Real estate market expected to remain strong in first half of 2010
• TSX -57.73 dropping for the first time this year with declines led by telecom and energy stocks.
• DOW +33.18
• Dollar -.23c to 96.62cUS as commodity prices weakened in response to possible indications from China that it plans to cool its economy to keep a lid on inflation by raising rates
• Oil -$.52 to $82.66US per barrel. on worries that demand would ease if China took more substantial steps to remove excess liquidity from its system in order to keep growth in check.
• Gold -$2.80 to $1,133.70USD per ounce
Real estate market expected to remain strong in first half of 2010
DAVID PADDON, THE CANADIAN PRESS
TORONTO - Canada's residential real estate market is expected to remain unusually strong through the first half of this year after a strong finish to 2009, according to a survey published Thursday by Royal LePage.
The Royal LePage analysis is consistent with other recent reports on the state of the Canadian real estate market, which has rebounded over the past 12 months after sales dried up in late 2008 and hit a multi-year low in January 2009.
The Canadian market's sudden plunge was sparked by a credit crunch that originated in the U.S. housing and lending industries - eventually spreading globally, causing a worldwide recession in the late summer and early fall of 2009.
However, the Canadian real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.
Royal LePage executive Phil Soper says Canada's real estate market enters 2010 with "considerable momentum from an unusually strong finish to the previous year."
The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity to new highs, he said in a statement.
Royal LePage says house prices appreciated in late 2009, with fourth-quarter price averages higher than in the fourth quarter of 2008.
The average price of detached bungalows rose to $315,055 (up six per cent), the price of a standard two-storey home rose to $353,026 (up 5.2 per cent), and the price of a standard condominium rose to $205,756 (up 6.4 per cent).
Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C.
Vancouver, which is frequently Canada's most expensive real estate market, experienced a particularly robust quarter, with home prices rising across all housing types surveyed.
"No other sector of the economy has been as highly affected by economic stimulus as housing," said Soper.
"As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property."
Royal LePage estimates that Vancouver's real estate prices will rise a further 7.2 per cent this year, although February may be soft because of the Olympic Winter Games that will be held in the city and nearby Whistler, B.C.
Detached bungalows in Vancouver sold for an average of $828,750 in the fourth quarter, up 11.4 per cent from the same period last year. Standard condominiums in Vancouver went up 11.8 per cent year-over-year to an average of $452,750. Prices of standard two-storey homes in Vancouver rose 9.6 per cent year-over-year, selling at $917,500.
In Toronto, the average price of a standard condo rose 2.9 per cent to $309,316, detached bungalows rose 9.9 per cent to $446,214 and standard detached homes increased 3.5 per cent to $564,175.
In Montreal, the average price of a detached bungalow rose to $245,125 (up 3.1 per cent; a condo increased to $216,667 (up 16 per cent) and a two-storey house increased 12.3 per cent from a year earlier to $345,789, Royal LePage said.
The Greater Montreal Real Estate Board reported Thursday that the number of sales last year increased 41,802, up three per cent from 2008. The median price of a single-family home was $235,000 last year, up four per cent from 2008.
"Although sales decreased the first four months of 2009, Montreal's real estate market rebounded and finished the year on a positive note," said Michel Beausejour, the Montreal board's chief executive.
The group that represents Toronto-area realtors reported Wednesday that there were 87,308 transactions last year through the Multiple Listing Service, a 17 per cent increase over 2008.
In December, there were 5,541 sales in the Greater Toronto Area (average price $411,931), up from 2,577 sales in December 2008 (average price $361,415), according to the Toronto Real Estate Board.
The Toronto board also said the number of sales of existing homes rebounded in the latter half of 2009 after a slow start at the beginning of last year.
Royal LePage's average price estimates for other Canadian cities include:
-St. John's, N.L.: Detached bungalow, $217,167 (up 14.3 per cent); standard two-storey house $298,833 (up 14.1 per cent).
-Halifax: Detached bungalow, $238,000 (up 10.7 per cent); standard two-storey homes, $265,333 (up 1.8 per cent).
-Charlottetown: Detached bungalow, $160,000 (up 1.9 per cent); standard two-storey $195,000 (up 3.7 per cent).
-Saint John, N.B.: Detached bungalow, $228,000 (up 1.3 per cent); standard two-storey $299,000 (up 1.5 per cent).
-Moncton, N.B.: Detached bungalow, $152,300 in the fourth quarter (up 1.5 per cent); standard two-storey home, $131,000 (up 4.0 per cent)
-Fredericton: Detached bungalow, $182,000 (up 12.3 per cent); standard two-storey, $210,000 (unchanged).
-Ottawa: Detached bungalow, $332,417 (up 3.4 per cent); standard two-story home $331,917 (up 3.7 per cent).
-Winnipeg: Detached bungalow, $241,650 (up 9.9 per cent); standard two-storey home $275,500 (up 10 per cent).
-Edmonton: Detached bungalow, $299,286 (down 0.7 per cent); standard two-storey home, $340,557 (down 1.2 per cent)
-Calgary: Detached bungalow, $412,478 (up 0.5 per cent); standard two-storey home, $427,067 (up 2.3 per cent).
Friday, January 8, 2010
Thursday, January 7, 2010
Financial Update For Jan. 7, 2010
• TSX +56.46 to 11,944
• DOW +1.66 to 10, 573
• Dollar +.23c to 96.25cUS
• Oil +$1.41 to $83.18US per barrel.
• Gold +$17.80 to $1,136.90USD per ounce
Bond Market Waiting for Jobs Reports
Traders are treading cautiously ahead of Friday’s big U.S. and Canadian jobs reports. Bond yields are hovering just under their 15-month high.
Most lenders are holding off on further mortgage rate increases ahead of the report.
Interestingly, only a few lenders chose to raise mortgage rates following December’s big spike in yields. (Why spoil the holidays, eh?)
Looking forward, this Friday's employment report could be a huge catalyst for rate direction. It should be:
• Positive for mortgage rates if employment gains are dismal; or
• Negative for mortgage rates if job gains are strong.
Mortgage planners will probably want to have their rate locks ready in case yields happen to explode higher.
Canadian and U.S. employment reports will be released Friday, January 8, at 7:00 a.m. and 8:30 a.m. ET respectively.
Posted at 01:38 PM in Mortgage Rate Trends | Permalink
Tackling debt a growing priority
Roma Luciw Globe and Mail
More Canadians are heeding the interest-rate warnings and focusing on curbing their debt loads in 2010.
A Manulife Financial poll released Tuesday found that paying down credit cards and lines of credit is growing as a financial priority among Canadians. In fact, more than a quarter, 28 per cent, pegged debt elimination as their main goal, up from 24 per cent in 2009 and a five-year high.
The results come at a time when households are tackling post-Christmas credit card bills and struggling with record debt, both mortgage and consumer. With interest rate hikes on the horizon, Bank of Canada Governor Mark Carney last month cautioned Canadians against taking on more debt than they can handle.
Despite this red flag, Canadians dug deeper this December, with spending in the holiday period rising 3.44 per cent in volume over the previous year, according to Moneris Solutions, which processes credit, debit and online payments.
The central bank estimates there was nearly $1.4-trillion in total household credit outstanding in October, the most recent data available, up from $1.3-trillion a year earlier. Much of the growth stems from mortgage debt, which stood at roughly $950-billion in October, compared with less than $890-billion a year earlier.
The Manulife national survey of 1,000 people, conducted last month by Research House, found that the second most-cited financial priority among Canadians was paying down the mortgage. It was chosen by 14 per cent of respondents, up from 11 per cent last year.
The third priority – saving for retirement – was listed by 11 per cent of those polled, down from 14 per cent a year ago.
“Paying down debts is understandably a priority, particularly at this time of year,” Paul Rooney, chief executive officer of Manulife Manulife Canada, said in a news release. “Given the economic challenges in 2009, we shouldn't be surprised to see more Canadians focused on ensuring their financial house is in order.”
Only 5 per cent of respondents listed saving for a child's education, through a tool like a registered education savings plan, and saving for purchasing a home, as financial priorities, on par with last year's results.
Home builder backs tighter mortgage rules
BY CHUCK HOWITT, RECORD STAFF
WATERLOO — Tightening mortgage eligibility rules to prevent a housing bubble may not be such a bad idea, says the founder of Canada’s largest homebuilding company.
“Housing is meant to shelter. Secondly, it is an investment,” Peter Gilgan, chief executive officer of Mattamy Homes, told a luncheon at Wilfrid Laurier University Wednesday.
Gilgan, who was in town to accept the Outstanding Business Leader of the Year Award from Laurier’s school of business and economics, was asked about recent statements by federal Finance Minister Jim Flaherty that Ottawa may increase minimum down payments for residential mortgages to ensure that homeowners don’t face huge bills if interest rates rise.
“It would be a very responsible thing to do,” said Gilgan, whose Mississauga-based company has built several thousand homes in Cambridge, including some in an indoor factory, and has land available for development on the west side of Kitchener.
When people start treating houses “as a derivative,” as some kind of vehicle to make a quick buck, “it creates too much volatility in the market,” Gilgan said.
As for the province’s recent law establishing greenbelts around urban areas in southern Ontario to avoid sprawl, he said builders have to adjust to the new reality. Twenty years from now, all the desirable greenfield land in the Golden Horseshoe will be gone, he said.
Mattamy has enough greenfield land to build on for the next 10 years, he said, but after that it will have to adopt a new strategy of infilling, intensification and redevelopment in urban areas.
Gilgan doesn’t oppose the province’s thrust as long as everyone faces the same rules. “You can throw anything at me. As long as it’s a level playing field, we’ll figure it out.”
The development restrictions in Ontario are one of the reasons Mattamy is expanding into other geographic areas such as Alberta and the U.S., he said.
Since its launch in Burlington in 1978, Mattamy has built more than 47,000 homes in over 100 communities. Fifty per cent of those homes are in greater Toronto and beyond, Gilgan said, with Cambridge accounting for about 10 per cent of that activity.
The company has had mixed success south of the border. It has “dug a little trench” in five American cities and hopes to break even this year. Doing business in the U.S. is different, Gilgan said. While Canadians tend to plan a lot and adopt a cautious approach, Americans plunge ahead much more aggressively, he said.
Gilgan also touched on the company’s efforts over the years to be innovative. During the 1990s, it decided there was a better way to build housing than having the garage as the most dominant feature. It started building houses on wider lots, as much as 36 feet in width, so that more living space could look onto the street.
“We’re providing something more than a house, we’re providing a community.”
“Pocket parks” or smaller green spaces among subdivisions was another popular Mattamy innovation, he said.
“Be really aware of the competition,” he advised young entrepreneurs, but try to do something unique or different.
Gilgan had the audience in stitches when he told them about his daughter enrolling at Laurier 13 years ago. When he came to visit her, she and four roommates were living “in something resembling a house on King Street.” You could put your hand through open space in the front door, he said. “There was no glass there.”
He drove around the neighbourhood and found a house for sale on Ezra Street. With the help of an all-female team of architects and designers, he turned the house into a “chick machine” with five bedrooms, five bathrooms and a giant shoe rack.
He assuaged his guilt over doing this for his daughter with the knowledge that some years later “a greater fool” would buy it. And sure enough, someone did. A few years later he came back when his son enrolled at the University of Waterloo, but the house was already gone. It had been replaced by a residence for 80 students.
“At first I was offended. Then when I did the math on it, I thought, yeah, it makes sense.”
• DOW +1.66 to 10, 573
• Dollar +.23c to 96.25cUS
• Oil +$1.41 to $83.18US per barrel.
• Gold +$17.80 to $1,136.90USD per ounce
Bond Market Waiting for Jobs Reports
Traders are treading cautiously ahead of Friday’s big U.S. and Canadian jobs reports. Bond yields are hovering just under their 15-month high.
Most lenders are holding off on further mortgage rate increases ahead of the report.
Interestingly, only a few lenders chose to raise mortgage rates following December’s big spike in yields. (Why spoil the holidays, eh?)
Looking forward, this Friday's employment report could be a huge catalyst for rate direction. It should be:
• Positive for mortgage rates if employment gains are dismal; or
• Negative for mortgage rates if job gains are strong.
Mortgage planners will probably want to have their rate locks ready in case yields happen to explode higher.
Canadian and U.S. employment reports will be released Friday, January 8, at 7:00 a.m. and 8:30 a.m. ET respectively.
Posted at 01:38 PM in Mortgage Rate Trends | Permalink
Tackling debt a growing priority
Roma Luciw Globe and Mail
More Canadians are heeding the interest-rate warnings and focusing on curbing their debt loads in 2010.
A Manulife Financial poll released Tuesday found that paying down credit cards and lines of credit is growing as a financial priority among Canadians. In fact, more than a quarter, 28 per cent, pegged debt elimination as their main goal, up from 24 per cent in 2009 and a five-year high.
The results come at a time when households are tackling post-Christmas credit card bills and struggling with record debt, both mortgage and consumer. With interest rate hikes on the horizon, Bank of Canada Governor Mark Carney last month cautioned Canadians against taking on more debt than they can handle.
Despite this red flag, Canadians dug deeper this December, with spending in the holiday period rising 3.44 per cent in volume over the previous year, according to Moneris Solutions, which processes credit, debit and online payments.
The central bank estimates there was nearly $1.4-trillion in total household credit outstanding in October, the most recent data available, up from $1.3-trillion a year earlier. Much of the growth stems from mortgage debt, which stood at roughly $950-billion in October, compared with less than $890-billion a year earlier.
The Manulife national survey of 1,000 people, conducted last month by Research House, found that the second most-cited financial priority among Canadians was paying down the mortgage. It was chosen by 14 per cent of respondents, up from 11 per cent last year.
The third priority – saving for retirement – was listed by 11 per cent of those polled, down from 14 per cent a year ago.
“Paying down debts is understandably a priority, particularly at this time of year,” Paul Rooney, chief executive officer of Manulife Manulife Canada, said in a news release. “Given the economic challenges in 2009, we shouldn't be surprised to see more Canadians focused on ensuring their financial house is in order.”
Only 5 per cent of respondents listed saving for a child's education, through a tool like a registered education savings plan, and saving for purchasing a home, as financial priorities, on par with last year's results.
Home builder backs tighter mortgage rules
BY CHUCK HOWITT, RECORD STAFF
WATERLOO — Tightening mortgage eligibility rules to prevent a housing bubble may not be such a bad idea, says the founder of Canada’s largest homebuilding company.
“Housing is meant to shelter. Secondly, it is an investment,” Peter Gilgan, chief executive officer of Mattamy Homes, told a luncheon at Wilfrid Laurier University Wednesday.
Gilgan, who was in town to accept the Outstanding Business Leader of the Year Award from Laurier’s school of business and economics, was asked about recent statements by federal Finance Minister Jim Flaherty that Ottawa may increase minimum down payments for residential mortgages to ensure that homeowners don’t face huge bills if interest rates rise.
“It would be a very responsible thing to do,” said Gilgan, whose Mississauga-based company has built several thousand homes in Cambridge, including some in an indoor factory, and has land available for development on the west side of Kitchener.
When people start treating houses “as a derivative,” as some kind of vehicle to make a quick buck, “it creates too much volatility in the market,” Gilgan said.
As for the province’s recent law establishing greenbelts around urban areas in southern Ontario to avoid sprawl, he said builders have to adjust to the new reality. Twenty years from now, all the desirable greenfield land in the Golden Horseshoe will be gone, he said.
Mattamy has enough greenfield land to build on for the next 10 years, he said, but after that it will have to adopt a new strategy of infilling, intensification and redevelopment in urban areas.
Gilgan doesn’t oppose the province’s thrust as long as everyone faces the same rules. “You can throw anything at me. As long as it’s a level playing field, we’ll figure it out.”
The development restrictions in Ontario are one of the reasons Mattamy is expanding into other geographic areas such as Alberta and the U.S., he said.
Since its launch in Burlington in 1978, Mattamy has built more than 47,000 homes in over 100 communities. Fifty per cent of those homes are in greater Toronto and beyond, Gilgan said, with Cambridge accounting for about 10 per cent of that activity.
The company has had mixed success south of the border. It has “dug a little trench” in five American cities and hopes to break even this year. Doing business in the U.S. is different, Gilgan said. While Canadians tend to plan a lot and adopt a cautious approach, Americans plunge ahead much more aggressively, he said.
Gilgan also touched on the company’s efforts over the years to be innovative. During the 1990s, it decided there was a better way to build housing than having the garage as the most dominant feature. It started building houses on wider lots, as much as 36 feet in width, so that more living space could look onto the street.
“We’re providing something more than a house, we’re providing a community.”
“Pocket parks” or smaller green spaces among subdivisions was another popular Mattamy innovation, he said.
“Be really aware of the competition,” he advised young entrepreneurs, but try to do something unique or different.
Gilgan had the audience in stitches when he told them about his daughter enrolling at Laurier 13 years ago. When he came to visit her, she and four roommates were living “in something resembling a house on King Street.” You could put your hand through open space in the front door, he said. “There was no glass there.”
He drove around the neighbourhood and found a house for sale on Ezra Street. With the help of an all-female team of architects and designers, he turned the house into a “chick machine” with five bedrooms, five bathrooms and a giant shoe rack.
He assuaged his guilt over doing this for his daughter with the knowledge that some years later “a greater fool” would buy it. And sure enough, someone did. A few years later he came back when his son enrolled at the University of Waterloo, but the house was already gone. It had been replaced by a residence for 80 students.
“At first I was offended. Then when I did the math on it, I thought, yeah, it makes sense.”
Wednesday, January 6, 2010
Financial Update For Jan. 6, 2010
• TSX +21.18 to 11,888 ending on a 15-month high
• DOW -11.94 the number of buyers who agreed to purchase previously occupied homes fell sharply in Nov. The National Association of Realtors says its seasonally adjusted index of sales agreements fell 16%. The drop was far larger than the 2% decline that economists expected. It was also the first decline following 9 straight months of gains
• Dollar +.23c to 96.25cUS touching another 2 ½ month high as the U.S. currency weakened for a second day
• Oil +$.26 to $81.77US per barrel.
• Gold +$.40 to $1,118.10USD per ounce
U.S. economy could create up to two million jobs in 2010
Paul Vieira, Financial Post
OTTAWA -- Markets might be "dramatically underestimating" how many jobs the U.S. economy will produce this year, economists at Scotia Capital said Tuesday, indicating the pace of job creation could reach levels not seen in over a quarter century.
In a note to clients, Derek Holt and Karen Cordes suggested the U.S. economy, mostly through help from the federal government, could create up to two million jobs in 2010. The bulk of this job creation, especially for the first half of this year, will be driven by U.S. government hiring to complete the once-in-a-decade census.
"The consensus is dramatically underestimating potential upsides to nonfarm employment in 2010," say the Scotia Capital analysts. "We readily admit we'll be wrong on the final tally, but if we're even anywhere close to the mark, then the main point will be that current consensus is caught flat-footed on such expectations and is off by orders of magnitude on potential job growth."
However, the analysts add the census-related jobs will disappear as quickly as they are created – resulting in steep monthly job losses in the latter half of 2010. But on net, they believe up to two millions jobs could be created in the United States in the 12-month period.
This call comes as both Canada and the United States release jobs data for December on Friday. In November, market analysts were caught offguard after data suggested the U.S. economy shed only 11,000 jobs – after 21 consecutive months of six-figure job losses. Action Economics, a U.S.-based forecasting firm, issued its own analysis on Tuesday indicating there's a chance the United States could post job growth in December.
Scotia Capital said the impact of census-related job growth would be greater this year than in the previous censuses of 1990 and 2000, as the White House will be eager to use stimulus cash to create jobs. The economists forecast that about 180,000 census jobs will be created in the first quarter and an additional 971,000 in second quarter. All those jobs will then be lost by the end of the third quarter. Most of the hiring will be concentrated in one or two months, Scotia Capital said, "such that one single month could see up to one million jobs created," likely in May.
The record single-month nonfarm job gain was September 1983 when 1.11 million jobs were created in the United States.
Meanwhile, other factors will spur job creation, most notably the impact of Washington's nearly US$800-billion stimulus package and decisions by private-sector companies to add to their payrolls.
Nevertheless, the Scotia Capital economists warn the "potential is there" for markets and policy makers to overreact to the initial job data. Of concern, they say, is that pressure will mount on the U.S. Federal Reserve to hike interest rates based on the strong data, even though it might be skewed by one-time factors, such as the census.
"[But] markets probably will and therefore heighten the risk of prematurely tightening growth drivers," they said
• DOW -11.94 the number of buyers who agreed to purchase previously occupied homes fell sharply in Nov. The National Association of Realtors says its seasonally adjusted index of sales agreements fell 16%. The drop was far larger than the 2% decline that economists expected. It was also the first decline following 9 straight months of gains
• Dollar +.23c to 96.25cUS touching another 2 ½ month high as the U.S. currency weakened for a second day
• Oil +$.26 to $81.77US per barrel.
• Gold +$.40 to $1,118.10USD per ounce
U.S. economy could create up to two million jobs in 2010
Paul Vieira, Financial Post
OTTAWA -- Markets might be "dramatically underestimating" how many jobs the U.S. economy will produce this year, economists at Scotia Capital said Tuesday, indicating the pace of job creation could reach levels not seen in over a quarter century.
In a note to clients, Derek Holt and Karen Cordes suggested the U.S. economy, mostly through help from the federal government, could create up to two million jobs in 2010. The bulk of this job creation, especially for the first half of this year, will be driven by U.S. government hiring to complete the once-in-a-decade census.
"The consensus is dramatically underestimating potential upsides to nonfarm employment in 2010," say the Scotia Capital analysts. "We readily admit we'll be wrong on the final tally, but if we're even anywhere close to the mark, then the main point will be that current consensus is caught flat-footed on such expectations and is off by orders of magnitude on potential job growth."
However, the analysts add the census-related jobs will disappear as quickly as they are created – resulting in steep monthly job losses in the latter half of 2010. But on net, they believe up to two millions jobs could be created in the United States in the 12-month period.
This call comes as both Canada and the United States release jobs data for December on Friday. In November, market analysts were caught offguard after data suggested the U.S. economy shed only 11,000 jobs – after 21 consecutive months of six-figure job losses. Action Economics, a U.S.-based forecasting firm, issued its own analysis on Tuesday indicating there's a chance the United States could post job growth in December.
Scotia Capital said the impact of census-related job growth would be greater this year than in the previous censuses of 1990 and 2000, as the White House will be eager to use stimulus cash to create jobs. The economists forecast that about 180,000 census jobs will be created in the first quarter and an additional 971,000 in second quarter. All those jobs will then be lost by the end of the third quarter. Most of the hiring will be concentrated in one or two months, Scotia Capital said, "such that one single month could see up to one million jobs created," likely in May.
The record single-month nonfarm job gain was September 1983 when 1.11 million jobs were created in the United States.
Meanwhile, other factors will spur job creation, most notably the impact of Washington's nearly US$800-billion stimulus package and decisions by private-sector companies to add to their payrolls.
Nevertheless, the Scotia Capital economists warn the "potential is there" for markets and policy makers to overreact to the initial job data. Of concern, they say, is that pressure will mount on the U.S. Federal Reserve to hike interest rates based on the strong data, even though it might be skewed by one-time factors, such as the census.
"[But] markets probably will and therefore heighten the risk of prematurely tightening growth drivers," they said
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