September 2013 Canadian Economic Fundamentals

[Amber]

Canada, U.S. expected to see lower jobless rates




PARIS ` Unemployment rates in Canada and the United States will fall significantly by the end of next year but the overall rate among some of the world`s advanced economies will remain high, the OECD forecasts in a report issued Tuesday.






For the 34-country Organization for Economic Co-operation and Development, overall unemployment is projected to fall slightly next year to 7.8 per cent from eight per cent.






In Canada, which weathered the latest recession better than many other advanced countries, the unemployment rate was 7.1 per cent in the first quarter of this year and is projected to fall to 6.7 per cent by the end of 2014.



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[Amber]

Bank of Canada holds rate, warning recovery is losing momentum




OTTAWA ` Two months into the job, the new governor of the Bank of Canada now appears to be hedging his bets on when the long-promised, business-driven recovery will kick into gear.






Stephen Poloz and his policy team are cautioning that although the global economy is expanding `broadly as expected, its dynamic has moderated.`






And that, they say, is `delaying the anticipated rotation of demand in Canada towards exports and investment.`





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[Amber]

September Fixed Mortgage Rates To Remain Steep As Bond Yields Climb




An autumn crispness may be creeping into the air but there`s no cooldown anticipated for bond yields, the main driver of fixed mortgage rates. The new highs hit during the month of August are anticipated to continue throughout September as investors react to a potential withdrawal of U.S. economic stimulus. This will prompt lenders to respond with a hike to their fixed rate offerings. Variable rates, however, are to remain unchanged as Canadian economic growth remains below the benchmarks required to raise interest rates.






Fixed Mortgage Rates: Up: Global bond investors continue to react negatively to the possibility of a quantitative easing scale back in the U.S. This has impacted Canadian bond yields in turn, which hit new highs in the month of August, and are not anticipated to moderate in the short term. This will prompt lenders to increase the price of their fixed mortgage rates.



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[Amber]

Why real estate doomsayers continue to be wrong





Mandy Coz needs a lead. She isn`t the first sales rep from a nearby real estate brokerage to cold call my parents` home in the suburbs on behalf of a family that badly wants to become our neighbours. But she`s the most recent and she`s on the hunt for a new seller. Her clients `lost out` on another property on our street.





`This summer has been a bit unusual,` says the RE/MAX Premier Inc. sales representative, who`s located north of Toronto in Vaughan. When warmer weather hits and people start flocking to family barbecues, restaurant patios and cottage docks instead of open houses and showrooms, listings often languish. Not this year, though. More residential homes in Vaughan have been listed and sold in June and July compared to the same two-month period in 2012, according to data compiled by the Toronto Real Estate Board. The homes have sold for more too, with the median sale price up 6.1% year-over-year, translating into better business for local sales reps such as Coz. `Buyers are out in full swing. We`ve been busy during the last two months,` she says. `The market has been quite steady. It`s healthy.`





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[Amber]

Canada`s Largest Housing Markets Continue Surge in August




Sept. 5 (Bloomberg) -- Home sales in Canada`s two largest real estate markets continued their surge in August from a year earlier.






Sales in Toronto, the largest market, rose 21 percent from August last year to 7,569 units, the Toronto Real Estate Board said in a statement today, with average prices gaining 5.4 percent. Vancouver existing home sales rose 52 percent, that city`s real estate board said yesterday.






Housing-market data are showing few signs of a hard landing after warnings from economists and policy makers that a bubble may have been forming. Buyers have adjusted to tighter mortgage rules imposed last year, according to Diane Usher, president of the Toronto realtor group.



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[Amber]

Business hubs willing to pay to be near rapid transit






New research from Jones Lang LaSalle (JLL) reveals that office tenants in Toronto`s emerging business hubs are willing to pay a substantial premium for the convenience of rapid transit access.






In the firm`s inaugural Transit Report, that examines the impact of transit access on the commercial real estate market, 88 per cent of residents in the GTA indicate that it`s important to reduce congestion and increase the frequency of transit to get commuters to their destination more quickly. While this number might seem overwhelming initially, a quick look at the facts can explain this sentiment: the GTA loses approximately $6 billion each year in productivity and 26,000 jobs due to congestion; the average GTA commuter spends 82 minutes trying to get to and from work every day. That number will grow to 109 minutes if the status quo is maintained; more than two million automobile trips are made during the peak hours each morning in the GTA. That number is forecasted to reach three million by 2031, with an average vehicle holding 1.2 people; and the GTA is currently home to just over six million people. By 2031 that number is projected to be 8.7 million.





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[Amber]

Is Canada`s housing market touching down or taking off?





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[Amber]

Canada to slash federal debt-to-GDP ratio to 25 per cent by 2021: G20 summit




ST. PETERSBURG, Russia ` The Conservative government is trying to stick to its economic agenda at a G20 summit being dominated by the crisis in Syria, announcing Thursday it plans to reduce Canada`s federal debt-to-GDP to 25 per cent by 2021 ` a potential softening of what was projected just last fall.






Canada`s federal debt-to-GDP ratio ` which is considered a key indicator of the health of the economy and public finances ` was at 34.6 per cent in 2012, with the country`s net debt less than half the G7 average.






However, the government`s promise to lower the ratio to 25 per cent by 2021 is conditional, based on the country`s economic outlook.






Also, a Finance Canada report released last fall on long-term fiscal projections pegged Canada`s debt-to-GDP ratio at 23.8 per cent in 2020-21.







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[Amber]

Immigration boosting housing sector: report




With every report of continued strength in the remarkably stubborn Canadian housing market (and we have had more such indications this week), the question gets asked: How can Canada`s housing sector possibly keep this up?






National Bank Financial believes it has one compelling answer: Immigration.






In a report issued Thursday, NBF senior economist Matthieu Arseneau argued that Canada`s unusually high level of net migration in the 20-44 age group is underpinning a high rate of formation of new households in the country, and that has been driving housing demand. He noted that in 2012, Canada`s overall population growth in that age group was 1.1 per cent, compared with a decline of 0.3 per cent in the rest of the developed world. And that growth was entirely driven by immigration; without the influx of new Canadians, Canada`s population in this critical household-forming age group would have shrunk last year.





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[Amber]

Green acres: The soaring value of Canada`s farmland




In a lifetime of farming, Dwight Foster has never seen anything grow like the value of his land over the past five years. The price of a plot in and around North Gower, Ont., south of Ottawa, where he has 6,000 acres, has more than tripled since the height of the Great Recession.






`For years and years, the price of land never really changed. In the past five years, it`s done huge things,` said Mr. Foster, 47, who cultivates corn, wheat and soybeans on his land.





While irrepressible strength in housing prices has drawn attention in recent years, home values look tame next to the dramatic run-up in farm-country real estate in North Gower ` and right across the country ` where a confluence of economic factors is pitting farmers against their neighbours and sometimes hedge fund managers in a race to gather arable land.





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[Amber]

Rental apartment construction set to boom








Some of Canada`s biggest real estate owners, from pension funds to REITs to insurers, are showing more interest in developing new apartment buildings in major cities than they have in decades, a phenomenon that could change the way renters live.






The emerging trend comes in the face of what industry players characterize as a near-perfect storm: The cost of buying older apartment buildings has jumped; financing for new construction is relatively inexpensive due to low interest rates; rental demand and rents are rising; fears of provincial rent control regimes are subsiding; condo markets are weakening; and institutional real estate owners are looking for places to park their money.






`For the first time in generations it`s starting to make sense to build rental apartment buildings in big cities,` said Macquarie Securities analyst Michael Smith. `I think we`re in the early stages of a new era. If condo prices correct some more and mortgage rules get tougher, I see purpose-built rentals in big cities starting to fill the void.`





Read full article here

 

[Amber]

July building permits hit record, housing tame




Canada's construction sector showed surprising strength in July, mainly because of a sudden jump in plans for commercial buildings, with housing showing just a modest rise, according to Statistics Canada data released on Monday.






The seasonally adjusted value of building permits issued in July jumped 20.7 percent from June to a record $7.99 billion, far stronger than the 1.0 percent median forecast in a Reuters survey of economists.






Canadian authorities have been monitoring the housing market carefully for signs of a bubble, but the residential component of building permits rose by a relatively tame 4.1 percent, after a 12.8 percent fall in June and a 4.1 percent rise in May. It stood 3.4 percent below levels of a year earlier, with multiple-family buildings up slightly and single-family homes down somewhat more.







Read full article here

 

[Ally]

Immigration boosting housing sector




With every report of continued strength in the remarkably stubborn Canadian housing market (and we have had more such indications this week), the question gets asked: How can Canada`s housing sector possibly keep this up?




National Bank Financial believes it has one compelling answer: Immigration.





Read the full article here.

 

[Ally]

Tenant insurance - a renter's best friend





Back in the dark ages when I was a student, insurance never crossed my mind. I happily rented apartments with nary a care, believing my worldly possessions weren`t worth much (they were) and nothing would happen anyway (it did).







Then, one fateful summer during a work placement in Ottawa, someone broke into the apartment my roomies and I had sublet. Not much was taken, but it was a big-wake-up call that bad things can and do happen.





Read the full article here.

 

[Amber]

How to make money investing in real estate



Don Campbell thinks everyone should consider real estate. Of course, you`d expect him to think that given his firm has advised clients on real estate purchases of more than $4 billion. The senior analyst at the Real Estate Investment Network in Vancouver, says every investor should be pondering where they can fit real estate into their overall strategy given the volatilities and uncertainties of the equities market.





`A portion of your portfolio should be in housing or hard assets,` he says. `Our clients lean towards owning their own homes and direct real estate. Our philosophy is that a good piece of real estate is like a blue chip stock. It won`t make you rich overnight, but it will perform well.`





Many investors already own their own homes or are paying off mortgages, so they have a sizeable portion of their overall net worth tied to a hard asset. But there are several other ways to invest in real estate including secondary properties, real estate income trusts and alternatives such as real estate limited partnerships. The key thing to remember is that no one asset type should take up more than 50% of an investor`s portfolio, but how you get to that level can be dramatically different from person to person.





Read full article here

 

[Amber]

Real Estate owners eye development of apartments




Some of Canada's biggest real estate owners, from pension funds to REITs to insurers, are showing more interest in developing new apartment buildings in major cities than they have in decades, a phenomenon that could change the way renters live.






The emerging trend comes in the face of what industry players characterize as a near-perfect storm: The cost of buying older apartment buildings has jumped; financing for new construction is relatively inexpensive due to low interest rates; rental demand and rents are rising; fears of provincial rent control regimes are subsiding; condo markets are weakening; and institutional real estate owners are looking for places to park their money.






"For the first time in generations it's starting to make sense to build rental apartment buildings in big cities," said Macquarie Securities analyst Michael Smith. "I think we're in the early stages of a new era. If condo prices correct some more and mortgage rules get tougher, I see purpose-built rentals in big cities starting to fill the void."







Read full article here

 

[Ally]

How to make money investing in real estate




Don Campbell thinks everyone should consider real estate. Of course, you`d expect him to think that given his firm has advised clients on real estate purchases of more than $4 billion. The senior analyst at the Real Estate Investment Network in Vancouver, says every investor should be pondering where they can fit real estate into their overall strategy given the volatilities and uncertainties of the equities market.





`A portion of your portfolio should be in housing or hard assets,` he says. `Our clients lean towards owning their own homes and direct real estate. Our philosophy is that a good piece of real estate is like a blue chip stock. It won`t make you rich overnight, but it will perform well.`





Read the full article here.

 

[Ally]

Real estate owners eye development apartments




Some of Canada's biggest real estate owners, from pension funds to REITs to insurers, are showing more interest in developing new apartment buildings in major cities than they have in decades, a phenomenon that could change the way renters live.





The emerging trend comes in the face of what industry players characterize as a near-perfect storm: The cost of buying older apartment buildings has jumped; financing for new construction is relatively inexpensive due to low interest rates; rental demand and rents are rising; fears of provincial rent control regimes are subsiding; condo markets are weakening; and institutional real estate owners are looking for places to park their money.





Read the full article here.

 

[Ally]

Boomers aren't trading houses for condos


Baby boomers may be looking to trade their traditional single-family homes for the convenience and comfort of the condo craze, but a mass exodus is still a long wayoff.




So say real estate experts, who find boomers are reaching retirement age right at the end of an era of historically low interest rates. And this has conjured up fears about the impact on the housing market of a growing number of homeowners choosing to downsize to condominiums.





Read the full article here.

 

[Ally]

Canadian homeownership rate holds steady near 70%




OTTAWA ` About seven in 10 Canadian households own their homes, a number largely unchanged in recent years, according to data released Wednesday by Statistics Canada.




The latest National Household Survey data found that in 2011 approximately 9.2 million households were owners, pegging the national homeownership rate at 69 per cent.



Read the full article here.