CANADIAN PRESS

April 20, 2009

OTTAWA – After more than a year of cutting borrowing costs to boost the slumping economy, the Bank of Canada may hold the line on interest rates when it announces its rate decision Tuesday.

But there are other things the central bank is expected to do to boost the supply of money into financial and credit markets.

Economists seem split on whether another cut is needed, with some saying it would stimulate more borrowing if implemented with other credit-enhancing moves by the Canadian central bank and others dismissing the effectiveness of rate cuts alone.

With the trend setting overnight bank rate at half a point, Bank of Canada governor Mark Carney “has exhausted conventional remedies,” says Avery Shenfeld, chief economist at CIBC World Markets.

“A further cut to a quarter-point overnight rate would be futile on its own, and would squeeze margins in the banking system, and we therefore expect Carney to hold the target at 0.5 per cent.

“More effective would be simply to remind markets, again and again, that short rates will be staying low for the foreseeable future, likely right through 2010 if the real GDP recovery speed is seen at two per cent or less.”

Michael Gregory, senior economist at BMO Capital Markets, said “it’s better than even odds” there will be a quarter-point cut Tuesday.

“The market is not sure. I think they will cut but they will have to do something else with it as well.”

Gregory says the central bank may alter some of its other relations with the country’s big banks and other financial companies – something he calls settlement balances – to encourage them to lend more to consumers and businesses or buy securities, helping to loosen up the credit crunch that has been a large hurdle to economic recovery in corporate Canada.

As well, the central bank “can buy assets and then pay for them by printing money or creating money,” says Gregory.

“We can buy assets, maybe asset-backed commercial paper, and we will pay for it by printing money. Well, guess what, all that money we print has a potential for circulating in the economy to further expand the monetary supply.”

While observers will be watching Tuesday’s bank rate, all eyes will be on the Bank of Canada’s latest economic outlook that will be released Thursday.

The bank’s Monetary Policy Report will give us the Bank of Canada’s view of how deep the recession will be and when economic recovery is expected.

The January report predicted recovery will be strong next year, but Shenfeld believes this week’s assessment will offer “a more sobering outlook”on Canada’s economic prospects than the January update.”

Some economists predict the eight per cent jobless rate will surpass 10 per cent by the end of the year and about 600,000 additional jobs will be lost in the economy. Reduced trade with the United States, weak financial markets, the credit crunch, falling commodity prices and the restructuring of the manufacturing sector are all taking their toll on the economy.

“Expect governor Carney and his team to say, in effect, ‘never mind’ about what they said about a brisk economic rebound in 2010,” Shenfeld said. “That was based on a too-rosy reading of the external environment, and on both the Canadian and global economies responding to monetary stimulus in the way that macro models predict.”

“Historically, deep interest rate cuts would spark a wave of borrowing and spending, and the bank’s economic model captures such impacts. But in a shock caused by excess leverage (global debt), it’s going to take a long time before we see a releveraging of the household and business sectors. Growth is likely to stay below Canada’s non-inflationary potential through 2010 as a result.”

The market is changing fast… very similar to what we saw when the market had it’s down turn back in May 2007.

As of this morning there were 2,521 residential listings in Edmonton proper.  In the last 30 days there were 684 listins sold which again is an increase over last week.  That would give us a listing to sales ratio of 3.56:1.  Again that is a drop from last week.

For those of you who have been following this blog you will remember that historically in Edmonton we need a listings to sales ratio of 4:1 for a neutral or balanced market.  Now for 2 weeks in a row we have been below that market which supports my comments lasts week that we have probably seen the bottom of valuations.

I wouldn’t be surprised at all if we were to start seeing valuations start to rise again soon.  So if you were thinkg of buying then the sooner the better as they say.

According to a study done by IPSOs REID

Amid Barrage of Bad News,

Most (83%) Canadians Remain ‘Optimistic’ About Canada

Seven in Ten (69%) Think We’ll Come Out of the Recession

Stronger and Better than Before it Started

Toronto, ON – Amid a barrage of bad-news stories dealing with gloomy economic forecasts, deep deficits and job losses, even in this time of recession Canadians remain optimistic, according to a new Ipsos Reid poll conducted on behalf of Canwest News Service and Global National.

 In fact, eight in ten (83%) are ‘optimistic’ (36% very/47% somewhat) about ‘Canada as a nation’, and an equal proportion is ‘optimistic’ (26% very/57% somewhat) about their ‘standard of living compared to others’. It seems that even in tough times, most Canadians believe they’re relatively well-off.

 Further, eight in ten (84%) ‘agree’ (35% strongly/49% somewhat) that they are ‘always an optimist’ and that they ‘see the glass as half full’, an attitude that appears to be in stark contrast to the prevailing mood in the news media – one of impending doom and gloom.

 Focusing on the economy, seven in ten (69%) ‘agree’ (23% strongly/46% somewhat) that ‘we’ll come out of this economic recession stronger and better than before it started’. Just three in ten (30%) ‘disagree’ (8% strongly/22% somewhat). What is unclear is when that will be, as only 44% are ‘optimistic’ (11% very/34% somewhat) that it will be this year. The majority (55%) is ‘not optimistic’ (20% not at all/35% not very) that we’ll get out of recession this year.

 Still, nine in ten (87%) ‘agree’ (40% strongly/47% somewhat) that ‘despite everything that’s going on in the world, they’re still optimistic for a better tomorrow’. However, only a slim majority ‘agrees’ (15% strongly/37% somewhat) that ‘they’re confident that when they grow up, today’s children will be better off than their own generation is today’, while nearly one half (47%) ‘disagrees’ (15% strongly/32% somewhat) with this sentiment.

Health, Arts, Science and Technology…

Setting aside economic issues for now, Canadians appear to be optimistic about a wide variety of things ranging from their own health to advancements in science and technology.  More specifically, nine in ten (90%) are ‘optimistic’ (44% strongly/46% somewhat) about their ‘personal health’ situation, perhaps driven by the fact that eight in ten (83%) are ‘optimistic’ (32% very/50% somewhat) about ‘the advancements in science and healthcare to cure future ailments’.

 Moreover, eight in ten (80%) Canadians are ‘optimistic’ (29% very/50% somewhat) about ‘technological discoveries that will help make our lives better’.  One area where a majority (62%) is still ‘optimistic’ (18% very/44% somewhat), but not to the same degree as the areas above, relates to ‘the strength of arts and culture’ in their community. Fully one in three (34%) are ‘not optimistic’ (8% not at all/26% not very) about the strength of the arts in their community.

These are the findings of an Ipsos Reid survey conducted on behalf of Canwest News Service and Global National between March 24 and March 26, 2009. The poll was based on a randomly selected sample of 1,001 adult Canadians, who were interviewed by telephone. With a sample of this size, the results are considered accurate to within ±3.1 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. The data was statistically weighted to ensure the sample’s regional and age/sex composition reflects that of the actual Canadian population according to the census data.

For more information on this news release, please contact:

John Wright

Senior Vice President

Ipsos Reid

Public Affairs

(416) 324-2002

For full tabular results, please visit our website at www.ipsos.ca. News Releases are

available at: http://www.ipsos-na.com/news/

Weekly rate minder provided by:

Narish Maharaj

Dominion Lending Centres Optimum
(780) 238 – 7038
Apply online :
www.dlconline.com

CAUTION!!

  Buyers should be really aware that the bottom of the real estate market in my opinion has hit, and I am expecting valuations to possibly start rising.  So if you have been sitting on the fence waiting for prices to drop lower, then jump off quickly and start looking.

As of this morning on the MLS system in Edmonton proper there were 2,497 single family dwellings for sale, a number that has been holding pretty stable.  However, the number of sales are on the rise.  In the last 30 days there were 630 single family dwellings sold.  That would give us a listing to sales ratio of 3.96:1, the lowest seen since early 2007.  It is also lower than the 4:1 we need for a balanced or neutral market, and an  improvement over last week.

 If this trend continues you can expect valuations to start rising.  If you have been thinking of  buying in the next year now is the time to act and save money.

Source of listing and sales data provided by the Realtors Assc. of Edmonton

With the uncertainty of job loss racing through many homeowners’ minds these days, taking a proactive approach to this issue by putting mortgage payments aside while you’re still actively employed can help set your mind at ease.

It’s a wise move to set money aside each pay period so you can accumulate six to 12 months’ worth of mortgage payments in a short-term GIC as security for a possible job loss.

Planning for the future and potential job loss is one of the most important undertakings homeowners can make to ensure you can pay your mortgage in uncertain times.

And, best of all, if your job remains secure, you can take the money out of your GIC and make a pre-payment back on your mortgage on your anniversary date (or whenever your prepayment options permit you to do so), which can end up saving you thousands of dollars in interest payments and trim down the amount of time it will take to pay off your mortgage.

But if it’s not plausible to save money each pay period, refinancing to access the equity you’ve already built up in your home is another valid option for planning ahead in uncertain times.

In addition to freeing up money to store future mortgage payments in a GIC, some of the money can also be used to pay off high-interest debt – such as credit cards – and get you off to a fresh financial start.

You will find that taking equity out of your home to pay off high-interest debt can put more money in your bank account each month.

And since interest rates are at historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year.

There are often penalties associated with paying your mortgage loan out prior to renewal, but these could be offset by the extra money you save through a refinance.

With access to more money, you will be better able to manage your debt. Refinancing your mortgage and taking some existing equity out could also enable you to do some home renovations, take a vacation or even invest in your children’s education.

As always, if you want to talk about your financing options, I’m here to help.

Source:

Narish Maharaj
Dominion Lending Centres Optimum
(780) 238 – 7038
Apply online : www.dlconline.com

Weekly rate minder provided by:

Narish Maharaj
Dominion Lending Centres Optimum
(780) 238 – 7038
Apply online : www.dlconline.com

Great news if you are going to be selling your home as it doesn’t look like values are going to be dropping much further if any at all.  Bad news if you have been thinking of buying but want to wait a little longer.

As of this morning there were 2,454 residential single family dwelling listings in Edmonton proper.  In the past 30 days we have had 593 single family dwellings sold.  An increase over the last time I checked it.  This brings the listings to sales ratio now down to 4.14:1.  This is also an improvement over last week.

If this ration drops under 4:1 then we can expect valuations to start rising.

So if you have been thinking about buying this year get on the band wagon now…

Don’t have your downpayment all saved up yet… don’t wait contact Dominion Lending Optimum at www.dlconline.ca  to contact them and ask about their 100% financing options.

 The average* price of single family homes in the Edmonton area has hovered around the $350,000 mark for the first quarter of this year, reported the REALTORS® Association of Edmonton. At the beginning of January the average price for a SFD was $351,870. The price varied slightly and at the end of March the average SFD price was $349,716, up 0.7% from the previous month. Condo prices were a little more volatile but popped up 1.6% in March to $230,469, after a 5% drop in February. The average price of a duplex/rowhouse was $276,776.

“With price stability, low interest rates, spring weather and pent-up demand; it appears that REALTORS® are starting to get busy again,” said Charlie Ponde, president of the REALTORS® Association of Edmonton. “Our offices are reporting an increase in buyer interest. Sales in March were up 28% from the previous month.”

Residential sales through the Multiple Listing Service® in March totalled 1,380 units. Total MLS® sales (including commercial and rural sales) were 1,513 units. This is a 30% increase over the previous month. Total residential sales for the first quarter were 3,185 units and total MLS® sales were 3,471 with a YTD value of $1.1 billion.

There were 2,891 residential listings in March (down 31.7% from last March) resulting in a month end inventory of 7,476 residential properties (down from 9,464 in March 2008). The sales-to-listing ratio was 48% and average days-on-market was 56 days (down five from February).

 “The market is once again operating in a normal fashion with typical seasonal fluctuations,” said Ponde. “REALTORS® are prepared with daily statistics and market knowledge to help clients understand the market fluctuations and advise them on pricing and marketing strategies that help buy and sell homes and commercial properties.”

REALTORS® (who are all members of the REALTORS® Association of Edmonton) have just completed their annual membership renewal. Some members choose renewal time to withdraw or retire from the industry so membership numbers dip slightly at the end of March. So far the renewals are typical and the Association expects that the more stable market will encourage most REALTORS® to remain in the industry.  

Highlights of MLS® activity

¹. Residential includes SFD, condos and duplex/row houses.
². Single Family Dwelling
³. The middle figure in a list of all sales prices

* Average prices indicate market trends only. They do not reflect actual prices, which may vary.

 Source: The Realtors Association of Edmonton

In the last quarter of 2008, 6,198 people packed up their belongings and moved to Alberta which brings the province’s population to 3,632,483 as of January 1. Alberta was the only province with substantial interprovincial migration: BC came in next with 1,453 new residents according to statistics compiled by Statistics Canada, CMHC and the Conference Board of Canada.

Now that our newest residents have been in the province for a while and have secured stable jobs and lifestyles, they are going to be looking to find the home of their dreams, and they’ll need to move out of their current abode. That’s where you come in. Residential sales have been increasing since December and there are over 7,500 listings currently on the market. So if a client comes to you and asks if now is a good time to buy, tell them yes.

In-migration is a key factor that influences the housing market. New Albertans looking for homes increase demand for homes and simple supply and demand theory states as demand increases, so does price. Interested in what the market did in March? The REALTORS® Association monthly and quarterly market analysis is now available on the intranet. The Edmonton market is solid and now is a great time to buy