September 2013 Canadian Economic Fundamentals

[Ally]

Rent control: A nightmare to avoid




With the prospect of higher price inflation coming, I`d like to bring up a potential risk of what might happen more often in some cities in the US and across the world, particularly in places with a more socialist view such as San Francisco.




To many investors in real estate, I`ve just stated the obvious in my title. All cities or countries that have implemented a rent control have ultimately destroyed the availability of good housing. Rent control has always been implemented only on residential housing, since the government doesn`t feel it needs to be involved in commercial real estate where the lease contract is between two businesses. But when it comes to housing, what better way to get more votes than to promote a new law that will freeze rent increases or limit their growth?





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[Ally]

Market news: The dark horse comes in



If the last year were a three-way race, the winner would be clear.




Line the rental, resale and new condo markets up at the starting line and one comes out ahead. In the year that began with the third quarter of 2012 and ended in the second quarter of 2013, 17,166 rentals were recorded across the Toronto Census Metropolitan Area (CMA). That`s compared to 14,247 sales in the resale market, and 13,789 in the new condo market.





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[Ally]

Boomer's condo exodus still long way off, say experts




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 likely still a long ways off, real-estate experts and recent retirees say.




The convergence of boomers reaching retirement age at the end of an era of historically low interest rates has conjured fear about the impact on the housing market of a growing number of homeowners choosing to downsize to condominiums.





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[Ally]

Home shoppers, don't rush to buy just to lock into cheap mortgage





The idea that low mortgage rates are gone forever sent Canadian home shoppers into a panic this summer. Thousands rushed to use their rock-bottom pre-approved mortgage rates and buy a home, contributing to a 20 to 50 per cent spike in sales last month in Canada`s biggest housing markets.




But how logical is rushing to buy a house simply because mortgage rates have risen?






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[Ally]

Housing starts 'stable' for the sixth straight month, CMHC reports




Housing starts in Canada were trending at 187,197 units in August compared to 187,324 in July, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR)[sup]1[/sup] of housing starts.





`The trend in total housing starts continued to be relatively stable for a sixth consecutive month, remaining within a narrow range of roughly 182,000 to 188,000 units since March 2013. This is in line with our forecasts,` said Mathieu Laberge, Deputy Chief Economist at CMHC.





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[Ally]

Home price surge continues in Toronto and Vancouver





Home sales in Canada's two largest real estate markets continued their surge last month from a year earlier.




Sales in Toronto, the largest market, rose 21 per cent from August last year to 7,569 units, the Toronto Real Estate Board said, with average prices gaining 5.4 per cent.





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[Ally]

Pace of housing starts slows everywhere but Ontario in August




OTTAWA ` Housing starts fell for the third consecutive month in August as developers scaled back the number of new condo and apartment buildings in urban areas, according to new data from the Canada Mortgage and Housing Corp.




The monthly seasonally adjusted rate fell to 180,291 units last month, down from 193,021 in July and 193,797 in June.




August's seasonally adjusted rate is the lowest since April, when there were 175,922 units.





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[Ally]

Don't bet against boring Canada?





Investors betting against Canadian assets are poised to lose out because the country`s growth prospects mean the securities offer protection against potential crises, Caisse de Depot et Placement du Quebec`s chief investment officer said today.





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[Ally]

Little farmland on the market




The price of farmland in southern Alberta isn`t changing like it is in many other parts of Canada.




A report from Re Max Real Estate says Canadian farmland values increased significantly year-over-year in most areas. However they changed little in southern Alberta.





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[Ally]

How much do Canadians pay for housing?




If you live in Barrie, we have bad news. You likely spend a higher percentage of your income on shelter than any other city in Canada.




This might come as a surprise to people who live in Toronto or Vancouver, where high housing prices are an everyday topic of conversation. But according to data from Statistics Canada`s National Household Survey, an ordinary Torontonian household can expect to spend about 20.55 per cent of their income on housing, putting it in fourth place nationwide.





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[Ally]

Why condo owners need household insurance





Some condo buyers think they don`t need household insurance, because it is somehow covered by their common expense payment each month. They should think again.






Although the condominium corporation must carry insurance on the building, it does not cover everything and there are deductibles involved. A recent study by Abacus Data, commissioned by Allstate Insurance found that that 61 per cent of new condo buyers didn`t know, for example, that when a fire or leaky pipe in your unit damages another, you may be personally responsible for the damages, not the condominium insurance policy.






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[Ally]

Investing in student housing





For a big reason, getting high yields the student accommodation letting means the landlord would gain extra benefits. Although the student accommodation has outperformed during the last financial year 2012 among the other property sectors and thus admired to be the best performing UK property investment in 2012 with increase in up to 5% rents as well as more than 10% annual average returns.





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[Ally]

David Rosenberg on Canada: 'So much for the housing bust'




Like many other economists, David Rosenberg wonders today what happened to a housing bust some observers had predicted.




`As if to purposely defy the Canadian economy, banking and loonie bears, home resale activity rose 2.8 per cent sequentially in August and over 11 per cent on a year-over-year basis,` the chief economist at Gluskin Sheff + Associates said in a research note today.





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[Ally]

How farmland became Canada's hottest real estate market




Buy land, advised Mark Twain, because, as the punch line goes, they ain`t making any more of it. Fast forward to 2013 and that advice, as a look at prices for farmland shows, seems as prescient as ever.




As any farmer will readily tell you, the agriculture business has had a tough run. Agriculture was once an economic mainstay. Turn back the clock to 1950 and the sector employed nearly a fifth of Canada`s work force. Today, agriculture accounts for less than 2 per cent of the country`s employed workers, while its share of gross domestic product is also a shadow of what it once was. Farm prices have languished for decades, as Canada`s population has shifted from rural to urban. By the 1990s, North America was losing two acres of productive farmland to development every minute.





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[Ally]

CREA raises outlook for home sales this year




OTTAWA - The Canadian Real Estate Association has raised its outlook for homes sales this year as it reported an 11.1 per cent jump in August sales compared with a year ago.




The industry organization said Monday that it now expects sales of 449,900 homes this year compared with a June forecast of 443,400.





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[Ally]

Economy to bounce back in third quarter: RBC




The Canadian economy is expected to pick up in the third quarter as rebuilding of flood damaged areas in Alberta and the end of a construction workers strike in Quebec are expected to boost growth, according to the Royal Bank of Canada.




Despite the improvement, however, RBC chief economist Craig Wright said business investment spending and exports are expected to remain hesitant.





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[Ally]

Canadian home sales up 2.8% in August




Canadians continued to snap up housing in August, with home sales up 2.8 per cent from July and up 11.1 per cent from the previous year.




The Canadian Real Estate Association says the recent rise in mortgage rates caused people who already had mortgage approvals from their lenders to move their decisions forward.





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[Ally]

Canadian household net worth rose in Q2 to a new high of $7.3 trillion




The market value of Canadian household net worth rose by 0.7% ($49 billion) to $7.3 trillion in Q2/13. The gain builds off the 2.2% ($152 billion) increase in the previous quarter and pushes the aggregate wealth of Canadian households to the highest level on record. Per capita net worth was $205,900, also an all-time high.




The total value of household assets rose 0.9% ($77 billion) to $9.0 trillion as both financial and non-financial asset values gained in the quarter. The market value of household financial assets rose 0.3% ($15 billion) as increases in cash & deposits and life insurance & pension assets offset a decline in the value of holdings of equities and bonds that reflected weakness in financial markets. Non-financial assets rose 1.5% ($62 billion) from Q1/13 as the combination of ongoing housing market activity and modestly rising home prices supported a 1.6% ($56 billion) increase in the value of total real estate assets (real estate accounts for just under 90% of household non-financial assets).





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[Ally]

Canada's jobless rate falls in August




Canada`s jobless rate fell to 7.1 per cent in August from 7.2 per cent the previous month, Statistics Canada reported Sept. 6.




The agency says most of the 59,000 net jobs created during the month were in part-time work.





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[Ally]

Bank of Canada governor bullish on prospects for sustained growth




VANCOUVER -- Bank of Canada governor Stephen Poloz expects Canada`s trade in commodities to become a bigger share of the economy as it evolves from recovery supported by government monetary policy into sustained expansion fuelled by business growth ` but don`t expect that to give British Columbia a leg up.




Poloz, in his first visit to Western Canada and second major speech since taking over the job, spoke on the theme of Canada approaching a `tipping point` where the pace of new business creation and demand for exports may overtake domestic spending as the driver of growth.





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