November 2010 Canadian Economic Fundamentals

[Ally]

Hometown bias can lead real estate investors astray

Real estate is a hot topic these days. Given the possibility of interest rates rising sharply at some point, some say the property market is due for a correction. Others believe tangible assets are the best security in volatile times such as these.

Recently, I was invited to attend a family meeting of a clan we`ll call the McKenzies, a family of long-time business owners to discuss this important topic. Since coming to Canada over 45 years ago, the McKenzies have done well by owning a specialty manufacturing business. But the bulk of their wealth has come from real estate. The family holds a substantial real estate portfolio, including residential, commercial and industrial property, almost all of it in the Greater Vancouver area.

Now that mom and dad were ready to pass on the family business to their four children, the family wanted to gather perspectives on whether this focus on real estate would serve them well in the future.

Read the full article here.

 

[Ally]

The world`s most ethical oil

Last week, I had the opportunity to visit Fort McMurray`s oilsands with my Wildrose Caucus colleagues. It was truly an amazing site to behold. Not only are these multi-billion dollar projects impressive in their size and scope, just as amazing if not more so, are the lengths to which our industry is going to restore the land to its original use after mining operations are complete.

I saw dozens of wood buffalo stampeding across miles of restored grasslands that were once massive craters hundreds of feet deep only a few years earlier. I learned about the billions in investments being made in environmental research and technology, and the incredible advances that are underway to reduce water usage, tailings ponds and emissions.

To see this kind of world class development in Alberta being conducted by Albertans and Canadians left me feeling incredibly proud and hopeful for our children`s future. I don`t think Canadians, and even Albertans, realize the incredible amount of good that will flow from the riches of our northern oilsands. Think of the billions of dollars in royalties that will be used to build our health and education systems; the hundreds of new environmental and industrial technologies that will be used to reduce pollution and environmental impacts around the world; and the trillions of dollars of earnings to be enjoyed by hundreds of thousands of Canadians and their families.

There are, of course, many detractors. Most of whom are generally ignorant of the facts, or worse, knowingly ignore the facts in pursuit of an extremist ideological agenda intent on shutting down the oilsands entirely regardless of the economic devastation it would cause our province and country.

Read the full article here.

 

[Ally]

Rising mortgage rates expected to push Canadian housing costs: Royal Bank says

OTTAWA - Rising mortgage rates are expected to increase the cost of home ownership and keep house prices in check next year, according to a report by the Royal Bank.

Canada`s largest bank suggested increasing household income and an improved job market will balance supply and demand.

"We don`t see any kind of imbalances out there that need to be corrected or rectified over the next year or so, so we think that probably will translate into modest everything," RBC senior economist Robert Hogue said.

"In the near term, possibly some downward pressure on prices, but then stabilizing and moving up modestly again."

Canadian fixed-rate mortgages spiked up in the spring, but have since seen a steady decline, helping increase affordability for home buyers this year. Even the Bank of Canada, which raised its key rate and with it variable rate mortgages and lines of credit, has put additional rate hikes on hold for now.

But rates are expected to resume their march higher from near-record lows next year. That would increase the cost of borrowing money to buy, renovate or furnish a home.

Read the full article here.

 

[Ally]

RBC releases third quarter housing affordability report

To read the full report, click here.

 

[Ally]

All Provinces, except for Manitoba and Saskatchewan, can expect slower economic growth in 2011

Ottawa, November 23 — Canada`s economic recovery has lost momentum over the past few months and growth in most provincial economies will slow in 2011, according to The Conference Board of Canada`s Provincial Outlook – Autumn 2010.

"Most provinces will post solid growth this year. With the exception of Manitoba and Saskatchewan, however, all provinces can expect weaker economic growth in 2011," said Marie-Christine Bernard, Associate Director, Provincial Forecast. "As we head into 2011, provinces will have to walk a fine line between reducing fiscal deficits and facing the risk of weakening economies further."

Newfoundland and Labrador is poised to lead all provinces in economic growth this year, with real gross domestic product (GDP) forecast to expand by 4.7 per cent in 2010. Capital investments are growing in several industries, including manufacturing and metal mining. A boom in the construction industry will contribute to growth in the province for at least two more years. In 2011, real GDP is forecast to expand by a solid 3.7 per cent.

Compared to Newfoundland and Labrador, the rest of the Atlantic provinces can expect modest economic prospects in 2011. Nova Scotia`s real GDP will grow by 3 per cent this year due to strength in wholesale trade, housing, and the forestry sector. In 2011, growth is expected to moderate to 1.8 per cent, as both the provincial and federal governments begin to curb infrastructure spending. In addition to lower public investment in 2011, construction activity in the province is expected to slow following the completion of Encana`s Deep Panuke off shore natural gas platform this year and weaker housing starts.

Read the full article here.