Enter city, area, postal code or MLS� number:
Wednesday, October 31, 2012
Should We Worry About a U.S. Style Housing Meltdown?
Benjamin Tal is a smart cat - check it out:
CIBC Deputy Chief Economist Benjamin Tal sounds like he’s getting tired of the comparisons linking the Canadian housing market to a U.S. style crash.
Canada is just not going to have a severe crash, he says in a report dubbed “Should We Worry About a U.S. Style Housing Meltdown? You could lose a “night’s sleep” if you glance at charts comparing U.S. household debt and prices before their correction with today’s Canadian housing market but Mr. Tal says a closer look reveals vast differences.
“I just think the comparisons are irrelevant,” says Mr. Tal. “There are two different questions. Are we slowing? Yes, we are slowing. But not every slowdown should be a U.S. type crash. Just because it happened there doesn’t mean it happens here.”
The biggest facts are these:
1. Adjusted Rate Mortgages Dont Exist in Canada
While the 30-year fixed rate mortgage has long been the U.S. standard, 80% of new mortgages in the U.S. went for an adjusted rate mortgage leading up to the crash. Those mortgages had teaser rates for two to three years that were almost 4.25 percentage points below prevailing rates.
“[That teaser] expires and overnight you’ve got two years worth of [Federal Reserve] increases in one day, that’s a shock,” says Mr. Tal.
2. Low percentage of Homeowners in Mortgage Arrears
He says the Canadian market has room for a soft landing which is what Australia experienced recently. “They demonstrated there is such a thing as a soft landing, interest rates went up and prices went down by 7% to 8%.”
So why are we so obsessed with comparing ourselves to the U.S.? Mr. Tal says it’s normal. “It makes sense because it happened in the U.S. and everybody was talking about it and we are going through a significant increase in house prices. I can understand why people do it but it should be based on fact.”
read the Full Article: http://natpo.st/YoEl2C
Thursday, September 13, 2012
Nordstrom Coming to Calgary First
High-end U.S. retailer Nordstrom is coming to Toronto, Ottawa, Calgary and Vancouver starting in the fall of 2014.
The announcement this morning in Toronto sees Nordstrom join a fast-growing field of foreign chains vying for coveted Canadian consumer dollars.
Officials from the Seattle-based department store chain and Cadillac Fairview say Nordstrom will be moving into space vacated by Sears and then renovated at Pacific Centre in Vancouver, Calgary’s Chinook Centre, and Rideau Centre in Ottawa.
A new store will be built at Toronto’s Sherway Gardens. The tentative timeline for the stores opening is; fall of 2014 in Calgary; spring 2015 in Ottawa and Vancouver; and fall 2016 in Toronto.
Great market news as the US retailer wants a piece of the Canadian Market.
Read the full story here: http://natpo.st/PwcYkV
Tuesday, June 12, 2012
Canada to skirt global turbulence, record healthy growth this year
A new outlook from the Royal Bank predicts Canada’s economy will skirt the global economic turbulence and rebound strongly from a slow start to the year.
The RBC’s new quarterly forecast anticipates the economy will rebound to 3.1% growth during this quarter, which ends in June, and record a 2.6% gross domestic product gain overall for both 2012 and 2013.
The optimistic view from economists at Canada’s largest bank is somewhat surprising, given the stream of negative news emanating from Europe, China and the United States.
Last week, the Bank of Canada noted that “global economic growth has weakened,” and that first quarter growth of 1.9 was disappointing.
On Friday, Statistics Canada confirmed that the strong job gains seen in March and April had flattened in May.
Meanwhile, Europe has teetered from crisis to crisis, from the threat of a Greek default and exit from the eurozone, to insolvency in Spain’s banking sector. The eurozone has announced a $125 billion bailout of its banks, but questions remain about the package.
In their report being released Tuesday morning, RBC economists attribute the soft first quarter to temporary factors — a mild winter that reduced demand on utilities, and temporary shutdowns in both energy and mining production facilities.
They believe the economy will catch up in the second quarter, noting the outsized 140,000 employment increase recorded in March and April.
More fundamental to the optimistic outlook, RBC believes that policy-makers will meet the challenge of averting disaster in Europe.
Under that assumption, the bank believes the United States will continue to bounce along with moderate growth and Canada to benefit from strong fundamentals.
The 2.6% forecast for this year is identical to RBC’s previous call in March, but about half a point below the consensus.
“We’re relatively bullish,” agreed Craig Wright, RBC’s chief economist. “On balance, conditions for growth are positive, supported by a continuation of a low interest rate environment and a Canadian financial sector that is healthy and ready to provide credit.”
Wright said a lot of the recent bad news has dampened confidence, but has not changed the overall outlook.
“It’s still basically a risk story,” he said. “In a sense it’s more of the same, we get dragged to the edge of the cliff and then get dragged back.”
The other risks the bank says must be averted are the possibility of a harder than expected landing for China, and the danger that political gridlock in the U.S. will prevent a compromise to extend stimulative fiscal measures beyond this year.
Dodging the pitfalls would enable the U.S. recovery to continue, and for Canadians to benefit, particularly exporters in the auto and industrial production sectors.
“In 2012 and 2013, we expect that a strengthening U.S. economy, a soft landing in China and an eventual return to growth in the eurozone will support the fastest pace of Canadian export growth over a two-year period since 2000,” Wright said.
Given the positive growth, Wright said he expects the Bank of Canada will start raising interest rates later this year.
The report cautions that growth will not be evenly spread. The RBC economists say western Canada will continue to dominate in growth this year, led by Alberta, but with Saskatchewan and Manitoba close behind. Ontario and B.C. are expected to mirror the national average in growth.
RBC also sees the unemployment rate in Canada remaining just above 7% until the middle of next year, which implies modest job creation going forward.
From our friends at The Finanical Post
Friday, April 20, 2012
Canadian Inflation and Interest Rates
Looks like the recent data showing a drop in the national inflation rate will NOT affect the interest rate rise in the near term:
A drop in Canada’s year-on-year inflation rate to an 18-month low in March will not delay interest rate hikes by the Bank of Canada, which is paying closer attention to economic growth, analysts said on Friday.
Statistics Canada said the annual inflation rate fell to 1.9% in March from 2.6% in February, the lowest level since the 1.9% recorded in September 2010. Analysts had forecast a rate of 2.0%.
The Bank of Canada, which targets a 2.0% inflation rate, this week made it clear it might have to start raising rates from near-historical lows because of reduced slack in the economy and increased underlying inflationary pressures.
The central bank has kept rates unchanged since September 2010.
“We now see the bank firmly in a data dependent mode as it considers when and how much of the considerable monetary stimulus currently in place will need to be withdrawn,” said TD Securities strategist David Tulk. “There is nothing in this report in our view that will influence the outlook for monetary policy.”
Story from the Financial Post: http://natpo.st/I6lNMr
Tuesday, April 17, 2012
Bank of Canada: Top 6 Summary
Today's summary of the Bank of Canada decision:
Interest rates stay at 1% Tuesday.
However, Mr. Carney’s comments send the clearest and most hawkish signal yet that rates will be moving higher — but precisely when remains to be seen.
“In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2% inflation target over the medium term,” Mr. Carney said. “The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.”
Here’s a look at the factors Mr. Carney cites as a basis for this conclusion:
The global outlook is on the upswing
Since the bank released its January Monetary Policy Report, there have been signs of improvement around the world. Europe is now expected to “emerge slowly from recession” in the second half of the year, although the risks remain high. The U.S. is benefiting from somewhat improved labour markets, financial conditions and confidence, as well as fiscal consolidation and household deleveraging. Meanwhile, emerging market economies will “moderate to a still-robust” pace supported by an easing of macroeconomic policies.
Canada’s economy firmer than expected; 2012 growth boosted
The bank has hiked its GDP forecast for 2012 higher, to 2.4% from 2.0%. “The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated,” the bank said. “As a result, business and household confidence are improving faster than forecast in January.” Mr. Carney expects domestic demand and consumption to remain the primary driver of the economy, again warning that household debt burdens are still the biggest domestic risk. Business investment will remain robust, but government spending contributions will be modest.
But 2013 growth will slow
On the other hand the bank has also trimmed its forecast for 2013 growth to 2.4% from 2.8%, returning to full capacity in the first half of that year, while maintaining a 2.2% outlook for 2014. “The BoC is signalling that it does not expect growth to materially outstrip potential growth, or the speed limit of the economy,” Mr. Holt said. “While spare capacity may close in 2013H1 it won’t trip materially into excess demand that would spark deeper inflation concerns. That’s why the guidance here is toward ‘modest’ rate hikes.”
Speaking of inflation
Mr. Carney also characterized inflation as “somewhat firmer than anticipated” in January. Total CPI inflation is expected, along with core inflation, to be around 2% for the foreseeable future. This fits with the more hawkish tone, as Mr. Carney had previously forecast inflation to ease to 1.7% for both headline and core by the fourth quarter, Mr. Porter said. “The bank is clearly uncomfortable with keeping interest rates below inflation when household debt continues to grind higher.”
The loonie will be a factor
The loonie, meanwhile, is spiking higher, up a penny and rising. Mr. Holt suspects that fiscal tightening has not been priced into the dollar and its movements will be a limiting factor on the BoC’s policy flexibility.
Commodities are still elevated
Improving global economic prospects, supply disruptions and geopolitical risk have also kept commodities prices higher, particularly oil. However, international oil is now “considerably higher than that received by Canadian producers” — a possible reference to the supply bottleneck at Cushing, Okla. that has contributed to the price gap between North American crude and London Brent. “If sustained, these oil price developments could dampen the improvement in economic momentum.” As well, exports will remain constrained due to the persistent strength of the dollar.
Read the Full article: http://natpo.st/IumE9l
Tuesday, December 20, 2011
Variable Rate Mortgage Discounts Disappearing
From our friends at the Financial Post:
The days of getting any sort of discount on a variable rate mortgage are over — again.
Those mortgages, tied to prime, have become a mainstay of the housing market. And, why not? While prime has stood at 3% at most major financial institutions, the discount has meant a rate as low as 2.1% at times this year.
However, in the last 10 days what was left of that discount — it had already been shrinking for weeks — has disappeared at all of the major banks.
You have to head back to the credit crisis of 2008 to find a similar period where the discount disappeared. At the time, consumers were paying a 100 basis point premium above prime for the privilege of a floating rate.
The new reality is expected to reshape the mortgage market in the coming months, reversing a strong trend that had seen consumers roll the dice on interest rates, confident in the belief they were not going up.
How confident were they? Well the Canadian Association of Accredited Mortgage Professionals says 37% of consumers opted for variable rate mortgages over the last year, bringing the total percentage of those with a floating rate to 31%.
To be clear, anybody with an existing mortgage is unaffected until they renew. Why would you want to renew early or lock in if your present rate is 2.1%?
“If you have three and half years left on that term you are not going to give it up,” said Vince Gaetano, of Monster Mortgage, adding you can borrow at 3.29% if you lock in for five years or 3.09% for four years. “The last decade I’ve been telling people to go variable but I’m saying go fixed [for new clients].”
The other key advantage for a term five years or longer is you get to use the rate on your contract to qualify for a mortgage as opposed to the current five-year posted rate of 5.39%. The difference means you’ll qualify for a larger loan by locking in.
“People are being heavily compelled to lock in,” says Doug Porter, deputy chief economist with the Bank of Montreal, in talking about the negligible spread between short and long-term money. Will Dunning, an economist CAAMP, said his group was not surveying consumers the last time short-term rates climbed like this so he can’t be sure what the reaction will be this time around.
Meanwhile Farhaneh Haque, director of mortgage advice and real estate secured lending with TD Canada, says she’s already seeing the effects as people shy away from variable. Her financial institution is not offering any discount at all on prime these days, a move necessitated by rising borrowing costs for the bank.
“I think there is a whole different conversation that we are having now than we were a few years ago,” says Ms. Haque, adding at today’s rates fixed products have their own attraction. “The stability it offers with a low rate makes it more affordable.”
While Benjamin Tal, deputy chief economist with CIBC World Markets, doesn’t think variable rates premiums will rise above prime, the drop in the discount we’ve seen in the last few months could impact on the housing market.
“You know 80 basis points below didn’t make much sense either. I think variable at prime is the new normal. They won’t go higher unless we get a new crisis,” says Mr. Tal, adding banks were not making much money on variable with the steep discounts so they backed away from them.
Clearly there is no discounting how dependent the housing sector has become on cheap money.
Read the full story here: http://natpo.st/t6kzgr
Wednesday, October 5, 2011
Snapshot: Canada's Housing Market
OTTAWA — Home prices rose during the third quarter of 2011, but the raw numbers may not be telling the whole story of the Canadian housing market, a new survey says.
The Royal LePage House Price Survey released Wednesday found that the average price of a home in Canada increased between 5.7% and 7.8% in the third quarter of 2011 compared with the same period last year.
The average price of a detached bungalow was $349,974, a standard two-storey home was $388,218 and a standard condominium was $239,300, according to the survey.
Royal LePage said that the rise in price defied expectations and suggested that record-low interest rates and a fairly stable Canadian economy have bolstered consumer confidence.
However, the third quarter of 2010 was a relatively weak period for housing prices, which makes the increase this year appear rosier than they are and may mask a decline in prices in the months ahead, it said.
“The strength in Canada’s national housing market conceals signs of predictable softening in some regions,” Phil Soper, president and chief executive of Royal LePage Real Estate Services, said in a statement.
“A broader slowdown is expected in the months ahead, but fears of a U.S.-style correction are completely unfounded.”
Vancouver had the highest priced homes in the country during the third quarter of 2011 and was the only city in the survey where the average bungalow or two-storey home cost more than $1 million.
Halifax, Montreal, Toronto, Saint John, N.B., and Ottawa all saw prices increase between 4.4% and 10.4%.
In Alberta, the volume of homes trading hands increased, but prices stayed soft, the survey found: Detached bungalows in Calgary fell 1% in the third quarter.
Victoria was similarly weak, with detached bungalows and standard two-storey homes falling 2% and 1.1% respectively.
See full story here: http://natpo.st/nHaHFy
Friday, June 10, 2011
Alberta Tops Country in Job Growth
More GREAT news about our economy in Alberta.
CALGARY — Alberta’s unemployment rate fell in May as the province experienced the fastest growth rate for job creation in the country over the previous 12 months.
Statistics Canada reported Friday that the province’s unemployment rate dipped to 5.4 per cent for the month, down from 5.9 per cent in April.
Employment increased by 8,500 and over the previous 12 months, employment grew by 2.8 per cent, or 56,300 jobs, the fastest growth rate in the country.
Sunday, June 5, 2011
U.S. Giant Retailer Big Lots Targeting Canadian expansion
More great news that Canada is a strong market for international investment:
U.S. giant retailer Big Lots has entered an agreement to buy the 92 Liquidation World stores in Canada and is setting its sights on opening numerous new stores under its corporate banner in the near future.
Recently, Liquidation World Inc., which began with its first store in Calgary in 1986, announced it had entered into a definitive acquisition agreement with Big Lots, the largest closeout retailer in the U.S. The offer is expected to close by July 31 subject to and shortly after receipt of shareholder and court approvals.
Tuesday, May 17, 2011
Canadian Pension Plan BUYS More Real Estate
Canada Pension Plan buys into foreign shopping malls
A few months back the CPP bought some prime Austrialian Real Estate. Now they purchased more than $700 Million dollars worth of Shopping Malls in the US and Germany.
Nice work !!
Thursday, March 31, 2011
Canada's factories on overdrive
From the Financial Post: More good signs for Canada.
OTTAWA — The Canadian economy has more momentum than most people and the Bank of Canada expected, analysts say, as real GDP grew 0.5% month-over-month in January, led by manufacturing.
The January data, released by Statistics Canada Thursday, matched a strong December performance and sets the economy up for first-quarter annualized growth of 4%-plus, economists say.
“The Canadian economy started the year on the hop,” said Douglas Porter, deputy chief economist at BMO Capital Markets, adding 4.5% annualized first-quarter growth was possible so long as there are modest gains in February and March.
This report will draw more attention to the Bank of Canada, and whether it begins to shift its tone and signal possible rate hikes by mid-year. In its last forecast, it projected 2.5% first-quarter growth. The central bank issues its next rate decision April 12 and an updated economic outlook a day later.
The 0.5% advance matched market expectations, so bond yields and the Canadian dollar were little changed in Thursday trading.
The big driver in January GDP was manufacturing, which advanced 2.8%, following a 0.8% gain in December. Statistics Canada said manufacturing growth was broadly based in both durable and non-durable goods, although metal products, motor vehicles and auto parts recorded the largest increases.
The data agency noted the recovery in vehicle and auto parts production could be attributed to some temporary factors, such as plant shutdowns for retooling in November 2010 and unfavourable weather that hampered production in December.
The services sector was limited in January to a 0.3% gain, due to a slight drop, 0.1%, in retail trade. Offsetting that, however, was a robust 1.2% rise in the transportation and warehousing component.
One surprise was a 0.5% drop in mining and oil and gas, but analysts don’t expect this trend to persist.
Overall, the goods-producing sector has posted solid gains as the U.S. economy strengthens. Nevertheless, there is some caution for data in the coming months as it will take into account political unrest in North Africa and the Middle East, and the devastating earthquake and tsunami in Japan.
“Signs of softness may be more visible in the second quarter as global turmoil and supply disruptions from the Japanese disaster in March impacts some sectors,” said Pascal Gauthier, senior economist at Toronto-Dominion Bank. “Nonetheless, we expect quarterly annualized growth to stay above 2.5% for the remainder of the year.”
Categories: | Alberta Economy | Awesome Tips | Buy a House In Calgary | Calgary Buyers | Calgary City Assessment | Calgary Commercial Real Estate | Calgary Downtown Core | Calgary Economy | Calgary Foreclosures | Calgary Home Buying | Calgary Home Repairs | Calgary Homeowners | Calgary House Tips | Calgary Landlords | Calgary Market Trends | Calgary Mortgages | Calgary No Qualifying Deals | Calgary Real Estate | Calgary Real Estate Data | Calgary Real Estate Investing | Calgary Real Estate Market | Calgary's Best Realtors | Canada Revenue Agency | Canadian Banks | Canadian Economy | Canadian Mortgages | CMHC Insurance | Contest | Copperfield | Darren Weeks | Denis Hrstic | Economics | ELITE Buyers Program | Elite Results | Elite Sellers Program | Elite Service | Energy Saver | Fast Track To Cash Flow | Fight Aids Save Taxes | First Time Buyers | Global Economics | Happy Customers | Home Inspections | Household Appliances | Inspiration | Living in Calgary | Motivation | MyHomeAgent | Okotoks | Pineridge | Real Estate in Canada | Real Estate Investing | Real Estate Investing in Calgary | Remodeling | Renovation | Save Your Money | Sell your Home in Calgary | Silverado | Smile Calgary | Stop Foreclosure | Testimonials | Top Producers | Tuscany | Unemployment | VIP BUYERS PROGRAM | Zero Down Calgary