May 2014 Canadian Economic Fundamentals

[Ally]

The bank said no. No what?





Investors Group threw coals on the housing fire this week by cutting its three-year variable mortgage rate to a market-share-boosting 1.99%. Federal Finance Minister Joe Oliver is watching.





As competitive pressures among lenders push rates down to nearly unheard-of levels, the government keeps trying to cool things off. It is a delicate public/private balancing act.





CMHC, the federal mortgage insurer, recently stopped insuring mortgages on second homes and tightened requirements for the self-employed, requiring independent validation of income statements.





Read the full article here.

 

[Ally]

How over-paying for an apartment can get you a deal in real estate





We`re taught that we should never underwrite a commercial real estate deal based on future performance, always on current performance.





This is great advice, but sometimes it doesn`t match reality.





Here`s an extreme example to make my point: what if you`re looking at an empty 10-unit apartment building?





Read the full article here.

 

[Ally]

Real estate gains keep Canadian consumer sentiment near highs





Rising real estate prices and low interest rates are keeping Canadian households upbeat.





The share of Canadians who are predicting higher home prices in their neighborhood remained above 40 percent for a fifth week in the latest weekly polling by Bloomberg and Nanos Research. That`s kept consumer confidence levels at near the highest in four years, the data show.





Read the full article here.

 

[Ally]

Canada's post-slump jobs record not as impressive as believed, says BoC





OTTAWA - Canada's official unemployment rate is among the most watched economic indicators by markets and policy-makers, but it may be overestimating the actual health of the country's labour market, according to the Bank of Canada.





The central bank says in a new research paper that unemployment rates have "overstated" the jobs recovery in Canada and particularly in the U.S. because they fail to capture a complete picture of what is happening in the labour market.





In the paper, the bank creates a composite labour market indicator, or LMI, that combines a broad range of measures to paint what it says is a more accurate picture of what has occurred since the 2008-09 recession.








Read the full article here.

 

[Ally]

A slowdown sales doesn't mean that Canada's housing boom is over





For over half a year, there has been an odd situation developing in Canada`s housing market.





Home resales fell for five consecutive readings (a streak that was snapped in February) before beginning to pick up in recently. However, in both March and April, sales came in below their 10-year averages for the month, by 8.2 percent and 1 percent, respectively. At the same time, home price appreciation has continued to outpace wage growth and the rate of inflation, with the MLS Composite Home Price Index up 5 percent year-over-year in April.





Read the full article here.

 

[Ally]

Canada's economy is rebounding





The Canadian economy is rebounding from a weather-related winter slowdown and is poised to take advantage of stronger demand in the U.S., a new report says.





According to international forecasting house IHS Economics ` formerly known as IHS Global Insight ` growth will average 2.3 per cent this year, 2.5 per cent next year, and 2.7 per cent in 2016, with unemployment rates dropping to 6.5 per cent by the third year.





Read the full article here.

 

[Ally]

Workforce shrinking as boomers retire








The steady decline in the so-called participation rate continues even as the
unemployment rate drops, Royal Bank economist Nathan Janzen notes in a fresh
analysis on employment.






The participation rate is a littlereported number that tracks Canadians with
jobs and those looking for jobs as a percentage of the workingage population. It
dipped to 66.1 per cent in the latest employment data for April, down from 66.5
per cent from a year ago and from 67.8 in February 2008.





Read the full article here.

 

[Ally]

Canada's job marketing softening





OTTAWA ` A new Royal Bank analysis suggests the Canada`s labour market is already starting to feel the impact of the aging work force.





The RBC paper notes that given soft job growth in the past year, and the corresponding decline in the labour participation rate, it is easy ` and likely inaccurate ` to jump to the conclusion that many Canadians are becoming too discouraged to look for work.





Read the full article here.

 

[Ally]

CMHC reports rise in housing starts





The pace of Canadian housing starts rose in April, compared with March.






Canada Mortgage and Housing Corporation says housing starts came in at an annualized rate of 195-thousand.









That is up from 157-thousand in March -- and higher than the 175-thousand that economists had expected.





Read the full article here.

 

[Ally]

House prices to increase as new home builds slow





Canada`s national housing agency says it expects fewer homes to be built this year and next as the market absorbs a flood of new condominiums already underway.





The Canada Mortgage and Housing Corporation revised its forecast for housing starts lower for 2014 and 2015, saying it expects there to be between 160,600 and 203,600 construction starts next year.





Read the full article here.

 

[Ally]

Multi-family real estate forecast: 2014-2020





Multi-family housing construction is doing surprisingly well recently. Over the long run, housing units in buildings with five or more housing units comprise about 25 percent of all housing units constructed. So far in 2014, the figure is 35 percent. Why is multi-family so popular now?





Before reaching for a major change in attitudes about how we live, let`s consider other possibilities. Part of the story is demographics. Young adults are much more likely to live in apartments than are older adults. And the number of young adults (which I`m defining for this purpose as ages 20-34) is rising, as the children of the baby boomers come of age.





Read the full article here.

 

[Ally]

As growth in full-time workers stalls, lower quality jobs on the rise





With the exception of Alberta, job creation in Canada has been lacklustre at best in recent months.






In April, roughly 29,000 jobs were lost across the country, according to Statistics Canada `a dismal reading on employment that seems to confirm what many experts have had a hunch about: job growth is stalling.





Read the full article here.

 

[Ally]

Canada vs. U.S. unemployment





Canadians, get ready to be jealous of America`s job market once again.





After a half-decade of lower unemployment rates and greater job growth in Canada than in the U.S., the tables are beginning to turn.





Initial applications for Employment Insurance in Canada shot up to their highest level in three years in March, according to StatsCan data released this week. There were 241,580 EI claims made in March, up from 231,230 the month before.





Read the full article here.

 

[Ally]

Baby boomer tastes redesigning Canada's condo markets





Jim Case raves about his downtown Vancouver condominium, but he admits there was a time when he would never have considered living in anything other than a single-family home.





At 54, Case is considered a Baby Boomer, the wealthiest generation in Canadian history. And, like most members of this demographic, he has stubbornly resisted the urban trend towards a condo lifestyle.





Read the full article here.

 

[Ally]

Home ownership becoming increasingly difficult





It`s becoming increasingly difficult for families to own a home in Canada and affordability is only expected to get worse going forward, according to the Royal Bank of Canada.





With house prices continuing to rise, RBC said its affordability index deteriorated in the first quarter of this year ` the third quarter that has happened out of the last four ` with the deterioration particularly acute in the hot markets of Toronto, Calgary and Vancouver.





Read the full article here.

 

[Ally]

Home affordability likely to get worse





OTTAWA It's becoming increasingly difficult for families to own a home in Canada, and affordability is only expected to get worse, according to the Royal Bank of Canada.





With house prices continuing to rise, RBC said its affordability index deteriorated in the first quarter of this year ` the third quarter that has happened out of the past four ` with the deterioration particularly acute in the hot markets of Toronto, Calgary and Vancouver.





Read the full article here.

 

[Ally]

Surprise - homes becoming less affordable as prices rise, RBC says





OTTAWA ` It`s becoming increasingly difficult for families to own a home in Canada and affordability is only expected to get worse going forward, according to the Royal Bank of Canada.





With house prices continuing to rise, RBC said its affordability index deteriorated in the first quarter of this year ` the third quarter that has happened out of the last four ` with the deterioration particularly acute in the hot markets of Toronto, Calgary and Vancouver.





Read the full article here.

 

[Ally]

Mortgage battle escalates as Scotiabank offers 2.97% 5-year rate





That`s the lowest five-year fixed rate among the big banks, and comes in slightly below the 2.99 per cent rate that Bank of Montreal has sparked controversy with in recent years (Bank of Montreal`s current five-year fixed rate is 3.29 per cent).





When Bank of Montreal and Manulife Bank dropped their five-year fixed rates below 3 per cent in the spring of 2013, they raised the ire of then-finance minister Jim Flaherty, who was trying to curb growing consumer debt levels. But current Finance Minister Joe Oliver has signalled that he wants to be less involved in the mortgage market than his predecessor was.





Read the full article here.

 

[Ally]

Growing rate of first-time homebuyers





CALGARY - Low interest rates and good economic conditions have first-time homebuyers entering the Canadian housing market in `substantial` numbers, according to a report released Thursday by the Canadian Association of Accredited Mortgage Professionals.





Its latest consumer survey report, Looking for a `New Normal` in the Residential Mortgage Market, found that `homeowners appear to be happy with the decision to buy their home.`





Read the full article here.

 

[Ally]

BMO trying to increase mortgage rate share with low rates





The chief financial officer of Bank of Montreal says one of the bank's priorities is to grow their market share in mortgages.





`Our strategy in the mortgage market is to do two things. One: to grow our business and to grow our share. And second is to help Canadian consumers do the responsible thing in this environment` says Tom Flynn, chief financial officer, BMO.





Read the full article here.