December 2012 Canadian Economic Fundamentals

[Ally]

For new Canadians, the West is best




Nowhere are job prospects for immigrants brighter than in the Prairies, while newcomers in Quebec continue to have the worst labour market outcomes in the country.




A recent paper by Statistics Canada shows Alberta had the country`s lowest immigrant jobless rate last year -- and established immigrants (those who have been in Canada for over a decade) had even higher rates of employment than Canadian-born workers.



Read the full article here.

 

[Ally]

Always get real estate details in writing




There is a reason why real estate deals have to be in writing. Things said, but not written down, are open to interpretation and misunderstanding later as a decade old case in Brampton illustrates.




In this instance, the discussions meant the end of a real estate contract and eight years of court battles.




In August 2000, Tony Rizzuto put in an offer on a 32-acre farm in Brampton. He offered the owners, Jennifer Footman and her husband, $1.7 million based on a price of $52,000 per acre. The Footmans rejected the offer, signing it back for $65,000 per acre for a total price of 2.1 million, plus the right to remain living there rent-free for three years after closing.




Rizzuto was satisfied with the price, but didn`t





Read the full article here.

 

[Ally]

Condo buyers breaking contracts as prices fall




As the country`s housing market weakens, one consequence could be a spike in condo lawsuits. When prices fall, pre-sale buyers are tempted to look for ways to get out of their deals`and that`s exactly what`s happening in British Columbia.




The province`s home prices have slid from their lofty peaks, and the courts have been sympathetic to pre-sale buyers, in part due to a strong piece of consumer-protection legislation known as the Real Estate Development Marketing Act (REDMA). The law, passed in 2004, sets out extensive disclosure requirements for developers and allows buyers to reclaim their deposits if the builder hasn`t met all of the terms. In one case decided this year, five buyers were allowed to rescind contracts even after taking ownership of their units.





Read the full article here.

 

[Ally]

Exposed Canadian economy to see economic slowdown in 2013: CIBC




TORONTO, Dec. 19, 2012 /CNW/ - Without key domestic economic drivers to shelter Canada from a continued weak global economy, GDP growth will slip to a very mediocre 1.7 per cent in 2013, finds CIBC's latest Canadian economic forecast.




"Having earlier tapped fiscal stimulus and a housing boom to shelter the economy from sluggishness abroad, the country's ability to set its own course is now much more limited," says Avery Shenfeld, chief economist at CIBC. "Escaping economic mediocrity will depend on the kindness of strangers, with exports and related capital spending critical to Canada's fate in 2013-14."





Read the full article here.

 

[Ally]

Fewer Canadians tardy with their mortgage payments



Federal officials say fewer Canadians are falling behind in their mortgage payments. Canada Mortgage and Housing Corp. says it has found a downward trend in the number of Canadian residential mortgage payments that are overdue by three months or more. It says the rate of mortgages in arrears dropped to 0.36 per cent in the first half of 2012.





Read the full article here.

 

[Ally]

Canada's hottest real estate markets cooling





The price of houses dropped by 1% in Canada, and 12% fewer homes were sold in November this year, than last. According to the Canadian Real Estate Association, sales were down in most markets, and large Canadian cities, except Calgary, Alberta, where there was a 10% increase in sales.







Major declines in the two hottest markets accounted for most of the overall decrease. Sales were down 27% in Vancouver, and 18% in Toronto. Gregory Klump, Chief Economist with CREA, said, `Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that changes to mortgage regulations are responsible for having cooled activity.`








Read the full article here.

 

[Ally]

Canada to depend on the kindness of strangers




The Canadian economy will be held back by belt-tightening governments and tapped out consumers and will have to rely on its export sector and capital spending to support "mediocre" economic growth next year, according to CIBC economists.




As such, CIBC has lowered its 2013 GDP forecast to 1.7 percent from it previous call of 2.0 percent.




"Household debt burdens are keeping consumption bounded by the moderate growth pace for real incomes," CIBC Chief Economist Avery Shenfeld said in a note to clients on Wednesday. "Escaping economic mediocrity will depend on the kindness of strangers, with exports and related capital spending critical to Canada`s fate in 2013-14."





Read the full article here.

 

[Ally]

Canada's economy to pick up speed, but headwinds remain




The Canadian economy is expected to pick up speed ` a little ` by the middle of next year, though external risks still `loom large,` a new forecast said Wednesday.




The country`s gross domestic product will grow 1.8 per cent next year and accelerate to 2.25 per cent in 2014, the International Monetary Fund said in its preliminary assessment of the Canadian economy. That`s down slightly from its October forecast of 2 per cent growth for next year.



Read the full article here.

 

[Ally]

Why Canada's productivity has been underestimated for decades




Canadian business productivity has been systematically underestimated for decades, according to provocative new research.




Years of hand-wringing that the Canadian economy is less productive than the United States` and other leading countries` economies may be misplaced as a radically different picture of the business landscape emerges.



Read the full article here.

 

[Ally]

National home prices cool in November




National home prices slid 0.37 per cent lower from October to November, but remain 3.29 per cent higher than a year ago, according to an index compiled by Teranet and National Bank.




`For the first time since February 2009, when the recession was in full swing, prices were down from the month before in 10 of the 11 metropolitan markets surveyed,` Marc Pinsonneault, the National Bank economist who works on the index, stated in a release.




A slump in sales is weighing on home prices, which had been on a tear in recent years. On Monday the Canadian Real Estate Association reported that sales over the Multiple Listing Service fell 1.7 per cent from October to November, and were down 11.9 per cent from last November. The continuing slump in activity prompted the association to cut its sales forecasts for both this year and next.



Read the full article here.

 

[Ally]

Always get real estate details in writing




There is a reason why real estate deals have to be in writing. Things said, but not written down, are open to interpretation and misunderstanding later as a decade old case in Brampton illustrates.




In this instance, the discussions meant the end of a real estate contract and eight years of court battles.




In August 2000, Tony Rizzuto put in an offer on a 32-acre farm in Brampton. He offered the owners, Jennifer Footman and her husband, $1.7 million based on a price of $52,000 per acre. The Footmans rejected the offer, signing it back for $65,000 per acre for a total price of 2.1 million, plus the right to remain living there rent-free for three years after closing.





Read the full article here.

 

[Ally]

Post-recession job growth: A tale of two countries




There has been much discussion about the different pace of recovery between Canada and the United States after the recent recession. The U.S. has witnessed weak economic growth and a stagnant labour market while the Canadian economy has performed much better.




Canada`s relatively strong performance during this recovery, at least as measured by employment growth, differs from previous recessions. At the state and provincial level the divergence has been even more pronounced.





Read the full article here.

 

[Ally]

IMF tells Canada to be wary of interest rate raise




OTTAWA The International Monetary Fund is telling the Bank of Canada to hold off on interest rate hikes until the economy improves, and not to discount the need for cutting should a shock occur.




The IMF`s latest report on Canada, issued Wednesday, paints a picture of an economy that is doing reasonably well in the face of global headwinds, but also one that is vulnerable to external shocks.




It notes the recovery`s cruising speed has slowed this year and will likely underperform next year to slightly below two per cent.





Read the full article here.

 

[Ally]

Canada among most desirable destinations by both local and foreign real estate investors



As the global economy is plowing through challenges and uncertainties still lingering from the last recession, Canadian commercial real estate investors are optimistic about market conditions, yet somewhat cautious about taking on more risk, according to Colliers International`s 2012 Global Investor Sentiment Survey. Although the Investor Sentiment Index rises to 104.1 points over the five-year time frame, which indicates a positive stance, less than half (45 per cent) of respondents said they are likely or highly likely to move up the risk curve to reap better yields. This risk tolerance level is lower than the one expressed by investors last year when nearly two-thirds (64 per cent) of Canadian investors were willing to take on more risk.





This somewhat conservative mindset to risk is also reflected in investors` views on returns as 58 per cent of Canadian respondents target their Internal Rate of Return (IRR) below 10 per cent. Nevertheless, Canadian investors have not lost their appetite for deal-making with an overwhelming majority (78 per cent) confirming plans to expand their portfolios in the near future.







Read the full article here.

 

[Ally]

B.C., Alberta, and Saskatchewan gloomy as oil resources tank





Governments of natural resourced based economies obviously do well when commodity prices are high, and struggle when prices tank.



That's the brutal reality currently facing governments in British Columbia and Alberta and to some extent, Saskatchewan





Read the full article here.

 

[Ally]

Stance on resource development in NDP leader's biggest weakness




The close of 2012 leaves NDP Leader Tom Mulcair with one great area of vulnerability, it seems to me, which he has yet to sort out: His continuing inability to frame a discussion of environmental sustainability in terms that do not set Albertans' teeth on edge. That aside, all things considered, he had a good year.





Read the full article here.

 

[Ally]

Where the jobs were in 2012




Okay, it`s not exactly year-end, but close enough to start toting up the economic winners and losers. The Canadian economy has had a decent year on most counts, including jobs.




Things could be better, but as of November (the last month for which Statistics Canada has released figures) employment was up a just-about-acceptable 1.6 per cent compared to where it was at the end of 2011. (Note: Calculations based on the percentage change in seasonally adjusted employment between December, 2011 and November, 2012). The overall figure, however, masks some big discrepancies between sectors, meaning that it could feel like a boom or a recession -- depending which industry you are in.



Read the full article here.

 

[Ally]

Income inequality under various income metrics









In a recent report (Income and Income Inequality ` A Tale of Two Countries), TD Economics reported that the traditional economic benchmark for income inequality, the Gini coefficient, has remained largely unchanged since 1998 in Canada. In light of that finding, we received numerous responses from experts and policymakers asking why we had used pre-tax total household income (which includes government transfers) as opposed to other measures that are available. Given the interest, we thought it would be useful to illustrate that the story does not change if one uses after tax or market income or numbers adjusted for family size.







Read the full report here.

 

[Ally]

Income and inequality - a tale of two countries









For most of the last two decades, there has been a sizeable gap in median incomes between Canadian and U.S. families. At its peak in 1998, median household income in the U.S. was 10% higher than in Canada (see Chart 1 - all income figures in Charts 1-4 are before taxes, include government transfers and are adjusted for inflation). Since then, however, incomes south of the border have suffered in the wake of two recessions and have declined fairly steadily to a 16-year low in 2011. Meanwhile, a solid pace of household income growth in Canada since 1997 has not only helped to erase the gap with the U.S., but created a 9% income advantage as of 2010. Even after the impact of the 2008 recession, Canadian median household income remains just 2% away from its all-time high set in 2008.







Read the full article here.

 

[Ally]

Regional differences continue to play into the national scene





The provincial economic forecast is largely unchanged relative to the publication released three months ago. Make no mistake ` the subdued global economic environment has impacted all provincial growth rates for 2012. There has been much uncertainty on the health of the global recovery, downward pressure on commodity prices and a slowdown in the resale and new housing market. Some provinces received downgrades to their real GDP growth of 0.1-0.2 percentage points in 2012. The diversity within provincial economies served as a shield from more substantial revisions: where one sector tightened, another sector was given some much needed positive news. This push-and-pull action in economic growth drivers will leave eight provinces with unexciting 2.2% growth or lower in 2012. By contrast, Alberta and Saskatchewan will fare better and clock in above 3.0%





Read the full article here.