November 2007 Market Research

[BMironov]

Statistics Canada:New Housing Price Index (Sep 2007) (Nov 8, 2007)
http://www.statcan.ca/Daily/English/071108/d071108c.htm

QUOTE The rate of growth in new housing prices decelerated for the 10th consecutive month in September, in line with a trend seen across most of the country.

Contractors` selling prices increased 6.2% between September 2006 and September 2007, a slowdown from the 6.5% gain observed in August.

Sep 2006 to Sep 2007 change in some CMAs:
Ottawa: +1.1%
Toronto-Oshawa: +2.7%
Hamilton: +3.3%
Kitchener: +1.9%
Winnipeg: +16.2%
Regina: +29.6%
Saskatoon: +47.0%
Calgary: +5.9%
Edmonton: +26.6%
Vancouver: +6.1%

Canada total: +6.2%

 

[BMironov]

Statistics Canada:Study: Trading with a giant: An update on Canada-China trade. 2002 to 2007 (Nov 8, 2007)
http://www.statcan.ca/Daily/English/071108/d071108b.htm
http://www.statcan.ca/english/ads/11-010-XPB/pdf/nov07.pdf

QUOTE Canada`s merchandise exports to China in the first seven months of 2007 have grown at more than twice the pace of its imports on the strength of the Asian giant`s demand for Canada`s natural resources, according to an article published today in the Canadian Economic Observer.Between January and July 2007, Canada`s exports to China surged 43% from the same period in 2006, while its imports from China rose only 17%.

This rate of growth in exports in 2007 surpassed that of any other G7 country, and put China neck-and-neck with Japan as Canada`s third largest export market.

Canada`s exports to China rose sharply between 2002 and 2006, from $4 billion to nearly $8 billion. In 2005 and 2006, gains were subdued after a surge in 2004.

The sharp rise in exports during the first seven months of 2007 was the result of several factors. Accelerating Chinese demand, combined with higher world prices for metals, potash and canola, boosted industrial goods and agricultural exports. China also became Canada`s number two export market for crude oil.

Canada is clearly benefiting from the magnitude of China`s demand for natural resources. The nation of more than 1.3 billion people is expanding its manufacturing base and building massive infrastructure projects, from ports and bridges to facilities for the 2008 Olympic Games.

This demand has propelled world commodity prices to unprecedented levels. In 2007, metals prices were over three times higher than in 2002, and crude oil prices quadrupled to over $90 US per barrel. By pushing prices higher, China has boosted Canada`s natural resource exports to other countries.

Increasing exports to Europe and Asia, combined with relatively little growth in exports to the United States, resulted in a sharp increase in the share of Canada`s exports held by countries other than the United States.

Nearly one-quarter (24%) of Canada`s exports headed to non-US destinations in 2007, compared with 16% just five years earlier.

Highlights:

• Export surge concentrated in industrial goods
• China leads Canada`s trade diversification Import growth from China in 2007 more restrained than exports

 

[BMironov]

TD Economics:CANADIAN STARTS FALL BACK DOWN TO EARTH (Nov 8, 2007)
http://www.td.com/economics/comment/bc110807.pdf

QUOTE Canadian housing starts came back down to earth in October with a 22% retreat that took back all of the gain posted in the previous month. Although the monthly drop may seem outsized at first glance, this is not a U.S.-style retreat. Rather, data in September received an unexpected large boost by rental market construction activity in Quebec that was predominantly geared towards retirement homes, so pay back was to be expected in October. Therefore, the 36% contraction in multiple units during the month does not offer the shock value that the figure alone would lead one to believe. More importantly, this is not the stuff that will present a concern to the Bank of Canada.

Looking beyond one-time factors, October’s 219,500 annualized units in starts essentially returned the level of activity back to where it was in the spring of this year. This is not a market that is on wobbly legs and it does not appear that the recent tightening in credit conditions has created an undo burden to developers and consumers. But, home affordability is eroding across the nation, especially in the western provinces where it has become commonplace to see double-digit annual price gains in the new and resale markets. This largely explains why construction activity in higher priced detached homes is down 7.6% on a year-to-date basis. In contrast, building activity in the more volatile and affordable multiples market remains in the black with a 5.3% gain on the year. At this point in the cycle, it is reasonable to expect home building activity to continue to cool towards a more sustainable trend closer to the 200,000-210,000 watermarks in 2008.

 

[BMironov]

A lot of articles these days talk about property tax hikes in different cities. For example:Edmonton, ABEdmonton Journal:Property tax hikes could hit double digits in 2008 (Nov 9, 2007)
http://www.canada.com/edmontonjournal/news...5cb&k=66796

Proposed 10.9-per-cent increase could herald new era of higher jumps unless province helps more, councillor says


Mississauga, ON
Globe and Mail:
Cash-strapped cities welcome McCallion`s move (Nov 9, 2007)
http://www.theglobeandmail.com/servlet/sto...tional/Ontario/

QUOTE Shockwaves from a dramatic tax hike in Mississauga and a renewed crusade for a larger slice of federal surpluses reverberated across the region yesterday, with two cities ready to follow suit.

Toronto Mayor David Miller and counterparts in neighbouring cities were unanimous in hailing Mississauga Mayor Hazel McCallion`s political gambit of Wednesday - a council-approved, 5-per-cent surcharge on Mississauga taxpayers that claws back a recent one-percentage-point cut in the federal GST.

Her bold stroke, on top of a proposed 3.9-per-cent property tax increase, catapults the iconic suburban mayor to the front of a national campaign for Ottawa to share its $14-billion surplus with cash-strapped cities.


Brampton, ON
Toronto Star:
Brampton also facing tax hike, mayor says (Nov 9, 2007)
http://www.thestar.com/News/article/275060

QUOTE Fennell said council won`t make a final decision on the hike until February and can wait to see if other funding arrives before then.

Unlike Mississauga, which is largely maxed out in terms of growth, Brampton is booming and needs to find about $1 billion to fund new capital development, in addition to the repairs shortfall.
...
With the same statement on their tongues, other GTA mayors waded into the tax hike debate.

While applauding McCallion for bringing attention to the issue, Markham`s Frank Scarpitti and Richmond Hill`s Dave Barrow questioned her tactics. By surcharging residents, they said, the city is taking the pressure off Ottawa to pony up. Finance Minister Jim Flaherty "is probably laughing all the way to the bank," Scarpitti said. Both mayors felt tackling Ottawa as a united front may have been better than raising taxes.

"Municipalities are really letting the federal government off the hook," Scarpitti said. "The reality is that you can`t fund these major infrastructure projects from property taxes."

Vaughan councillor Joyce Frustaglio lauded McCallion for raising a ruckus, describing her as a "tiger" for challenging a federal mini-budget favouring tax cuts.


... And here is an answer for question (Why all of a sudden 5% is something that Mississauga Mayor would talk about as something out of line):

Toronto Star:
Harper rejects financial aid for cities (Nov 9, 2007)
http://www.thestar.com/News/Ontario/article/275075

QUOTE Toronto Mayor David Miller has been asking that one percentage point of the federal GST be given to municipalities, which would mean $410 million a year to help the city build and maintain roads, bridges and expressways.

And this week, Mississauga Mayor Hazel McCallion launched her own campaign to get federal funding for infrastructure costs after council voted to impose a 5 per cent levy on property taxes to pay for repairs and replacement of aging bridges, roads and sewer and water systems.

But sources say the Prime Minister emphasized in the meeting that he had "no plans to transfer tax to another level of government" and noted municipalities are creatures of the province – not a federal responsibility.
...
"The citizens have a choice," said McCallion, mayor since 1978 and one of Canada`s most popular and influential civic leaders. "They can press the federal government or they pick up the tab on their property taxes. They can`t sit back and do nothing."

The surtax will cost Mississauga homeowners an average of $50 a year.
...
Flaherty noted that Ottawa is giving the provinces $33 billion in infrastructure over the next seven years, which will help municipalities.

My personal position is that $50 extra in property taxes a year is nothing and for sure it will not fix infrastructure problems in cities. This is just politics talking via newspapers.

If federal government will be able to deliver $33B over next 7 years (about $4.7B annually) then it will be much better action towards $200B needed than $50 per year from each homeowner.

Simple math:
$4,700,000,000 / $50 = 94,000,000 properties
With Canadian population about 32 million people we just do not have so many homeowners to collect $4.7B annually by $50 pieces.

Best regards,
Boris

 

[BMironov]

Globe and Mail:Greenback languishes, but not U.S. economy (Nov 9, 2007)
http://www.reportonbusiness.com/servlet/st...lumnsBlogs/home

QUOTE The important thing, in the end, is almost never the troubles we know. From this existential perspective, Canada could be more troubled than our southern neighbour - but doesn`t yet know it.

The U.S. is actually doing quite well - notwithstanding, among other tribulations, the war in Iraq, the falling dollar, the rising price of oil and the mortgage meltdown.

The U.S. Bureau of Economic Analysis (BEA) reported last week, for example, that real gross domestic product growth hit 3.9 per cent annualized in the third quarter, fractionally better than 3.8 per cent in the second quarter, pushing nominal GDP beyond $14-trillion (U.S.). These GDP dollars aren`t quite what they used to be, but there are a lot more of them.

The country remains on track to produce $50,000 in per capita GDP by 2010, up from $44,000 in 2006. The moment will be symbolically important - demonstrating that the "GDP gap" between the U.S. and the rest of the world will probably widen in the years ahead whether Americans produce the highest rates of growth or not. When your base number is large enough, relatively small percentage increases in growth produce more wealth than relatively large percentage increases on smaller numbers.

I would like to quote the whole article full of numbers showing strength in US economy.

 

[BMironov]

Toronto Star:U.S. economy faces risk, not recession: Fed (Nov 9, 2007)
http://www.thestar.com/Business/article/274999

QUOTE Federal Reserve chair Ben Bernanke told lawmakers yesterday the U.S. economy did not appear headed for recession, but warned growth could prove weaker than expected and inflation higher.

"Our assessment is for slower growth, but positive growth, going into next year," Bernanke said in a status report on the economy`s health to the congressional joint economic committee.

The Fed chair said the economy is likely to experience ``noticeably" slower growth in the final three months of the year than the robust 3.9 per cent annual rate in the third quarter, saying a housing slump looked set to intensify and consumer and business spending could slow.

However, he said, the U.S. central bank expects the world`s largest economy to regain steam by the middle of next year as housing and financial markets stabilize.

 

[BMironov]

Financial Post:Exports to China soar in first six months (Nov 9, 2007)
http://www.canada.com/nationalpost/financi...e5-b631743d95c6

Imports change from toys to high-end items

QUOTE Canada`s exports to China have exploded this year at a faster clip than any other G7 nation, but economists seem more interested that the goods coming the other way are changing from toys and trinkets to LCD screens, laptop computers and even automobiles.

In the first half of this year, Canadian exports to China jumped 43% from a year ago, Statistics Canada said yesterday, double the rate at which imports grew.

But the trade remains largely a one-way street, as Canada exports about $8-billion worth of goods annually to China, versus imports of around $35-billion, according to the statistics agency.

Canada`s resource sector gains from the Asian giant`s demand for raw materials, but manufacturers have trouble competing with the cheaper price at which China now makes high-end goods.
...
Toronto-Dominion Bank chief economist Don Drummond said China`s economic rise will force Canadian manufacturers to become more productive, focusing on select products. But a larger Chinese economy also means a more diversified export base for all Canadian companies.

This trend is already apparent. Between 2002 and 2006, the United States` share of Canadian exports fell from 84% to 79%, yesterday`s report said. During the first seven months of this year, that share declined further to 76%.

The shift to increased trade with the rest of the world is timely, said Mr. Drummond, given troubles in the housing market south of the border.

 

[BMironov]

Statistics Canada:Canadian international merchandise trade (Nov 9, 2007)
http://www.statcan.ca/Daily/English/071109/d071109.pdf

QUOTE Canada`s trade balance with the world contracted to its lowest level since December 1998, as exports declined and imports increased.

Exports decreased 2.3% to $37.7 billion in September, the lowest level since October 2006. Only three sectors—automotive products, energy products, and other consumer goods—recorded gains.

Imports rose 2.2% to $35.1 billion, recapturing some of the loss registered in August. Energy products were by far the prime force behind the rise, followed by industrial goods and materials, automotive products, and other consumer goods.

With imports rising and exports falling, the nation`s trade balance with the world narrowed to $2.6 billion, falling to its lowest level since December 1998. The trade surplus with the United States shrank to $6.2 billion.

HIGHTLIGHTS:

• Exports decrease despite growth in automotive products, energy products, and other consumer goods
• Energy products fuel imports Snapshot of emerging markets: Russia

 

[BMironov]

CIBC World Markets:Canadian Trade: Still a Surplus, But… (Nov 9, 2007)
http://research.cibcwm.com/economic_public...load/tradec.pdf

QUOTE Although the monthly results were tarnished by a temporary squeeze in the energy balance, the shrinkage in Canada’s trade surplus in September underscored the growing drag from a strong loonie. The country is still in surplus, but the $2.6 bn in black ink was the thinnest since 1998. Domestic demand, not trade, is the economy’s engine of growth. For Q3, real imports look to have surged at a more than 25% annualized pace, against less than 1% growth in imports.

As expected, imports rebounded from an August dip, rising 2.2%. While gains were broadly based, with all categories save machinery on the rise, about half the rise came in the energy sector, in part due to refinery shutdowns that required imports of gasoline. That cut into the key energy trade surplus, which will in any event get a lift in the coming months on sharply higher crude oil prices. A rising C$ softened the climb in the import bill. In real (chain-weighted) terms, imports were up a brisk 4%, more-thanrecouping an August decline.

Exports were much weaker than expected, falling 2.3% in nominal terms. The strong C$ also lowered prices for some export goods, as in some cases these are following global or North American prices in US dollars. In real terms, exports were down a more modest 0.5%, but were still at the weakest level this year. Year-to-date, nominal exports are still up 4.2% (vs. a 3.9% rise in imports), with exports of all major categories other than forestry still rising year-to-date.

Canada’s trade surplus continues to be entirely based on a positive balance with the US. While that was sharply weaker this month, it was still running at a $6.2 bn monthly pace. Can we really argue that the Canada-US exchange rate is so out of line given that black ink?

 

[BMironov]

TD Economics:The Weekly Bottom Line (Nov 9, 2007)
http://www.td.com/economics/weekly/nov907.pdf


QUOTE Canadian dollar marches higher

In the early years of the 21st century, as Canadians busied themselves at work and drove the unemployment rate to an all-time low, the Canadian dollar was simultaneously being pushed up. At first, this appreciation seemed orderly and gradual, but then concerns and questions arose. How much of the loonie`s rise was a reflection of the need of the U.S. dollar to weaken in order to address the American`s large current account deficit? How much was a reflection of China`s fear of floating, which foisted undue appreciation on the loonie that should have befallen the renminbi? And why do policymakers appear to be complacent? The pandemonium has been palpable, but the fallacies have flown faster than the facts.

• The day Asian currencies worth stood still
  
  The U.S. current account deficit is a reflection of the fact that Americans import more than they export, and over time, the U.S. dollar adjusts to make those imports more expensive and exports cheaper. The depreciation of the U.S. dollar since 2002 then has been part of the natural global economic stabilizers. The U.S. dollar has depreciated by 20% since 2002 on a trade-weighted basis against all its trading partners. This depreciation has generally been stronger against commodity-rich countries given their relative economic out-performance (40% against the Canadian dollar and Norwegian krone and 45% against the Australian dollar and South African rand) than it has against other major currencies (35% against the euro and 30% against the British pound). The concern, however, is that the currencies of Japan and China have been much less responsive. To address the U.S. deficit in the 1980s, the larger trading partners saw larger U.S. dollar depreciation. This time, the opposite has been true (see chart).
  
• Invasion of the loonie watchers
  
  The appreciation of the loonie against the greenback this year, however, has outpaced every other major currency. There are certainly economic reasons for this. While the U.S. economy grew by only 2.2% in the first half of the year, the Canadian economy grew by 3.6%. The pace of Canadian housing starts this year has been slightly faster than in 2006 – whereas U.S. housing starts are down nearly 30% since end-2006. The risks to inflation from strong domestic growth persuaded the Bank of Canada to hike interest rates by 25bps earlier this year while the Federal Reserve – with risks from housing and subprime – has cut U.S. rates by 75bps. Commodity prices have moved in Canada`s favour, as well. While non-energy commodity prices have fallen since the spring, they are still up over 4% from where they started the year. Energy prices, meanwhile, are up 30%, with half of that coming just since August.
  ...
  Even with the strong near-term economic fundamentals, then, the Canadian dollar has clearly overshot the mark. It should not currently be trading in the $1.06-$1.10 range and has tracked oil prices recently more than usual. Yes, commodity prices have risen this year, but the gains reported above – weighted by their Canadian production shares – have actually been less than the gains when weighted by global production shares. In other words, the prices of the commodities Canada produces have increased less than the commodities the rest of the world produces. In periods of rapid price changes, it is not uncommon for currencies to overshoot the mark and only later, ease back off to a more sustainable level. This appears to be what is underway now in Canada.
  
  Dr. Strangelove (or how I learned to stop worrying and love the loonie)
  
  What we are seeing is an adjustment, not a battle. The U.S. trade deficit in September surprisingly shrank in spite of rising oil prices, while the Canadian trade surplus eased below $3bn on a large increase in imports. The pace of recent changes makes it hard for exporters to plan and it could weigh further on Canadian economic growth in 2008 if not quickly unwound. This is not a war of the worlds, however, and there is no reason to run for the hills. A run for a border state to get a good deal at a shopping mall? Maybe.

Good 2-page document showing all the news of this week.

 

[BMironov]

Statistics Canada:Non-residential Building Construction Price Index (Nov 13, 2007)
http://www.statcan.ca/Daily/English/071113/d071113d.htm

QUOTE The composite price index for non-residential building construction increased 1.6% from the previous quarter to 159.9 (1997=100) in the third quarter, and 9.6% from the third quarter of 2006. As in the first half of 2007, the quarterly increase was mostly the result of higher labour and material costs, and the persistent strength of the non-residential building construction market.
...
Note: The non-residential building construction price index provides an indication of the changes in new construction costs in six census metropolitan areas or CMAs (Halifax, Montréal, Toronto, Calgary, Edmonton and Vancouver) and the Ontario part of the Ottawa–Gatineau CMA.

Three construction categories (industrial, commercial and institutional buildings) are represented by selected models (a light factory building, an office building, a warehouse, a shopping centre and a school).

Q3 2006 to Q3 2007:
Halifax: +5.9%
Montréal: +3.4%
Ottawa–Gatineau, Ontario part: +6.5%
Toronto: +6.4%
Calgary: +17.1%
Edmonton: +17.9%
Vancouver: +13.3%
Composite: +9.6%

 

[BMironov]

ReMAXCondominiums achieve unprecedented favour among Canadian homebuyers (Nov 14, 2007)

Press Release:
http://www.remax-oa.com/MarketReports_PDF/...tPR2007_REL.pdf

Report:
http://www.remax-oa.com/MarketReports_PDF/...tPR2007_RPT.pdf


QUOTE After more than three decades of slow but steady growth, the condominium concept has finally clicked with Canadian homeowners. The lifestyle has proven to be a solid investment in housing markets across the country, chalking up some of the most impressive gains in residential real estate in 2007, according to the RE/MAX Condominium Report released today.

In fact, 80 per cent of markets surveyed reported doubledigit gains in sales year-over-year, with 53 per cent reporting increases over 20 per cent. The greatest growth was experienced in Canada’s small to mid-sized markets. Leading the country, in terms of percentage increase in sales so far this year, are Kitchener-Waterloo (+59%), Regina (+57%), St. John’s (+54%), and Saskatoon (+33%).

“Deteriorating affordability levels in major Canadian centres have led to the resurrection of the condominium lifestyle in recent years,” says Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. “Condominiums are clearly the answer to the skyrocketing cost of land and shelter that has all but eradicated the dream of homeownership for many first-time buyers.”
...
Condominium values were also up from coast-to-coast in 2007, with all major markets reporting an increase in average price. Thirty-three per cent of cities surveyed reported double-digit price appreciation. The most dramatic hikes were seen in Western Canada’s red-hot housing markets, led by Saskatoon (+24%), Calgary (+22%), Edmonton (+19%), Kelowna (+16 % for town homes, +12% for apartments), Vancouver (+14 % for town homes, +11% for apartments), and Victoria (+9% for town homes, +12% for apartments).
...
“The impact of speculation, especially in Canada’s largest condominium markets, has yet to be determined, but concerns for the future are relevant,” says Ash. “In downtown Vancouver, an estimated 50 per cent of sales activity is attributed to investors, whereas as much as 60-85 per cent of new condominiums sales in Toronto’s downtown core reportedly involved investors in 2007. This is a major factor that could influence prices in years to come.”

For now, a number of market fundamentals point to increased growth in sales, prices and demand well into 2008. These include vibrant economies, Canada’s aging population, rising prices, and higher levels of immigration, to name a few.

 

[BMironov]

Edmonton Journal:Transit effect a boon to homeowners (Nov 14, 2007)
http://www.canada.com/edmontonjournal/news...ad-e3fd4bc5586d

Analyst finds properties on LRT lines gain premium over average house price increases

QUOTE Prices of homes near new extensions of the LRT and Anthony Henday Drive will rise by 10 to 20 per cent above the Edmonton average over the next three to five years, says real-estate researcher Don Campbell.

He released a report Tuesday on The Edmonton Transportation Effect, which reviews the findings of scholarly research in other cities and applies them to Edmonton.

Campbell said he expects Edmonton home prices generally to rise nine per cent in 2008 and 12 per cent in 2009. Homes that benefit from transportation improvements will outperform the market by an additional 10 to 20 per cent, he said. "When people look for a property to purchase, be it their primary residence or an investment property, they take into consideration affordability, commute times and commute costs," Campbell said.
...
Don Campbell is the founder of Real Estate Investment Network, which has 2,800 members across Canada including 780 in Edmonton. Members pay $200 per month for access to workshops and REIN research. REIN does not sell real estate.

The Edmonton Transportation Effect is available free of charge to non-members. It may be ordered by email at:
[email protected]

Campbell, a Vancouver resident, has written two best-selling books, Real Estate Investing in Canada and 97 Tips for Canadian Real Estate Investors.

He has donated all author royalties, $311,000, to Habitat for Humanity Edmonton.

 

[BMironov]

Calgary Herald:Building record falls with $5B in permits (Nov 14, 2007)
http://www.canada.com/calgaryherald/news/c...d7-087f97fbb728

Construction mark surpassed with two months left in 2007

QUOTE In just 10 months this year, Calgary has obliterated the already-stratospheric annual record for construction value in the city, with projects already on the books valued within a hair of $5 billion.

The City of Calgary said Tuesday that between January and October, it issued building permits valued at $4.96 billion, eclipsing the nation-leading record of $4.76 billion Calgary set in all of 2006. The city`s construction business is running 26 per cent ahead of where it was at the end of October a year ago.

"The fact we have two months left in the calendar year and have already surpassed last year`s total construction values gives a clear picture of just how hot the building and development climate is in Calgary," said David Watson, the city`s general manager of planning development and assessment. The atmosphere is so busy and momentum in the economy so strong that Calgary may be on track for as much as $6 billion in construction projects this year.
...
The accelerating pace of Calgary`s frenzied construction sector was also reflected in the monthly figures for October, which hit $646 million, with non-residential building rising to $495 million, up a staggering 42 per cent from the same month of 2006. The overall figure in October 2006 was $442.7 million and year-to-date last year was $3.9 billion.

"It`s a bit surprising. There`s a lot of momentum in this economy," said University of Calgary economist Frank Atkins, who attributes the strength in construction to a backlog of demand. "Downtown, almost every corner has construction cranes."

Rising costs for materials and labour are also clearly playing a role in lifting the numbers, said Watson.
...
The latest October numbers were boosted by major permits issued for office and commercial projects that included Eighth Avenue Place at the west end of downtown, Phase 2 of the Glenmore Professional Centre, two buildings at the Great Plains Distribution Centre and Phase 2 of Millard Refrigerated Services.
...
Calgary`s residential construction sector is still growing in 2007 compared to last year, with $2.25 billion in housing construction permits issued during the January to October period, a 12 per cent increase from a year ago when the running total for homes was just over $2 billion.

Nonetheless, the increased price of new home construction -- and the declining pace of new home construction -- is clearly evident in the city`s figures over the 10-month period. For 2007, the average permit value for 4,927 single family homes was $220,010, up sharply from the average $171,062 for 6,989 new singles in 2006.

 

[BMironov]

CanWest:Record housing resales in October (Nov 15, 2007)
http://www.canada.com/topics/news/national...3e2&k=40052

QUOTE Canada`s housing market rebounded from three months of declines in October, as resales climbed to their highest level ever, the Canadian Real Estate Association reported Thursday.
...
Gains were driven by strength in the Toronto, Edmonton and Montreal markets.

For the sixth consecutive month, prices gained at least 10 per cent year-over-year.
...
"It`s still a seller`s market," said Gregory Klump, CREA`s chief economist. "Strong economic factors are continuing to support the market. Consumers are still enthusiastic about making major purchases." The association predicted however that sales volumes would slow in 2008, while remaining near record levels. October`s numbers showed a 7.6-per-cent increase over a year ago.
...
"Price increases in both Calgary and Edmonton will be more in line with a balanced market. We`ve had a huge increase in listings in both of those markets. The big run-up in prices has affected affordability and, with it, the number of people who can qualify to purchase." The average resale price rose to $333,544, a 10.6 per cent increase over a year ago.

Klump said the report shows Canada to be untainted by the sharp subprime declines that have laid waste to the U.S. housing market.

"It really highlights the fact that Canadian and American housing markets are in two completely different gears,"_Klump said, adding that he didn`t expect the U.S. economy to slide into recession and drag the Canadian market down with it.

Report available at:
http://creastats.crea.ca/natl/

 

[BMironov]

Globe and Mail:High costs trim forecast for oil sands production (Nov 15, 2007)
http://www.theglobeandmail.com/servlet/sto...ory/energy/home

QUOTE Output from Alberta`s oil sands will grow more slowly than was predicted last year as spiralling costs deter investment in the vast but difficult resource, Canada`s national energy regulator says.

The National Energy Board forecast in a report released Thursday that by 2015 Canada`s total oil output will be 4.05 million barrels of crude a day, 61 per cent greater than it was in 2005.

Of that total, 2.8 million b/d will come from the oil sands, the report states, down 200,000 b/d – an amount roughly equal to one large oil sands development – from the NEB`s forecast last year.

Not one oil sands operation has so far has been brought on stream at a cost anywhere near budget, and some have overrun initial estimates by almost 100 per cent as Alberta`s oil boom has driven up the cost of employees and materials.

The NEB estimates that the cost of adding a new b/d of synthetic crude production capacity in the oil sands now ranges between $80,000 and $100,000.

If oil prices – now nudging $100 (U.S.) a barrel – remain high, Canada`s crude output could rise to almost six million b/d by 2030, of which five million b/d would come from the oil sands, the report, entitled Canada`s Energy Future, states.

Conversely, if oil prices fall to around $35 a barrel, Canada would only produce about three million b/d of crude by 2030, and only 2.7 million b/d of that would be from the oil sands.

At the moment, that prospect appears unlikely, NEB analyst Bill Wall says.

Meanwhile, Canada will become a net importer of natural gas by around 2028 if current production and price trends continue, with the shortfall from dwindling Western Canadian output being met by liquefied natural gas from overseas.
...
Exports of electricity will increase, in part because of the anticipated construction of five new nuclear plants in Ontario and New Brunswick, the NEB states.

NAtional Energy Board report:
http://www.neb.gc.ca/clf-nsi/rthnb/nwsrls/...srls38-eng.html

 

[BMironov]

Globe and Mail:B.C.`s booming building sector (Nov 16, 2007)
http://www.reportonbusiness.com/servlet/st...lumnsBlogs/home

QUOTE British Columbia is booming, if you consider broad statistics, but there are two economies in this province. One is the construction-fuelled domestic boom, with condo sales and housing starts displaying continued strength, according to figures released this week. The other is a disastrous export picture, with the forestry and energy sectors - mainstays of B.C.`s resource-fuelled economy - both facing major downturns.The Business Council of British Columbia has just issued revised economic forecasts, now predicting growth of 3 per cent next year, down from 3.5 per cent. It`s tough to be gloomy when the provincial economy is set to expand at a 3-per-cent clip, well above the national average and far better than malingering Ontario. But Jock Finlayson, the council`s executive vice-president, manages to do so easily.
...
Rising housing prices are, without a doubt, fuelling consumer spending. Housing prices in Metro Vancouver are rising at 12-per-cent rate so far this year, according to Credit Union Central of British Columbia - tens of thousands of dollars in added wealth for even a modest condo or house in urban Vancouver. So long as housing prices keep rising at that clip, B.C. can continue with the Ponzi-like expansion where I pay you to renovate my house so you can spend the money that allows someone else to buy a home, which further inflates housing prices and allows me to once again spruce up my kitchen.

It all adds up to a dangerously familiar economic equation of consumer spending on the rise while wealth creation and investment lag, and the trade deficit soars. Even before the latest drop in exports, B.C. had the most inward-facing economy in the country, with exports accounting for a paltry 46 per cent of gross domestic product. If B.C. were a country, Mr. Finlayson says, it would be a twin to the American economy. Fortunately for the province, the rest of Canada provides an economic cushion for its dismal export performance.

And it`s getting worse. In September, exports dropped to their lowest level in three years, down to $2.46-billion from a recent peak of close to $3.2-billion two years ago, according to figures from the Credit Union Central of British Columbia. So far this year, exports from B.C. are down $1.1-billion, a 4.5-per-cent drop, with two sectors, forestry and energy, accounting for virtually all the decline.

Forecast should be published on:
http://www.bcbc.com/

BC Economic Index (October issue):
http://www.bcbc.com/Documents/BCEIndexv6n3.pdf

 

[BMironov]

Statistics Canada:Machinery and equipment price indexes (Nov 16, 2007)
http://www.statcan.ca/Daily/English/071116/d071116b.htm

QUOTE The Machinery and Equipment Price Index (MEPI) stood at 86.8 (1997=100) in the third quarter, down 3.2% from the second quarter. The import component index fell 5.0%, while the domestic index edged down 0.3%. Compared with the third quarter of 2006, the total MEPI was down 3.1%, as the import index decreased 5.0%, while the domestic index rose slightly by 0.1%.
...
The US dollar depreciated 4.9% against its Canadian counterpart in the third quarter of 2007.

Interesting to see correlation between depreciation of USD against CAD and price change between 2006 and 2007:
Total machinery and equipment price index: -3.1%
Domestic: +0.1%
Imported: -5.0%

The only sector experienced price growth is: Fishing, hunting and trapping
Everything else is lower than it was year ago.

 

[BMironov]

Globe and Mail:B.C. nearing record haul on oil leases, drill permits (Nov 19, 2007)http://www.theglobeandmail.com/servlet/sto...ory/energy/home
QUOTE British Columbia is on the verge of setting a record in 2007 for the value of petroleum leases and drilling permits.
...
Four major energy companies are in a race to tie up land holdings for shale gas plays in northeastern B.C., and last week sparked another $55-million haul for the province from leases and permits.

With one more auction to go in December, B.C. has already collected $646-million, just shy of the record $646.7-million collected in 2003. Provincial officials say most of that money is aimed at tying up a potentially huge shale gas play.

The companies involved - Houston-based EOG Resources Inc. plus EnCana Corp., Apache Canada Ltd. and Nexen Inc., all of Calgary, are tight-lipped about their land acquisitions. Data from most of their drilling activity are still confidential.
...
Heightened interest in shale gas is coming at a time when conventional natural drilling is in serious decline in Western Canada because of chronically low natural gas prices.

Of the companies involved, Houston, Tex.-based Apache has been the most forthcoming about its shale gas activities in B.C. During a conference call with analysts after the release of the company`s third-quarter financial results two weeks ago, president and chief executive officer Steven Farris said the resource potential is between three and six trillion cubic feet (tcf).

"We have an aggressive appraisal program planned this winter," he told analysts. "Apache now controls with our partner EnCana about 400,000 gross and 200,000 net acres - enough to potentially drill 1,200 net wells at four wells per section.

"We plan to drill and complete nine horizontal wells this winter, which will allow us to develop a firm view of the play`s potential, and utilize a variety of fracture stimulation programs."

 

[BMironov]

Toronto Star:15-year low forecast for auto sales (Nov 19, 2007)
http://www.wheels.ca/article/33012

QUOTE Three top investors in the automotive industry painted a grim picture Sunday for the sector in 2008, with one executive predicting a possible slump in U.S. sales to levels not seen in 15 years.

The weakest forecast is for a possible 9.4 per cent decline. But all three – Jerry York, an adviser to billionaire investor Kirk Kerkorian; financier Wilbur Ross; and Thomas Stallkamp, a former Chrysler president – were more pessimistic than many in the battered industry.

"While I am very negative on the autos sector over the next 12 to 18 months, I`m just not sure how bad it could be," York, a former board member of General Motors Corp and chief financial officer of Chrysler, said at the Reuters Autos Summit in Detroit. "We all know housing is a debacle."

U.S. light auto sales could slip to 15.5 million or less next year, York said. That would be down from near 16 million this year, a drop of 3 per cent to mark the second consecutive annual decline and the lowest tally since 1998.

Stallkamp, a partner at private equity firm Ripplewood Holdings, which owns several auto parts makers, said the market could slump to 14.5 million, the lowest level since 1993.

"I`d say it`s somewhere between 14.5 (million) and 15 (million), somewhere in there and it`s hard to tell," he said. "Today, I`m a little more towards 14.5 (million)."
...
The investors see the Big Three U.S. automakers cutting factory production instead of returning to overly generous discount deals such as GM`s zero-per cent financing offers, first rolled out after the Sept. 11, 2001, attacks.

"I think you`re going to see less discounting in general," Ross said. "Now that they have a little better control of the factories and now that the factories are a little more right sized."

None of the three predicted a recession for the U.S. economy in 2008, but York said "it feels like it`s on the way."