December 2011 Canadian Economic Fundamentals

[Ally]

Brookfield acquires Prudential Real Estate





Brookfield has expanded its reach into the United States, as well as emerging markets like China, Brazil and India, with its purchase Tuesday of Prudential Real Estate and Relocation Services.




The deal, worth about $110 million, means Brookfield will now have some 80,000 agents in 10 Canadian provinces, 50 U.S. states and a number of other countries once Prudential joins its existing stable of brokerages.





Read the full article here.

 

[Ally]

Canadian home prices, sales better than expected in 2011




This year is turning out to be record-setting for Canada`s seemingly unstoppable housing market, despite all the economic gloom in the rest of the world.




And things aren`t expected to let up much in 2012, according to a report released Tuesday by Re/Max.




The average house in the GTA now costs $465,000, some 7 per cent more than last year. And prices are expected to climb a further 5 per cent to $488,000 by the end of 2012, Re/Max says.





Read the full article here.

 

[Ally]

Pot-smoking tenant may be hard to evict




Several readers have asked whether you can evict a tenant who is smoking marijuana for medicinal purposes, or if you can refuse to rent to someone who tells you that they have a license to grow marijuana for medicinal purposes.




A few B.C. court cases in B.C. shed some light on the issue. The short answer is that it depends. Bill Spelcham owned a condo which he rented to Ryan Buchanan who had a license to grow marijuana for medicinal purposes. Spelcham visited the condo and noticed mould and mildew because of the high moisture in the unit. He evicted Buchanan in 2007, arguing that the marijuana growing damaged his unit, endangered the other tenants and placed him at significant risk.





Read the full article here.

 

[Ally]

Resource rich provinces to lead economic growth: RBC




Resources will continue to drive the economies of Saskatchewan, Alberta and Newfoundland and Labrador forward next year, leading Canadian economic growth.




That's according to the latest provincial forecast from the Royal Bank of Canada.




In a report released early Monday, Canada's largest bank said `the biggest differentiating factor` for provincial growth in 2012 will continue to be a dynamic natural resource sector.





Read the full article here.

 

[Ally]

Is that new condo a good investment?



Buying pre-construction real estate is really a leap of faith. As much as five years could pass from the time you sign the offer until you get the keys to your unit. Many `moving parts` could affect how long it takes, and how profitable your investment will be. The following are some examples.





The State of the Economy Today and in the Future





If you buy a pre-construction condo today as an investment with the hope that the future value will be much higher, you`re banking on the assumption that the economy will be healthy and keep growing. How can you forecast economic fundamentals in the future? While it might seem like an arduous task, using the REal Experts Property Analyzer will guide you and empower you to make the right decision.





Read the full article here.

 

[Ally]

Making life with the in-laws bearable




Kevin Barnes paid about $280,000 for a newly built home in Orlando this summer, when median prices for existing single-family homes in the area were just $128,000. Yet the 42-year-old chemical salesman thinks he got a good deal. Built by KB Home (KBH), the 2,565-square-foot ranch-style house has a second master suite to accommodate Barnes`s mother-in-law, who lives with the family. `She`s a free baby sitter,` he says. `Day care costs about $200 a week.`




A new kind of home is being marketed to multigenerational households, a category that increased by 30 percent from 2000 to 2010, according to the U.S. Census Bureau. KB Home, Lennar (LEN), and Pulte Group (PHM) are among builders that offer models with second master bedrooms, kitchenettes, and separate entrances. Those features may help lure buyers at a time when new residences are selling at a record slow pace. The number of new single-family homes sold sank to 323,000 last year, the fewest since the Commerce Dept. began tracking data in 1963 and down from a peak of 1.28 million in 2005. `This is a niche area that appears to be solid and growing,` says Stephen Melman, director of economic services at the Washington-based National Association of Home Builders. `It`s a demographic thing.`





Read the full article here.

 

[Ally]

The real threat facing Spanish lenders



While Europe`s sovereign debt crisis grabs all the headlines, distressed real estate may pose a bigger threat to the Spanish banking system. The country`s lenders hold about Â30 billion ($41 billion) of unfinished homes and land that`s `unsellable,` according to Pablo Cantos, managing partner of MaC Group in Madrid. MaC Group is a risk adviser to several leading Spanish banks. `I`m really worried about the small and medium-size banks whose business is 100 percent in Spain and based on real estate growth,` says Cantos. He adds that only bigger, more diversified lenders such as Banco Santander (STD), Banco Bilbao Vizcaya Argentaria (BBVA), La Caixa, and Bankia are strong enough to survive their real estate losses: `I foresee Spain will be left with just four large banks.`





Spain`s central bank tightened rules last year to force lenders to set aside more reserves against property seized in exchange for unpaid debts and is pressing them to sell assets rather than wait for the market to recover from its four-year decline. Yet unloading the real estate may be difficult or impossible. Bank-owned land `in the middle of nowhere` and unfinished residential units will take as long as 40 years to sell, Cantos predicts. Fernando RodrÃguez de AcuÃa MartÃnez, a consultant at Madrid-based adviser RR de AcuÃa & Asociados, has a more dire view. About 43 percent of unsold new homes are in exurbs far from city centers, he says, and `if you take into account population growth for these areas, there`s no demand for them. Not now or in 10 years.`





Read the full article here.

 

[Ally]

Net worth sinks at fastest pace since depth of recession





As the song goes, another day older and deeper in debt.



The credit burden of Canadian consumers rose in the third quarter as they took on more debt with little change in what they were bringing in, and household net worth slipped. This is not a good sign amid rising unemployment and forecasts that expect economic growth to slow.




The ratio of debt to personal disposable income, the key measure of where a consumer stands, climbed in the third quarter of the year to a record 152.98 per cent from 150.57 in the previous quarter, Statistics Canada said today.





Read the full article here.

 

[Ally]

Mortgage rates are poised to rise




Mortgage rates could be drifting up again soon, even if the Bank of Canada is standing pat for now, experts say.




Already over the last few months, variable-rate mortgages have started to climb, erasing much of the advantage they had over traditional fixed-rate mortgages, says Kerri-Lynn McAllister, community manager at RateHub.ca. McAllister says we can expect more of the same.




`A few months ago, there was basically a one per cent spread between fixed and variable. Now it`s .2 or .3,` said McAllister. `I don`t think they`re done. We`re still seeing banks increase their premiums.`




Part of the reason for the hike, says McAllister, is that with mortgage rates as low as they`ve been, banks have a harder time making money.





Read the full article here.

 

[Ally]

Rise of the non-OPEC brigade




Another report, another prediction of the imminent revival of North America as a major oil producer.




A new International Energy Agency report echoes earlier studies from OPEC and other market observers of the transformational impact of oil sands and shale oil on North American production, which should see a major boost by 2016.




Here are the key themes you need to know from the report:






RISE OF THE NON-OPEC BRIGADE

While OPEC member countries will continue to ramp up production, hot on their heels is the brigade of non-OPEC producers also raising their output.







Read the full article here.

 

[Ally]

The new Canada-U.S. love-in, built on Iranian nukes and Alberta oil




WASHINGTON ` At a dinner event hosted at the Canadian embassy in Washington last week, former U.S. national security advisor Robert `Bud` McFarlane was asked to explain why America has no `energy policy.`




In response, he paraphrased an answer that Gary Hart once had given to that very question: `Oh, you`re wrong about that. We do have an energy policy. We limit ourselves to one fuel. We buy it from a cartel. And every five years, we go to war to maintain that privilege. That`s the policy.`




The fuel, of course, is oil. The cartel is OPEC. And the last war, in Iraq, has cost the United States close to a trillion dollars. That`s a hard number to swallow in a country where the national debt has become a source of shame and political paralysis. It isn`t just peaceniks who are fretting about `war for oil` these days. It`s also hawks like McFarlane and former CIA director James Woolsey, who appeared alongside McFarlane at Thursday night`s panel.





Read the full article here.

 

[Ally]

Hang on! 2012 looks like an even wilder ride than 2011




LONDON ` The ancient Mayans attached special significance to 2012, possibly the end of time. That has spawned a rush of apocalyptic literature for the holiday season.




But you don`t have to believe the world is about to end to realise that next year contains perhaps the widest range of political risks to the global economy in recent history.




With elections and leadership changes in the most powerful countries, Europe in crisis, ferment in the Middle East and worsening economic hardship driving unrest and discontent everywhere, 2012 could be just as volatile as 2011 if not worse.





Read the full article here.

 

[Ally]

Canadian house resale prices climb higher




Canada`s housing market is still chugging along steadily as sales activity nudged higher and prices continued to climb in November, data from the Canadian Real Estate Association said Thursday.




Sales activity rose a seasonally adjusted 0.5% in November, compared with the month before, as about 35,000 houses changed hands.




The national average price increased 4.6%, but that is the smallest increase since January.





Read the full article here.

 

[Ally]

Kyoto accord was never about the environment






Finally, something positive happened at a United Nations climate summit on the Kyoto Protocol.




Canada walked away. We officially withdrew from the Kyoto madness.




The Kyoto Protocol, signed in 1997 under the auspices of the United Nations, was the first international agreement to set binding targets for countries to reduce greenhouse gas emissions by 5.2 per cent relative to 1990 levels by 2012.




At the recent meeting in South Africa, more than 190 countries all but conceded Kyoto's ultimate defeat by extending the 2012 deadline to 2017.






Read the full article here.

 

[Ally]

Housing prices cool though sales still brisk




Driven by hot markets in some unlikely places, housing prices are still rising in Canada, but not by nearly as much as earlier in the year, new data show.




The average price nationally for a resale home in November was $360,400, the Canadian Real Estate Association said Thursday, up 4.6 per cent from November 2010 but unchanged from October.




That's the lowest price rise this year. From February through July, CREA's monthly reports showed housing prices rising more than eight per cent over 2010.


.promosidebar {
PADDING-BOTTOM: 0px; MARGIN: 0px 20px 0px 0px; PADDING-LEFT: 0px; WIDTH: 140px; PADDING-RIGHT: 0px; DISPLAY: block; FLOAT: left; PADDING-TOP: 0px
}
.promosidebar .promo {
BORDER-BOTTOM: #c4c4c4 1px solid; BORDER-LEFT: 0px; PADDING-BOTTOM: 3px; MARGIN: 0px 0px 10px; PADDING-LEFT: 0px; WIDTH: 140px; PADDING-RIGHT: 0px; DISPLAY: block; FONT-FAMILY: arial, sans-serif; FLOAT: left; FONT-SIZE: 11px; BORDER-TOP: 0px; BORDER-RIGHT: 0px; PADDING-TOP: 0px
}
.promosidebar .promo H3 {
LINE-HEIGHT: 14px; MARGIN: 0px 0px 4px; FONT-FAMILY: arial, sans-serif; COLOR: #fff; FONT-SIZE: 11px
}
.promosidebar .promo A {
COLOR: #115278; TEXT-DECORATION: none
}
.promosidebar .promo H3 .flag {
BORDER-BOTTOM: #000 0px solid; BORDER-LEFT: #000 0px solid; PADDING-BOTTOM: 0px; TEXT-TRANSFORM: uppercase; PADDING-LEFT: 0px; WIDTH: 95%; PADDING-RIGHT: 0px; DISPLAY: block; FONT-FAMILY: arial, sans-serif; MARGIN-BOTTOM: 5px; FLOAT: left; CLEAR: both; FONT-SIZE: 11px; BORDER-TOP: #000 0px solid; FONT-WEIGHT: bold; BORDER-RIGHT: #000 0px solid; PADDING-TOP: 2px
}
.promosidebar .promo H3 .flag {
COLOR: #115278
}
.promosidebar .promo H3 A .flag {
COLOR: #115278
}
.promosidebar .promo H3 STRONG.headline {
PADDING-BOTTOM: 4px; PADDING-LEFT: 0px; PADDING-RIGHT: 0px; DISPLAY: block; FONT-FAMILY: arial, sans-serif; FLOAT: left; CLEAR: both; FONT-SIZE: 11px; FONT-WEIGHT: normal; PADDING-TOP: 2px
}
.promosidebar .promo H3 .synopsis {
DISPLAY: none; VISIBILITY: hidden
}




The hottest provincial market in November was Newfoundland and Labrador, where prices were up 12 per cent from the same month in 2010. At the back of the pack was Prince Edward Island, where the average resale home price dropped 11.1 per cent.





Read the full article here.

 

[Ally]

TD slahes economic forecasts




TD Bank is dramatically downgrading its expectations for the Canadian and global economies.




The bank's new forecast for Canada is that growth will be limited to 1.7 per cent next year as global activity slows to 2.5 per cent.




Both estimates represent a more modest outlook than is predicted by the Bank of Canada as well as the economists consensus used by the federal government in its fall economic update.





Read the full article here.

 

[Ally]

Canadian economy's trouble spots smoothing out





OTTAWA - Canadian industries are operating at a production capacity that is approaching pre-recession levels and the housing market remains strong, according to data on Thursday that offered the prospect of steady, if slower, economic growth.







Industries operated at 81.3 percent of capacity in the third quarter, rising sharply from 79.9 percent in the previous quarter as automakers rebounded from supply disruptions resulting from Japan's earthquake and tsunami.







The performance was above the 79.5 percent market forecast. It was also the highest rate since the third quarter of 2007 but still below the 83.4 percent peak seen earlier that year.




Read the full article here.

 

[Ally]

Variable rate mortgage disounts disappearing




The days of getting any sort of discount on a variable rate mortgage are over ` again.




Those mortgages, tied to prime, have become a mainstay of the housing market. And, why not? While prime has stood at 3% at most major financial institutions, the discount has meant a rate as low as 2.1% at times this year.




However, in the last 10 days what was left of that discount ` it had already been shrinking for weeks ` has disappeared at all of the major banks.







You have to head back to the credit crisis of 2008 to find a similar period where the discount disappeared. At the time, consumers were paying a 100 basis point premium above prime for the privilege of a floating rate.




The new reality is expected to reshape the mortgage market in the coming months, reversing a strong trend that had seen consumers roll the dice on interest rates, confident in the belief they were not going up.




The days of getting any sort of discount on a variable rate mortgage are over ` again.



Rea the full article here.

 

[Ally]

CRA closes tax loophole with win over billionaire's companies




A Supreme Court of Canada ruling in a complex case involving companies controlled by billionaire Li Ka-Shing and his son Victor Li gives the government new legal tools to challenge corporate transactions crafted to avoid taxes.




The case, Copthorne Holdings Ltd. v. Canada, centred on the application of a key provision for the Income Tax Act, known as the General Anti-Avoidance Rule or GAAR.





Read the full article here.

 

[Ally]

U.S. Senate approves pipeline, tax deal





WASHINGTON ` The U.S. Senate passed a $1-trillion spending bill and a two-month payroll tax cut holiday extension Saturday, setting up fresh congressional gridlock for the 2012 election year.




The compromise tax measure further dented President Barack Obama`s authority by forcing him to revisit the contentious $7-billion Keystone XL pipeline plan to ship Canadian oilsands crude to the U.S. Gulf Coast.




Read the full article here.