June 2013 Canadian Economic Fundamentals

[REIN]

Overheated condo market sheds dark cloud over Canadian economy




OTTAWA ` An overbuilt and overpriced condominium market is posing a risk to Canadian households, banks and the economy in general, the Bank of Canada warned Thursday in its latest review of the health of the country`s financial system.




The central bank particularly singles out the Toronto condo market, which it notes continues to carry a high level of unsold high-rise units in the pre-construction or under construction phases.



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[REIN]

Harper battles oilsands 'dirty' reputation in Europe





Prime Minister Stephen Harper is appealing to his European peers to stop EU plans to single out Alberta`s oilsands as a source of high-polluting energy as the country struggles to find new markets for its oil.




Harper pushed the issue with French President Francois Hollande Friday after raising it with U.K. Prime Minister David Cameron Thursday. Canadian Natural Resources Minister Joe Oliver is also meeting with government and industry officials in London this week.





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[REIN]

U.S. revival to inject life into Canadian economy, but not until 2014




OTTAWA - Canada's recovering economy hit a major pothole Friday with a manufacturing report showing activity in the country's factories slumped 2.4 per cent in April, the worst decline in almost four years.




As well, Statistics Canada said the sector suffered an even worse March than previously reported, with sales falling by twice as much as the original 0.3-per-cent estimate.





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[REIN]

Home sales 'gradually' slowing to soft landing





The Canadian Real Estate Association will release data on Monday about the number of homes that changed hands in May, and it`s likely to provide more evidence that policy-makers have pulled off a soft landing in the market ` for now.




It`s a fine line. The steep sales slump that began last summer, after Finance Minister Jim Flaherty tightened the mortgage insurance rules, appears to be ending. But if the market picks up too quickly, Mr. Flaherty could be forced to pour cold water on it again.






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[REIN]

Canadian home sales and prices tick higher




Both the average selling price and the number of Canadian homes sold ticked higher last month, according to data released Monday.




The Canadian Real Estate Association said home sales increased 3.6 per cent on a monthly basis in May, and the average price of a Canadian home sold last month was $388,910, an increase of 3.7 per cent compared to a year ago.





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[REIN]

Canada's housing market surprisingly healthy




Canada`s housing market continues to show signs of stability as the number of homes sold so far this year has come in slightly higher than projected, a possible signal that the market is set for a rebound in 2014, according to the Canadian Real Estate Association.




The industry group representing Canadian realtors reported Monday that although it still expects fewer sales to be logged this year than in 2012, the decline will be smaller than what was predicted in March.





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[REIN]

Canadian home sales jump in May




TORONTO, June 17 (Reuters) - Sales of existing homes in Canada jumped in May from April and will be higher than expected both this year and next, the Canadian Real Estate Association (CREA) said on Monday, adding to evidence that the market has managed a soft landing.




CREA, the industry group for real estate agents, said sales were up 3.6 percent in May from the month before, the largest monthly gain in almost 2-1/2 years. It was the latest data to suggest the Canadian housing market - far from crashing, as some economists had predicted - is doing better than expected.





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[REIN]

Housing strength thwarts bubble talk




Not so fast. The purported collapse of Canada's housing market does not appear to be in sight, and any correction down the road could likely be a mild one.




Recent data have defied warnings from market watchers of an impending plunge - caused mainly by the impact of tighter mortgage rules imposed by the federal government last summer to slow the race by consumers for record-low lending rates.



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[REIN]

Canada's impending housing collapse not in sight




OTTAWA ` Not so fast. The purported collapse of Canada`s housing market does not appear to be in sight, and any correction down the road could likely be a mild one.





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[REIN]

Why Canadians get worse rates on mortgage renewals





When it comes time for their mortgage renewal, most Canadians simply sign back the notice to renew their mortgage without investigating all their options. Studies show that approximately 94 per cent of Canadians sign back their notice of renewal on their existing mortgage and end up with a posted rate of interest instead of the bank`s best discounted offers. Why?




How many of you reading this would say, `I am an informed consumer who knows what mortgage products are available to me, what the best rate of interest is for the term I am looking to have, and I always do my homework when it comes to financial matters`? Maybe that`s why.





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[REIN]

Canadian snowbirds could face U.S. 'tax bomb'




CALGARY ` International tax expert Roy Berg of Calgary has dubbed it the U.S. tax bomb.




And it's something snowbirds should be aware of, as U.S. Congress looks at allowing Canadians to stay south of the border for a longer period of time.





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[REIN]

The "alarming" decline of housing affordability




The question of whether Canada`s housing market is a bubble or not hinges on how affordable it is to buy a home.




Gulp. Rising home prices and mortgage rates suggest trouble ahead, but that`s only half the problem. Bubble or not, houses are being priced out of reach for first-time buyers and households with income levels at or even a little above average. It may be time to redefine what we mean when we say houses are affordable.





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[REIN]

Jumping off the REIT bandwagon?




That pop you heard might have been the bubble finally bursting ` at least for real estate investment trusts if not housing.





Rising bond yields have brought down the publicly traded real estate sector since it hit an all-time high at the end of April. The iShares S&P/TSX Capped REIT Index Fund dropped about 12% before recovering about two percentage points off that fall in the past week or so.





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[REIN]

The NGO pipeline bullies




The Western Premiers` conference had `bullying` on the agenda, but not Enbridge`s proposed Northern Gateway pipeline. That`s because the $6-billion project ` to pump 525,000 barrels a day (bb/d) of diluted bitumen from the Alberta oil sands to Kitimat B.C. ` is a delicate `bilateral` matter between B.C. and Alberta. This surely confirms that the notion of a comprehensive National Energy Strategy would be a time-waster even if the federal government were onside. Particular energy issues should be discussed between those parties directly involved, all within the emphasis on markets that have served Canada well since the days of Brian Mulroney. Apparently the Western Premiers are all gung ho for new west-to-east oil pipeline capacity, but if everybody agrees on an issue, why do you need a strategy in the first place?





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[REIN]

RBC raises Canadian growth forecast




TORONTO`Economists at the Royal Bank group say Canada`s growth appears to be stronger than previously thought.




RBC Economics has raised its estimate for the country`s 2013 economic growth to 1.9 per cent and says 2014 growth will be about 2.9 per cent.





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[REIN]

Most Canadians don't expect to be mortgage free until 57





EMC Business -A new CIBC (TSX: CM) (NYSE: CM) poll reveals that Canadian homeowners with a mortgage now believe they will be age 57 on average before paying their mortgage off, compared to age 55 in a similar CIBC poll conducted in 2012. The poll also reveals that while Canadians are taking some positive steps to accelerate mortgage repayment, it is their non-mortgage debt that may be the biggest factor in how quickly they can become mortgage free.







Key poll findings include: The average age at which Canadian homeowners with a mortgage believe they will be mortgage free is 57, compared to age 55 in a similar CIBC poll one year ago.





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[REIN]

Bank of Canada will maintain inflation: Poloz





This morning, Bank of Canada Governor Stephen Poloz gave tips on how Canada can build up business confidence at the Oakville Chamber of Commerce.



He stressed what `happens to business in Canada matters to the Bank of Canada`In order for us to do our job properly [and] promote the economic and financial welfare of Canadians, we need to understand all the dynamics that feed into the Canadian economy.`





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[REIN]

Canadian household debt ratio falls




The ratio of Canadian household debt to disposable income fell for a second quarter after reaching a record last year, suggesting consumers are heeding warnings about the risks of too much borrowing.




Credit-market debt such as mortgages fell to 161.8 percent of disposable income, compared with a revised 162.6 percent in the prior three-month period, Statistics Canada said today in Ottawa. Mortgage borrowing grew at the slowest pace since the 2009 recession, the agency said.





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[REIN]

Canadian economic outlook given bounce from U.S. recovery




TORONTO ` An anticipated financial recovery south of the border is likely to help economic growth in Canada, economists said Wednesday, although the U.S. is likely to outpace its neighbour for the first time in years.




RBC Economics raised its estimate for Canada`s 2013 economic growth to 1.9 per cent, from 1.8 per cent in March, citing an improving picture on trade and the strength of corporate balance sheets.





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[REIN]

Bank of Canada in uncharted territory






BURLINGTON, ONT. - The Bank of Canada cannot rely on its usual models to assess the economy because of unexpectedly high levels of uncertainty, with the biggest risks coming from abroad, the new central bank chief, Stephen Poloz, said on Wednesday.




Answering audience questions after his inaugural speech, Poloz said the central bank was in "uncharted territory" and called for direct feedback from those doing business on the ground in order to better understand what is happening.





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