July 2012 Canadian Economic Fundamentals

[Ally]

Oil sands development not an 'either-or' debate




The oil sands debate does not have to be an `either-or` proposition as articulated by the federal government and the official opposition, said Liberal leader Bob Rae as he embarks on a three-day tour of the Alberta oil sands.




`Stephen Harper and Thomas Mulcair want Canadians to believe that developing the Alberta oil sands is an either-or proposition,` said Mr. Rae in a statement. `That is patently false. Liberals understand that we can reap the benefits of oil sands development and mitigate the environmental impact, but only if we engage and consult with parties on all sides of this issue.`






The Liberal leader`s statement is in sharp contrast to the view taken by NDP leader Thomas Mulcair who has been critical of the oil sands development and believes Canada`s manufacturing sector is suffering as rising oil exports are propping up the loonie ` afflicting the nation with the so-called `Dutch disease`.





Read the full article here.

 

[Ally]

Financial crisis is 'pretty serious'






The former Liberal MP for Ottawa South was a cabinet minister in the Chretien government from 1993 to 2003. In 1995, the budget hammer came down and Mr. Manley had to knock huge chucks of programs and staff off Industry Canada`s books. But it was the 2008 financial crisis that he characterizes as `probably the most frightening time in the world economy` since 1929. Four years later, in its wake, another crisis is upon us.




Mr. Manley ` who, in addition to industry minister, also served as finance minister, foreign affairs minister and deputy prime minister ` says leaders in Europe and the United States need to make equally hard decisions before the economic threat to world`s biggest economies becomes a reality.





Read the full article here.

 

[Ally]

Target's Canada locations mapped - Is there a store opening near your?






Target released a compete list of locations for its first 125 Canadian stores opening next year and said it will announce additional locations for those opening in 2014 later this year.




The Minneapolis-based rival of Walmart aims to open 200 new stores in Canada generating sales of $6-billion per year, and had said previously it would open 125 to 135 in 2013.





Read the full article here.

 

[Ally]

How could somebody pay $90,000 over the asking price?






One of the best-read Moneyville stories last week was the article about the couple who bid $90,000 over the asking price on a $1-million Toronto home in the belief that they were in a bidding war. They were shocked to find out they were the only bidders.




The seller was eventually persuaded to accept half that ` $45,000 over asking, but the question remains: how did this happen?





Read the full article here.

 

[Ally]

Why a crash in Canadian housing prices is certain




The local Vancouver media is abuzz with the softening real estate market. We`re seeing 10-year lows in sales and highs in inventory. We even have a couple realtors getting bearish and calling for a crash (see here and here). I`ve personally been calling for a crash in Vancouver RE (real estate) for a couple years (see my previous post here). Prices here increased 200% in the last decade on cheap credit & animal spirits, while incomes and rents have barely increased 30%. I believe March 2011 was the peak and prices will gradually fall over 5+ years with a total peak-trough drop of about 50% in order to return to long-term price multiples of income and rent. It shouldn`t really be that shocking of a prediction when we`re seeing RE bubbles pop around the globe after their own credit gorging. Vancouver has similar valuation multiples that Miami, Phoenix & Vegas reached at their peak. Those cities are currently down 50-60% since their peak 6 years ago.





Read the full article here.

 

[Ally]

Work in the resource sector? Your next home may be a shipping container




CALGARY ` Tip over a cargo ship in the middle of the northern Canadian wilderness and the resulting image will closely resemble the resource camps of the future.




The thousands of steel rectangular shipping containers stacked on that ship`s deck are transforming the multibillion-dollar modular housing sector and Canadian companies are leading the charge. Designed to be affordable, durable and easily transportable, shipping containers are a natural fit for mining and resource extraction camps that are often in difficult-to-access remote regions and need to be relocated fairly often.




For decades, however, those containers have generally been viewed as dwellings only in cases of human smuggling. As a result, firms have more or less stuck with the less-durable and more-difficult-to-transform wood-framed alternatives.





Read the full article here.

 

[Ally]

Why Canada's houses are getting smaller






Akua Schatz and Brendon Purdy have trouble finding space for a coffee table, not to mention the baby they are expecting this fall.




The couple, both in their mid-30s, live in a 500 square foot home in the Vancouver neighbourhood of Dunbar. Completed last year for $280,000, the modernist two-storey home stands on what used to be Mr. Purdy`s parents` backyard.





Read the full article here.

 

[Ally]

Economists warn of slowing labour market




Canada`s economy was a job-creating machine in the first six months of 2012, adding 155,000 new positions in that time. Better yet, many of those positions were high-paying and full time.




But economists say Canadians should prepare themselves for a much bleaker second half of the year.





Read the full article here.

 

[Ally]

Rae seeks middle ground on oilsands development




Interim Liberal leader Bob Rae waded into the oilsands debate Saturday suggesting that, while Alberta's booming development is an important part of Canada's economy, the discussion about how best to use it has been polarizing and unproductive.




"I don't think it's just a matter of saying 'I'm pro-development' or 'I'm anti-development,' I think everybody recognizes it's a huge resource for Canada. The question is: Can we do it in a sustainable way?"





Read the full article here.

 

[Ally]

Long amortizations survive...with 20% down





When the government cut maximum amortizations in 2008 and 2011, most big lenders reduced amortizations on all of their mortgages.



They didn`t need to apply the changes to uninsured mortgages, but many did anyway.




Not this time.





Read the full article here.

 

[Ally]

Falling oil puts pinch on economy





Oil`s retreat from the $110-a-barrel (U.S.) mark this year may have helped fend off a deeper global economic slump, but for Canada the benefits of lower energy prices come with a serious cost.




The drop in the cost of crude to about $87 currently has made it cheaper for companies to run their plants and has saved drivers some money at the pumps.






Read the full article here.

 

[Ally]

Global woes a bigger drag on Canada's economy than expected





OTTAWA ` The Bank of Canada acknowledged Tuesday that the weakening global economy is slowing growth in this country more than previously thought, but it still expects moderate growth.




"Consumption and business investment are expected to be the primary drivers of growth, reflecting very stimulative domestic financial conditions," it said, but added "the slowdown in global activity has led to a sizable reduction in commodity prices, although they remain elevated."




As widely expected, the central bank held its key interest rate at a near-historic low of one per cent, where it has been since September 2010.






Read the full article here.

 

[Ally]

Drought worsens crop damage, raising world food, fuel worry



Corn and soybeans in the U.S. Midwest baked in an unrelenting heat wave on Monday with fears rising of big crop losses that will boost food and fuel prices and cut exports and aid from the world's top shipper of the key crops.





The condition of the nation's corn and soybeans as of Sunday deteriorated even more than grain traders had feared, and the U.S. Agriculture Department cuts its weekly corn crop condition rating by the biggest amount in nearly a decade.





After weeks of growing drought some lucky farms have been doused by scattered thunderstorms in the past few days. But weather forecasters warned the heat and dryness would only intensify through the end of July and possibly beyond.





Read the full article here.

 

[Ally]

Canadian home sales, resales slip in June





The number of Canadian homes sold last month dropped more than four per cent from the level in June 2011, the first year-over-year decline in sales volume since April 2011, the Canadian Real Estate Association said Monday.







Resales of homes were also down 1.3 per cent in June from May ` the second month-to-month decline ` with a total of 46,444 transactions through CREA members. That was down from 48,591 in June 2011, the association said.







The national average home price in June was $369,339, down 0.8 per cent from the same month last year, CREA said.






Read the full article here.

 

[Ally]

Meridian takes on banks as Canadian credit unions grow




Coast Capital Savings and Meridian Credit Union lead Canadian credit unions planning to take advantage of regulations allowing them to expand across the country, challenging bigger competitors such as Royal Bank of Canada. (RY)




Credit unions, financial institutions owned by their customers and overseen by provincial regulators, are awaiting changes promised in the 2010 federal budget giving them the option to become federally-regulated entities. Canadian Finance Minister Jim Flaherty released draft rules this month.





Read the full article here.

 

[Ally]

Canadian real estate capitalization rates hit record low





CALGARY ` Investors are still hungry for income-producing real estate as demonstrated by further cap rate compression across almost all geographies and property types in Canada, says commercial real estate firm CBRE Limited.




The company`s Second Quarter Canadian Cap Rate Survey said the national average cap rate fell to 6.33 per cent in the quarter from 6.46 per cent in the last quarter.






Read the full article here.

 

[Ally]

Financial report exposes tender spots across Canada





While Canada weathered the storm of the recession better than the United States, its lessons still weigh heavily on our minds. That doesn`t mean Canadians are reacting uniformly in the face of financial stress, though; regional habits and market trends have weighed strongly on our reactions.




It`s no powerhouse yet, but Manitoba is now the country`s fastest-growing province in terms of prosperity. Alberta is still struggling; Calgary, once home to the country`s wealthiest denizens, is watching the oil-sands boom ease off. Meanwhile, risk-tolerant Nova Scotia saw its household net worth decline almost 5 per cent in 2011.






Read the full article here.

 

[Ally]

Housing market entering 'Big Sleep'



Canada's real estate market is showing signs of cooling off with national home sales and the average home price down year over year, indicators that have at least one senior economist wondering if the once red-hot market is entering a "Big Sleep."





The new data from the Canadian Real Estate Association follow several reports saying some real estate markets and some types of housing are overvalued, although there's a range of opinions about how much and how quickly prices will decline.





That's left economists and consumers watching closely for signs demand has softened to the point where prices will start going down.





Read the full article here.

 

[Ally]

The CRA's information highway




Are you wondering how the Canada Revenue Agency (CRA) knows your number? Lots of taxpayers are asking that question after receiving reassessments for income that was not reported, accidentally or otherwise. Why is this happening?




Governments around the world are struggling with deficits and are looking for new revenue sources. Canada is no different.






Traditionally, the CRA would review and audit Canadian tax filings on a random basis. The agency would compare tax slips and receipts to the taxpayer`s tax filings. In the 21st century, the so called `information era,` the CRA has found different ways to ensure that income has been completely and accurately reported by taxpayers.





Read the full article here.

 

[Ally]

Is Canada's housing market finally starting to cool?





Fewer housing sales and more listings may bring some long-awaited balance to the Canadian housing market, says the latest report from the Canadian Real Estate Association.




While home prices are still on the up, a drop in sales activity in June points to a possible chill in Canada's housing market.






Read the full article here.