Edmonton Real Estate Blog

Driven by emotions, investors have tended to pour money into equity mutual funds following a period of strong growth, and then move to the next ”hot” asset class during market troughs. A strategic asset allocation approach to diversifying your portfolio will help take the emotion out of investing and can result in higher overall returns.

Feel free to contact me or visit my website for more information.

OTTAWA (Reuters) – The Bank of Canada on Tuesday sharply cut its growth forecast for the third quarter of 2013 and said the crucial export sector might pick up speed slower than initially expected.

Senior Deputy Governor Tiff Macklem said the central bank expected annualized growth in the third and fourth quarters to be in the 2 to 2.5 percent range before strengthening next year. In its monetary policy report released in July, the bank said third quarter growth would be 3.8 percent and fourth quarter growth would be 2.5 percent.

Macklem told a Toronto audience that a predicted switch in demand toward exports and business investment – important to help ensure a healthier economic growth rate and reduce reliance on consumer spending – had proved elusive.

“There is a risk that this rotation is delayed further,” he said in the prepared text of his speech.

The Bank has kept its key interest rate unchanged at a near record low 1 percent since September 2010 and Macklem gave no hints of a hike in the near future.

“With inflation subdued, monetary policy remains highly stimulative to provide time for the recovery in exports and investment to take hold,” Macklem said.

He said growth of at least 2.5 percent was needed to absorb the current slack in the economy. The bank expected household and government spending combined to contribute about 1.5 percentage points of growth.

To reach the required 2.5 percent growth, net exports and investment would need to contribute at least 1 percentage point. That implies combined growth of exports and investment of about 4 percent. In the last year net exports and investment in fact contributed nothing to growth, he noted.

(Reporting by David Ljunggren, editing by Louise Egan)

Source: MSN Money

Canadian consumer sentiment climbed to the highest in more than two years as employment rose and the housing market remained buoyant, according to the new Bloomberg Nanos Canadian Confidence Index.

The index, a weekly measurement of the economic mood of Canadians, rose to 59.75 in the period ended Sept. 27, from 59.23 the previous week. That’s the highest since March 2011 for the index, which tracks consumers’ perceptions of the strength of the economy, job security, real estate and their financial situation.

“September remains above average in terms of positive consumer sentiment in Canada,” said Nik Nanos, chairman of Nanos Research Group, the Ottawa-based polling company.

The data reflect recent improvement in economic reports. Job security among Canadians rose this month after Statistics Canada reported Sept. 6 that the economy added 59,200 jobs in August, the second highest total this year. Data this month also have shown the number of Canadians receiving jobless benefits is falling.

“Modest improvements in housing finances and the Canadian labor market are the primary factors for the best reading of the index in over a year,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.

The index has two sub-indexes: the Bloomberg Nanos Canadian Pocketbook Index on personal finances, and the Bloomberg Nanos Expectations Sub-index on future views. The data in the indexes date to 2008 and is based on phone interviews with 1,000 consumers, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points.

Pocketbook Survey

The Pocketbook Index, based on survey responses to questions on personal finances and job security, rose to 61.37 from 60.55. The difference between the share of Canadians who report their jobs are secure and those saying they’re not secure rose to 59.1 percentage points last week, the most since March 2011.

The expectations index, based on surveys for the outlook for the economy and real estate prices, rose to 58.13 from 57.91 as more Canadians predicted home prices would rise.

The improvement in attitude comes as the Bloomberg Consumer Comfort Index, a separate gauge of consumer sentiment in the U.S., rose for a third straight week.

Canada’s economy grew at its fastest pace in two years in July, Statistics Canada reported today, with the 0.6 percent advance reversing the prior month’s drop.

The country’s output is poised to accelerate at a 2.1 percent pace from July to September, after slowing to 1.7 percent in the second quarter, according to Bloomberg economist surveys.

Housing Rebound

Concerns that Canada’s housing market will cool rapidly are dissipating. Canadian home sales rose 2.8 percent in August from the previous month, the Canadian Real Estate Association reported Sept. 16. Sales have increased for six consecutive months at an average pace of 2.3 percent, the most since January 2011.

The Bloomberg Nanos gauge of Canadians’ view on real estate strengthened this month, with 38.1 percent polled predicting increased real estate values in their neighborhoods, up from as low as 34.5 percent in August. Twenty-one percent of those surveyed said they are better off financially over the past year, the highest reading since June.

The youngest age groups, and lowest income earners, are showing among the biggest confidence gains, according to the polling results. Consumers in Ontario led gains over the past week for the Bloomberg Nanos index.

Store Sales

Statistics Canada reported last week the nation’s retailers boosted sales in July by 0.6 percent, adding to evidence the nation’s economy is rebounding.

Statistics Canada also reported today that industrial product prices rose 0.2 percent in August, while raw materials prices increased 0.9 percent.

Elsewhere in the economy, Bank of Canada Senior Deputy Governor Tiff Macklem will give a speech tomorrow in Toronto on “Global Growth and the Prospects for Canada’s Exports.”

Western University in London, Ontario will release its Ivey Purchasing (IVEYSA) Managers Index for August at the end of the week, with economists forecasting a reading of 53.5 from 51 in July.

Source: bloomberg.com/news

Investigators say it could be weeks before the cause of the Rutherford Landing massive condominium fire early Sunday will be known.

About 265 units in three buildings of a condo complex under construction in southwest Edmonton were destroyed in the $17 million fire.

– Fire tears through south Edmonton condo development

The fire covered two city blocks.

One building was almost finished with owners set to move in this December.

The second building had the roof on and construction was just underway on the third.

With all the buildings levelled to the ground there’s a lot of rubble for investigators to sift through, said Michael Tucker, spokesperson for Fire Rescue Services.

He says there are many witnesses to question as well.

Investigators have been on scene since 2 a.m. Sunday when the fire started

Tucker said he expects the damage estimate will rise over the next few days as more claims are filed because the intense heat melted the siding of nearby houses and vehicles parked nearby.

“I know our investigators just had preliminary chats with some of the homeowners, people who were affected from across the street,” he said. “That number is going to increase by quite a bit I would imagine as we get a better sense of the damages.”

The construction company, The Carlisle Group, said it will begin rebuilding the complex, which was 90 per cent sold, as soon as the investigation is complete.

The developer is unsure if the underground parkades can be salvaged.

Source: MSN

Not all debt is created equal. Interest expenses incurred for the purchase of non-registered income generating investments are generally tax deductible. Interest on loans to purchase personal assets, pay personal income taxes or buy your home, however, are not. What is Debt Swapping? Essentially, it is converting non-deductible debt into deductible debt. How? Sell your non-registered assets to pay off your non-deductible debt. Next, take out a line of credit to repurchase non-registered securities and deduct the interest! Your after-tax cash flow increases, but your overall level of debt remains the same.

Assumptions:
• Under current income tax legislation, case law and CRA assessing policy, interest incurred on money borrowed to purchase non-registered income-producing investments is tax deductible. Income for the purposes of the
Income Tax Act (Canada) does not include capital gains. Further restrictions on the deduction of interest apply in the Province of Québec.
• Taxable capital gains may be realized when selling investments.
• Capital losses realized on a disposition may not be fully deductible if the same non-registered investments are purchased within a period that begins 30 days prior to their disposition and ends 30 days after the disposition.
• Individuals must qualify for a line of credit/investment loan.
• Lump-sum payments on a mortgage may incur penalties.
• The after-tax cost of borrowing on the Line of Credit (investment loan) must be less than the before-tax interest
charged on the mortgage loan and car loan for this strategy to be effective.
• The CRA has commented positively on the implementation of basic debt swap transactions; however, the CRA is not legally bound by their policy statements. In some circumstances, particularly those involving transactions between non-arm’s length parties, the CRA may consider debt swap transactions a misuse of the Income Act and apply the General Anti-Avoidance Rule to deny any resulting tax benefits. We recommend that clients discuss this matter with their accounting or legal advisor if they have concerns.

Feel free to contact me or visit my website for more information.

Fall is the best and most appropriate time for preparing your home for the bitter cold of winter. Winterization protects against the damage caused by broken water pipes and from the heat loss caused by openings in the building envelope. Every inspector should know what is involved in winterization and they should pass this information to their clients.

Insulation

Everyone knows that hot air goes up. This is why a significant amount of heat is lost in the attic more than any other part of the house. Make sure the house has the proper amount of attic insulation which prevents warm indoor air from escaping. Attic insulation should be at least 12 inches thick in cold climates but this depends on the amount of space for proper ventilation in an attic space.

Also, make sure storm doors and windows are installed properly to insulate the house and protect against bad weather.

Heating Systems

The heating system is constantly working during the winter, especially for those of us in Edmonton. Here are some inspection tips that will help homeowners:

1. Test the furnace by raising the temperature on the thermostat; if it does not turn on then something is wrong so make sure to get it repaired as soon as possible.

2. Check the air filter and replace it if it is dirty.

3. Make sure the propane and/or oil is always full if your furnace uses one.

Roofs

Replace missing shingles from the roof before the winter hits. Debris left in gutters can get wet and freeze which then can form into ice dams that stop water from draining properly; trapped water in the gutters can enter the house and lead to mold growth so make sure you remove all pine needles, leaves, and everything else from the gutters.

Source: Full Scope Inspections Inc.

If you want to give your home more curb appeal, one great way to start is by giving the exterior a thorough cleaning. An exterior that sparkles in the sun can make a world of difference. But if you’re about to reach for a pressure washer, stop right there. Not all surfaces can handle the intense spray of a pressure washer; some, like brick, can be damaged by the wrong tools. Here you’ll find out which method is best for your home, along with more know-how you’ll need to get the job done right.

Every design choice in my house is dictated by budget. I’m a work-at-home freelance artist raising two children, and every room has come together using finds from thrift stores, Craigslist and even bulk trash. I frequently work on large-scale art pieces, and my office, which doubled as a guest room, was just too small. I needed more square footage.

Armed with a strict $300 makeover budget, my husband and I reconfigured some of our rooms over a weekend, turning our converted 19- by 19-foot two-car garage into an art-making haven. This called for getting creative and making do with existing furniture pieces from elsewhere in the house. The total cost of my garage makeover, including two gallons of paint and four dining chairs, was $274.23.

BEFORE: Previously we used this space, the former garage, as a TV room and catchall for toys. The whole room felt dingy and dim. My husband used to call this “the room of squalor and filth.”

The previous homeowner had converted the garage, filling in the garage door, installing carpet and lining the walls with faux wood. Since he did it himself, there’s no insulation, and the walls don’t go all the way to the floor in places, making me contend with spiders and geckos at times. The homeowner said it cost him about $600 to convert the garage a few decades ago.

AFTER: The space is now a welcoming studio where I can work on art pieces, freelance writing and photography, and host workshops and classes.

The carpet is laid directly onto a gently sloping cement foundation, which makes it interesting for lining up artwork on the walls. I painted the walls Black Suede by Behr, because I love dramatic cocoon-like spaces.

Tip: Most art studios have bright white walls, which provide extra light and help to keep the focus on the art. But black can also be a wonderful backdrop for artwork.

Source: Houzz.com

The local housing market will not feel any pressure from the recent mortgage rate increases, according to the REALTORS® Association of Edmonton. Several of the major banks increased their mortgage rates in August because of changes in the bond market. The higher rate will increase the monthly payments on a typical mortgage or decrease the total amount that a buyer can borrow from their financial institution.

“Buyers applying for a mortgage now may have to buy a slightly less expensive property than before because their qualification amount may be lower,” said President Darrell Cook. “In the short term, any reduction in the number of buyers will be made up by the potential buyers becoming more motivated to buy before their pre-approval period ends.”

The all-residential average* price in the Edmonton CMA in August was up a quarter of a percent from last month at $351,455. The average price for a single family detached (SFD) property in the Edmonton Census Metropolitan Area (CMA) in August was $416,494, up 1.5% from July but up 5.4% from a year ago. Condominium average prices were also up by 0.9% at $244,675. Duplex/row house prices rallied in August after a price dip in July at $337,745 (up 2.1%).

As compared to August 2012, prices of all types of residential property were up: SFD up 5.4%, condos up 3.8%, and duplex/rowhouses up 12.1%. The all-residential average price was up 3.7% over the same time last year.

“Our market continues to exhibit strong fundamentals,” said Cook. “Rental vacancy rates are low at about 1.2%, new home starts are up and weekly take-home pay rates are the highest in Canada. The upward pressure on housing prices will be moderated by the seasonal decreases as we approach winter.” Despite the increases, housing prices in Edmonton continue to be affordable, mainly because of the higher average incomes.

The sales-to-listing ratio of 65% was the result of 2,299 residential listings and 1,490 residential sales in August. The inventory of available homes on the Edmonton MLS® System was down from 5,834 units in July to 5,557 units in August. It took 53 days on average to sell a home in the Edmonton area.

The total value of MLS® sales YTD is the highest it has been in five years at $5.8 billion as a result of stronger sales numbers and higher prices overall.

Source: Realtors Association of Edmonton

Throughout the European sovereign debt crisis, little attention has been given to the positive developments that are occurring at the corporate level. Corporate earnings have continued to rise since the market bottomed in early 2009 and most recently the companies listed on the S&P 500 have been delivering record-breaking results. Another positive development relates to the high levels of cash that companies are holding. Once the economic climate begins to clear, it is only a matter of time before corporate spending will again stimulate economic growth. Despite all the negative headlines, U.S. companies are proving their resilience. Similar performance is occurring in Canada, providing the underpinnings for improved equity performance.

Feel free to contact me or visit my website for more information.