January 2013 Canadian Economic Fundamentals

[Ally]

Why the fiscal cliff relief won't last




A last minute deal to avert the U.S. fiscal cliff gave investors reason to celebrate on Wednesday, even as analysts warned the rally could be fleeting as an even bigger fiscal debate looms in March.




From Tokyo to New York City to London, stock markets soared after a bill was passed in the U.S. House of Representatives that scaled back a potentially devastating series of tax hikes and spending cuts that were set to take effect this month.





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[Ally]

Hearty Canadian jobs prompt cheers, fears




The strength of Canada`s labour market continues to surprise even the most optimistic forecasters, but a cooling economy, slowing housing market and delayed U.S. spending cuts promise to take their toll.




The country has enjoyed several months of better-than-expected job creation, capped Friday by a Statistics Canada report showing 39,800 new positions in December and an unemployment rate at a four-year low of 7.1 per cent.



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[Ally]

Canadians carrying debt into retirement




We've all heard the warning. Don't retire with debt. It's a four-letter word ` especially for those who've left the workforce.




But many of us aren't listening, it seems.





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[Ally]

Flood of jobs may turn to trickle in 2013



Canada churned out jobs in December at a pace that blew past expectations, but many economists warn with the economy showing signs of weakness, the good times are unlikely to last.





The Canadian economy added nearly 40,000 jobs in December, while the unemployment rate fell to 7.1 percent from the 7.5 percent at the beginning of the year, according to data released from Statistics Canada on Friday. The unemployment rate now sits at a four-year low, but is still more than a full percentage above pre-financial crisis level.





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[Ally]

Canadian unemployment rate at 4-year low





economy created 40,000 jobs in December ` all of it in full-time work ` and drove the unemployment rate to its lowest in four years, Statistics Canada said Friday.



Ontario accounted for about three-quarters of the jobs added across Canada in December and almost all of the other provinces either saw gains or stayed even. The only exception was Nova Scotia, which lost 5,000 jobs.





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[Ally]

Where the jobs are





Jobless rates for provinces and major cities across Canada.







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[Ally]

No bubble, no trouble




Like many Torontonians, Dave Pearce and his wife Jennine Profeta are struggling to find an affordable home. They currently live in a one-bedroom apartment with their infant son and it`s getting cramped. `We need more room, and soon,` Pearce says. In the city`s highly competitive real estate market, where bidding wars are still common, home ownership has so far been unfeasible for the couple. But after a decade of staggering growth, the housing market in many Canadian cities is starting to cool`a trend economists and real estate experts suggest will continue through 2014. Prospective buyers like Pearce and Profeta are smelling opportunity, but they`re not sure how to take advantage. `If there`s a downturn coming, what`s our best strategy?` Pearce wonders.




Let`s be clear: despite what some in the media would have you believe, Canada`s housing market is not at the edge of a cliff, ready to plunge into free fall. `There are articles saying we`re going to have the same kind of crash we had in the United States, but that`s not going to happen,` says Jane Londerville, a real estate and housing adviser at the University of Guelph.





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[Ally]

Canada's richest cities





An interactive map exploring the 20 richest metros in Canada.







See the map here.

 

[Ally]

Rites and wrongs: It's prediction time again





No one ` including Bank of Canada Governor Mark Carney and all those overpaid windbags on Wall Street ` really knows what the future holds.




Trying to predict what`s ahead is little more than a mug`s game. For evidence, just consider some of the bone-headed calls that have been made in past years:




In 1999, an army of tech geeks and Y2K doomsayers warned that planes would literally fall from the sky once the new millenium arrived. It never happened.





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[Ally]

Why Canada isn't heading for U.S.-style housing bust






Q What do you think is the biggest challenge facing TD in the medium term?






A No question for all banks, for insurance companies, for pension funds, it is the prospect of low interest rates for an extended period of time. I think people have this idea that, `Well, gosh, low interest rates must be good for banks.` [The truth is that] low interest rates are terrible for banks. I`ll put it in simple terms: The charges that we [have] for a bank account do not pay the costs of giving people a bank account. So as interest rates come down, the spread you earn on those [deposits] dramatically changes and that means that you have to figure out a way to deliver that chequing account for less money.





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[Ally]

Royal LePage forecasts slower pace of housing sales will reduce price growth




TORONTO - The latest Royal LePage report on Canadian real-estate shows average housing prices were up between two and four per cent in the fourth quarter of 2012 compared with the same time last year.




However, the same survey shows average prices for the three main categories of housing were down from the third quarter of 2012 ` a period that included new mortgage rules that have discouraged many first-time buyers.





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[Ally]

Brief, mild correction forecast for Canada's housing market in first half of 2013




TORONTO, Jan. 8, 2013 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today showed the average price of a home in Canada increased year-over-year between 2.0 and 4.0 per cent in the fourth quarter of 2012. Compared to 2012, fewer homes are expected to trade hands in the first half of 2013, which should slow the pace at which home prices are rising. However, by the end of 2013, Royal LePage expects the average national home price to be 1.0 per cent higher compared to 2012.




While home sales volumes slowed in the second half of 2012, house prices, for the most part, held firm. Some consumers delayed their entry into the market during 2012, faced with economic uncertainty as governments in both the U.S. and Europe struggled with debt management plans and as homes in some regions became less affordable. In the fourth quarter, standard two-storey homes rose 4.0 per cent year-over-year to $390,444, while detached bungalows increased 3.6 per cent to $356,790. National average prices for standard condominiums increased 2.0 per cent to $239,374.





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[Ally]

Rate hike unlikely in 2013 despite strong jobs report



Last week's surprisingly strong jobs report last week has raised expectations that the Bank of Canada may raise interest rates this year, but National Bank Financial economists caution that rate hikes may not be imminent just yet.





In a new research note, NBF reports that more than 300,000 net new jobs were added in Canada in calendar 2012. And, it says that Canada's stellar December employment report, in particular, "has led to a significant increase in rate hike expectations" for 2013.





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[Ally]

Apartment rents continue to rise as vacancies fall




Apartment landlords continued to impose hefty rent increases as 2012 drew to a close, although there are some early indications they could be losing their leverage with tenants.




The average nationwide monthly apartment rent was $1,048 in the fourth quarter, up 0.6% from the third quarter and up 3.8% from a year earlier, according to a report set to be released Tuesday by real-estate research firm Reis Inc. The year-over-year increase was the largest since 2007 and a sign that landlords still have the upper hand they regained in 2010.





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[Ally]

Hot or not? Canada's job market varied below the surface




Canada`s labour market put in a remarkably sturdy showing in 2012, given the choppy global economic climate and a marked slowdown in domestic activity in the last half of the year.




All told, employers churned out 312,000 jobs -- all in full time work -- and the country`s unemployment rate ebbed to a four-year low of 7.1 per cent in December from 7.5 per cent a year earlier.



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[Ally]

RBC says Canadian housing market is solid despite slow down in mortgage lending





Royal Bank CEO Gord Nixon says a slowdown in the Canadian real estate market is affecting mortgage lending but the softness is not a crisis since he expects the country's housing market will remain solid.




The head of Canada's largest bank told a RBC banking conference Tuesday that he expects the bank's consumer lending growth will slow to mid single digits but it should see an increase in commercial loans.




Nixon said the bank has relatively small exposure to the condominium market and has requirements that protect it from troubled lenders.





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[Ally]

Montreal posts house price gains in the 4th quarter of 2012






MONTREAL, Jan. 8, 2013 /CNW/ ` Today`s House Price Survey and Market Survey Forecast, issued by Royal LePage, reports that house prices on the Island of Montreal were up in the fourth quarter when compared with the same period last year. Due to the influence of new mortgage lending rules, first-time buyers were less active in the fourth quarter than in preceding years. However, repeat buyers were more active, which stimulated sales of high-end homes and upwardly skewed the average price of homes surveyed in the metropolitan area. Royal LePage is expecting the average house price to increase slightly in 2013, although the actual number of sales is expected to slightly decrease.




In the fourth quarter of 2012, the average price of a detached bungalow increased to $282,911, which was 2.2 per cent year-over-year increase. The average price of a standard two-storey house increased 5.3 per cent to $379,546, while standard condominiums rose 4.7 per cent to $240,272.





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[Ally]

Bankers expect Canadian housing market to have a soft landing despite slowdown





Canada's real estate market remains ``relatively solid'' and should experience a ``soft landing'' despite the current slowdown and fears of overbuilding in the condominium segment, the country's leading bankers said Tuesday.




Speaking to a RBC banking conference in Toronto, the country's top bankers said they don't expect a dramatic downturn like the one in the United States about five years ago.





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[Ally]

TD Tower stake swap sets new high mark for commercial property market




Two of the country`s largest pension funds have completed a real estate swap at the highest per-square-foot price to date in Canadian commercial property history.




Veteran real estate analyst Neil Downey, managing director, global equity at RBC Capital Markets, released a note to investors confirming the deal, which sources indicate is for about $465-million for a 50% stake in TD Canada Trust Tower in Toronto`s financial district.





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[Ally]

Canada's housing market cooling, but homes $1M and above still hot




OTTAWA ` While Canada`s housing market appears to be cooling, that may not be the case for homes in the rarefied listings of $1-million and above.





Speaking to a RBC banking conference in Toronto on Tuesday, the country`s top bankers said they don`t expect a dramatic downturn like one experienced by the United States about five years ago.





A new report by Southeby`s International Realty Canada says 2013 looks like a good year for sellers of top-end homes, given the stable Canadian economy, increasing employment and continuing low interest rates.





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