April 2015 Canadian Economic Fundamentals

[Ally]

Boomers drive real estate market for luxury housing

Among the more surprising generational trends is that far from downsizing to smaller condos as they age, wealthy boomers are increasingly looking to upsize into luxury homes, often because they still have adult children living at home. Empty-nesters are more likely to “right-size” into bungalows and condos that are only slightly smaller than their previous home.

In many cases, boomers are taking on debt to buy luxury homes, despite the fact that the typical boomers buying in Canada’s high-end market earn an average of $500,000 and can easily afford to pay cash. Often they’re looking to take advantage of low interest rates to invest their home equity in vacation homes, investment properties or the stock market.

Read the full article here.

 

[Ally]

Economists are confident that our lending systems are strong despite IMF's recent warning bell

Although the International Monetary Fund (IMF) has recently sounded warning bells regarding the Canadian housing market, economists believe its concerns are being overplayed and should have little bearing on Canadian homebuyers and owners.

Earlier this month, the IMF released a research note that expressed unease with recent policy changes made by the federal government to help tighten mortgage lending rules and financial oversight.

Read the full article here.

 

[Ally]

Stalled pipeline projects threaten Canada's economic future, banker warns Ottawa

Canadian leaders must put aside bickering and indecision to ensure major energy projects get done before global markets move on to other suppliers, Bank of Nova Scotia Chief Executive Officer Brian Porter said Thursday in his first foray into public policy.

Read the full article here.

 

[Ally]

March 2015 housing starts in Canada

OTTAWA, ONTARIO--(Marketwired - April 10, 2015) - The trend measure of housing starts in Canada was 179,016 units in March compared to 180,236 in February, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR)[sup]1[/sup]of housing starts.

"Despite recent month-to-month changes in the SAAR, the trend in housing starts essentially held steady in March compared to February," said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. "However, the trend in housing construction has moved lower since September 2014, partly reflecting efforts to manage the level of completed but unsold units."

Read the full article here.

 

[Ally]

A snapshot of Canada's apartment market

Seventy-five per cent of Canadian apartment market is located in the Windsor-to-Quebec City corridor, but nowhere does the apartment reign supreme more than in Montreal.

Quebec’s largest city has 534,005 rental units, far outpacing Toronto’s 308,212 and Vancouver’s 106,111, according to the inaugural issue of the ROCK National Rental Market Review that uses fall 2012 to 2014 data published by Canada Mortgage and Housing Corporation and ROCK Advisors Inc.’s own research covering 20 major markets across Canada.

Read the full article here.

 

[Ally]

Canada's jobless rate: Steady for now, but may poke higher

It didn’t happen today, but Canada’s jobless rate is probably still heading higher.

The question is how high.

First, there’s the oil shock that has already sparked a spike in unemployment in Canada’s oil-sensitive regions. Then there’s the shutdown of Target Corp. in Canada, and the loss of 17,000 retail jobs there. Then there’s government restraint.

Read the full article here.

 

[Ally]

Canadians can now pay their rent by credit card - and millennials love it

A Vancouver-based company says it has signed up more than 5,000 Canadians to directly pay their rent or condominium fees with a credit card since launching almost two years ago.

Read the full article here.

 

[Ally]

Putting properties in lower-income spouse's name to save taxes? STOP and talk to your accountant first

On a fairly regular basis, we get questions like this from a husband or wife saying they want to put all the properties in their spouse’s name because the spouse doesn’t make any money, while they have a high salary. Seems like a great way to save taxes right? Not so fast!

While this sounds like a really great idea, the Canada Revenue Agency is not as keen. The Income Tax Act contains a series of rules known as “attribution rules”. These rules are intended to stop people from creating a tax benefit by shifting income or capital gains from the high income earning taxpayer, to the lower income earning, lower taxed spouse, or in some cases, another non-arm’s lengths person.

Read the full article here.

 

[Ally]

Canada's luxury home market driven by baby boom generation

The baby boom generation continues to wield strong influence in Canada's luxury housing market, both by contributing to down payments for their children and by trading up to more expensive homes, according to a report from Sotheby's.

There are 9.6 million people born between 1946 and 1965 — almost 30 per cent of the Canadian population, according to the report from Sotheby's International Realty Canada released Wednesday. Now in their 50s and 60s, the boomer buyers of luxury homes tend to have incomes of about $300,000 to $500,000 annually.

Read the full article here.

 

[Ally]

Iran nuclear deal seen cutting oil prices by $15 a barrel

Oil prices could tumble $15 a barrel next year if sanctions are lifted following a final nuclear deal with Iran, according to the Energy Information Administration.

Iran and world powers reached a preliminary agreement on April 2 that set the parameters for further negotiations needed to complete an agreement by a June 30 deadline. The re-entry of more Iranian barrels could cut the agency’s price projection by $5 to $15 a barrel, the EIA said Tuesday.

Read the full article here.

 

[Ally]

The "doable" oil price recovery

I remember July 2008 like it was yesterday. Oil price hit $145 per barrel for the first time in history. Analysts predicted that insatiable Chinese demand would drive oil price even higher; $150, $170, and even $200 per barrel were not out of the question. But by December 2008, the Financial Crisis had hammered-down oil demand, causing price to fall below $40 per barrel.

Just like in 2008, the sequence of events that culminated in the 2014 oil price crash came with surprising speed. The unexpected increase in production from war torn Libya, slowing demand from China, a large surge of US tight oil, and the upshot — OPEC’s decision to keep pumping oil at the same rate, despite falling price.

Read the full article here.

 

[Ally]

Madonna won't like it, but we are living in a millennial world

Madonna won't like to admit it, but according to Dov Baron we've moved on from the "Material Girl" and we're now living in the "Millennial world". Baron says the Millennial generation, those born after 1980 and up to 2004, place a higher priority on being part of something meaningful than did members of Gen X or Baby Boomers before them, and business hasn't worked it out yet.

With 10,000 Boomers retiring a day, Millennials will outnumber them in the workforce by 2015. In fact, the U.S. population now includes more than 70 million people from the Millennial generation.

Read the full article here.

 

[Ally]

What a recession is..and why this isn't one

Call it economic hypochondria. While regular hypochondriacs fret about every twitch and minor symptom, convinced that they signify the onset of a serious illness, economic hypochondriacs fret about every market fluctuation and data release, convinced that they signify the onset of a recession, if not the collapse of our civilization.

Hypochondriacs are often the butt of jokes, even though their condition can have genuinely debilitating effects. Economic hypochondriacs are taken rather more seriously: No publishing season is complete without at least one best-seller explaining why an economic crisis is just around the corner (“and how you can profit!&rdquo. And the bulk of economic reporting faithfully adheres to Easterbrook’s Law: “All economic news is bad.”

Read the full article here.

 

[Ally]

Why millennials are afraid to top up their TFSAs

The prospect of Prime Minister Stephen Harper following up on his four year old promise to double the money that can be socked away in a Tax-Free Savings Account (TFSA) is drawing the ire of cash-strapped Canadians who say only the wealthy have $11,000 to put away.

However CIBC's Jamie Golombek says the group least likely to max out their TFSA contributions have their priorities out of whack.

Read the full article here.

 

[Ally]

Canadian crude prices strongest in a year as refiners boost operations

Canadian crude prices are at their strongest in almost a year as U.S. refiners increase production just as oil sands operations shut for maintenance.

U.S. imports of Canadian crude fell last week as refiners ran at their highest rates in almost three months, according to Energy Information Administration data. Oil sands producers including Suncor Energy Inc., Royal Dutch Shell Plc and Syncrude Canada Ltd. plan “bigger than normal” maintenance shutdowns this month and next, Genscape Inc. said.

Read the full article here.

 

[Ally]

IMF trims Canada's growth outlook

The International Monetary Fund (IMF) has trimmed its GDP forecasts for Canada slightly amid the ongoing drag caused by lower oil prices.

In its latest global forecasts, the IMF says that it sees 2.2% growth for Canada this year, slowing further to 2.0% next year. Both calls are down 0.1 percentage points from the previous forecast. The IMF notes that lower oil prices "pose downside risks to the Canadian economy."

Read the full article here.

 

[Ally]

Vancouver NOT most expensive Canadian city for first-time home buyers

Despite being Canada’s most expensive real estate market in general, Vancouver was second to another major city in terms of how much first-time home buyers spend on a property, according to a recent survey by Genworth Canada. First-time buyers in the city spent a median of $420,000 on their first home – sneaking in at $5,000 less than the $425,000 median price spent in Toronto.

Read the full article here.

 

[Ally]

Bank of Canada slashes growth outlook

OTTAWA — The Canadian economy likely stalled in the first three months of 2015, prompting the Bank of Canada to stay the course with ultra-low interest rates and continue to assess the damage from still-low oil prices.

Policymakers on Wednesday held their benchmark lending rate at 0.75 per cent, where it has been since Governor Stephen Poloz announced a surprise drop in January from 1% — a level that been a fixture at the central bank since September 2010.

Read the full article here.

 

[Ally]

Major Chinese developer says it can't pay dollar debts

Kaisa Group Holdings Ltd. became China’s first real estate company to default on its U.S. currency debt, capping a month of distress in bond markets amid an anti-corruption probe and fueling concern that losses will spread.

The default coincides with the expiration of a 30-day grace period on $52 million of missed interest payments on two dollar-denominated bonds, according to a Hong Kong stock exchange statement Monday. Kaisa, based in the southern city of Shenzhen, is struggling to service 65 billion yuan ($10.5 billion) of debt owed to both onshore and offshore lenders while becoming embroiled in President Xi Jinping’s crackdown on graft.

Read the full article here.

 

[Ally]

Report says Canadian house prices overvalued by 35%

In a global tracking of housing prices, a prominent British publication says properties in Canada are overvalued by 35 per cent when compared with income and rent.

The Economist’s latest housing index figures found that prices are rising in 19 of 26 markets surveyed around the world.

Read the full article here.