June 2011 B.C. Economic Fundamentals

[Ally]

Prince George council opts for new Kin 4 arena




Prince George City Council has decided new is better than renovated.










At Monday's meeting, council voted to look at building a new arena, designated as Kind 4, on the P.G. Exhibition Grounds for the 2015 Canada Winter Games, rather than demolishing the current Kin 1 and replacing it.










With Mayor Dan Rogers and Coun. Don Bassermann opposed, council decided to go with the stand-alone Kin 4 option, and establish a working group to explore ways of bringing down the costs. Councillors Murry Krause and Dave Wilbur were not at the meeting, and technical difficulties prevented them from taking part electronically.





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[Ally]

Premier Clark confident in B.C.'s bid for huge shipbuilding contract




Premier Christy Clark confidently predicted a win for B.C. in a `once in a lifetime` military shipbuilding bid that could bring $15 billion in economic benefits to the province.




Seaspan, part of Washington Companies, is competing to build ships for Canada`s Coast Guard and Navy, in a contract for half of a 30-year, $35-billion federal procurement project.




Irving Shipbuilding in Halifax is also vying for the combat shipbuilding portion of the project, while two other eastern companies, Dave Shipyards of Levis, Que., and Upper Lakes Industrial and Marine of St. Catherines, Ont., compete for the non-combat shipbuilding portion.





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[Ally]

Vancouver red hot in our 'Goldilocks' housing market




The Canadian real estate industry says the housing market looks like something out of Goldilocks because it`s not `too hot and not too cold,` but don`t tell that to Vancouver buyers.




Home buyers in Canada`s most expensive city probably think the housing market in Vancouver is more comparable to the red hot oven in Hansel and Gretel.




The Vancouver market, said to be stoked by Asian speculators, continues to boost the overall national average sale price figure, which was up 8.6% in May from a year earlier to $376,817, according to the Canadian Real Estate Association. Vancouver prices were up 25.7% from a year ago to $831,555.




`Quite simply, no other city in the country is seeing anything remotely close to what`s unfolding in Vancouver. In fact, many large cities have posted price declines over the past year, notably Calgary, Edmonton and Halifax,` said Doug Porter, an economist with Bank of Montreal. `Among the other largest cities, only Toronto is showing anything close to overheating, and its 8.7% year over year price gain seems to fall well shy of bubble territory. Canada`s housing market appears to have enjoyed a healthy (but not too healthy) spring selling season, largely undeterred by generally lousy weather and the new tighter mortgage insurance rules. Most markets appear well balanced and unremarkable. Then there`s Vancouver.`





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[Ally]

Uncertain future for LNG: Analyst






Western Canadian natural gas producers seeking salvation from low domestic prices through liquefied natural gas markets in Asia could be disappointed, cautioned one analyst.




Producers hope to profit on prices currently $4 to $8 higher in Japan and Korea than in North America, and possibly see stronger prices at home even if competing export terminals spring up across the U.S.




The rationale makes sense in an open market context of supply and demand, but fundamentals can and do change quickly, noted Gerry Goobie, with Purvin & Gertz energy consultants




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[Ally]

Canada house market shows moderation: Flaherty





TORONTO - Canadian Finance Minister Jim Flaherty said on Monday he continues to monitor the country`s housing market, which has some `hot spots,` but said the situation remained stable.




`We have seen some moderation in the housing market in Canada,` Flaherty told reporters after a speech in Toronto. `There are a couple of hot spots in the country, including Vancouver, the condo market in Vancouver, but overall I`m satisfied that there is some moderation in the market.`




Last week, housing figures from the Canadian Real Estate Association (CREA) showed home resale prices slipped 0.6 per cent in May from April, partly because of the effect of stricter mortgage rules that came into effect in the spring. It was the first full month of data that reflected the new rules.






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[Ally]

Flaherty says no new mortgage rules despite record high household debt





OTTAWA ` Canadians fell even deeper in debt in the first quarter of this year, Statistics Canada reported Monday, as they used low interest rates to buy into the housing market, sending household debt to a new record high.







The report showed that household debt has risen to a new record of $1.548 trillion from $1.526 billion in the previous quarter. On a per-capita basis, the amount rose to $45,000 from $44,500 in the previous quarter.





Also worsening was the capacity of Canadians to handle that debt.





The ratio of household debt to personal disposable income increased to 147.3 per cent between January and March, the federal agency said. That surpassed the previous record of 146.2 per cent in the fourth quarter of 2010. Household debt includes mortgages, consumer credit and loans.




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[Ally]

No need to tighten mortgage rules further: Flaherty




Canada`s finance minister said Monday he had no plans to tighten mortgage rules again, stressing that the real estate market remains healthy.




`We just took action` in March and activity is already starting to moderate, Jim Flaherty told reporters in Toronto.




Mr. Flaherty`s comments came after a strong warning on the housing market from Bank of Canada governor Mark Carney last week.




Cheap credit ` while spurring the economy out of recession ` has also provoked the run-up of real estate valuations, Mr. Carney said.





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[Ally]

Gaping holes in our knowledge of the labour market




In the late 1990s, Canada opened its doors to the world`s best and brightest computer scientists, luring them with the promise of steady, well-paying jobs.




Then the bubble burst. Thousands of Web designers and engineers were forced into joblessness or underemployment. The knock-on effect was to dramatically widen the earnings gap between recent immigrants and Canadians ` among men, new Canadians in 2005 earned 63 cents for each dollar earned by the Canadian-born, down from 85 cents in 1980.





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[Ally]

No global double-dip slump: OECD




The world economy is slowing down due to a combination of factors such as the euro zone`s debt problems and a weak U.S. housing sector, but it is not headed for a double-dip slump, the head of the OECD said on Monday.




`We do not believe there is a return to a recession,` Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD), told reporters when asked if recent signs of a slowdown pointed to a major weakening in the global economy.





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[Ally]

EU debt crisis threat to Canadian economy: Flaherty




The sovereign debt situation in Europe could spread and pose a threat to other economies, says Finance Minister Jim Flaherty.




`There is a real danger of contagion stemming from the situation in Europe,` he told a conference of international insurance professionals in Toronto Monday morning.





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[Ally]

Indian market matures





Expansion, growth, evolution, success. Whatever Canadian entrepreneurs call it, taking their business into another country always involves risk. Expansion for Canadians used to mean the United States first and foremost, our least risky foreign market.




That was before the United States bore the brunt of the global economic downturn, making it less attractive for expansion, with little hope of improving anytime soon.




"The U.S. has some very serious economic challenges ahead of it, so it is absolutely critical that we expand our trading relationships with other countries around the world," Ed Fast, Canada's new Minister of International Trade and the Asia-Pacific Gateway, said in a recent interview. "That is why we're really focusing on countries like India."





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[Ally]

Metro Vancouver's luxury home market set to climb to new heights





VANCOUVER - Metro Vancouver`s luxury homes appear to be more popular than ever.




A survey by Macdonald Realty has concluded that Metro Vancouver is set to break all records for a fourth consecutive year, with a projected 792 sales this year of homes valued at more than $3 million ` up from the 550 luxury sales predicted earlier this year.




The 792 sales would be more than double the 375 sold in 2010 ` itself a record ` and nearly four times the 2009 sales number of 209.




The 2010 total has already been surpassed, with 384 homes over the $3-million price point sold so far in 2011, according to Macdonald Realty.




There have also been 66 homes over $5 million sold so far, and a predicted 132 over$5 million by the end of the year.






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[Ally]

Results are in for affordable housing survey



Until now, bureaucrats and statisticians measuring affordable housing in the Northeast had very little to be worried about. On paper, at least, the situation appeared manageable.





Fort St. John residents` median income has risen faster than the rest of the province, up 34 per cent from 2003 compared to 29 per cent across British Columbia, and housing prices climbed more slowly, up 123 per cent over ten years as opposed to 138 per cent for B.C. as a whole.





However, a simple conversation with most of the community`s renters, elderly and young residents revealed a very different story to City Planner, Kevin Brooks.





`There`s obviously some inaccuracy in the data from the statistics when you start comparing them to the reality on the ground,` said Brooks.





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[Ally]

Smelter to spark boom in Northwest





Rio Tinto Alcan urged contractors Wednesday to get ready for a massive $2.5-billion rebuild of its Kitimat smelter, a mega-project that is expected to spark a boom for the province's depressed northwest.




"The money is flowing," said Thom Meier, past president of the Kitimat Chamber of Commerce, of the impact the project is already having in the region.




Meier, whose own Kitimat engineering company, 101 Industries Ltd., already has $25 million in contracts, was one of 300 contractors attending a forum the mining giant held Wednesday in Vancouver for an update on the status of the modernization project.




The project had stalled during the 2008-09 recession, but is back on track for a 2014 completion, Kitimat Works Modernization project manager Michel Lamarre said at the daylong session on project opportunities.




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[Ally]

Metro mayer pitch ideas to keep Evergreen Line from going off the rails





Metro Vancouver mayors will meet with the province's transportation minister next Monday, armed with a host of suggestions aimed at keeping the Evergreen Line rapid transit project alive.




The mayors, who met privately Wednesday, refused to say what they will propose to Transportation Minister Blair Lekstrom, but some said they're optimistic they will finally be able to move forward with the 11-kilometre line linking Burnaby and Coquitlam.




The line was supposed to be operational by 2014 but has been stalled because Trans-Link doesn't have its $400-million share of the funding for the $1.4-billion project. The provincial and federal governments have committed $410 million and $417 million respectively (it's unknown where the remaining $200 million will come from).




"We've got to move forward on it or we're going to lose the funding," Surrey Mayor Dianne Watts said. "There's nothing concrete, but we've thrown some suggestions out. It's a negotiation, so until we're down that road with it I'd hate to get it off the rails."




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[Ally]

Surging China market a bright light for B.C.'s forest industry





B.C.'s forest industry may be facing tough times, but moves to diversify into the China market are paying off, according to a national report released Wednesday.




"Exports to China have skyrocketed in recent years with considerable potential for more growth," the Conference Board of Canada's Spring 2011 Outlook concluded. "According to the B.C. Ministry of Forests, Lands and Natural Resource Operations, 4.6 million cubic metres of softwood lumber products were exported to China in 2010, a 76-per-cent increase from 2009."




Regarding future potential, it said there is a huge supply gap between China's forest resources and its industry demand, so Chinese lumber imports are expected to double over the next five years to 12 billion board feet.




The growth in exports to China was a bright note in the conference board report that said despite slower production growth in 2011, Canada's wood product industry will record a second consecutive year of profitability, largely due to cost-cutting measures and diversification efforts.






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[Ally]

B.C. posts seventh-straight monthly decline in EI claims






The number of British Columbians receiving regular employment insurance fell 3.7 per cent in April, the seventh straight monthly decline, Statistics Canada reported Thursday.




The federal agency said nearly 67,000 people in the province were on EI in April, down 2,5000 from the previous month. Beneficiaries were down in six provinces, with the biggest declines seen in British Columbia and Alberta.




On a yearly basis, the number of British Columbians receiving regular benefits fell in 24 of 25 large centres (defined as those with a population of 10,000 or more).




The fastest declines were in Fort St. John, Prince George, Kamloops, Quesnel and Dawson Creek where the mining, forestry and agricultural sectors have rebounded following the global recession.






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[Ally]

Developers say HST causes construction dip in housing




Developers and construction workers across the province hope that new housing sales will pick up once the fate of the Harmonized Sales Tax is decided.




Home construction in Nanaimo is down more than 30% from this time last year, according to data from the Canadian Mortgage and Housing Corporation, and builders maintain a large part of the drop in the demand for new housing is related to uncertainty and confusion over the HST.




Nanaimo's InSight Developments has recently decided to delay a number of planned housing projects in the city and mid-Island area due to the market slump. InSight president Doug Bromage said many people are afraid to make any decisions regarding buying real estate in Nanaimo until the fate of the tax is finally decided once all the ballots in the referendum are counted, expected in late July.





Byron Gallant, president of the mid-Vancouver Island chapter of the Canadian Homebuilders Association, agreed that a lot of potential home-buyers are "sitting on the fence" and waiting until the referendum is decided before making any major real estate decisions.





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[Ally]

What's driving Vancouver house prices?




For those desperate for hard data on the effect of Chinese buyers in the Vancouver housing market, answers seemed to come from the most unlikely of sources ` China's state run newspaper.




The China Daily ran a story ` later picked up by a Forbes blog ` which said that "according to Colliers International, a real estate service provider, the proportion of Chinese buyers in Vancouver's property market is on the rise. At the end of the first quarter this year, it increased to 29 per cent of all home buyers."




The buying is attributed to a desire to move money out of the country, preferably into hard assets, as China restricts home ownership in the country in a bid to cool the market.





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[Ally]

Only 0.4% of Lower Mainland sales made by foreign buyers: Report





Just 0.4% of all homes sold in the Lower Mainland in 2010 were bought by owners with a foreign mailing address, according to researchers at Urban Futures. When just condos and apartments were considered, the proportion rose to 0.7%.







While many experts on the Vancouver property market have over the past year pointed their finger at Chinese buyers for causing the latest rise in average prices, the actual affect from abroad might be exaggerated.







`We`re dealing with pretty small numbers here,` said Urban Futures economist Ryan Berlin to B.C. Local News last week.







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