November 2012 Canadian Economic Fundamentals

[Ally]

Canadian housing market to soften more than previously thought: CMHC




OTTAWA ` Canada Mortgage and Housing Corp. says the market for existing homes will be softer this year than previously forecast, although the mid-point price will continue to rise from where it was in 2011.




The Crown corporation`s latest quarterly outlook calls for up to 465,600 units of existing housing to be sold this year. That`s about 20,000 units fewer than the comparable number in CMHC`s previous outlook in August.




The mid-point price for sales of pre-existing housing is now anticipated to be $365,100 this year, about $3,000 lower than in the summer quarterly outlook.



Read the full article here.

 

[Ally]

Mining: Report chronicles rough times ahead




Vancouver-based Ivanplats Ltd.`s $300.8-million initial public offering last month will be a `litmus test` for whether Canada is ready for a revival in mining-company IPOs, PricewaterhouseCoopers LLP said.




Four mining companies sold shares for the first time on the TSX Venture Exchange in the third quarter, down from 14 a year earlier, PwC said Monday in a report. Mining IPOs on the exchange in the first nine months of 2012 fell to 25 from 34.




`There are some very significant IPOs in the pipeline that could revive the total IPO market and turn around the year, but it will require the resolution of some thorny economic issues beyond our borders` Dean Braunsteiner, a PwC partner in Toronto, said in the report.




Canada`s junior mining sector has had





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[Ally]

Will inflation keep boosting house prices? Don't bet on it




With Canadian real estate prices near record highs and sales in many Canadian cities starting to weaken significantly, recent articles have sought to quell fears by reminding readers that housing is an excellent hedge against inflation. The argument is that house prices stand to benefit from rising inflationary pressures, which some suggest are just around the corner.





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[Ally]

Emerging trends in real estate




In a world struggling to manage unprecedented debt levels and economic upheaval, Canada enjoys a stable real estate economy, its real estate markets moving along in a state of near-perpetual equilibrium ` at least compared with other volatile regions, including most obviously the U.S. From Vancouver's Pacific gateway and Alberta's oil sands in the west to Toronto's global financial centre to Halifax's shipbuilding in the east, Canada is well positioned to maintain its economic consistency.




The rest of the world has taken notice. U.S. retailers are expanding into the dependable Canadian market, immigration waves stoke growth in housing and condo sales and foreign investors try to gain footholds (most unsuccessfully) in property sectors against difficult odds: Canadians tend to buy and hold long term.





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[Ally]

Most real estate investors and developers signal that 'mediocre' is the new 'good': 2013 emerging trends in real estate forecast






TORONTO, Nov. 6, 2012 /CNW/ - The Canadian real estate market is expected to remain steady with "modestly good" investment and development prospects across most property sectors for 2013, reflecting expectations of solid supply and demand, according to the findings of the Emerging Trends in Real Estate 2013 report, released in Canada today by PwC and the Urban Land Institute (ULI).




According to survey participants, Canada's real estate market will follow along in a seeming state of near-perpetual equilibrium compared with other more volatile regions studied in the report, including most obviously the United States.





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[Ally]

While Australia embraces Asia, Canada dithers





The contrast couldn`t be clearer.




While the Australian government talks ` and acts ` as if its economic future is tied to China and

other fast-growing Asian economies, Canada remains tentative, conflicted and unsure.




The federal government`s protracted review of a proposed $15.1 billion bid by China National Offshore Oil Corp. for Calgary-based Nexen and the endless battles over proposed oil pipelines to the West Coast underline this country`s confused sense of priorities. Canada insists that it`s open for business and eager to ramp up trade with Asia ` except, it seems, when it isn`t. (Don`t ask the Harper government to clarify that just yet; it`s still working on it.)





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[Ally]

Canadians see homes as an investment, not an expense




CALGARY ` The majority of Canadians ` 77 per cent in fact ` indicate their home is an investment rather than an expense, according to a Scotiabank poll.




For Canadians who see the home as an investment, not as expense ` the differences between the regions are as follows: Quebec (79 per cent), Manitoba/Saskatchewan (80 per cent) and Alberta (69 per cent).




The Scotiabank poll found that two-thirds (69 per cent) of Canadians report owning a home and for Canadian homeowners, 40 per cent are living mortgage-free.





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[Ally]

Canada is not on the verge of a housing bubble




Marcus Arkan, CTO of Syndicate Mortgages and an experienced industry expert, has recently stated that Canadians need not fear a housing bubble. According to Mr. Arkan, the speculations regarding Canada real estate bubble has been around since the US housing market crashed.




Mr. Arkan`s analysis and statement is largely based on a report presented by Deputy Chief Economist Benjamin Tal of the Canadian Imperial Bank of Commerce (CIBC). The report which was published on 30th October sketches a detailed picture of the pre-crash environment in the US and explains how the current Canadian market is on a completely different page.





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[Ally]

Top 5 tenant gripes about condo landlords

According to Geordie Dent, executive director of the Federation of Metro Tenants' Associations (FMTA), condos are unique in terms of residential tenancy law and landlords often fail tenants when condo-specific conundrums crop up. Here are five investor missteps that can leave tenants out in the cold and send even the best renters running for purpose-built rental units.











The Problem: Raising Rent




How Landlords Fail: Jacking it Up ` Too Much




`You see this in condos built after 1991,` says Dent. `None of those condos are subject to rent control, so landlords can increase rent whatever they want, which often results in us seeing condo rents 40% higher than in other buildings.` Driving rents up can drive great tenants out, and if the new rent price is unmanageable, this can also lead to a prolonged vacancy thereafter.





Read the full article here.

 

[Ally]

Exports rise in September, but trade remains a drag on Canadian economy



OTTAWA - Canada's trade performance beat expectations in September with a smaller than expected deficit of $826 million, but economists note the sector remains a major drag on growth.





The trade report from Statistics Canada found the deficit shrinking by almost half from a downwardly revised $1.5 billion in August, aided by a welcome 1.9 per cent uptick in exports





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[Ally]

Housing starts fall in October, drops in all regions



OTTAWA - The pace of home building slowed in October to a softer reading than economists expected in a report by the federal mortgage insurer, providing yet more evidence of a cooling housing market.



Canada Mortgage and Housing Corp. said Thursday there were 17,507 actual housing starts last month. That translates into a seasonally-adjusted annual rate of 204,107 starts, down almost nine per cent from an annual rate of 223,995 recorded in September.





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[Ally]

Goldman labels Canadian real estate a 'high flyer'




Canada's housing market is being called a 'high flyer' compared to other developed economies and could be in line for a pullback in prices and new housing starts, according to Goldman Sachs economists.




While many developed economies have suffered from a housing boom-turned-bust, Canada and other countries such as Norway, Australia and Germany, have experienced an increase in home prices since the end of the financial crisis.




Some of that increase can be attributed to stronger economic growth -- particularly in commodity-heavy economies such as Canada and Australia -- compared to their peers, but also to loose monetary policy outside of their borders, the economists say.





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[Ally]

Bank reform helps economic growth: Carney




MONTREAL ` Bank of Canada governor Mark Carney says there is evidence that reforms being imposed on the world`s largest banks ` often against their will ` is contributing to economic growth and job creation, rather than the opposite as critics claim.




Canada`s top central banker, who holds the prestigious position of head of the Financial Stability Board overseeing international reform of the sector, said he will insist on timely and consistent implementation of agreed reforms.





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[Ally]

The gentrification calculation





When Nicole Babin chanced opening a secondhand clothing shop on the western fringe of Parkdale, a Toronto neighbourhood long known for rooming houses, prostitutes and cheque-cashing stores, in 2010, she was prepared for some excitement. Not as much as she got when a heroin user entered her store, Common Sort, and tried to steal a belt to wrap around his arm while shooting up. "That was definitely one of those moments," says Babin, "where I thought, 'This is a colourful neighbourhood.'"



Babin is what's known as a "retail pioneer": a brave entrepreneur who moves into an "area in transition" and waits to harvest the fruits of gentrification. For those who get the time and place right, opening a business in an underdeveloped neighbourhood can pay off big.




Such opportunities are at hand in bigger cities across Canada, says Elvin Wyly, a geography professor at the University of British Columbia and co-author of Gentrification, the first textbook on the topic. The transformation of scruffy streets and unappealing real estate into precincts of the bourgeoisie is especially strong in Toronto, Vancouver and Montreal, where population growth is driving demand for downtown real estate and pushing low-income dwellers out of once undesirable neighbourhoods.





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[Ally]

OECD: Canada to lead G7 growth over next 50 years




OTTAWA ` The 21st century may not exactly belong to Canada, but according to a major world economic body the country is going to do pretty well.




In fact, the Paris-based Organization for Economic Co-operation and Development sees Canada among the world`s leading economic lights over the next 50 years.





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[Ally]

Flaherty says he won't 'stand by' if shock pushes Canada into a recession





Canada's top financial policy-makers say they are prepared to once again come to the rescue of the economy if a looming fiscal crisis in the United States triggers a recession.







Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney both pledged Wednesday to take action to support the economy if a shock from the U.S., or Europe, threatened to once again plunge the country into recession.










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[Ally]

Canadian home prices falling, not crashing




TORONTO ` Canadian housing prices will fall 10% over the next several years and homebuilding will slow sharply in 2013, but the country`s recent property boom is not expected to end in a U.S.-style collapse, according to a Reuters poll.




The survey of 20 forecasters published on Friday showed the majority believe the Canadian government has done enough to rein in runaway prices, preventing the type of crash that has devastated the U.S. market for years.





Read the full article here.

 

[Ally]

Rail traffic takes a turn for the worse




Rail traffic turned down sharply this week as intermodal traffic dipped -6.2%. That brings the 3 month moving average to 2.7%, down sharply from last week`s reading of 3.5%. One week doesn`t make a trend, but rail trends haven`t been negative since 2009 so this is one to keep a close eye on if things continue to deteriorate. Here`s more from the AAR:




`AAR today also reported declines in rail traffic for the week ending Nov. 3, 2012, which included impacts from Hurricane Sandy. Last week U.S. railroads originated 278,230 carloads, down 6.8 percent compared with the same week last year, while intermodal volume for the week totaled 224,467 trailers and containers, down 6.2 percent compared with the same week last year





Read the full article here.

 

[Ally]

Putting the mortgage in its place






If you have older clients, they may have mortgage debt, a burden that could weigh heavily on their ability to save for retirement. And working around the problem is not likely to be easy.




According to a poll by Bank of Montreal, almost half of Canadians between the ages of 50 and 59 who own a home carry mortgage debt. Of those between the ages of 60 and 69, more than 25% still do. Making matters worse, many of those same people are likely to be among the 21 million Canadians who have unused contribution room in their RRSPs.




There's no easy solution, says Peter Drake, vice president of retirement and economic research at Fidelity Investments Canada ULC: "This question comes up often: should I pay down my mortgage or should I save for retirement? I think you can give your clients guidelines, but I'm not sure there's an answer that is right for everybody."





Read the full article here.

 

[Ally]

Competition for immigrants has Canadian companies looking for U.S. workers





'Move north young man, move north.'



According to a weekend story in the L.A. Times, employment recruiters from Alberta's oil sands industry have descended upon the state of California in a big way.





Read the full article here.