November 2013 Canadian Economic Fundamentals

[Ally]

Housing boom rests on shaky foundation



Low interest rates are a form of economic junk food.





It's true in the housing market, where low rates have glossed over a striking decline in affordability in the past two decades. A sustainably strong housing market is based on fundamentals like a reasonable match between growth in incomes and home prices, not the economic equivalent of fat and salt.





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[Ally]

House prices vs. Canadian income





This chart compares average housing price data supplied by the Canadian Real Estate Association with average annualized weekly wages for full-time workers over the past 17 years. The numbers are in current dollars, which means no adjustments for inflation have been made.







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[Ally]

Canadian homes slip in affordability in Q3





OTTAWA - Higher prices and an increase in mortgage rates have made home affordability more of a problem for the average Canadian family, says a new report from the Royal Bank of Canada (TSX:RY).







RBC's latest research on the portion of average household income needed to maintain a home shows that affordability deteriorated over the summer, the second consecutive drop in as many quarters.







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[Ally]

287,400 jobs went unfilled in Canada in Q3


Toronto, November 26, 2013 ` The number of unfilled private sector jobs remained unchanged in the third quarter from the previous quarter (2.4 per cent), according to the Canadian Federation of Independent Business` (CFIB) Help Wanted report. The smallest businesses also continued to be the hardest hit, struggling more than most to find the workers they need.





Approximately 287,400 full and part-time private sector vacancies were reported in the quarter on a seasonally adjusted basis. These results are based on regular surveys of CFIB members on economic and business conditions. Findings reflect 3,098 responses between July and September 2013 and are weighted to reflect the entire private sector labour market.





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[Ally]

Sears Canada laying off close to 800 workers



Sears Canada Inc. is laying off close to 800 employees as it reorganizes its repair services and parts business and makes cuts at head office.





The changes over the next six months will affect 712 associates in repair services and 79 at head office, it said in a news release Tuesday.





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[Ally]

IMF sees Canadian economy picking up in 2014, rates on hold





TORONTO (Reuters) - Economic growth in Canada should accelerate next year as a pick-up in the U.S. recovery boosts exports, but low inflation means the Bank of Canada can wait to raise interest rates until early 2015, the International Monetary Fund said on Wednesday.





The IMF sees Canada's economic growth accelerating to 2.25 percent in 2014 from an estimated 1.6 percent this year. While household consumption has remained robust this year, growth in exports and business investment has disappointed.







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[Ally]

Homeownership slipping away from more Canadians





A stronger housing market and increasing mortgage rates mean housing was less affordable in Q3, RBC Economics` latest housing trends and affordability report shows.



Still, lack of affordability has yet to threaten the housing market`s overall health and stability, RBC says.





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[Ally]

IMF recommends Canada scale back CMHC



The International Monetary Fund says Canada is exposing itself to risk by insuring mortgages through the Canada Mortgage and Housing Corporation and recommends scaling back the federal housing agency.





The advice is contained in the IMF's latest economic report card on Canada, which projects modest economic growth of 2.25 per cent in 2013, but warns of `downside risk` from the unstable U.S. economy.





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[Ally]

Private buyers, pension funds fuel real estate investment



The commercial real estate investment market continues to recalibrate following a summer in which interest rate movements spurred pension fund demand and spooked real estate investment trusts (REITs), according to a report.





CBRE`s Canadian Investment MarketView indicates that, as the year has progressed, private buyers came to the forefront and are now the primary source of demand for commercial property.





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[Ally]

5 hot housing markets, including some you've never heard of



Western Investor picks five hot housing markets for residential investors in 2014, including a couple of small-town sleepers that may hold the best potential in the West.





Langley Township

Langley Township's household growth is expanding by 1,125 per year, second only to Surrey as the fastest pace in B.C. The average detached house price is $447,000 and it posted the biggest increase, up 2 per cent, of any Fraser Valley community since 2012, reports Canada Mortgage and Housing Corp. The rental vacancy rate is a healthy 4.4 per cent.

In the first seven months of this year, total commercial building permits in the Township reached $24.6 million, well above the five-year annual pace of $21 million. But another number may be as important: new home construction year was more than $250 million as more than 650 new homes broke ground.





South Delta

South Delta could be the next hot housing destination, as witnessed by the sales success of the Tsawwassen Springs condo development and golf course, the beaches, the two pleasant towns ` Ladner and Tsawwassen ` that anchor it; its proximity to Vancouver; and its reasonable housing prices. Detached houses sell for about half the price of nearby Richmond.







Lately, South Delta realtor phones have started ringing a lot ` and they will likely keep ringing for years. The reasons are obvious: the new bridge to replace the aging Massey Tunnel with work to start in four years; the largest mall in B.C., Tsawwassen Mills, to be built near the B.C. Ferry terminal; the new billion-dollar South Perimeter Road freeway that opens in December; and the 950-home, 540-acre residential development being pushed forward by Century Group, all of which will generate jobs and a further population surge.





Read the full article here.