Edmonton Real Estate Investor: canada economy

After a wonderful few weeks off. We come back to oil prices still falling. I went to the pump and had a moment of glee when I saw the price at $.72 per litre, then I realized the impact on me and Albertans as a whole.

This isn't the first time in Alberta has ridden a roller coaster and it won't be the last. In fact it may not be that bumpy at all.

Low gas prices are still nothing to take lightly. Here are some big risks to the Canadian economy JUMP

A Futurist forecasts the unexpected. One of them isn't a Hoverboard.... HERE

I’m not a fan of Maclean’s overall, but there are of course some good opinions and ideas inside the magazine. There are far too many charts here to get an idea of anything, but it is still worth looking through and examining key charts that paint a picture of Canada and your province. JUMP HERE

The end of the year always bears reflection on what we've done in the last 11 - 12 months. The goal sheets I crafted at the end of 2012 are examined and my highlighter joyfully crosses off what I can mark as done. I would say that the crossing off of goals with a highlighter is one of my favorite things.

Once the highlighting frenzy is over I start thinking about the next year. Not only my goals but how our economy locally, provincially and nationally will fare.

Alberta's outlook for 2014 looks sunny with a chance of headwinds . REIN puts Edmonton back as the top town to invest in but Calgary looks good as well.

"(Don) Campbell said both cities are poised to be economic leaders in Canada in 2014 and 2015 and therefore the forecast for in-migration and housing demand remains very strong."

There is a lot of uncertainty in the US and Europe if things stay on track globally it will bode well for Canada. It's been a while since we've had B.C, Alberta and the potential of the east coast all gearing up at the same time.

At any rate we can all do our part for the economy by something as simple as having a cold beer.

Campbell said both cities are poised to be economic leaders in Canada in 2014 and 2015 and therefore the forecast for in-migration and housing demand remains very strong. - See more at: http://www.reincanada.com/RealEstateNewsView/tabid/72/articleType/ArticleView/articleId/350/Edmonton-housing-market-overtakes-Calgary-in-investment-ranking.aspx#sthash.E92SAIXf.dpuf

I'm on Peter Kinch's mailing list because you never know when you'll need a top quality mortgage broker and you can never get enough insight into mortgage interest rates.

Here is a recent mailout:

In case you missed it the following is a copy of the interview between Peter Kinch and Russell Byth that aired Sunday, November 1st on News 1130

Russ:

There's been a lot of talk recently about Canada's economic recovery and a key component of that recovery has been record low interest rates. So, does an economic recovery spell the end of low rates for homeowners?

On the line with me is best selling author, Peter Kinch with Dominion Lending Centres. Pete, what are your thoughts?

Peter:

Well Russ, there's no question that the Bank of Canada used 'Emergency Rates' to kick start the economy and once again we've seen that the housing market was at the heart of that recovery.

Russ:

So once the Central Bank feels the recovery is in full swing, will they start to raise rates?

Peter:

Technically yes - in fact, the Central Bank's main mandate is to keep inflation at about the 2% level. If inflation is below 2% they keep rates low to stimulate the economy and if it's above 2% they raise rates to cool it off.

Russ:

But in spite of signs that we are in a full recovery, inflation is still below 2%.

Peter:

That's right and mainly thanks to the strength of the Canadian dollar. In fact, the Bank of Canada is quite concerned that if the Loonie continues to gain on the US Greenback it could dampen Canada's recovery, which will serve to keep inflation below the 2% mark, thus resulting in the Central Bank continuing to keep the Prime rate low for now.

But in the meantime Russ, remember that the long term rates are governed by the bond markets and they are starting to factor in a recovery - so we will likely see a slight rise in the long term rates over that same period.

Russ:

Thanks Pete, something to keep an eye on. In the business centre, I'm Russell Byth.

While the oil sands produce a larger chunk of the Canada's greenhouse gases the pros outweigh the cons. Canada as a whole benefits and will benefit from jobs for up to 5.4 million Canadians by 2020. Imagine the housing needs then. Everyone knows that the oil sands' pros far outweigh the cons and would be foolish to say no to their significant contribution to Canada's economy.

The Alberta government has taken A LOT of flak for the environment in Northern Alberta. Yet it seems to be doing so much to right the environment.

Recently the province announced plans to more than triple the amount of protected land in the controversial northeast. Forests rebuilt from reclaimed ground are soon to become a reality as researchers work to bring back the boreal forests.

Check out how Faster Forests come into play here.

Alberta's economy was hit by the recession as was the rest of the country. The province saw record job losses, debt and housing prices declines but when it comes to rejuvenating the countries economy it will be oil that gets things going again.

Oil prices have yet to rebound to the anticipated figures for this period so Alberta's deficit will get that much bigger. The stability that is necessary for the province to rebound is still not happening and may not happen till 2010. Alberta may be diversified but it is still a resource based economy.

We're all waiting for the upturn in international economic activity that starts to drive oil and natural gas prices upward when that happens let the good times roll again. For now the long term view, late 2010, is the best bet before we see the boom years again.

When they go, and they will, oil will save the country:

"The oilsands production would result in $1.7 trillion in incremental GDP growth for Canada, $78.1 billion alone for Ontario and Quebec, the study concludes, adding it translates into 700,000 jobs being created across the country and additional tax revenues for Canada of over $306 billion.

When conventional gas and oil developments, plus LNG (liquid natural gas) development, pipelines and offshore facilities are added in, the industry will boost Canada's GDP by $3.6 trillion ($144 billion in Ontario alone)and will create 980,000 new jobs, contributing additional tax revenue of $429 billion in Canada."

Where do you think you should put your money for best growth?

Alberta's economy will take some hits before rebounding in 2010 according to Premier Ed Stelmach.

"It's just not oil and gas prices, but it's the value of the dollar, the manufacturing sector, and that's why we're promoting Alberta globally, because we have to find new markets for our products."

RBC says that Saskatchewan, Manitoba and Nova Scotia are expected to show economic growth in 2009. The rest of the provinces should be on track by 2010.

So basically Alberta, a province with until recently the most growth, will experience negative growth like most other Canadian provinces until 2010.

What's the good news?

"The good news here is the downturn is giving the province's overheated economy time to breathe and is allowing energy companies time to redevelop their stalled megaprojects to being more environmentally friendly."

"As an example, the Canada West Foundation mentions Imperial Oil's announcement of its $8-billion Kearl oilsands project last month: "Sign of the times: the announcement included a mention of greenhouse-gas emission targets and was realistic about the technology upgrades required to meet them. The next cycle of oilsands development should be quite different from the previous one." Read More Good News About Alberta's Economy

If you really want to know what's going on with the economy in Canada and aren't afraid of knowing the REAL facts not the hype then you must go to this event:

Real Estate Investment Network(TM) (REIN(TM)) will host the Canadian Economic Summit on June 26th in Edmonton. Some of Canada's top economists will be providing unbiased opinion and analysis on the fundamentals of the Canadian economy (locally and nationally) and its impact on the bottom line for investors and business owners. Among the speakers will be Mary MacGregor, Chief Economist for the Government of Alberta.

Other speakers include:

Carl Gomez, Bentall Capital's Vice President, Research.

Ron Gilbertson, President and CEO of Edmonton Economic Development Corporation

Todd Hirsch, Economist and Media Commentator

Peter Kinch, Author and Canadian mortgage expert

Don R. Campbell, Bestselling author & market analyst

"The market will no longer cover up mistakes and blind guesses. Actions and investments must be better planned, and better planning comes from knowledge," said Don Campbell, President of REIN. "These experts will provide unbiased analysis of where we are heading as a country and how that will affect you and your business."

Topics on the agenda include:

- Long-term effects of high unemployment rates, cancelled capital projects and economic stimulus packages

- Today's world economies, how long will the turbulence last

- Will lending environment continue to tighten

- Positioning your company and investments for recovery

- Assessing the real estate market - when should you invest

- Inflation? Deflation? Recession? Depression? What the economic fundamentals really tell us and the affect on businesses, labour markets, oil prices and retail sales

Complete information at

REIN ECONOMIC SUMMIT

WHEN & WHERE: June 26th at 7:00 PM

Shaw Conference Centre in Edmonton Alberta - Hall D

Contacts:
Real Estate Investment Network
Kelly Marvetz-Todd
604 856-2825
kelly@reincanada.com

From Globe and Mail

"Jeff Rubin, former chief economist at CIBC World Markets Inc., took your questions at Wednesday at 12:15 p.m.

Mr. Rubin built his reputation on a number of successful predictions, including one in 2000 that oil prices would hit $50 (U.S.) a barrel within five years and correctly calling the residential real estate market bust in the early 1990s. He was named Canada's top economist a number of times.

Mr. Rubin recently forecast that the price of oil will reach $225 a barrel by 2012, and his book, called Why Your World Is About to Get a Whole Lot Smaller, is about how oil scarcity will lead to the end of globalization.

"It's a book about the way the world is about to change. We've all got our eyes right now on the global financial meltdown, but I believe that oil scarcity will change the global economy even more profoundly and, in the process, change all of our lives - from where we work to where we live to what we eat," Mr. Rubin says"

Canada's natural resources are what the world needs.

"Despite its economic ills, Canada is the best place to ride out a worldwide recession, ....And the best place in Canada is Alberta.

"Compared to the ailing economies of nations such as the United States, Germany, France, Italy and Japan, Canada is faring well..."

"We've got a lot of problems in this country, but there's no country in the world that you want to be in to weather the economic storm (other) than in Canada," Warren Jestin Scotiabank's senior vice-president and chief economist Wednesday

Click Here To Read Full Article

My aunt forwarded this to me. I know it is quite late; now news a month old is ancient history. However, it is a good read and pretty bang on.

An American Perspective

Newsweek: Oh those Boring Canadians
by : Fareed Zakaria
in : NEWSWEEK
Feb 16, 2009

The legendary editor of The New Republic, Michael Kinsley, once held a
"Boring Headline Contest" and decided that the winner was "Worthwhile
Canadian Initiative." Twenty-two years later, the magazine was rescued from
its economic troubles by a Canadian media company, which should have taught
us Americans to be a bit more humble. Now there is even more striking
evidence of Canada's virtues. Guess which country, alone in the
industrialized world, has not faced a single bank failure, calls for
bailouts or government intervention in the financial or mortgage sectors.
Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking
system the healthiest in the world. America's ranked 40th, Britain's 44th.

Canada has done more than survive this financial crisis. The country is
positively thriving in it. Canadian banks are well capitalized and poised to
take advantage of opportunities that American and European banks cannot
seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in
North America one year ago. Now it is the fifth-largest. It hasn't grown in
size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the
past 15 years, as the United States and Europe loosened regulations on their
financial industries, the Canadians refused to follow suit, seeing the old
rules as useful shock absorbers. Canadian banks are typically leveraged at
18 to 1-compared with US. banks at 26 to 1 and European banks at a
frightening 61 to 1. Partly this reflects Canada's more risk-averse business
culture, but it is also a product of old-fashioned rules on banking.

Canada has also been shielded from the worst aspects of this crisis because
its housing prices have not fluctuated as wildly as those in the United
States. Home prices are down 25 percent in the United States, but only half
as much in Canada. Why? Well, the Canadian tax code does not provide the
massive incentive for overconsumption that the U.S. code does: interest on
your mortgage isn't deductible up north. In addition, home loans in the
United States are "non-recourse," which basically means that if you go belly
up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours.
Ah, but you've heard American politicians wax eloquent on the need for these
expensive programs-interest deductibility alone costs the federal government
$100 billion a year-because they allow the average Joe to fulfill the
American Dream of owning a home. Sixty-eight percent of Americans own their
own homes. And the rate of Canadian homeownership? It's 68.4 percent.

Canada has been remarkably responsible over the past decade or so. It has
had 12 years of budget surpluses, and can now spend money to fuel a recovery
from a strong position. The government has restructured the national pension
system, placing it on a firm fiscal footing, unlike our own insolvent Social
Security. Its health-care system is cheaper than America's by far
(accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does
better on all major indexes. Life expectancy in Canada is 81 years, versus
78 in the United States; "healthy life expectancy" is 72 years, versus 69.
American car companies have moved so many jobs to Canada to take advantage
of lower health-care costs that since 2004,Ontario and not Michigan has been
North America's largest car-producing region.

I could go on. The U.S. currently has a brain-dead immigration system. We
issue a small number of work visas and green cards, turning away from our
shores thousands of talented students who want to stay and work here.
Canada, by contrast, has no limit on the number of skilled migrants who can
move to the country. They can apply on their own for a Canadian Skilled
Worker Visa, which allows them to become perfectly legal "permanent
residents" in Canada-no need for a sponsoring employer, or even a job. Visas
are awarded based on education level, work experience, age and language
abilities. If a prospective immigrant earns 67 points out of 100 total
(holding a Ph.D. is worth 25 points, for instance), he or she can become a
full-time, legal resident of Canada.

Companies are noticing. In 2007 Microsoft, frustrated by its inability to
hire foreign graduate students in the United States, decided to open a
research center in Vancouver. The company's announcement noted that it would
staff the center with "highly skilled people affected by immigration issues
in the U.S." So the brightest Chinese and Indian software engineers are
attracted to the United States, trained by American universities, then
thrown out of the country and picked up by Canada-where most of them will
work, innovate and pay taxes for the rest of their lives.

If President Obama is looking for smart government, there is much he, and
all of us, could learn from our quiet-OK, sometimes boring-neighbour to the
north. Meanwhile, in the councils of the financial world, Canada is pushing
for new rules for financial institutions that would reflect its approach.
This strikes me as, well, a worthwhile Canadian initiative.

I read an article the other day that Albertans are gloomier than most Canadians about the home prices. My question is why? The market is stable and compared to what is going on in the rest of the world very healthy.

It seems to be a case of think it and it will be real. According to economist Canada is actually in pretty good shape. I think as Canadians we have been financially tied to the U.S for so long that we automatically assume that their financial crisis is ours.

However in world terms Canada is doing very very well.

"Canada is a financially conservative country where consumers are able to meet the terms of their mortgages, and buying decisions are based on affordability,"

"This contributes to a solid real estate market that will not experience the same drop-off we see south of the border." Will Dunning, Canadian Association of Accredited Mortgage Professionals' chief economist

If you think Alberta is in a bad way listen to this BBC special on Iceland. Iceland went from the fifth richest country in the world to a devastated economy where national debt is 12 times the national GDP.

Two Merrill Lynch economist report the real estate market in Canada is on the tipping point of a US style meltdown. In fact it's just a matter of time before the crisis happens and our overextended, hyper-leveraged population is going to see the same type of economic suffering that the US economy is currently battling.

"We fear . . . it may simply be a matter of time (before) . . . housing and credit markets in Canada crack," "Markets remain overly sanguine with respect to the prospects for the Canadian housing market, the financial sector and the overall economy." Merrill Lynch Canada Inc. analysts David Wolf and Carolyn Kwan

They are certainly brave to come out with news like that.

Almost every other analyst around is refuting the chance of a US style meltdown in Canada. The circumstances are simply not the same. Although we may be over leveraged and overextended there is no comparison to the sub-prime mess in the US.

Already markets in Alberta are starting to level out and the slight declines (about 10%) we saw over 2008 are stabilizing. By 2009 the market will be balanced and we should see a decrease in the high inventory of real estate properties.

"Price advances had been supported by fundamentals - strong employment and low interest rates - not softening credit conditions. Canada's real estate market is therefore not overvalued, a finding confirmed through a recent study published by the IMF," report by Desjardins senior economist Hélène Bégin.

If I reacted to everything that was reported in the news I would be a nervous wreck. Sensation sells and if we were told, "Oh don't worry about it - markets have blips all the time..." then no one would be a newspaper or read the news.

On that note Canada lost 6,000 jobs in June:

"We wouldn’t make too much of a one-month dip in employment --- that can happen even in the middle of a boom. However, the jobless rate continues to gradually grind higher --- now up 0.4 percentage points since its three-decade low at the start of the year --- while full-time employment growth is clearly fading. The slow slackening in the labour market may start to take some of the steam out of wages, which would be a moderate relief to the Bank of Canada’s inflation concerns. The Bank was anticipating slow growth this year, and these figures are hardly shockingly weak, so it won’t do much to alter their bigger view." Douglas Porter, BMO Capital Markets

I chose this one specifically because he stressed that one month is irrelevant in the big picture. To read more takes on the same subject from all the major bank's analysts in Canada CLICK HERE.

If you've ever wondered how your friend's pay cheques measure up to yours, you can take a peek at The all-Canadian wealth test on the Canadian Business site. Showing age, gender and provincial averages you can get a good idea of who is earning what where.

Alberta looks to have the highest salaries across the board.

My biggest question is the gender salary divide really that great?

One other good read that my lead you to your millions is 10 laws of building wealth simple advice that makes a lot of "cents".

"Canada's dollar touched the highest since 1974 on surging demand for the nation's commodity exports, with oil reaching an all-time high.

The Canadian currency strengthened as the U.S. dollar fell against 11 of 16 most-actively traded currencies. The Federal Reserve is forecast to cut borrowing costs on Oct. 31 to prevent the world's largest economy from slipping into a recession, which would eliminate the U.S.'s interest-rate advantage over Canada."

Read Full Article

One U.S dollar buys 96.02 Canadian cents. Look out for the snowbirds!

Canada's stellar economy, low un-employment rates and strong dollar leave Canadians a lot to be thankful for on this Thanksgiving Day.

"We live in a time of plenty. Our country is experiencing an exceptional period of harmony. Our governments in Ottawa and Quebec are in minority postures, which are notionally unstable but surprisingly functional most of the time.

On Friday, StatsCan put out the best labour-market report in 33 years, which is to say in nearly two generations. Unemployment fell to 5.9 per cent in a country in which six per cent, because of our generous social safety net, is considered full employment. In September alone, the economy grew by 51,000 jobs."

Of Canada's rising star has more than any province to be thankful for,

"And Alberta, well, what can you say about an economy with a jobless rate of only 3.6 per cent, while fast-food restaurants continue to close because they can't find people to flip burgers? Let the good times roll." READ ARTICLE

So at the dinner table give thanks for your health, family and friends but also squeeze a thanks in there for being Canadian at probably the biggest economic boom we have seen for a long time.

"What remains the greatest source of weakness in today's U.S. economy is a continued source of strength in Canada," "While the U.S. housing market is mired in deep recession, Canada's own housing market has demonstrated extraordinary resilience." Warren Lovely of CIBC World Markets

Our great economy is due to low unemployment, rising incomes and low interest rates. Although sales in Edmonton and Calgary have slowed down due to an increase of properties listed on the market,the province of Alberta is leading price increases with CREA forecasting a 25% jump in housing prices by the end of 2006.

Other leading provinces:

*17.4 per cent in Saskatchewan
*11.2 per cent in Manitoba
*9.9 per cent in B.C.
*9.2 per cent in Nova Scotia
*8.6 per cent in Ontario this year.

Hot demand and dwindling supply have parking rates increasing in Canada. Experts say that higher rates are an indicator of a healthy economy. If more people are out shopping and working the need for parking increases.

"This suggests that the slowdown in consumer spending coupled with modest job gains had a cooling effect on parking rates. However, as the economy is anticipated to improve, and only a small amount of new parking supply is slated to come on-line, an increase in demand is expected to push rates even higher over the next year," Colliers International

What city is leading Canada? Calgary with a rich $350 median monthly rate. As usual Edmonton is right behind with a $60 leap over the last year.

"Indicators of this upward trend include smaller markets, such as Victoria and Edmonton, where monthly rates have jumped $60 over those in 2006,"

So instead of getting angry that your parking rates are increasing be grateful for a strong economy which will positively affect housing prices.

Investors must be aware that parking rates are a huge factor when choosing a place to live.

"Parking costs continue to have a significant effect on a tenant's decision-making process," commented John Arnoldi, managing director of office leasing at Colliers International. "Monthly parking costs and availability contribute to the overall desirability of any given location, and in many instances can be the tipping point for a tenant — helping them select one building over another."

Edmonton's "Landlords market" means that people are willing to pay to get a place to live and park- just don't take advantage of them. In a "Renter's market" you would have to sweeten the deal and discount the parking rates or give one month free when tenants sign a 1 year lease.

Read The Article

The Scotia Bank released it's provincial report yesterday. David Hamilton, one of Scotia's Economists, says that Alberta will continue to be the top performer.

"Alberta will remain a top provincial performer for the foreseeable future, driven by broad-based strength," "Overall oil production will continue to increase as new oil sands projects start up and upgraders are built. Aside from the oil sands, infrastructure will see significant investment over the next few years to service record net inter-provincial migration." David Hamilton Scotiabank Economist

If you would like to download the complete PDF to see how your province rates nationally click here