June 2012 Canadian Economic Fundamentals

[Ally]

Canada's economy hums as Eurozone sputters. But is relief only a one-quarter wonder?




While the turmoil in the eurozone dominated the headlines in recent months, Canada`s largest bank says it believes the domestic economy continued to power ahead.




Striking a rosier note than most of the banks, RBC said Tuesday it expects Canada`s gross domestic product will grow 3.1 per cent in the quarter that ends June 30, two and a half weeks from now.




For the year, the bank is forecasting more moderate growth of 2.6 per cent as concerns about events in Europe, China and the U.S. continue to cast a shadow over the global economy.





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[Ally]

CMHC Spring 2012 Rental Market Survey



According to the Spring Rental Market Survey conducted by Canada Mortgage and Housing Corporation (CMHC), the average vacancy rate for privately initiated structures with three units or more was 2.2 per cent in April in urban areas (10,000 inhabitants or more) of Quebec. The decline, of 0.2 points over the same period last year, was not statistically significant.




This result is largely due to the influence of the census metropolitan area (CMA) of Montreal - which represents two-thirds of Quebec's rental stock - but also to other areas of the province.





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[Ally]

Banks go on appraisal alert in a volatile housing market





Several Canadian banks have been quietly re-evaluating their appraisal strategies amid increased worries about the accuracy of property values in a market deemed at risk of overheating.









Lenders use a variety of techniques, including full appraisals, so-called `drive-by` appraisals based on the exterior of the home, and databases of market prices, to evaluate homes. The values they arrive at help determine how much money they should lend to mortgage borrowers. They are also key for measures such as the loan-to-value ratio that are used to track the health of loan portfolios and borrowers` debt loads.




Banks are emphasizing on-site visits to value properties, especially those above a certain price or in rural areas. They are also paying closer attention to who does the appraisal. The higher level of diligence aims to get more accurate values amid fears of an overheated housing market. If standards tighten or appraisals become more conservative, it could result in a decrease of the amount of mortgages that banks lend.





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[Ally]

Canada's status as a first-tier nation becomes stronger every day





ATHENS ` An American energy adviser to the European Union declared last week that Canada had made "a really, really historic mistake" by backing the oilsands.







Europeans, who had made green power their top priority, now regarded Canada as "a bad guy" that "could potentially become a second-tier country," the EU consultant said.







Days later Germany's ambassador to Ottawa said his country was annoyed with Canada for being slow to contribute to an International Monetary Fund bailout package for Europe.






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[Ally]

Home price drop could mean less spending





With the Toronto-Dominion banking group calling for a gradual 15-per-cent drop in Vancouver home prices over the next two to three years, both lenders and homeowners will likely reduce spending.




The TD report aligns with the latest monthly Metro Vancouver real estate numbers, which show a continued rise in listings accompanied by falling sales and flat prices.




When asked what the implications of this prediction or a drop in prices could be for homeowners, mortgage broker Chris Pughe said `some people who have used their equity to sustain their lifestyle choices may make the decision to sell because there is nothing else for them to do ` a drop in prices could have serious consequences for some of our families.`






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[Ally]

Cross-border energy development key, says head of U.S. Chamber of Commerce





For both nations, it is imperative that we secure an abundant and affordable supply of energy,` Thomas Donohue said in notes for a luncheon speech to the International Forum of the Americas.



"We have a mutual interest in developing Canada's oil sands and building the Keystone XL pipeline. Both can be done safely and with a limited impact on the environment. It's not a question of whether these oil sands are going to be developed, it's a question of which markets the energy will go to. The United States is the best destination -- we are close, we are a friend and an ally, and we have stronger environmental standards than many other possible recipients. This is a win-win deal for both countries."





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[Ally]

Is Canada's commercial property market too hot?



Canada`s commercial property market is less appealing than `recovering` areas such as the U.S. and Asia as investors compete for assets, said Sonny Kalsi, founder and partner of GreenOak Real Estate LP.





`Canada`s a little bit too competitive and a little bit too expensive,` Kalsi said today during a speech in Toronto hosted by Queen`s University. `The U.S. is in a recovery, though it`s a challenged recovery.`





The commercial real estate market in major Canadian cities is dominated by investments from retirement funds such as Canada Pension Plan Investment Board and firms including Brookfield Asset Management Inc., as well as real estate investment trusts. GreenOak is focused on investing in office properties in the U.S. and Japan, and plans to add real estate assets in China, India and Europe in the next five years.





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[Ally]

Canada's housing market still outshines rest of world




TORONTO ` Canadian housing market conditions have cooled slightly, with prices down nearly 2% in the first-quarter, but the country continues to outperform other developed nations, according to a new Scotiabank real estate report.




The latest Scotiabank Global Real Estate Trends report released Wednesday found that the inflation-adjusted national average home price fell by 1.6% in the first quarter of 2012 compared to the same period of 2011.





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[Ally]

National vacancy rate falls



The rental market in Canada tightened slightly in April with the vacancy rate dropping and average rental rates increasing, according to Canada Mortgage and Housing Corporation.





The average rental apartment vacancy rate in Canada's 35 major centres decreased slightly to 2.3 per cent in April 2012, from 2.5 per cent in April 2011, according to the spring Rental Market Survey released by CMHC.





`An overall improving job market over the last year, in conjunction with new migrants coming to Canada`s major centres, are factors that are supporting rental demand in Canada,` said Mathieu Laberge, deputy chief economist at CMHC's Market Analysis Centre. `Immigrants, as well as young workers, usually tend to rent first and then move to homeownership.`





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[Ally]

Sticking close to home paying off for Canadian manufacturers





Against the odds, Canadian factories suddenly are among the busiest in the world.




In the United States, President Barack Obama preaches weekly about a manufacturing renaissance, and Germany`s ability to compete with lower cost rivals in Asia continues to astonish. Yet neither of those countries is hiring more factory workers now than Canada, a country burdened by relatively high labour costs, a strong currency and weak productivity.






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[Ally]

Homes sales fall in May for the first time since the start of the year



For the first time since the beginning of the year, the number of home sales in Canada dropped in May, falling about 3 per cent from April.





Prices too appear to be softening. Home-buyers last month paid an average of $375, 605 for their new home, slightly less than those who purchased a year ago, the Canadian Real Estate Association said Friday.





Signs of a cooling housing market may be welcome news to economists who are watching closely for signs of price correction in Canada`s over-valued real estate market.





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[Ally]

OPEC could slow shale development by lowering prices







Environmentalists who oppose shale drilling have found an unlikely ally. The Organization of the Petroleum Exporting Countries, meeting in Vienna this week, has also played up safety concerns with hydraulic fracturing. That`s partly because fracking threatens to erode the cartel`s global market share and clout. But OPEC`s best strategy to slow the shale revolution may well be to keep oil affordable.






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[Ally]

New and existing home markets to moderate by the end of 2012: CMHC




OTTAWA ` Canada Mortgage and Housing Corp., expects both new and existing home markets to moderate through the end of the year.




The agency`s second-quarter housing market outlook says housing starts on an annual basis will be in the range of 182,300 to 220,600 units this year.




It expects starts for 2013 to range between 175,100 and 213,500 units.





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[Ally]

U.S. begins review of TransCanada's new Keystone pipeline route





WASHINGTON ` The U.S. State Department on Friday launched an environmental review of a new route proposed for the controversial Keystone XL pipeline that would transport oil from Canada`s oilsands.




President Barack Obama rejected the initial proposal for the $7-billion pipeline early this year, saying he could not vouch for its safety in time for a deadline despite intense election-year pressure.




Republican presidential hopeful Mitt Romney lashed out at Obama`s rejection, saying the incumbent fighting for a second term in November elections `demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth and achieving energy independence.`






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[Ally]

Is your new home a former grow op?





The Laval bungalow`s entrance closet and pantry appeared black and rotten, but Joe Gagliano`s children were immediately drawn to the spacious suburban house, and the idea of having their own rooms.




It was only after buying the foreclosed home, and removing the kitchen cabinets and the bathroom tiles that Gagliano discovered more rotten black patches. The damage that Gagliano said he`d been told was isolated to a few rooms and involved $30,000 to repair turned out to be widespread ` likely the result of the home`s former vocation as a marijuana grow-op.






`I got the shaft,` claims Gagliano, 49, a foreman at a welding company. `Our broker told us that it was like that because of a leaky roof. But this is not $30,000 worth of repairs. It`s contaminated to the extreme.




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[Ally]

Home sales to beat forecast for year





TORONTO ` The Canadian Real Estate Association said Friday that the national home price and sales activity this year will be higher than previously forecast, following a strong spring.




It forecasts 475,800 homes will be sold in 2012, up 3.8 per cent from 2011, compared with earlier expectations of a gain of 0.3 per cent.




The average home price is forecast to rise by 2.2 per cent to $370,700 in 2012 compared with an earlier expectation that it would fall 1.1 per cent






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[Ally]

Harper prepares Canadians for possibility of another recession




The Prime Minister is preparing Canadians for the possibility of another recession, while insisting that it`s the Europeans, not his government, who will be to blame.




The blunt truth, however, is that it doesn`t matter who is to blame. If recession comes, this time there will be very little that any Canadian politician can do about it.




`Governments in Canada don`t have nearly as much latitude as they did in the last episode to open their taps,` says Douglas Porter, deputy chief economist at BMO Financial Markets.





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[Ally]

First-time homebuyers should strive for bigger downpayment



Carla Day-Reiner and Grant McVittie want to buy a home in Toronto, but with little saved they know it`s not going to happen overnight.





So, they`ve developed a plan to buy in two years ` one that doesn`t resign them to dine on ramen noodles.





"At least now, we`re a bit more conscious about frivolous spending and prioritizing, but it hasn`t impacted what we`re used to," Day-Reiner said of their investment plan.





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[Ally]

Canada warned of 'major shock' from Europe's debt crisis





The Bank of Canada is warning that growing concern over European debt could severely crimp financial conditions around the world and hit Canada with a `major shock` ` a warning that comes as infighting broke out among the euro zone players with the most power to keep the crisis from spreading out of control.






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[Ally]

Oppotunities abound for skilled tradespeople





There's no shortage of skilled trade jobs in an economy where the resource industry is booming and employers are looking for able-bodied individuals to do everything from equipment repair to electrical and carpentry work.







Twenty-one-year old Bradley MacIntosh in Edmonton is one of many apprentices whose training will serve him in good stead in a growing economy. Currently apprenticing as a heavy equipment technician for SMS Equipment, he says he likes the idea of working on the "big stuff" like crawlers, excavators and bulldozers.







"My automotive teacher in high school got me interested in the field when he took the class on some tours to heavy equipment shops in the city," he says.






Read the full article here.