2011 GDP growth by a half-percentage point and signalled economic slack shrank faster than anticipated. But that was offset by increased concern over the elevated Canadian dollar and the impact it might have on net exports, one of two key drivers of economic growth along with business investment.




`The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices,` it said in its statement explaining its decision to keep its benchmark rate unchanged for a fifth consecutive time.





Read the full article here.

 

[Ally]

Only recessions can deliver Obama's energy targets




Like many in the White House before him, President Barack Obama charted out a plan last week to reduce America`s dependence on foreign oil. And like his predecessors, his road map to cut U.S. oil imports by one-third over the next decade comes against the backdrop of sharply rising oil prices and supply disruptions from an increasingly volatile Middle East.





Read the full article here.