Bond rates have increased 37 points in the month of May. Originators should prepare for higher interest rates.
RBC Capital Markets is now predicting no rate cut by the Bank of Canada on June 10, citing, higher commodity prices, higher currency, and rising inflation since the last rate cut on April 22. Rates have already started to increase in the Australian market, which typically trends ahead of the Canadian market.
Take advantage of our market leading fixed rates….Before it is TOO LATE!!.
....rates can go up in a HURRY and normally quicker than they go down….
· TSX -111.45
· Dow +52.19
· Dollar +.08c to $101.10
· Oil -4.41 to $126.62US per barrel
· Gold -23.30US to $881.70US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Canadian Bonds Fall Amid Speculation Banks to Stop Rate Cuts
By Haris Anwar
May 29 (Bloomberg) -- Canada's bonds declined, pushing the two-year's yield to the highest in more than three months, amid speculation the Bank of Canada and U.S. Federal Reserve will stop cutting borrowing costs.
Government securities fell for a fourth day as interest- rate futures suggested traders were reducing bets on rate cuts. Canada's central bank lowered the target lending rate by a half- percentage point to 3 percent on April 22 to shield the economy from a U.S. economic slowdown. Borrowing costs have been lowered four times since December from 4.5 percent.
``The Bank of Canada won't cut rates on June 10,'' said Mark Chandler, a senior fixed-income strategist in Toronto at RBC Capital Markets, a unit of Canada's largest bank. ``We can see a further upward pressure on short-term yields if that is the case. Higher commodity prices, a strong currency and rising inflation are going against the case for more rate cuts.''
The yield on the two-year Canadian government bond rose 2 basis points, or 0.02 percentage point, to 3.12 percent at 12:49 p.m. in Toronto. It reached 3.16 percent, the highest since Feb. 26. The yield has increased 37 basis points this month.
The price of the 3.75 percent security due in June 2010 fell 5 cents to C$101.23.
10-Year Yield
The 10-year government bond's yield increased 3 basis points to 3.72 percent. The price of the 4 percent security due June 2017 fell 23 cents to C$102.16. The yield is up 13 basis points this month.
Fed Bank of Dallas President Richard Fisher said the central bank will raise the benchmark interest rate if inflation expectations increase. Canada ships about 80 percent of its exports to the U.S.
Bankers' acceptances futures contracts for September rose to 2.99 percent, from 2.64 percent on May 20. The futures have settled at a three-month lending rate averaging 16 basis points above the central bank's target since Bloomberg started tracking the data.
``The Bank of Canada can still afford to cut rates, but the magnitude of the cutting is likely to be scaled back,'' said Eric Lascelles, chief economist and rates strategist at TD Securities Inc. in Toronto, a unit of Canada's second-largest bank. ``The bank may signal a pause after a 25-basis-point cut on June 10. Unattractive yields and capital losses'' are making the government bond market an unfriendly place. ``The recent sell-off may be difficult to fight.''
Futures Contracts
Futures contracts on the Chicago Board of Trade show 98 percent odds the Fed will keep borrowing costs at 2 percent during its next meeting on June 25. The odds were 94 percent yesterday.
The 10-year bond yielded 60 basis points more than the two- year security, down from 109 basis points on March 17.
Canada's two-year bond yield will touch 2.90 percent by the end of this year, with the 10-year yield reaching 3.82 percent, according to the median forecast in a Bloomberg survey.
Canadian government bonds have returned 2.7 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries during the same period returned 1.5 percent.
Canada's dollar rose 0.2 percent to 98.82 cents per U.S. dollar, from 99.01 cents yesterday. One Canadian dollar buys $1.0120. Canada's dollar has strengthened 2 percent so far this month, making it the best performer against the 16 most-active currencies.
U.S. Economy
The U.S. economy grew more than previously estimated in the first quarter as Americans shunned imports and exports climbed to a record. The 0.9 percent gain in gross domestic product compares with an advance estimate of 0.6 percent, the Commerce Department said today in Washington. Fourth-quarter growth was 0.6 percent.
``As the market becomes less concerned about the downside risk in the U.S., that would also suggest less downside for the Canadian side,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``That bodes well for the Canadian dollar.''
Bank of America predicts Canada's currency will peak at 98 cents per U.S. dollar in the second quarter and decline to C$1.03 in the first quarter of 2009.
The loonie, as the currency is known because of the image of the bird on the one-dollar coin, has traded near parity with its U.S. counterpart this year after climbing 17 percent in 2007. It touched a 2008 low of C$1.0379 on Jan. 22, and a high of 97.12 cents per U.S. dollar on Feb. 28.
The currency reached 98.20 cents per U.S. dollar on May 21, the strongest since March 14.
Canada's dollar will decline to C$1.08 by the first quarter of 2009, according to the median forecast of 38 analysts in a Bloomberg survey
Friday, May 30, 2008
Thursday, May 29, 2008
Financial Update
There was barely a whimper when the price of oil raced passed key milestones this decade – $50 (U.S.) a barrel, $80, even $100.But with oil gaining strength at more than $130 a barrel, “shock” and “panic” have suddenly entered the popular lexicon. See article “A NEW KIND OF ENERGY CRISIS” below.
· TSX + 166.49
· Dow +45.68
· Dollar remains above par +.35c to $101.02
· Oil +$2.18 to $131.03US per barrel
· Gold -7.40US to $900.500US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
CIBC loses more than $1-billion TARA PERKINS Globe and Mail Update May 29, 2008 at 9:42 AM EDT
Canadian Imperial Bank of Commerce, the last big bank out of the gate with its second-quarter results, said Thursday it lost $1.11-billion, down from a profit of $807-million a year ago.
Bankers see signs of credit crunch easing
JOHN PARTRIDGE AND TARA PERKINS Globe and Mail Update
Both the Bank of Canada and one of the country's major commercial banks say the credit crunch is easing, although analysts argue it depends on how you measure the situation.
The central bank said Tuesday market conditions have improved, prompting a decision to cut by half the amount of cash it has been regularly lending commercial banks to keep the financial system liquid.
“The decision to reduce the amount of term financing outstanding reflects the general improvement in market conditions since the end of April, including funding conditions out to three months,” the central bank said in a statement.
Separately, Bank of Montreal chief executive Bill Downe said there are signs the impact of the crunch, which began with the U.S. subprime mortgage crisis last summer and has stung financial institutions around the world, is dissipating.
“Our outlook is improving as there are indications that concerns are easing in credit markets as credit spreads are trending towards more normal levels and we are encouraged by these developments,” Mr. Downe said as BMO reported a dip in profit for the second quarter.
Bank of Montreal said the global markets that banks tap for funds have improved in recent weeks. Spreads on investment grade corporate debt are decreasing, while the gap between the rates at which banks borrow money and treasury bill spreads have also been shrinking.
Also helping the outlook is the continuing support of central banks, which have been injecting liquidity into the market, BMO said.
The Bank of Canada said it will make $1 billion available in the next 28-day purchase and resale agreement auction when the previous $2 billion injection matures on May 29.
The central bank has been rolling over $4 billion in liquidity injections in $2-billion instalments on a regular basis since the beginning of the year.
Bank governor Mark Carney said last week the turbulence which hit credit markets last summer was easing, although he said he was not ready to declare the crisis over.
The bank said future roll-overs will be reviewed in light of conditions in financial markets.
Financial services analysts agreed the narrowing spreads between corporate and government bonds is a good sign.
However, Mario Mendonca at Genuity Capital markets in Toronto also offered a counterpoint.
If instead of looking at credit spreads, one looks at the “real economy,” the picture is nowhere near as bright, particularly the U.S. housing market, where the crunch began and which continues to deteriorate.
“So I think there are two sides to this,” Mr. Mendonca said. “You could look at what the bond market is saying in terms of credit spreads and call it ‘easing,' or you could look at the real economy and say ‘no, it isn't.'”
Michael Goldberg at Desjardins Securities expressed a similar view. “House prices in the U.S. are [still] falling, and that's not good,” he said.
However, it does look as if liquidity issues are “getting to be a little less severe,” and this means that in the second half of this fiscal year, Canada's banks will likely see a return to a more normal credit cycle “whose severity depends on how deep the economic downturn in the U.S. is.”
With files from The Canadian Press
A new kind of 'energy crisis'
Despite pain of high prices, there are no shortages or lineups
BARRIE MCKENNA AND RICHARD BLACKWELL From Thursday's Globe and Mail
There was barely a whimper when the price of oil raced passed key milestones this decade – $50 (U.S.) a barrel, $80, even $100.
But with oil gaining strength at more than $130 a barrel, “shock” and “panic” have suddenly entered the popular lexicon.
Ominous comparisons are being made to the devastating oil jolts of the 1970s. And a global economy that once seemed immune to expensive oil is getting antsy.
Sometimes violent protests swept across Europe and Asia this week. Even in the United States, where cars are a religion, Americans are driving less for the first time since 1979, spurning SUVs and embracing public transit.
Hundreds of truck drivers protested in London this week, adding their voices to global worries about rising gas prices.
Related Articles
Recent
* Motorists driving less; truckers driving slower <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wroilcars29/BNStory/energy>
* Airlines brace for hectic summer <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wroilplanes29/BNStory/energy>
* Cross-border shopping loses appeal <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wroilspending29/BNStory/energy>
* Gasoline, oil to remain high, NEB says <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wnebstaff0528/BNStory/energy>
* Total hit with setback in oil sands <http://www.theglobeandmail.com/servlet/story/RTGAM.20080529.wrtotal29/BNStory/energy>
Warning that the United States is facing “a true energy crisis,“ Dow Chemical Co. chairman and chief executive officer Andrew Liveris said Wednesday that the chemical maker is raising prices by up to 20 per cent to cope with a quadrupling of its energy and fuel costs since 2002.
“For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy,” Mr. Liveris said.
He complained that U.S. industry is losing ground to competitors abroad and is facing “demand destruction” at home. But is this an energy crisis? That may be in the eye of the beholder.
Unlike a recession, which can be tracked and quantified, a crisis is about what an environment feels like. If you're an auto maker or an airline, you're in full crisis mode.
The sheer magnitude of the recent spike is impressive. Oil is up nearly 50 per cent this year and 85 per cent in the past two years. And adjusted for inflation, oil has never been this expensive.
But for pure shock value, the recent runup still pales compared to 1973.
That's when oil shot up nearly fivefold (to $12 a barrel from $2.50), or 1979, when the price of oil more than tripled (to $40 a barrel from $12).
There are no embargos, no shortages and no lack of crude to feed refineries – as there were in the 1970s – and this isn't yet a crisis, says Robert Ebel, a former energy specialist at the U.S. Central Intelligence Agency
The main threat now, he said, is inflation.
“It's basically a price problem,” said Mr. Ebel, a senior adviser at the Washington-based Center for Strategic and International Studies. “It's beginning to hurt. You see it at the grocery store. You see at the gas station. It's having an effect on every segment of the economy.
It's something people are going to have to adapt to.”
Unfortunately for truckers, consumers, manufacturers, even fishermen, experts such as Mr. Ebel insist there's little governments can do in the short term to relieve soaring prices. Reducing gas taxes, for example, would only boost demand and lead to even higher prices down the road.
In Britain, where truckers have blocked key highways in London this week to protest fuel prices, Prime Minister Gordon Brown warned that the “global economy is facing the “third great oil shock of recent decades.”
Writing in the Guardian newspaper, Mr. Brown called on world leaders to devise a “global strategy” at next month's Group of Eight meeting in Japan, including emergency talks with major oil-producing countries and a renewed push for efficiency and alternatives. “A global shock on this scale requires global solutions,” he said.
French President Nicolas Sarkozy called for a Europe-wide cut in fuel taxes as protesting fishermen blockaded an oil depot near Marseille.
In Canada, many executives are loath to describe the spike in prices as a “crisis,” although they acknowledge they're adjusting business plans to deal with the new reality.
“I don't know if I'd say it's a crisis, but it certainly keeps you awake,” said Colin MacDonald, CEO of Halifax-based Clearwater Seafoods Income Fund.
High fuel prices have driven up the cost of operating its fleet of fishing vessels. The company is trying to become more efficient by using larger and more efficient boats, he said, but fuel costs have still boosted the input price of its products by 30 to 40 cents (Canadian) a pound this year.
At the same time, the cost of moving processed fish to markets around the world is rising, because transport companies are adding surcharges to help defray their fuel costs. And supermarkets and restaurants are reluctant to pay more.
Tom Winkler, chief financial officer at the Vancouver Port Authority, said the volume of goods handled through the facility could be hurt if higher fuel prices – and resulting surcharges shipping companies charge their customers – result in fewer containers of goods moving from Asia to Canada.
But the squeeze hasn't yet reached a crisis point, he said.
Economists at CIBC World Markets predicted this week that higher oil prices will result in less movement of global freight as companies look for local suppliers of goods.
Other companies that are taking a major hit from high fuel prices are also trying to see a silver lining.
At bus line operator Greyhound Canada, high fuel prices “drive our costs up through the roof,” said Randy Padley, director of passenger services for Eastern Canada.
At the same time, however, high pump prices “also drive people from their vehicles to the bus, so it's a double-edged sword,” he said. And Greyhound has already raised ticket prices and will do so again if it becomes necessary.
At Big Rock Brewery in Calgary, high energy prices have a significant impact on transportation costs, CEO Edward McNally said. “The truckers have been raising prices for a year or more.”
But spiking energy costs are also affecting the price of aluminum cans, and indirectly making barley more expensive. Big Rock is hedging its barley purchases, which helps, but has not made similar moves with aluminum, Mr. McNally said.
It is also focusing on selling to local markets, where it has an advantage over big Canadian rivals and importers, which now pay sharply higher shipping costs to get their beer to market in Alberta.
· TSX + 166.49
· Dow +45.68
· Dollar remains above par +.35c to $101.02
· Oil +$2.18 to $131.03US per barrel
· Gold -7.40US to $900.500US
Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html <http://www.bankofcanada.ca/en/rates/bonds.html>
CIBC loses more than $1-billion TARA PERKINS Globe and Mail Update May 29, 2008 at 9:42 AM EDT
Canadian Imperial Bank of Commerce, the last big bank out of the gate with its second-quarter results, said Thursday it lost $1.11-billion, down from a profit of $807-million a year ago.
Bankers see signs of credit crunch easing
JOHN PARTRIDGE AND TARA PERKINS Globe and Mail Update
Both the Bank of Canada and one of the country's major commercial banks say the credit crunch is easing, although analysts argue it depends on how you measure the situation.
The central bank said Tuesday market conditions have improved, prompting a decision to cut by half the amount of cash it has been regularly lending commercial banks to keep the financial system liquid.
“The decision to reduce the amount of term financing outstanding reflects the general improvement in market conditions since the end of April, including funding conditions out to three months,” the central bank said in a statement.
Separately, Bank of Montreal chief executive Bill Downe said there are signs the impact of the crunch, which began with the U.S. subprime mortgage crisis last summer and has stung financial institutions around the world, is dissipating.
“Our outlook is improving as there are indications that concerns are easing in credit markets as credit spreads are trending towards more normal levels and we are encouraged by these developments,” Mr. Downe said as BMO reported a dip in profit for the second quarter.
Bank of Montreal said the global markets that banks tap for funds have improved in recent weeks. Spreads on investment grade corporate debt are decreasing, while the gap between the rates at which banks borrow money and treasury bill spreads have also been shrinking.
Also helping the outlook is the continuing support of central banks, which have been injecting liquidity into the market, BMO said.
The Bank of Canada said it will make $1 billion available in the next 28-day purchase and resale agreement auction when the previous $2 billion injection matures on May 29.
The central bank has been rolling over $4 billion in liquidity injections in $2-billion instalments on a regular basis since the beginning of the year.
Bank governor Mark Carney said last week the turbulence which hit credit markets last summer was easing, although he said he was not ready to declare the crisis over.
The bank said future roll-overs will be reviewed in light of conditions in financial markets.
Financial services analysts agreed the narrowing spreads between corporate and government bonds is a good sign.
However, Mario Mendonca at Genuity Capital markets in Toronto also offered a counterpoint.
If instead of looking at credit spreads, one looks at the “real economy,” the picture is nowhere near as bright, particularly the U.S. housing market, where the crunch began and which continues to deteriorate.
“So I think there are two sides to this,” Mr. Mendonca said. “You could look at what the bond market is saying in terms of credit spreads and call it ‘easing,' or you could look at the real economy and say ‘no, it isn't.'”
Michael Goldberg at Desjardins Securities expressed a similar view. “House prices in the U.S. are [still] falling, and that's not good,” he said.
However, it does look as if liquidity issues are “getting to be a little less severe,” and this means that in the second half of this fiscal year, Canada's banks will likely see a return to a more normal credit cycle “whose severity depends on how deep the economic downturn in the U.S. is.”
With files from The Canadian Press
A new kind of 'energy crisis'
Despite pain of high prices, there are no shortages or lineups
BARRIE MCKENNA AND RICHARD BLACKWELL From Thursday's Globe and Mail
There was barely a whimper when the price of oil raced passed key milestones this decade – $50 (U.S.) a barrel, $80, even $100.
But with oil gaining strength at more than $130 a barrel, “shock” and “panic” have suddenly entered the popular lexicon.
Ominous comparisons are being made to the devastating oil jolts of the 1970s. And a global economy that once seemed immune to expensive oil is getting antsy.
Sometimes violent protests swept across Europe and Asia this week. Even in the United States, where cars are a religion, Americans are driving less for the first time since 1979, spurning SUVs and embracing public transit.
Hundreds of truck drivers protested in London this week, adding their voices to global worries about rising gas prices.
Related Articles
Recent
* Motorists driving less; truckers driving slower <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wroilcars29/BNStory/energy>
* Airlines brace for hectic summer <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wroilplanes29/BNStory/energy>
* Cross-border shopping loses appeal <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wroilspending29/BNStory/energy>
* Gasoline, oil to remain high, NEB says <http://www.theglobeandmail.com/servlet/story/RTGAM.20080528.wnebstaff0528/BNStory/energy>
* Total hit with setback in oil sands <http://www.theglobeandmail.com/servlet/story/RTGAM.20080529.wrtotal29/BNStory/energy>
Warning that the United States is facing “a true energy crisis,“ Dow Chemical Co. chairman and chief executive officer Andrew Liveris said Wednesday that the chemical maker is raising prices by up to 20 per cent to cope with a quadrupling of its energy and fuel costs since 2002.
“For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy,” Mr. Liveris said.
He complained that U.S. industry is losing ground to competitors abroad and is facing “demand destruction” at home. But is this an energy crisis? That may be in the eye of the beholder.
Unlike a recession, which can be tracked and quantified, a crisis is about what an environment feels like. If you're an auto maker or an airline, you're in full crisis mode.
The sheer magnitude of the recent spike is impressive. Oil is up nearly 50 per cent this year and 85 per cent in the past two years. And adjusted for inflation, oil has never been this expensive.
But for pure shock value, the recent runup still pales compared to 1973.
That's when oil shot up nearly fivefold (to $12 a barrel from $2.50), or 1979, when the price of oil more than tripled (to $40 a barrel from $12).
There are no embargos, no shortages and no lack of crude to feed refineries – as there were in the 1970s – and this isn't yet a crisis, says Robert Ebel, a former energy specialist at the U.S. Central Intelligence Agency
The main threat now, he said, is inflation.
“It's basically a price problem,” said Mr. Ebel, a senior adviser at the Washington-based Center for Strategic and International Studies. “It's beginning to hurt. You see it at the grocery store. You see at the gas station. It's having an effect on every segment of the economy.
It's something people are going to have to adapt to.”
Unfortunately for truckers, consumers, manufacturers, even fishermen, experts such as Mr. Ebel insist there's little governments can do in the short term to relieve soaring prices. Reducing gas taxes, for example, would only boost demand and lead to even higher prices down the road.
In Britain, where truckers have blocked key highways in London this week to protest fuel prices, Prime Minister Gordon Brown warned that the “global economy is facing the “third great oil shock of recent decades.”
Writing in the Guardian newspaper, Mr. Brown called on world leaders to devise a “global strategy” at next month's Group of Eight meeting in Japan, including emergency talks with major oil-producing countries and a renewed push for efficiency and alternatives. “A global shock on this scale requires global solutions,” he said.
French President Nicolas Sarkozy called for a Europe-wide cut in fuel taxes as protesting fishermen blockaded an oil depot near Marseille.
In Canada, many executives are loath to describe the spike in prices as a “crisis,” although they acknowledge they're adjusting business plans to deal with the new reality.
“I don't know if I'd say it's a crisis, but it certainly keeps you awake,” said Colin MacDonald, CEO of Halifax-based Clearwater Seafoods Income Fund.
High fuel prices have driven up the cost of operating its fleet of fishing vessels. The company is trying to become more efficient by using larger and more efficient boats, he said, but fuel costs have still boosted the input price of its products by 30 to 40 cents (Canadian) a pound this year.
At the same time, the cost of moving processed fish to markets around the world is rising, because transport companies are adding surcharges to help defray their fuel costs. And supermarkets and restaurants are reluctant to pay more.
Tom Winkler, chief financial officer at the Vancouver Port Authority, said the volume of goods handled through the facility could be hurt if higher fuel prices – and resulting surcharges shipping companies charge their customers – result in fewer containers of goods moving from Asia to Canada.
But the squeeze hasn't yet reached a crisis point, he said.
Economists at CIBC World Markets predicted this week that higher oil prices will result in less movement of global freight as companies look for local suppliers of goods.
Other companies that are taking a major hit from high fuel prices are also trying to see a silver lining.
At bus line operator Greyhound Canada, high fuel prices “drive our costs up through the roof,” said Randy Padley, director of passenger services for Eastern Canada.
At the same time, however, high pump prices “also drive people from their vehicles to the bus, so it's a double-edged sword,” he said. And Greyhound has already raised ticket prices and will do so again if it becomes necessary.
At Big Rock Brewery in Calgary, high energy prices have a significant impact on transportation costs, CEO Edward McNally said. “The truckers have been raising prices for a year or more.”
But spiking energy costs are also affecting the price of aluminum cans, and indirectly making barley more expensive. Big Rock is hedging its barley purchases, which helps, but has not made similar moves with aluminum, Mr. McNally said.
It is also focusing on selling to local markets, where it has an advantage over big Canadian rivals and importers, which now pay sharply higher shipping costs to get their beer to market in Alberta.
Financial Update
Oil drops below US $129 a barrel on demand concerns
· TSX -236.44 Tumbling resource shares led the Toronto Stock Exchange's main index
sharply lower
· Dow +68.72
· Dollar remains above par -.14c to $100.67
· Oil -3.34 to $128.85US per barrel falling sharply on a growing sense that soaring gas and
oil prices have cut demand for fuel during the normally busy summer driving season. Oil
prices were also pressured by the U.S. dollar, which gained ground against the euro.
Investors who buy commodities such as oil as a hedge against inflation when the dollar
falls tend to sell when the greenback strengthens. Also, a rising dollar makes oil more
expensive to investors overseas
· Gold -17.90US to $907.70US
· Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Better deals ahead expected for Canadian home buyers
New listings at record high
Alia McMullen, Financial Post Published: Saturday, May 24, 2008
Canada's housing market might still be expensive, but sellers are going to lose some of their negotiating power over the course of the year as housing supply floods onto the market.
The number of homes for sale in April was double that of the number that were sold as new listings reached a record high, the Canadian Real Estate Association's monthly Multiple Listing Service figures showed.
Residential listings for April jumped 2.8% from the previous month to a seasonally adjusted 77,248 units, while home sales rose 1.2% to 36,614 units. It was the first time monthly sales had increased this year.
The rise in supply, which comes on the back of years of under supply, caused house price growth to continue to moderate from recent highs. The national average house price was up 4% from a year earlier to $317,619-- the smallest annual gain in six years.
"Price increases are now maintaining at levels that are historically more consistent with the Canadian real estate market," Calvin Lindber, president of CREA said.
British Columbia remained the most expensive province, with the average house price up 10.7% over the year to $478,004, followed by Alberta, which fell 0.5% to $353,515. Prices rose 4.8% in Ontario to $314,041 and 4.3% in Quebec to $217,683. Prince Edward Island was the cheapest province, following a 9.8% annual decline to an average $121,807.
Amy Goldbloom, economist at RBC Financial Group said the latest results reflected the mid-point of a balanced housing market that was likely to soften gradually this year.
"As we see more supply coming to market, sellers are going to certainly lose some of their negotiating power, so the bidding wars that we've seen over the last couple of years, particularly in markets like the core area of Toronto, they're going to certainly slow," Ms. Goldbloom said.
She said there would be better opportunities for buyers as supply increases amid cheaper finance as a result of recent interest rate cuts. However, the market generally remained expensive and sales would likely continue to slow.
"The hit to affordability has certainly taken a toll on sales. People have simply been priced out of the market and that's become very evident in overheated markets in Calgary and Edmonton," Ms. Goldbloom said.
Although new listings in Calgary and Edmonton declined in April after posting record levels in March.
Derek Holt, economist at Scotia Capital said the ratio of listings to sales in Calgary and Edmonton had declined rapidly since last fall, dropping from about 90% to 40%.
"That speed of adjustment abruptly turned it away from a deep sellers market towards a marginal buyers market, so that's why they've seen prices come off their peak and why we think that they face a further housing correction in Alberta," he said.
Mr. Holt said while supply was expected to continue to enter the market, Canada would not experience the inventory overhang plaguing the U. S. housing sector.
He said Canada has not experienced the same factors that have driven the excess in U. S. supply, including the flood of foreclosed properties that have entered the market.
· TSX -236.44 Tumbling resource shares led the Toronto Stock Exchange's main index
sharply lower
· Dow +68.72
· Dollar remains above par -.14c to $100.67
· Oil -3.34 to $128.85US per barrel falling sharply on a growing sense that soaring gas and
oil prices have cut demand for fuel during the normally busy summer driving season. Oil
prices were also pressured by the U.S. dollar, which gained ground against the euro.
Investors who buy commodities such as oil as a hedge against inflation when the dollar
falls tend to sell when the greenback strengthens. Also, a rising dollar makes oil more
expensive to investors overseas
· Gold -17.90US to $907.70US
· Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html
Better deals ahead expected for Canadian home buyers
New listings at record high
Alia McMullen, Financial Post Published: Saturday, May 24, 2008
Canada's housing market might still be expensive, but sellers are going to lose some of their negotiating power over the course of the year as housing supply floods onto the market.
The number of homes for sale in April was double that of the number that were sold as new listings reached a record high, the Canadian Real Estate Association's monthly Multiple Listing Service figures showed.
Residential listings for April jumped 2.8% from the previous month to a seasonally adjusted 77,248 units, while home sales rose 1.2% to 36,614 units. It was the first time monthly sales had increased this year.
The rise in supply, which comes on the back of years of under supply, caused house price growth to continue to moderate from recent highs. The national average house price was up 4% from a year earlier to $317,619-- the smallest annual gain in six years.
"Price increases are now maintaining at levels that are historically more consistent with the Canadian real estate market," Calvin Lindber, president of CREA said.
British Columbia remained the most expensive province, with the average house price up 10.7% over the year to $478,004, followed by Alberta, which fell 0.5% to $353,515. Prices rose 4.8% in Ontario to $314,041 and 4.3% in Quebec to $217,683. Prince Edward Island was the cheapest province, following a 9.8% annual decline to an average $121,807.
Amy Goldbloom, economist at RBC Financial Group said the latest results reflected the mid-point of a balanced housing market that was likely to soften gradually this year.
"As we see more supply coming to market, sellers are going to certainly lose some of their negotiating power, so the bidding wars that we've seen over the last couple of years, particularly in markets like the core area of Toronto, they're going to certainly slow," Ms. Goldbloom said.
She said there would be better opportunities for buyers as supply increases amid cheaper finance as a result of recent interest rate cuts. However, the market generally remained expensive and sales would likely continue to slow.
"The hit to affordability has certainly taken a toll on sales. People have simply been priced out of the market and that's become very evident in overheated markets in Calgary and Edmonton," Ms. Goldbloom said.
Although new listings in Calgary and Edmonton declined in April after posting record levels in March.
Derek Holt, economist at Scotia Capital said the ratio of listings to sales in Calgary and Edmonton had declined rapidly since last fall, dropping from about 90% to 40%.
"That speed of adjustment abruptly turned it away from a deep sellers market towards a marginal buyers market, so that's why they've seen prices come off their peak and why we think that they face a further housing correction in Alberta," he said.
Mr. Holt said while supply was expected to continue to enter the market, Canada would not experience the inventory overhang plaguing the U. S. housing sector.
He said Canada has not experienced the same factors that have driven the excess in U. S. supply, including the flood of foreclosed properties that have entered the market.
Subscribe to:
Posts (Atom)
