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February 2015 Canadian Economic Fundamentals

Ally

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International Energy
Agency: Oil to Recover, Won't Return to Past Highs - Video


The price of oil is poised for a 'relatively swift' recovery following its recent moves to under $50 a barrel. But, it will not come close to returning to the highs of past years, the International Energy Agency predicted on Tuesday. The U.S. benchmark oil contract fell from nearly $110 a barrel last summer to under $45 this year before a recovery to around $53 in recent days. The IEA says the current price recovery is unlike those of the past, because of the sharp increase in production by non-OPEC countries, especially in the U.S., as well as slowing demand in China. The IEA now forecasts global oil demand to reach just over 93 million barrels a day in 2015, that's down roughly a million barrels from their previous forecast.

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Canada's oil output set to
grow more slowly.., but still grow IEA says


The International Energy Agency says Canada's crude output is expected to grow between now and the end of the decade, but not by as much as previously thought.

The IEA also says the price of crude is poised to recover soon but won't come close to the levels reached last summer.

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What are mico-condos and who is buying them?

Micro-condos are units any where between 220-400 sq. ft., but are typically between 250-320/350. These units are expertly designed to maximize space so you still have all of the creature comforts. Fold away furniture is standard issue. A bed will fold up to make room for a kitchen table. Storage space is created in every nook and cranny and is collapsible or can be hidden. Every inch is used to its maximum potential. They are really quite innovative!

These units are ideal for students, single professions, first-time buyers, etc. People willing to trade personal, private space for more public space. For example one might use a coffee shop as a sort of living space. Individuals buying these units typically want to live in the downtown core without paying downtown prices. Big cities, where space is at a premium and real estate is prohibitive, are turning to these types of developments as they offer affordable, albeit, small solutions. They are minimalist spaces designed for a certain type of lifestyle.

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The Other Side of the Story - Is Canadian Housing Overvalued?

From the desk of Ben Myers, SVP Market Research and Analytics

This is the eighth installment of my “Other Side of the Story” series, where we provide an alternative view on newspaper articles pertaining to the Canadian housing market. Our intent is not to demean the journalist or the publication, but to simply provide a further perspective on the results for Fortress, our partners and investors in the Fortress Real Capital product.

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CMHC predicts housing prices to rise, sales to slump

The average price for a home sold in Prince George will see a modest rise over the coming year, while the number of homes sold will decline slightly, according to a Canada Mortgage and Housing Corporation forecast.By the end of this year, the average price will have worked out to $277,000 on 1,260 sales, compared from $271,581 over 1,285 sales in 2014, CMHC is predicting, working out to a two per cent growth in the average price and a 1.9 per cent decline in the number of sales.

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Mortgage rate war heats up as smaller lenders offer deep discounts

Less than a month after the Bank of Canada’s surprise interest-rate cut, a renewed mortgage-rate war is in full swing. But, this time, it’s being driven by an unlikely source: smaller lenders.

Even as Canada’s big banks have cut rates to near three-year lows, small credit unions and mortgage brokers are going a step further, sacrificing profits in a fierce bid for new business.

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Canadian housing starts up in January

OTTAWA - The annual pace of new housing starts defied expectations and picked up in January as more multiple-unit starts offset a drop in single-detached starts, the Canada Mortgage and Housing Corp. says.

The federal agency said Monday that the seasonally adjusted annual rate increased to 187,276 units in January from 179,637 in December.

Economists had expected the rate to come in at 178,000, according to Thomson Reuters.

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Uncertainty hangs thick over Canada's job market this year

Unfortunately for job seekers, it’s an employer’s market this year and they’re not exactly rolling out the welcome mat.

With an economy that’s edging nervously closer to recession amid an economic shock triggered by collapsing oil prices, many employers are retrenching into wait-and-see mode, experts say.

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Average price of a home in Canada is now $401,000

There was a drop in home sales during the month of January and according to the Canadian Real Estate Association, Alberta and Saskatchewan are to blame.

Last month’s sales were down 3.1 per cent from December of 2014.

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Canadian home sales slip in January

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations fell 3.1 per cent in January 2015 compared to December 2014.

January sales were down from the previous month in about 60 per cent of all local housing markets. On a provincial basis, the monthly decline largely reflected fewer sales in Alberta and Saskatchewan.

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Reno projects hum in Western Canada

Weekend reno warriors and professional contractors alike continue to spend on home improvements in Alberta and elsewhere in Western Canada, according to Rona Inc., one of the country’s biggest sellers of building materials and tools.

But the impact of lower oil prices may well dent DIYer demand in the months ahead.

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Why oil prices must go up

It may be difficult to look beyond the current pricing environment for oil, but the depletion of low-cost reserves and the increasing inability to find major new discoveries ensures a future of expensive oil.

While analyzing the short-term trajectory of oil prices is certainly important, it obscures the fact that over the long-term, oil exploration companies may struggle to bring new sources of supply online. Ed Crooks over at the FT persuasively summarizes the predicament. Crooks says that 2014 is shaping up to be the worst year in the last six decades in terms of new oil discoveries (based on preliminary data).

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Cheap money floods commercial real estate market

The Bank of Canada’s (BoC) surprising January cut in the overnight lending rate to 0.75 per cent from one per cent could be the beginning of more BoC cuts to the benchmark interest rate. Vancouver mortgage broker Peter Kinch and others believe economic uncertainty triggered by slumping oil prices could drop lending rates to unprecedented lows. “I think we will see another Bank of Canada rate cut in March,” said Kinch, a mortgage consultant with Dominion Lending Centres.

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North American auto sales surpass 18.5 million units in 2015



TORONTO, ONTARIO and CHICAGO, ILLINOIS--(Marketwired - Feb. 20, 2015) - The North American auto sector is on pace for another record-breaking year with sales projected to surpass 18.5 million units in Canada and the U.S., according to new data from BMO Economics.

"The Canadian economy is expected to downshift to a slower growth path this year given the effects of dropping oil prices," said Alex Koustas, Economist, BMO Capital Markets. "However, the economy should still see average growth, enough to lead to a drop in the unemployment rate at the national level thanks in part to the lower dollar. Combined with rate cuts by the Bank of Canada, this should provide enough momentum in new vehicle sales to approach last year's performance."

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Will the Bank of Canada cut rates again in March?

When OPEC’s supply standoff initiated oil’s price slide last November, few foresaw just how quickly the commodity’s value would plunge. Equally surprising was how rapidly Canada’s economic policy makers reacted with a January rate cut that caught many – including the big banks – off guard. Now, as the next Overnight Lending Rate announcement looms on March 4th, borrowers and economists speculate whether the Bank of Canada has more “economic insurance” in store.

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