Edmonton Real Estate Blog

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

Sincerely Yours,

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

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

Mortgage rates rose 0.2 percentage points the week of August 22, but many prospective buyers locked in rates with their banks, and the impact of higher rates is not expected to be felt until later in the fall.

The August numbers also seem high by comparison with a year ago because sales activity had dropped sharply last summer after Ottawa tightened mortgage rules.

That tightening dampened enthusiasm to buy homes last fall, but by the spring, Canadians were again shopping for housing.

Sales rose sharply in most major cities and especially Vancouver Island, Victoria, Greater Vancouver, the Fraser Valley, Calgary, Edmonton and Greater Toronto.

Prices down in Fraser Valley, Ottawa, Kitchener-Waterloo

The average price of a home was up 8.1 per cent at $378,369, with price rises in Toronto and Vancouver driving most of the increase. The average price of a Vancouver house was $775,811 and in Toronto, it was $523,228.

Average prices dropped in the Fraser Valley, Ottawa-Gatineau and Kitchener-Waterloo, Ont.

CREA doesn’t expect the strong numbers will last this fall.

“That pool of homebuyers [who had locked in mortgage rates] has largely evaporated, so demand may soften over the fourth quarter,” said CREA chief economist Gregory Klump.

The big year-over-year gains will persist because sales were so weak in fall of 2012, he said.

Around 325,180 homes traded hands across the country so far this year. That is 2.9 per cent below levels recorded last year and overall sales are expected to stay below 2012 levels.

Source: CBC.ca/news

‘Mom’ has a big meaning for every family. A ‘mom’ can be many things: a spouse, common-law partner, sister, aunt or mother; your family’s primary or secondary wage earner; a stay-at-home parent who cares for young children and manages or co-manages your household; a small business owner; or even an empty-nester who may be financially alone.
If something happened to ‘mom’ – an accident or illness, a disability or even death — what would you do? Insurance may be the solution.
Life insurance could provide tax-free funds at a critical time to pay your mortgage or other household debts or as a source of investment income to replace mom’s income.
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Term life insurance can be a good ‘starter’ option for younger couples but gets more expensive over time and does not allow you to renew after age 75 or 80.
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Permanent life insurance stays ‘in force’ for a lifetime and the premiums are set at the time of purchase and depending on the policy acquired may never change.
If ‘mom’ is a business-owner, life insurance could be used to repay business debt or a co-owner could obtain ‘key person’ insurance on ‘mom’ and use it to buy out mom’s interest in the business.
Mortgage insurance will cover your mortgage debt. You can get mortgage insurance from your lender but the more flexible option is renewable term insurance that allows your named beneficiaries – probably ‘dad’ if mom is insured – to use the proceeds to pay off some or all of the mortgage or other pressing expenses.
Disability insurance can provide a source of income should ‘mom’ become unable to earn a living or manage your household for an extended period.
Critical illness insurance provides a lump-sum of money that can be used to pay for the replacement of ‘valuable’ services and/or the costs of medical care.
Long term care insurance pays the costs of medical and home care including respite care that allows a caregiver to take a break. It protects your family’s existing financial assets and helps ensure a surviving spouse or children will receive an undepleted estate.
Today’s “moms” can usually be found at the wheel of a minivan full of hockey skates and ballet slippers, birthday parties at local amusement centers and running a business or career all at the same time. Whether that describes one person or a combination of family members, high activity – high ‘life value’ contributors can and should be protected by insurance. Your professional advisor can help you make the right insurance choices for your family.

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

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

Many lenders have already raised rates, however, I still have a couple lenders holding off. They too will increase them in the immediate future so get your pre-approval right away.

Canada Mortgage and Housing Corp. is limiting guarantees it offers banks and other lenders on mortgage-backed securities. The measure comes amid the federal government’s efforts to protect taxpayers from financial risks in the housing sector, further cool lending and add upward pressure to mortgage rates.

The Crown corporation has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350-million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program. The decision comes in the wake of “unexpected demand” for the guarantees, a spokeswoman for CMHC said in an e-mailed statement.

The conversion of loans into securities with CMHC backing has become a popular way for lenders to tap funds from a broad range of investors, enabling banks to issue more mortgages and at a lower cost.

Federal Finance Minister Jim Flaherty, concerned that Canada’s housing market might overheat and infect the economy, has been taking steps to cut back the flow of mortgage credit. This spring, he went as far as to publicly chastise some banks for dropping their mortgage rates too low.

He is also taking steps to reduce the degree to which taxpayers backstop the housing market.

This year, he announced he would restrict the ability of banks to buy bulk insurance from CMHC, and he curtailed the use of government-backed insurance in securities sold by the private sector. Ottawa released a legal framework for covered bonds, another type of bond backed by pools of mortgages, last year. It said banks could not use insured mortgages in such securities.

In addition to removing fuel from the housing market, these moves force banks and other lenders to take on more of the risk of mortgage defaults, rather than offloading that risk to Ottawa.

Canada’s housing market slowed in the wake of the government’s moves, namely Mr. Flaherty’s decision last summer to tighten mortgage insurance rules. Still, prices in most areas continued to climb, and sales have begun to bounce back.

“The government is attempting to tighten credit conditions for home loans, for example the changes to CMHC’s underwriting standards last year, and this is the latest iteration of that effort,” said National Bank analyst Peter Routledge.

He said that the four largest mortgage underwriters, Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Bank of Nova Scotia, had made good use of the NHA MBS program “and I expect that their funding strategies will change as a consequence.”

“Given the differentials in funding costs via NHA MBS or unsecured long-term funding, I could see [an additional] 20 to 65 basis points in the cost of funding mortgages for the larger banks,” he said. “All else equal, we could see mortgage rates start to move up in unison.”

At the start of this year, after consultations with CMHC, Mr. Flaherty said the Crown corporation could guarantee a maximum of $85-billion worth of new NHA MBS this year. By the end of July, lenders had already issued $66-billion worth of the securities, compared to $76-billion during all of 2012. As a result, CMHC is imposing the $350-million cap on each issuer effective immediately, while it comes up with a formal allocation process this month that it will put in place for the final four months of the year.

The Crown corporation guarantees timely payment of interest and principal to investors in both types of securities, and charges the banks a fee for the service.

On its website, CMHC states that “MBS [have] helped to ensure a ready supply of low-cost funds for housing finance and to keep mortgage lending costs as low as possible for homeowners.”

Mr. Routledge said that smaller mortgage lenders don’t create enough NHA MBS to be materially affected by the new $350-million cap.

The amount of NHA MBS being issued shot up during the financial crisis, as banks sought cheaper sources of funds to continue lending mortgages. The securities are backed by pools of insured mortgages, and investors receive monthly principal and interest payments that stem from the payments homeowners make on the underlying mortgages. Banks sell the securities to investors, or to be used in the Canada Mortgage Bond program.

Feel free to call for questions or more information.

Source: www.cmhc-schl.gc.ca/en/co