November 2011 Canadian Economic Fundamentals

[Ally]

Quebec boards launch first 'rate-my-broker' program



Online websites have long been available for students to rate their teachers and patients to rate their doctors.


And now a new program will allow Quebecers to rate their real estate brokers ` at least indirectly ` with the full approval of the Quebec Federation of Real Estate Boards.



Announced today, the new `rate my broker` program ` believed to be the first of its kind in Canada launched by a provincial board ` is part of a bigger effort to promote best real estate practices at a time when the profession is being challenged by growing options for property owners to sell their own homes.



The Quebec initiative is based on the Quality Service Certification program in the United States.


But some real estate observers are already skeptical about the utility of the new board-run program, where brokers would be participating on a voluntary basis.


What`s more, brokers are questioning the litany of fees associated with the new Quality Service Certification program.




Read the full article here.

 

[Ally]

Provincial, territorial economies all increased in 2010



The economy of every Canadian province and territory expanded in 2010, a contrast to the previous year when declines or no gains were the norm.




A Statistics Canada analysis released Tuesday shows Canada's real gross domestic product increased by 3.2 per cent in 2010. That follows a national 2.8 per cent contraction in 2009.

Region


GDP gain in 2010






Canada


3.2






N.L.


6.1






P.E.I.


2.6






N.S.


1.9






N.B.


3.1






Que.


2.5






Ont.


3.0






Man.


2.4






Sask.


4.0






Alta.


3.3






B.C.


3.0






Yukon


3.7






N.W.T.


1.1






Nunavut


11.4

Provincially, the resource-based economies of Alberta, Saskatchewan and Newfoundland and Labrador outpaced the gains in the rest of the country. Those three resource-based economies have increased relative to the rest of the country over the last decade.





Read the full article here.

 

[Ally]

Toronto drives rise in Canada's new home prices




OTTAWA ` New home prices in Canada increased by 0.2% in September, the sixth consecutive month-on-month rise, on continued strength in the heavily-populated Toronto area, Statistics Canada said on Wednesday.




The growth in the new housing price index matched analysts` expectations. Prices rose 2.3% in the 12 months to September and since mid-2010 have been well above the pre-recession levels of 2008.





Read the full article here.

 

[Ally]

Will Bank of Canada slash rates?




Remember when all the talk was when the Bank of Canada would resume its rate-hiking campaign? Such sweet and innocent days! Sheryl King, an economist at Bank of America, thinks that Europe`s worsening sovereign-debt crisis is going to push the central bank to cut its key rate ` and cut it good.








`With the Eurozone sovereign debt and banking crisis showing no sign of containment, we think the Bank of Canada (BOC) will cut rates back to the effective lower bound of 25bps early next year from 1 per cent currently,` she said in a note. In other words, the bank will cut the key rate by an enormous 0.75 percentage points.




She now expects a so-called hard-landing in Europe, meaning that the economy is in deep trouble, and that will hurt the Canadian economy. Indeed, she thinks that economic growth in the first half of 2012 is going to flirt with outright contraction.





Read the full article here.

 

[Ally]

Small rate move would spell mortgage trouble for some Canadian




A `sizeable minority` of Canadian mortgage holders would be unable to make their payments if interest rates were to increase as little as 1 per cent, according to a survey by the Canadian Association of Accredited Mortgage Professionals.




In its annual report on the state of the Canadian mortgage industry, the trade group said that the majority of Canadians could pay more on their mortgages if necessary. But there are some who would run into trouble with even a small move in rates.




`A vast majority of mortgage holders has considerable capacity to afford rises in mortgage interest rates,` the report stated, suggesting the average mortgage holder could absorb another $750 a month in monthly payments. `There is a sizable minority of about 650,000 [people] who would be challenged by rate rises of less than 1 per cent.`





Read the full article here.

 

[Ally]

Realtor-rating site Canadian first





Real estate brokers, like teachers, doctors and other professions, have long been panned and praised by anonymous users on countless generic `rate my` websites.




But for the first time in Canada, a new program launched by organized real estate will allow Quebecers to rate the men and women they hire to help buy and sell their homes.






Read the full article here.

 

[Ally]

Resource-based provinces having bigger impact on economy





OTTAWA ` Canada's resource-based provinces now constitute almost a quarter of the country's economic activity, though the corresponding decline in Central Canada disguises a more solid manufacturing base, says Statistics Canada's chief economic analyst, Philip Cross.







The federal agency said Tuesday that as of 2010 the economies of Alberta, Saskatchewan, and Newfoundland and Labrador contributed 22 per cent of the country's gross domestic product. In 2000, that figure stood at 18 per cent.







Meanwhile, Central Canada's share of output has fallen to 57 per cent from 62 per cent previously.






Read the full article here.

 

[Ally]

Billions saved via mortgage refinance




Canadians saved $2.7-billion in the past year renewing or refinancing their mortgages and they seem to be betting that interest rates are not going up anytime soon.




The Canadian Association of Accredited Mortgage Professionals says 37% of Canadians opted for a variable-rate mortgage in the past year, raising the total portion of Canadians not using fixed mortgages to 31%.




But the group maintains Canadians are not overexposed to a potential risingrate environment.





Read the full article here.

 

[Ally]

Faith in Eurozone crumbles




MONTREAL . As Italy lurchs toward default and markets test whether European leaders have the guts to save the euro, some of the continent's strongest companies are trying to dodge the mess by setting their sights on Canadian targets as a path to growth.




One relatively small takeover announced Wednesday illustrates the potential for a spurt of similar deals in the industrial sector. Hochtief AG, Germany's largest construction company, said its U.S. subsidiary, Turner, would buy a controlling stake in Edmonton-based Clark Builders for $68-million.




Privately held Clark is Canada's 17th-largest construction firm, according to Reed Construction data, generating sales of $492-million last year. The remainder of its shares are owned by employees.





Read the full article here.

 

[Ally]

Bank of Canada could slash interest rates in a big way next year




As the nail biter in Europe continues this week, two economists are predicting the Bank of Canada will move to cut rates in a big way next year.




Sheryl King, an economist at Bank of America Merril Lynch, said in a note that the volatility hitting Europe and the risk of damage to the global economy means the Bank of Canada will move to cut its benchmark interest rate to ward off the risk of recession. Her prediction is the cut will be a whopping 0.75% decrease from the current rate of 1%.




`With the Eurozone sovereign debt and banking crisis showing no sign of containment, we think the Bank of Canada will cut rates back to the effective lower bound of 25 basis points (0.25%) early next year,` she said.




Ms. King forecasts that the cut would come in two phases, with a 0.50% trim being announced during the bank`s January 17 meeting, while the second and final 0.25% cut coming during the March 8 meeting.





Read the full article here.

 

[Ally]

Energy fuels surprise Canadian trade surplus




OTTAWA ` Canada`s trade balance unexpectedly turned positive in September, with the country posting the first surplus in eight months, led by increased exports of energy products.




Statistics Canada said Thursday a jump in shipments to the rest of the world pulled Canada out of a deficit and into a surplus of $1.25 billion during the month. That followed a downwardly revised shortfall of $487 million in August and produced the first surplus since January.




Economists expected Canada to remain in a deficit position of as much as $570 million in September.





Read the full article here.

 

[Ally]

Canada posts trade surplus as exports rebound




Canada continued to defy the global slowdown as recently as September, posting a surprisingly strong expansion in exports that gave the country its first trade surplus in eight months.




Economists said the rebound in exports, despite considerable headwinds from Europe and the United States, likely pushed the increase in Canada's gross domestic product to about three per cent in the third quarter. That would be one point higher than the Bank of Canada's recently revised call.





Read the full article here.

 

[Ally]

Canadian national house prices





A September surge in home buying helped boost the number of Canadian homes sold in the first nine months of this year an unexpected 1.2 per cent compared to the same period last year, according to figures compiled by the Canadian Real Estate Association.




Sales of existing homes rose 2.7 per cent in September compared with August, according to a monthly report released Monday by CREA. On a year-over-year basis, home sales in September were up 11 per cent from the same month in 2010.




`The Canadian housing market remains a bright spot against a backdrop of mixed headline news about the global economy,` said Gary Morse, CREA President.





Read the full article here.

 

[Ally]

Canadians are tackling debt




Canadians are coming to terms with debt.




Some 36 per cent of homeowners say they are now fast-tracking their mortgages through lump-sum payments, increased monthly payments or by paying weekly or biweekly rather than monthly, according to an annual survey.




In other words, homeowners have heeded the words of Finance Minister Jim Flaherty who has warned that Canadians are carrying too much debt, says Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals which released its seventh annual report on mortgage debt Wednesday.





Read the full article here.

 

[Ally]

China's imports rise sharply, while export growth slows




BEIJING ` China imports rose sharply in October while export growth continued to slow, according to data released Thursday that suggest robust domestic demand could offset the effects of weakening demand for Chinese goods in Europe and elsewhere.




The stronger-than-expected import data may also reflect inventory buildups as Chinese importers took advantage of price swings to stock up on crude oil, copper and other commodities, analysts said.




Over all, imports rose a surprising 28.7 percent, compared with levels a year ago, far surpassing an increase in September of 20.9 percent.





Read the full article here.

 

[Ally]

2011 property tax rate analysis





REALpac and Altus Group recently announced the release of the 2011 Property Tax Rate Analysis, which is a national survey of property tax rates in major urban centres. The survey results are used to promote tax fairness and recognize those cities that maintained equitable rates.







The 2011 survey saw results that were both encouraging and alarming. Vancouver, Montreal and Toronto continued to post the highest commercial-to-residential tax ratios and were at the higher end of the spectrum. Although these ratios are concerning to REALpac, Toronto and Vancouver posted a downward trend with significant reductions for the fourth consecutive year. Montreal on the other hand, continues to trend upwards and has the possibility to be on par with Toronto and Vancouver as early as next year. Winnipeg and Edmonton maintain the lowest commercial to residential tax ratios, ensuring favourable business environments.







Read the full article here.

 

[Ally]

Summarizing the CAAMP Mortgage Market 2011 Report




There are two important reports that come out every year that are the most referenced sources for mortgage statistics in the year following. Today, CAAMP released one such report `The Annual State of the Residential Mortgage Market in Canada`, which we will be using henceforth for much of our mortgage market references!




At 30+ pages, the report is a little long, but lucky for you, we are summarising the important points below!





Read the full summary here.

 

[Ally]

Quebec boards threaten to pull out of CREA




A Quebec real estate board says it will pull out of the Canadian Real Estate Association unless CREA makes major changes, and says other equally disgruntled boards in the province are ready to follow its lead.




`We feel we pay way too much for not much in return,` says Lise Desrochers, general manager of the 248-member Chambre immobiliÃre de la Haute-Yamaska in Granby.





Read the full article here.

 

[Ally]

Cash (Flow) is King!




If there is anything I have learned as an investor in the past 5 Years is that Cash Flow is King. Positive cash flow properties combined with variable rate mortgages helped us not only survive a recession but actually prosper in it. While we were watching big name investors fall off left and right our conservatively budgeted income properties were humming right along and as interest rates dropped in the recession our margins got wider.




Was it all roses? No, certainly not! Some of our rents needed to be lowered, tenants were harder to come by and vacancies tended to be longer than I was used to in the Alberta boom times. But we were still doing just fine! Mortgages were getting paid along with our investors which is more than some investors could say. Our focus on cash flow had served us very well while others who had focused on the number of doors they owned were suffering. Cash flow investors looked like fools in the boom when we couldn`t find property. Others, with greed in their eyes, seemed to be closing on properties everywhere and we couldn`t figure out how they were making it work. Turns out neither did they!!





Read the full article here.

 

[Ally]

Multi-family market a 'safe-haven' for real estate investors




Volatile stock markets and minuscule returns from fixed income have investors looking at global real estate. But rather than single-family residential property, the hot ticket these days is multiple-family dwellings.




At a luncheon for financial analysts with the Edmonton CFA Society, Eric Bonnor, senior vice-president with Brookfield Asset Management in Toronto, quoted from the publication Emerging Trends in Real Estate 2012, a survey of 950 real estate executives by the accounting firm PricewaterhouseCoopers and the Urban Land Institute.




"Canadian real estate remains the most stable in North America," Bonner said. "Canadian investors fed up with disappointing stocks and lowyielding bonds sit on lots of funds, looking for long-term cash flowing assets like real estate, and are having trouble placing the funds that they have. Investors condition themselves to accept lower domestic returns, or go outside the country and chase higher yields."





Read the full article here.