October 2012 Canadian Economic Fundamentals

[Ally]

New mortgage lending guidelines raise concerns




VANCOUVER ` Some real-estate industry insiders have concerns about new mortgage lending guidelines coming in this year, documents released by the Office of the Superintendent of Financial Institutions Canada reveal.




OSFI asked for comments on the new guidelines from banks, real-estate appraisers, mortgage insurers and mortgage brokers earlier this year. Based on the comments received, OSFI backed off on two ideas that were initially proposed ` a requirement for home equity lines of credit to be amortized and a requirement that people requalify when they renew their mortgage.



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[Ally]

New mortgage rules put brakes on Canada's housing market




TORONTO ` The average price of a home rose between 1.8% and 4.8% in the third quarter of 2012 compared with the same period last year, according to a survey by Royal LePage.




It says the cost of an average two-storey home in Canada increased 4% to $403,747, while detached bungalows rose 4.8% to $366,773.





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[Ally]

Everything you need to know about Canada's housing 'bubble'






Canada avoided many of the mistakes that the U.S. made in its housing market.




Banking regulations and lending standards have been much tighter, and that has prevented prices from getting completely out of control.




However, top economists including Robert Shiller and David Rosenberg are increasingly sounding alarms that the Canadian housing market is the next bubble and its about to burst.





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[Ally]

Carney says he will be clear about interest rate hikes to stem from debt problems




NANAIMO, B.C. - Bank of Canada governor Mark Carney is promising that he will be transparent about any moves the bank makes to raise interest rates in the future.




In a speech delivered in Nanaimo, B.C., Carney said he intends to ensure that Canadians know exactly what the bank is doing and why.




"If we were to lean against emerging imbalances in household debt, we would clearly declare we are doing so and indicate how long we expect it would take for inflation to return to the two per cent target," he said in notes released in Ottawa.





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[Ally]

Year-over-year home sales plunge 15.1% in September




Canada`s housing market is slowing markedly, and rapidly, but not to the extent that some observers had feared.





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[Ally]

Carney says Canadians' only fear in the global slowdown is fear itself




Bank of Canada governor Mark Carney reached back into U.S. history on Monday, saying the only thing Canadians have to fear in the current global slowdown `is fear itself.`




When U.S. President Franklin D. Roosevelt spoke those words 80 years ago, the American economy was in the depths of the Great Depression.




`But this is not the Great Depression,` Mr. Carney said in a speech in Nanaimo, B.C., to the Vancouver Island Economic Alliance.





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[Ally]

Canadian outlook still clouded despite clear economic gains




Canada`s growth pace has slowed to barely reach the two-per-cent threshold even with some impressive job gains recently, yet the Bank of Canada retains a moderate tightening bias. Simply, this means that the Bank expects to raise interest rates sooner than other central banks, most particularly, the U.S. Federal Reserve and the European Central Bank. The government also continues to lament the high level of household debt relative to income, claiming it is now above the level posted in the U.S. at the peak of the housing bubble. (I dispute this. According to our calculations, comparing apples-to-apples data, the Canadian ratio is well below the U.S. peak, although it is a bit above today`s much-reduced U.S. debt ratio.)




It is true, however, that household debt in Canada is near a record high relative to income. This is the direct reflection of record-low interest rates.





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[Ally]

Can the promise of lifestyle perks help developers sell Toronto's glut of condos?




This week, Toronto witnessed the unveiling of the condo to end all condos. Backed by theatre impresario David Mirvish and designed by Frank Gehry, a giant in his field ` known locally for the latest incarnation of the Art Gallery of Ontario, and globally for a stunning roster of buildings in places ranging from Bilbao to Prague ` the new three-tower development was announced to much fanfare.





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[Ally]

Why borrowing may force the Bank of Canada's hand on rates




Every dollar borrowed in this country is an argument in favour of higher interest rates.





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[Ally]

Vancouver real estate numbers drag down national average




VANCOUVER A slowdown in real estate sales numbers in Vancouver, particularly in single-family homes worth more than $1 million, dragged down the country`s average home price in September, the Canadian Real Estate Association said Monday.




In Metro Vancouver, the average home price was down 3.8 per cent in September from a year earlier, which CREA said skews the national average price, which was up 1.1 per cent. Excluding Vancouver, the national average price was up 3.4 per cent from a year ago.





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[Ally]

Canada's housing market to cool for rest of year




Canada's housing market to cool for rest of year: study




OTTAWA, Oct. 15 (Xinhua) -- Canada's housing market is cooling for the rest of the year, according to data released by the Canadian Real Estate Association (CREA) Monday.




Although home sales increased by 2.5 percent from August to September, last month's activity was down by 15.1 percent from September 2011, with more than half of all local markets posting declines of at least 10 percent.




"National activity is likely to remain down from year-ago levels over the fourth quarter of 2012," said Gregory Klump, chief economist with CREA.





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[Ally]

Canadian households in deep debt





OTTAWA - Canadian households are even more in debt than anyone imagined, according to a revised Statistics Canada calculation that gives a more accurate picture of family finances.







The revisions place household credit market debt in the second quarter at 163 per cent of disposable income, well above the previously reported 152 per cent, although the two levels are no longer a direct comparison.







The new numbers remove non-profit institutions from the household category, giving a more accurate accounting of family finances.







The revision shows debt growth over the last decade that looks "eerily similar to the U.S. experience, just before their dramatic housing bust," said David Madani, an analyst with Capital Economics.







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[Ally]

Small investors discover commerical real estate




Stan Vyriotes and his business partner David Wedemire have been scouring downtown Toronto streets for the last two years, looking for the perfect pension plan ` a storefront topped by a couple of apartments that they hope will keep them going in retirement.




The small businessmen ` they are both realtors ` are far from alone, according to a new ReMax report.




While residential sales may be sagging across the GTA, commercial real estate is in high demand as even amateur investors look for income-generating real estate to compensate for decimated pensions or slumping stock market holdings.





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[Ally]

Canadian manufacturers set out to shake cobwebs




Forget the high dollar, Dutch disease, cheap imports and the global economic slump.





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[Ally]

Canadian economic growth uncertain




The federal government may need to downgrade its growth projections for the Canadian economy when it releases its mid-year budget update, Finance Minister Jim Flaherty said Thursday.




The minister said prior to tabling his budget implementation bill that Canada's economy is holding up reasonably well, but is not immune to gathering global headwinds.




Flaherty said the mood at last week's meetings of finance ministers in Japan, was "not a positive one."





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[Ally]

Air Canada adding capacity to Western Canada routes to meet demand



MONTREAL - Air Canada (TSX:AC.B) says it's boosting capacity on routes in Western Canada this fall and winter to meet increased seasonal demand from Calgary, Edmonton, Vancouver and other cities in the region.



Much of the increased capacity will be in cities at the heart of Canada's energy sector, including Calgary, Edmonton and Fort McMurray, the focus of Alberta's oilsands activity.





Air Canada will offer 350 seats daily on the Calgary-Fort McMurray route and the same number on the Edmonton-Fort McMurray route, up from 300 a year earlier during the fall-winter period.





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[Ally]

Canadian businesses optimistic about 2013, one in four plan to hire




TORONTO - A new hiring survey issued by the Bank of Montreal (TSX:BMO) comes with a familiar old complaint: Good help is hard to find.




The survey released Friday by the big Canadian bank says 73 per cent of Canadian business are confident looking ahead to 2013 and nearly one in four plan to increase the size of their workforce.




In fact, taking on new staff is a priority second only to upgrading and purchasing equipment, according to BMO's Hiring Outlook Report.





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[Ally]

Canada's top 100 neighbourhoods revealed




Six months of research at Canada`s leading real estate magazine has uncovered the top 100 investment neighbourhoods in this country ` communities most likely to swerve a coming correction.




A team of journalists at Canadian Real Estate Wealth Magazine have used a host of statistics and industry analysis to form the Top 100 Neighbourhoods to Invest, the most comprehensive list of its kind. (See below for evaluation criteria.) The results ` set to hit newsstands on Oct. 22 in the magazine`s November issue ` identify the exact locations investors should focus on as a hedge against short- or long-term corrections.




While markets from all the provinces made The Top 100, number crunching and analysis uncovered several surprises that will challenge conventional thinking. Cases in point are small-town neighbourhoods in Ardrossan, Alta.; the Bowl District in Prince George, B.C.; Valley View in Brandon, Man.; and downtown central in Paradise, Nfld.





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[Ally]

Changes to the mortgage policy may not bring the desired effects




Households in Canada are facing a 152 percent increase in the ratio of debt to personal household income. There is an ever increasing burden on Canadians, especially those living in cities like Toronto and Vancouver. The alteration in the mortgage rules of the Canadian housing market were implemented to cool down the overheated household debt market but may have some undesired effects on the economy.




The main aim of these policy changes was to discourage overseas investors of their practice of buying and selling real estate at unreasonable prices. The rules were also aimed at limiting a further rise in inflation.





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[Ally]

Canada has done enough to cool housing market - Flaherty




TORONTO, Oct 20 (Reuters) - Canada has done enough to slow its housing market and prevent a crash like that seen in the United States or Spain, Finance Minister Jim Flaherty said on Saturday.




Speaking on CBC Radio, Flaherty said he had no plans to take further action to take froth out of the housing market, after a series of moves to tighten conditions for mortgage lending. The most recent change was in July.




"We've done enough, I do not intend to do any more," Flaherty said, adding that he was pleased at signs of a slowdown in key sectors of the market, like the condo market in the big cities of Toronto and Vancouver.





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