January 2010

[Ally]

Recession not truly behind Canada, Harper insists

Prime Minister Stephen Harper said on Thursday the country`s recession is not yet over, noting that the return to economic growth in a technical sense is not the only factor to be considered.

When asked in an interview with French-language broadcaster Radio-Canada if he believed the recession was over, Harper said: "I say no, and I know my friends, other economists, say the recession is over."

"That may be true in a technical sense -- growth has recommenced -- but in reality we`ve seen ... the stabilization of the world economy," he said in the interview shown to a group of journalists in Ottawa and scheduled to be broadcast in full on Sunday.

"We hope and we`re optimistic that we are going to get a boost during this year, but our position is that we must continue with the stimulus measures this year, but start planning the exit strategies," he said.

Harper also said he saw no need for major spending cuts in order to balance the federal budget in years to come, as long as Ottawa used fiscal discipline.

Read the full article here.

 

[Ally]

Navigating the Mortgage Loan Process

Please see attached for an article from Canadian Apartment Magazine.

 

[Ally]

Labour Market cut 2,600 Jobs in December, Unemployment Rate steady at 8.5%

Canada`s labour market was relatively stable in December, compared to the previous month, with the economy trimming 2,600 from payrolls. This disappointed forecasts for a 20,000 rise in employment; however, December`s slip followed a staggering 79,100 increase in November, which more than made up for the 43,200 jobs lost in October. On net, there were 33,300 new jobs created in the final quarter of 2009. The unemployment rate held steady at 8.5% as 8,900 left the labour force in the month.

December`s small-jobs decline reflected steady part-time employment with the number of full-time jobs falling by 2,400. Despite this moderation, full-time employment increased by 52,700 in the final quarter of 2009. Gains in the services-producing industries` employment totalled 9,400 in December, which masked rather substantial movements across industries. Strong gains in wholesale and retail trade, professional services, health care and accommodation services were nearly offset by falling employment in finance, insurance and real estate, public administration, business support services, transportation and warehousing. In the goods-producing industries, 12,000 jobs were cut with a rise in construction jobs being offset by declines in all other categories. Manufacturers reduced their payrolls by 9,700. Private companies cut 2,600 from payrolls, and the number of self-employed rose by 17,800, dampening the positive news in the report.

Alberta saw payrolls rise while Ontario, Manitoba and New Brunswick posted job losses.

The annual gain in the average hourly wage rate for permanent workers edged up to 2.2% from 2.1% in November, which was the slowest annual pace since March 2007.

Today`s report supports our forecast that the economy had a better quarter in the fourth quarter 2009 with 33,300 jobs created, the largest quarterly increase since the third quarter 2008 and building on the 13,200 job gains in the prior quarter. This improvement in the labour market jives with our forecast for real GDP growth of 3.4% annualized in the final quarter of 2009. Despite the rise in employment in the final half of the year, the recession took its toll on the economy in 2009 and 240,000 jobs were lost over the course of the year.

Read the full article here.

 

[Ally]

Calgary, Vancouver, Ottawa: Top Cities for Migrants

OTTAWA — Calgary, Vancouver and Ottawa were among Canada`s largest cities that made it to the `A` list in terms of places that are attractive to migrants, according to a study released Wednesday.

Some of the smaller locales to make it into the top tier in this report from the Conference Board of Canada included Waterloo, Ont., Richmond Hill, Ont., and St. John`s, N.L.

"Cities that fail to attract new people will struggle to stay prosperous and vibrant," Mario Lefebvre, the board`s director of municipal studies, said in a statement.

The cities were assessed in the following categories: society, health, economy, environment, education, innovation and housing.

Vancouver was lauded for its warm climate and "young, diverse, and multicultural population."

Calgary was ranked at the top of the list in terms of its economy and innovation, and also showed strength in the housing category.

Read the full article here.

 

[Ally]

Loonie climbs to three-month high, Commodities support

TORONTO (Reuters) - The Canadian dollar shot to a three-month high against the U.S. currency on Thursday as the greenback fell on soft U.S. economic data and the Canadian currency gained momentum after piercing key technical levels.

The Canadian unit rose as far as C$1.0245 to the U.S. dollar, or 97.61 U.S. cents, a three month high. The move was aided by a solid performance among commodity-linked currencies, but gained steam as the Canadian dollar firmly pierced C$1.0300, said Matthew Strauss, senior currency strategist at RBC Capital Markets.

"The underlying global backdrop supported commodity-based currencies but the (Canadian dollar`s) move against the U.S. dollar had more to do with important technical levels being broken," he said.

Market watchers will now wait and see if the currency is able to pierce its October 15 high of C$1.0207 to the U.S. dollar, a signal that it could quickly reach parity.

Thursday`s move higher came as the U.S. dollar and fell against the yen after data showed U.S. retail sales unexpectedly fell last month, supporting the view that the U.S. Federal Reserve will keep interest rates on hold in the foreseeable future.

At 1:06 p.m., the Canadian dollar was at C$1.0262 to the U.S. dollar, or 97.45 U.S. cents, up from Wednesday`s finish at C$1.0306 to the U.S. dollar, or 97.03 U.S. cents.

Read the full article here.

 

[Ally]

Canadian Economy will `roar like a lion`, then fizzle, CIBC says

OTTAWA -- The Canadian economy will roar back to strength in the first half of this year only to run out of fuel later in 2010 as foreign demand dwindles and the Canadian dollar appreciates on expected interest-rate hikes from the Bank of Canada, says an updated forecast from CIBC World Markets.

The economy will enter 2010 "like a lion," said Avery Shenfeld, the firm`s chief economist. "But the fading benefits of [stimulus] measures, and the lingering hangovers from the past two-years` turmoil, will see us exit like a lamb. An average-looking year for GDP growth as a whole will mask some quite varied temperature readings on a quarterly basis."

In its new outlook, CIBC World Markets envisages the Canadian economy expanding 2.3% in 2010, followed by 3% in 2011. As for the fourth quarter just passed, CIBC World Markets has pencilled growth of 3.5%.

In the first two quarters of 2010, Canadian output is expected to increase by over 3% -- 3.8% and 3.1% in the first and second quarters, respectively. Then, in the third and fourth quarters, GDP growth will be under 2%, at 1.5% and 1.9% respectively.

The previous CIBC World Markets forecast had growth of 2.1% this year and 3.8% in 2011.

The firm`s economists said momentum in the Canadian economy starting to build in the third quarter, with strong domestic demand, even though the headline growth figure came in at weak 0.4% on an annualized basis

Read the full article here.

 

[Ally]

Forestry faces two more years of pain: Report

One of the country`s leading investment firms is telling its timberlands investors to hang on for almost two more years of depressed prices while the U.S. housing market struggles to come back into balance.

Further, the Canadian forest industry is least able to weather a housing market that sputters during 2010 and 2011, Brookfield Timberlands Management says in its third quarter research report.

The report says there will be "significant down-sizing of the Canadian industry." Investments in timberlands, rather than mills, remain fundamentally strong and offer opportunities, but the report concludes that the current market "is not for the faint of heart."

Brookfield bases its two-more-years-of-pain forecast on what it calls a "glut" of homes either in foreclosure or facing foreclosure in the U.S., a growing crisis that threatens to undermine any housing recovery this year.

The Brookfield analysis, by Reid Carter, managing partner of Brookfield Timberlands Management LP., is one of the first research reports on the forest industry of 2010. Prepared for Brookfield`s own investors, it flies against views held by most analysts as recently as last December.

Carter said in an interview that he stands by his conclusions.

Read the full article here.

 

[Ally]

December Existing Home sales rise 72 per cent from a year earlier

TORONTO - The Canadian Real Estate Association says last year ended with the best December and best fourth quarter on record in terms of home resales, while prices also rose sharply from their year-earlier levels.

The association said 27,744 units were sold across Canada in December, up 72 per cent from the same month in 2008, which hit the lowest level in a decade in the wake of a global credit crunch.

December also marked the end of the strongest quarterly sales volume ever measured by CREA, with 137,957 homes sold over three months on a seasonally adjusted basis-up 2.6 per cent from the previous record set in the first quarter of 2007.

The 59 per cent year-over-year fourth quarter gain drove last year`s annual sales volume above above 2008 levels, but the number of transactions last year was 10.7 per cent below the peak reached in 2007.

The national average price for homes listed on the Multiple Listing Service in December was $337,410, which was 19 per cent higher than in December 2008, but slightly lower than the 2009 average of $348,840.

The association said the large year-over-year increase in the national average price in December reflects how much prices were skewed down in late 2008 by unusually low activity in the country`s priciest markets.

"The extraordinary decline in activity one year ago and subsequent rebound, particularly for higher-priced real estate, is stretching current year-over-year comparisons," said association chief economist Gregory Klump.

Read the full article here.

 

[Ally]

December Home Sales leap 72% to record high

OTTAWA -- Sales of existing homes reached a record high for the month of December, according the Canadian Real Estate Association, with annual sales coming in above 2008 levels.

"Sales activity in 2009 came in like a lamb and went out like a lion," CREA president Dale Ripplinger said in a release Friday.

"The continuation of unusually low interest rates may keep national sales activity near current levels over the coming months, as will a blip in housing demand in Ontario and British Columbia from homebuyers motivated to beat the introduction of the HST (harmonized sales tax)."

There were 27,744 units sold in December, up 72% from a year earlier "when activity dropped to the lowest level in a decade," CREA said.

Record highs for the month were reported in Ontario, Quebec, Saskatchewan, New Brunswick, and Newfoundland and Labrador, the industry group said.

Read the full article here.

 

[Ally]

No Housing Bubble yet: Bank of Canada

EDMONTON — The Bank of Canada does not see a housing bubble forming in Canada and clearly stated on Monday that it would not take any action to cool housing prices as the economy pulls out of recession.

David Wolf, adviser to Bank of Canada Governor Mark Carney, said housing prices, which have risen to near the record levels of 2008, appear to be in line with supply and demand fundamentals.

He said it would be a bad idea to hike interest rates earlier than planned just to target housing prices, as some have suggested.

"If the bank were to raise interest rates to cool the housing market now — when inflation is expected to remain below target for the next year and a half — we would, in essence, be dousing the entire Canadian economy with cold water, just as it emerges from recession," Wolf said in a speech.

Wolf was standing in for Deputy Governor Timothy Lane, who canceled his appearance at the last minute due to a private matter.

He spoke after a report showed Canadian housing starts rose 5.9 percent in December, their third consecutive monthly gain, beating forecasts and signaling the housing sector continues to lead the country`s economic recovery.

Read the full article here.

 

[Ally]

Canada`s hot Housing market to continue through mid-2010

OTTAWA - Canada has moved back into a seller`s market and will remain "unusually strong" through the first half of 2010 as economic conditions improve and low interest rates spur demand, according to Royal LePage`s Market Survey Forecast and House Price Survey released Thursday.

"The Canadian real estate market enters 2010 with considerable momentum from an unusually strong finish to the previous year," Phil Soper, president and chief executive of Royal LePage Real Estate Services, wrote in a statement. "The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs. This demand, coupled with a typical seasonal undersupply of homes for sale, should cause home prices to continue to appreciate significantly during the early months of the year."

The report comes hard on the heels of several others that show the market continuing to gather steam.

In early December, the Canadian Real Estate Association said sales of existing homes surged 73 per cent year over year in November, and that the average sale price has soared 19 per cent. On Wednesday, reports showed Toronto home sales shot up 115 per cent in December and that prices had gained 14 per cent year over year. More of the same is ahead, other reports have stated.

But Soper said the market`s apparent froth should ease in the second half of 2010 as supply of listed homes increases and higher interest rates temper rising home prices.

Read the full article here.

 

[Ally]

2009 resale housing market ends on a high note: MLS

Existing home sales activity reached the highest level ever for the month of December, according to statistics released by The Canadian Real Estate Association. Strong demand in the second half of 2009, especially in the fourth quarter, pushed annual sales above 2008 levels.

Residential sales activity via the Multiple Listing Service® (MLS®) of Canadian real estate boards numbered 27,744 units in December 2009. This stands 72 per cent above activity in December 2008, when activity dropped to the lowest level in a decade. New records for the month of December were reported in Ontario, Quebec, Saskatchewan, New Brunswick, and Newfoundland & Labrador.

Download the full report below.

 

[Ally]

Record House sales revive Bubble fears

The heated debate about whether the Canadian housing market is in the midst of a bubble is likely to continue into this year, thanks to December sales that set a new record for the month.

Existing homes recorded their best December ever as the recovery in the Canadian housing market saw sales climb 7.7% last year from 2008, according to the Ottawa-based Canadian Real Estate Association. Despite the impressive rebound, the 2009 market saw a decline of 10.7% from the record-breaking pace set in 2007.

The stakes are high as the Canadian housing industry battles the government, which has not ruled out tougher requirements for homebuyers to cool the market. Two scenarios rumoured to be under consideration include increasing the minimum downpayment from 5% to 10% and shortening the length of amortizations from 35 years to 25 years - moves that would drive many consumers out of the market.

This past week the mortgage brokerage industry produced a report showing much of the Canadian market has opted for locking its rates into longer terms, thereby providing a shield against rising interest rates that most predict will come by the middle of this year.

"We think that dismissing housing risks is being a tad Pollyannaish, but it`s all the rage in Ottawa circles these days," said Derek Holt, an economist with the Bank of Nova Scotia. "The industry is full of talk of an unsustainable non-bubble, whatever that is, and driving a message that borrowers are all acting out of utter forward-looking brilliance.

Read the full article here.

 

[Ally]

Home resales end `09 with a roar

Sales and prices of existing homes in Canada soared in December, capping a whirlwind 2009 that began weakly and then went on to set record highs for prices, and further stirring debate of a housing bubble.

The Canadian Real Estate Association said Friday that a total of 27,722 homes changed hands in December, up 72 per cent from the same month in 2008, when activity ground almost to a halt in the wake of the global financial crisis.

"Sales activity in 2009 came in like a lamb and went out like a lion," said CREA President Dale Ripplinger.

CREA said the national average price in December rose to $337,410, up 19 per cent year-over-year. For the year as a whole, the national average price climbed five per cent from 2008 to a record $320,333.

In the Edmonton region, the average residential price in December was $319,201, up 2.65 per cent year-over-year. For the year as a whole, Edmonton`s average price for a single-family home was $364,032 while the average for a condo was $240,322.

After the slowest start since 1996, resales in the Edmonton region reached 19,139 residential sales in 2009 to beat the forecast from the Realtors Association of Edmonton.

Read the full article here.

 

[Ally]

Don`t invest in Real Estate unless you have a financial buffer: Analysts

As Canada`s red-hot real estate market shows no signs of slowing down in 2010, analysts are beginning to caution some buyers that their best move may be to step to the sidelines.

"If you`re somebody in a situation that you have only five per cent down and you`re stretching to get in the market with a 35-year amortization, I think that would be a very precarious situation right now," said BMO Capital market economist Robert Kavcic.

Conversely, he said, "if you`re sitting on a pile of cash and looking to move into the real estate market, it would almost be a no-brainer to just wait for lower prices."

Notes of caution simmered to the surface this week after realtor Royal LePage forecast home prices would continue to "appreciate significantly" during the early months of the year. Already in 2009, they`re up 19 per cent, according to the Canadian Real Estate Association.

The trouble is that while prices are rising, incomes are not.

Yet rock-bottom borrowing costs continue to lure buyers, and investors are rushing in -- despite a shortage of listings -- for fear that if they don`t get into the market now, they`ll miss their chance.

Read the full article here.

 

[Ally]

Loonie falls 1.5 cents U.S. in biggest drop since October

TORONTO - The Canadian dollar took an unusually big dip Wednesday morning, falling about 1 1/2 cents in the biggest single-day decline since October.

The drop was attributed to a number of factors, including a report from Statistics Canada which showed that domestic inflation wasn`t as strong in December as expected.

The loonie was also impacted by renewed strength in the U.S. dollar, which climbed against the euro as well.

Currency watchers at Scotia Capital said the American dollar was ahead partly because of developments in China, where the chief banking regulator said some banks have been asked to reduce their lending.

The tighter lending polices in China increased fears of slower growth in a country that has been a major market for commodities produced by Canadian companies.

George Davis, chief technical analyst at RBC Capital Markets, also noted the Statistics Canada report on inflation further reduced the already slim possibility that the Bank of Canada will start raising interest rates before mid-year.

Read the full article here.

 

[Ally]

Column: Economic forecasting at best an educated guess

The problem with statistical regression analysis is that if you get one variable wrong — the impact of the subprime mortgage crisis in the U.S., for example — then your forecasting model might miss something big — like the worst recession since 1982.

In fact, most economists were off the mark by a wide margin on the 2009 recession. In February 2008, Central 1 Credit Union assured us that British Columbia would experience the strongest five-year rolling growth rate — during 2008-12 — since the mid-1980s. "We don`t see the B.C. economy getting hammered by the subprime mortgage crisis, the high Canadian dollar and weak U.S. export as much as the B.C. government does in the next five years," the credit union said. And we thought the government was seeing the economy through rose-coloured glasses.

Plotting data points based on eight years of boom, economists could be forgiven for projecting good times forever. Only the brave warned the bubble would burst, and they were treated with the derision usually reserved for "end of the world is nigh" doomsayers. Of course, past results do not guarantee future performance, as the mutual fund industry warns us while trumpeting their one-year, five-year and 10-year returns. So we should have anticipated that, sooner or later, the boom would go bust.

Nevertheless, it`s the job of forecasters to forecast, and, chastened by last year`s economic train wreck, they have delivered a short-term outlook that is decidedly downbeat on the pace of recovery.

On Tuesday, the B.C. Economic Forecast Council, which advises the minister of finance on the budget and fiscal plan, predicted real gross domestic product growth of 2.9 per cent this year, with average annual growth of 3.0 per cent over the 2011-14 period, down from its December forecast of 3.1 per cent. The individual forecasts by the 14 members of the council ranged from a low of 2.6 per cent to a high of 3.8 per cent. Central 1 sees growth of 2.5 per cent in 2010, following last year`s decline of 3.1 per cent, and gains of 2.6 per cent in 2011, 3.5 per cent in 2012, 4.2 per cent in 2013 and 3.8 per cent in 2014. These figures appear to be in line with other forecasts, although the Royal Bank of Canada is more bullish in the early years — 3.2 per cent in 2010 and 3.4 per cent in 2011.

Read the full article here.

 

[Ally]

Intrawest up the hill without any skis?

With less than a month to go before the opening ceremonies of the Vancouver Olympics, the company that owns the main venue for the games is in a fight with its creditors that could result in a change in ownership.

Bloomberg News is reporting that creditors to Intrawest ULC have lost patience with the owner of the Whistler Blackcomb ski resort after it missed the final payment on a US$1.4-billion loan that was originally due in October.

Fortress Investment Group LLC, which owns Intrawest, at first tried to persuade the creditors, including Davidson Kempner Capital Management LLC and Oak Hill Advisors LP, to exchange the debt for a new loan, but the offer was refused, with some creditors reportedly demanding equity instead.

Calls to Intrawest were not returned by press time.

The troubles at the ski resort operator come as British Columbia is struggling with a slumping economy and when the province won the right to host the Olympics it was hoped that the games would provide a boost for the tourism industry and help finance much needed transportation infrastructure, but since the start of the recession, some of the optimism has disappeared.

Last spring officials with the organizing committee conceded that the games are unlikely to yield a profit.

Read the full article here.

 

[Ally]

Canada`s inflation rises less than expected in December

OTTAWA — Canada`s annual rate of inflation rose to a 10-month high in December, but still remained below expectations, Statistics Canada said Wednesday.

Consumer prices were up 1.3 per cent in December compared to the same month a year earlier — mainly on gasoline prices — after a one-per-cent annual rise in November. December`s increase was the largest since February 2009.

"In December, gasoline prices were 25.6 per cent higher than they were in December 2008 . . . This follows an extended period in which they were the main contributors to year-over-year declines in overall consumer prices," the federal agency said.

The annual core inflation rate — which strips out volatile items such as energy products and certain food products — was up 1.5 per cent, matching the increase in November.

However, most economists had expected an overall inflation rate of 1.8 per cent and a core rate of around 1.9 per cent.

Read the full article here.

 

[Ally]

Global growth to exceed 3% in 2010

HONG KONG - The world`s economy is recovering more strongly than expected and the projected growth rate in 2010 is likely to beat the forecast 3 per cent, Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Wednesday.

But he said the recovery was patchy and various regions were rebounding at a varying pace.

While the recovery in most advanced economies was likely to remain sluggish and would continue to be dependant on government support, the outlook for emerging market economies was considerably better, he said in embargoed remarks ahead of a speech to the Asian Financial Forum.

He said recovery was being led by Asia among emerging market economies thanks to the resilience of domestic demand, sound economic frameworks and a swift policy response to the crisis.

Read the full article here.