Canada First Mortgage

Tuesday’s Globe and Mail

Interest rates have recently being going somewhere unexpected: down.

At their trough last week, the yields on 10-year U.S. Treasuries, the benchmark North American rate, touched 3.11 per cent, the lowest level in six months and more than half a percentage point below their February peak.

Yields on 10-year Government of Canada bonds have fallen, too, and are now virtually identical to their U.S. counterparts.

The sliding rates have surprised many market watchers. With the United States government bumping up against its debt ceiling, inflation ticking upward, and a growing debt crisis in Europe, most expected interest rates to be increasing.

While predicting the future for rates is notoriously difficult, some observers believe that the current low-rate environment may continue for a while. If so, it will mean pain for savers, but good news for borrowers.

A drop in interest rates is equivalent to a sale on the price of money, and corporations are already rushing to take advantage of the easy lending conditions, even if they’re in no immediate need of funds. A case in point is Google Inc., which has $37-billion (U.S.) in cash and marketable securities on its balance sheet, but raised $3-billion from a bond issue last week anyway. Mortgage rates have fallen, too – good news for homeowners looking to refinance.

But lower rates have not turned out so well for some of the market’s savviest players, including Bill Gross, the founder of Pimco, the world’s biggest bond fund. Earlier this year, he sold his U.S. Treasuries, because he thought interest rates were poised to rocket higher, which would drive down prices of bonds.

It’s difficult to fault his logic: only a few months ago, the case for higher interest rates seemed so compelling.

Governments around the world are carrying bloated deficits and massive borrowing needs. In the United States, politicians have yet to agree on any clear path to deficit reduction, despite more than $1-trillion in annual red ink. Meanwhile, oil has been trading consistently around the $100-a-barrel level, thereby lifting inflation, another bond-market negative.

And the U.S. Federal Reserve is no longer putting its thumb on the scale. In less than six weeks, it is going to end its program of quantitative easing, under which it is buying $600-billion in Treasuries to goose the economy. Many bond-market followers believe the Fed’s massive buying binge has been propping up Treasury prices and keeping yields artificially low.

So what has been pushing rates lower in recent months?

A weaker-than-expected recovery is the major culprit. “The global economy, and the U.S. economy in particular, is not on quite as solid a recovery track as people were imagining in the very optimistic days of six months or so ago,” observes Peter Buchanan, senior economist at CIBC World Markets.

A slew of recent statistics underlines that weakness, ranging from the poor state of U.S. home sales to the slowing pace of U.S. manufacturing growth. Meanwhile, the Japanese economy, the world’s third-largest, is shrinking and creating a further drag on global commerce, although few foresee a double-dip recession.

“We’re looking ahead toward a bit of a cooling in economic growth,” said Paul Dales, senior U.S. economist at Capital Economics, who foresees output in the U.S. rising about 2 per cent this year.

That level of growth won’t be “anything to celebrate but it’s nothing like the recession we saw previously,” he said.

Another factor driving rates lower has been the early May rout in commodities, which dampened some of the worry on the inflation front. In addition, the recent sluggish performance of the stock market suggests that investors are getting nervous and growing more willing to buy super-safe government bonds.

Mr. Dales believes the current trends have room to run, and that rates will surprise to the downside.

He predicts U.S. 10-year Treasury yields could slip to 2.5 per cent in the low-growth, less inflation-spooked environment he foresees ahead.

If growth continues to be slow, lower rates might be staying around for a while.

Mr. Buchanan says the most likely scenario, given the poorer economic outlook, is for the Fed to hold off on raising rates until 2013. He believes the yield on Treasuries will rise gradually, instead of falling further, getting back to 3.4 per cent by the end of this year and to 4 per cent by the end of 2012. http://www.theglobeandmail.com/report-on-business/economy/interest-rates/low-interest-rates-seen-sticking-around/article2032075/

Calgary market transitioning into a more vigorous phase

TORONTO, May 20 /CNW/ - Unlike most other major centres across Canada, housing affordability in Alberta remained stable in the first quarter of 2011, according to the latest Housing Trends and Affordability report issued by RBC Economics Research.

Until the fall of 2010, abundant availability of homes for sale in the face of sluggish demand kept housing prices firmly under control. Resulting stable or slightly declining property values contributed to a substantial improvement in affordability in Alberta last year.

“The Alberta market continued to be stuck in low gear in the first quarter of 2011. Sales of existing homes and construction of new housing units showed very modest increases,” said Robert Hogue, senior economist, RBC. “While market conditions have become more balanced in recent months, owning a home doesn’t seem to be getting more expensive in the provincial market at this stage. Affordability levels are still looking quite attractive.”

RBC’s housing affordability measures for Alberta, which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home, remained relatively unchanged and below their long-term averages in the first quarter of 2011. The measure for the benchmark detached bungalow in the province moved up to 31.3 per cent (an increase of 0.4 of a percentage point from the previous quarter), the standard condominium stayed flat at 20.2 per cent and the standard two-storey home fell to 34.2 per cent (down by 0.2 of a percentage point).

RBC’s report notes that there are signs that the Calgary housing market is finally overcoming its protracted slump. Home resales in the area grew for the second consecutive period in the first quarter, the most growth since the middle of 2009, helping to remove market slack and setting a healthier balance between demand and supply.

“Calgary home prices have yet to break out of their listless trends, but they rose at their fastest rate in more than a year in the first quarter, with detached bungalows leading the way,” said Hogue. “Firmer market conditions and higher prices had only limited impact on Calgary’s affordability, which remains among the most attractive of Canada’s major cities.”

The majority of Canadian markets experienced weakened affordability in the first quarter of 2011. Most notable was the sizeable deterioration in British Columbia. More specifically, Vancouver saw significant gains in property values, which drove the already elevated cost of homeownership even higher. Quebec’s homebuyers also faced noticeable rises in ownership costs, while those in Atlantic Canada saw their affordability advantage somewhat diminish. The picture remained mixed in other areas of the country, with Ontario, Alberta and Saskatchewan experiencing ups and downs in ownership costs, depending on the housing type.

“Despite the latest erosion in affordability, provincial levels generally continue to stand near their long-term averages, suggesting that owning a home remains affordable or, at worst, slightly unaffordable across Canada - with Vancouver being a notable exception,” said Hogue.

RBC’s housing affordability measure for a detached bungalow in Canada’s largest cities is as follows: Vancouver 72.1 per cent (up 3.4 percentage points from the last quarter), Toronto 47.5 per cent (up 0.8 of a percentage point), Montreal 43.1 per cent (up 2.0 percentage points), Ottawa 39.0 per cent (up 0.4 of a percentage point), Calgary 35.9 per cent (up 0.9 of a percentage point) and Edmonton 31.5 per cent (up 0.5 of a percentage point).

The RBC housing affordability measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market in Canada. Alternative housing types are also presented including a standard two-storey home and a standard condominium. The higher the reading, the more costly it is to afford a home. For example, an affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income.

Highlights from across Canada:

• British Columbia: Strong home price increases reduced affordability in the province in the first quarter. The RBC measures for British Columbia rose between 0.8 of a percentage point and 1.8 percentage points, the most significant increases of all the provinces. The lack of affordability will continue to weigh on local demand and could potentially cause painful market disruptions in the period ahead.
  • Vancouver affordability continued to wane, as measures climbed between 1.0 percentage point and 3.4 percentage points, and moved closer to all-time highs.
• Saskatchewan: Following solid performance in the second half of last year, some softening in property values in the early months of 2011 led to a further decrease in the cost of owning a home in Saskatchewan. The RBC measures for bungalows and two-storey homes fell by 0.7 of a percentage point in the first quarter, representing a third consecutive quarterly improvement in affordability. Condominium apartments bucked this trend and saw their affordability modestly deteriorate in the face of higher prices.
• Manitoba: Housing affordability continues to be attractive in Manitoba, with little change registered in the first quarter. Measures rose by 0.1 of a percentage point for detached bungalows, declined by 0.2 of a percentage point for condominium apartments and stayed even for two-storey homes. Manitoba is still one of only two provincial markets (alongside Alberta) where affordability measures stand below long-term averages for all housing categories.
• Ontario: In the first quarter of 2011, home resales in Ontario increased at a sustained and yet subdued rate, while home prices rose modestly overall. Affordability stood very close to long-term averages, leaving homebuyer demand largely unchanged in the province. RBC measures went up for bungalows and condominiums (by 0.5 and 0.1 of a percentage point, respectively), but down for two-storey homes (by 0.6 of a percentage point). Market activity in Ontario is likely to face some headwinds in coming months, given the latest changes in mortgage lending rules and the expected rise in interest rates.
  • Somewhat tense market conditions in Toronto further fuelled appreciation in property values and led to an erosion in affordability, as RBC measures for detached bungalows and condominium apartments rose by 0.8 and 0.1 of a percentage point respectively.
  • Ottawa measures increased modestly for detached bungalows and two-storey homes, while they remained the same for condominium apartments. As most measures have moved above long-run averages, any further deterioration in affordability will likely act to restrain demand in the area.
• Quebec: Quebec homebuyers faced higher ownership costs in the first quarter, which weighed significantly on affordability. RBC measures rose by 1.1 percentage points for detached bungalows and 1.3 percentage points for two-storey homes, both representing the second largest increases behind those recorded in British Columbia. All measures in Quebec stand slightly above their long-term averages, corresponding to a moderate strain in affordability in the province.
  • Montreal’s affordability measures rose between 0.1 of a percentage point and 2.8 percentage points in the first quarter of 2011, pushing levels for all housing types above national and long-term averages for the area.
• Atlantic Canada: In the first quarter, rebounding housing market activity has boosted property values in Atlantic Canada. Home resales in the region climbed solidly for the second consecutive period and further reversed some of the declines that occurred last year. The downside has been a modest fall in the region’s affordability position. Affordability measures for Atlantic Canada increased between 0.6 and 0.9 of a percentage point in the latest period, although levels hovered near long-term averages and remained among the lowest in the country.

The full RBC Housing Trends and Affordability report is available online, as of 8 a.m. ET today at www.rbc.com/economics/market/pdf/house.pdf.

Sale up 51% this year

CALGARY — Luxury home sales in Calgary have soared this year compared with a year ago, according to a report released Wednesday by RE/MAX.

The real estate firm noted that 145 homes have sold from more than $1 million year-to-date until the end of April, a 51 per cent hike from the 96 sold for the same period in 2010.

RE/MAX said improved financial standing among high net worth individuals is the major factor driving strong sales activity at the top end of housing markets across the country.

RE/MAX Ontario-Atlantic Canada and RE/MAX of Western Canada examined 12 major centres from coast-to-coast and found that luxury sales have surged in close to two-thirds of housing markets between January 1 and April 30 of this year, compared with the same period in 2010.

Leading in terms of percentage increases over the four-month period were Greater Vancouver (118 per cent)—”where foreign investment has also played a major role”—Ottawa (59 per cent), Calgary (51 per cent), Halifax-Dartmouth (27 per cent), Winnipeg (24 per cent), Hamilton-Burlington (13 per cent) and Greater Toronto (nine per cent), said the company.

Six of the seven major cities—with the exception of Calgary—are poised to set records in top-end activity by year-end. Several are just short of peak levels reported in 2010, such as Victoria, Regina, and London-St. Thomas, it added.

“Three key factors—serious equity gains, stock market recovery, and improved economic performance—have been behind the push for luxury housing product across the country,” said Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada, in a news release. “The combination also continues to bolster the bottom line of high net worth individuals both nationally and globally. The impact of that wealth is being seen in the demand for all things luxury—from homes to cars, collectibles and fine wines.”

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Christine Dobby, Financial Post · May 7, 2011 |

Hiring surged at North American companies in April, reminding investors the economic recovery continues to build underneath the wild swings in commodity markets.

Canada added 58,000 jobs in April, bringing the unemployment rate down 0.1 percentage point to 7.6% and returning fulltime employment to the level of October 2008 for the first time, Statistics Canada said Friday.

Perhaps more encouraging were figures from the United States. Employers there added 244,000 workers to their payrolls, the biggest increase in 11 months and trouncing expectations for a rise of 186,000. Private-sector hiring led the charge, as companies created 268,000 new jobs, the most in five years.

“The U.S. labour market continues to strengthen, greatly allaying recent concerns about a slowing economic recovery,” said Sal Guatieri, senior economist at BMO Capital Markets.

It was a relief after a volatile week that had the price of oil plunge 12%, silver collapse 27%, copper fall 6% and gold slide 4.5%.

Markets stabilized on Friday, with the S&P/TSX rising 111 points to 13,567 and the Dow Jones industrial average up 55 at 12,639.

The ongoing improvement in the Canadian labour market means the Bank of Canada is still likely to resume raising interest rates in the second half of the year barring a commodity drop so sharp it destabilizes the global outlook, economists said.

“I would say that on balance the employment numbers would have a bigger effect on the bank’s decision-making,” said Douglas Porter, deputy chief economist with BMO Capital Markets. “They can’t be whipsawed by week to-week news in commodity prices.”

He added while commodity prices are not as high as they were just a short week ago, they are still up in general this year, and oil prices at around US$100 a barrel are still quite encouraging for most Canadian oil companies.

It would take a serious and ongoing dip in the commodity market to influence Canada’s central bank, Mr. Porter said.

“If the deep downdraft is being driven by real concerns about the United States and the global outlook, then I think the bank would deeply reconsider the need for any further rate moves,” he said. “I guess if we drop back below where we were at the start of the year, the bank would probably take that into account, and we were around US$90 [per barrel] at the start of the year,” Mr. Porter said with respect to oil prices.

On the other hand, Derek Holt, an economist with Scotia Capital Markets, said while the jobs numbers are solid, the recent correction in the commodities market may already be enough to influence the bank.

“I think that gets bigger weighting,” he said, adding “I think [the bank's] on hold for quite some time. Our call remains that they’re on hold until October -so, later than the consensus.”

But Dawn Desjardins, assistant chief economist for RBC Economics, agreed with Mr. Porter that only a drop in commodity prices that destabilized the outlook for the global economy would influence the Bank’s reasoning and she does not see the recent “gyrations” as sufficient.

“From the Bank’s perspective, I think they try to look though the noise, as we all do,” she said.

Ms. Desjardins expects to see the interest rate hiked 0.25 of a percentage point in July and said the employment report substantiates the view that the trend is toward growth.

Thursday’s job numbers were also noteworthy for the fact that 41,000 of the new jobs were part-time and the total number of hours worked remained 0.6% below the October 2008 level.

“There’s been a less than handy recovery in hours worked, which is to say there’s greater slack in the economy than that represented by the number of jobs,” said Stewart Hall, economist at HSBC Securities, who nonetheless still expects a rate hike of 25 basis points in July.

Other notable numbers from Friday’s labour force survey:

- The part-time trend was reflected in Ontario, which posted a gain of 55,000 jobs, 46,000 of which were part-time.

- Newfoundland and Labrador was the only other province to show a significant gain, picking up 3,100 jobs.

- Meanwhile, employment dropped in Nova Scotia and Manitoba -down 5,500 and 3,300 jobs, respectively -and the rest of the provinces avoided significant drops or gains.

- Compared with April 2010, Canada’s employment increased by 283,000, a gain of 1.7%.

- The service sector led the way with the creation of 36,000 new jobs while employment in both construction and manufacturing held steady in April.

- The statistics agency also noted that women aged 55 and over picked up 29,000 jobs last month while there was little change in other demographics. http://www.financialpost.com/news/jobs/4743688/story.html

Tara Walton/Toronto Star By Bryan Borzykowski |

Last September, my wife and I started scouring the city for a new house. We were living in a cozy bungalow, but with a growing kid and another on the way, we decided it was time to move.

Buying a new house is, of course, expensive, so I wanted to do whatever it took to reduce my costs. Most of the fees couldn’t be avoided, but there was one costly payment I desperately wanted to steer clear from: The mortgage penalty charge.

I had just over 12 months left on my five-year mortgage term, which meant that I either had to break my mortgage or stay with my current lender by transferring my mortgage to my new house. The latter option would have allowed me to avoid the fee. However, my lender couldn’t give me the best interest rate.

The new lender, a bank, was offering a variable rate of 2.25 per cent, a much lower rate than my old lender was willing to offer. I calculated that over the term I’d be better off paying the fee and taking the lower rate.

It was going to cost me $10,000 to break my contract. It felt like an unnecessary cost — I paid my lender so much in interest over the four years, why would I have to cough up so much cash?

I asked my broker to see if the lender would waive the fee, even though I was using a new lender for my next house, but they didn’t. Peter Veselinovich, vice-president of banking and mortgage operations at Investors Group, isn’t surprised. “The charge isn’t negotiable,” he says.

While the penalty may seem like an arbitrary sum, it’s not a cash-grab, he says.

The lender takes mortgage funds from money invested in GICs and other products and then it pays investors interest on those investments.

The idea is to match a five-year mortgage with a five-year GIC, so investors can get paid back at the same time as the mortgage comes due.

If a mortgage is broken, the lender needs to come up with money to fill the gap between the investment coming due and the mortgage ending. Hence the fee. The lender then takes that lump sum and invests it, so it can pay investors back when its GIC comes due.

The penalty is calculated two ways: you either pay 90 days of interest or what’s called an interest-rate differential, which is a penalty based on your old rate and a new rate based on a shorter term.

For example, let’s say you wanted to exit your 5 per cent five-year term with three years left to go. The lender would look at the current three-year term rate, which, say, is 3 per cent, and then charge you interest on the difference, 2 per cent, for 36 months. The sum also depends on how much money you still owe the bank.

However it’s calculated, the payment can be huge.

Darick Battaglia, a mortgage broker and owner of Dominion Lending Centres’ Barrie location, says that while it may seem as though people have to empty their bank account to pay the penalty, ultimately, by paying the lower rate, they’re getting that money back in mortgage savings.

Whether you’re moving houses, or just want to break a mortgage to take advantage of a lower interest rate, people often pay the penalty so they can free up more disposable income.

“It can help people get into a better financial position, because they have more disposable income,” says Battaglia. “They may find that it’s better to invest that money in an RRSP.”

If you’re moving, there are strategies to help reduce the penalty or even not pay it at all.

Almost all mortgages allow people to put a certain percentage of money down on a house every year; I was allowed to pay 20 per cent of my balance every 12 months.

In some cases, lenders will allow you to designate the first 20 per cent — it could be less or more depending on your lender — of the proceeds of a sale of a house towards the prepayment in order to pay down the outstanding balance and so reduce the mortgage penalty.

Investors Group is one institution that allows this, but not all do.

Battaglia has dealt with many lenders who refuse to honor this type of arrangement. They want two checks: one for the prepayment and one to pay off the mortgage.

My own lender refused to let me make one payment; I had to borrow money from my broker, who paid my prepayment three days before closing. I had to pay him back with some of the proceeds of the sale. It was a major hassle. But I did save about $1,500.

Some lenders will eat the fees themselves to retain the business. Again, most want the money. Battaglia says that some banks — he’s seen this happen with Scotiabank and TD — will waive the fee as long as you extend your term. He often uses the penalty as a negotiating tool.

“I’ll tell a lender I’m shopping around and while we’d like to keep a client’s business with your company, what can you do on the penalty?” he says. “A lot of times the penalty gets reduced or it’s paid off by the lender.”

Porting a mortgage to a new house is another way to avoid the fee.

Let’s say you have $100,000 left on a mortgage with a 4 per cent rate, but you need $200,000 more for the new house. The bank will give you the additional money at the new rate, which could be 3 per cent. You’d keep the same term or extend it and now you’d pay a blended rate, in this case 3.5 per cent on $300,000.

“There are no penalty costs, because you’re still honouring the original contract,” says Veselinovich.

Most people will have to open their wallet when they break a mortgage.

Fortunately, you can avoid paying administration fees that the lender will charge you. It’s not necessarily a big cost — Veselinovich says people get charged between $75 and a few hundred dollars — but why pay more money than you have to?

“These fees should be readily negotiable based on your past performance and your relationship with the lender,” he says.

While I did get my penalty reduced by making a prepayment before closing, I still had to write a cheque for about $8,000. It was painful at the time, but now that I’m in my new house, paying a new mortgage at a much lower rate, I don’t think about the penalty anymore.

Now I have to figure out a way to convince Best Buy to give me a deal on TVs http://www.moneyville.ca/article/981221–why-i-paid-10-000-to-break-my-mortgage

The viral volcano erupted this week.  Quickly!  An RBC specialist was out claiming many falsehoods about the differences between RBC Mobile Mortgage Specialists, and Canadian Mortgage Brokers and Associates.  It does not bode well for either the Mobile Specialist, nor RBC in the wake of the disaster…

Claims such as “Brokers will charge you hidden fees”, “Brokers will FARM OUT your mortgage application to numerous lenders based on only the lowest interest rate, no other factors“, “the broker will pull numerous credit bureaus based on their software capability”, “Brokers cannot fit your mortgage solution together”….it goes on.

Such dangerous comments are cause for the gloves to hit the ice, fists in the air, and a stance that’s ready to fight….right?!  Well, it seems that the broker channel has held a little more class than that.  We understand that these mortgage specialists are out to compete with us…it would only hurt the entire industry if we returned a punch.  Hey - maybe it was a playoff tactic?  Maybe she was trying to lure us into a penalty.  Guess what…didn’t work.  Looks like you’re the only one heading to the sin bin for your proverbial two minutes. If it happens we’re going to take our puck and go home….again.  We compete…and compete is what we will continue to do.  Our gloves will be kept on for the remainder of the game.

But listen….RBC:  We thank-you for the apology.

Here is RBC’s apology…

John Shmuel Financial Post Apr 19, 2011

Inflation was hotter and more widespread than expected in March, figures released Tuesday showed, leading economists to predict that another strong reading in April could all but solidify an interest-rate hike in July.

Statistics Canada said the annual inflation jumped to a 2½-year high of 3.3% in March, well above economist expectations for 2.8%. Core inflation — which factors out volatile items such as energy and food prices — rose 1.7%, compared with an expected 1.2%.

The figures show prices are rising not only faster than expected, but also affecting Canadian wallets beyond the gas pumps and grocery stores. That puts pressure on the Bank of Canada, especially given its target inflation range is 2%.

“We were already expecting the Bank of Canada to tighten rates in July, but the March numbers were a shocker,” said Douglas Porter, deputy chief economist at BMO Capital Markets. “This solidifies our forecast of a July rate increase.”

Tuesday’s numbers come less than a week after the Bank of Canada raised its forecast for inflation this year, citing rising energy prices. Inflation in March was also a big leap from February, when the headline number was 2.2% and the core rate was 0.9%.

Gasoline prices were one of the main reasons for the inflation surge, with prices up 18.9% from a year earlier. The strong uptick coincides with rising oil prices in the wake of unrest in North Africa and the Middle East.

The figures helped push the Canadian dollar to its biggest advance against its U.S. counterpart in two months, surging to $1.0457.

Mr. Porter said the Bank of Canada’s next policy meeting, to be held on May 31, will signal whether the Bank of Canada will move to hike rates in July.

“They’ll have strong wording hinting at an increase,” he said, adding such a move is likely if April turns out to be another month of strong inflation — which he expects to be the case.

Economists will now be paying attention to April numbers and, in particular, to core inflation.

“The Bank of Canada will get one more CPI report before their next interest-rate decision on May 31, to assess whether this was a one-off fluke or the start of a new troubling trend,” Mr. Porter said. “Suffice it to say that the bank won’t be comfortable keeping rates on hold beyond the next meeting if this is not a fluke.”

The bank last raised its interest rate in September, when it moved its benchmark number from 0.75% to 1%.

But while the strong inflation data surprised many industry watchers, economist David Rosenberg labelled the inflation fears “uncalled for.”

In a note to investors about inflation in the United States, Mr. Rosenberg, the bearish chief economist and strategist at Gluskin Sheff + Associates, said inflation targets were unlikely to meet the lofty expectations of most economists.

“Whenever we go through one of these commodity spasms, household inflation expectations take off,” he said. “But this has proven to have been a great contrary signal each and every time.”

In the United States, fears over rising fuel and food prices have led some economists to predict inflation levels in that country could top 5%, especially given the U.S. Federal Reserve is not expected to boost its benchmark interest rate this year.

U.S. inflation in March was up 2.7% year over year, according to the consumer price index. Consumers’ one-year inflation expectation was left unchanged at 4.6% after numbers were released earlier in April.

Mr. Rosenberg, however, said history shows inflation is unlikely to hit those kind of levels.

“In periods when inflation expectations breach 6%, as is now the case, inflation has always receded in the next year and by an average of 300 basis points,” he said.

The latter two years showed just how volatility in non-core items can disrupt inflation. The summer of 2008 saw economists predicting inflation levels of nearly 8%, just as oil pushed US$145 a barrel.

“A year later, the inflation rate was flirting with the 0% threshold,” Mr. Rosenberg said http://business.financialpost.com/2011/04/19/it-started-with-energy-now-inflation-has-come-home/

Nearly one-third of sales under $300,000 level

See homes in Calgary listed for $299,900.

CALGARY — First-time buyers have re-entered the Calgary resale housing market with “a renewed sense of confidence,” says a report released Tuesday by real estate firm Re/Max.

In the first two months of this year, 32 per cent of all sales occurred under $300,000 in Calgary, said the report.

Average price in the metro area was about $410,000, it said.

“The strength of the entry-level segment is good news for the spring market as sales of starter homes are expected to have a domino effect, prompting greater move-up activity in the weeks and months ahead,” said the report.

In the overall market, the number of homes sold in Greater Calgary is slightly below 2010 levels, with 3,199 properties changing hands as of February 28 versus the 3,297 sales reported during the same period last year.

“Rising consumer confidence levels, buyer’s market conditions, ample inventory and low interest rates continue to be the primary impetus among buyers, especially now that prices have resumed upward growth,” said the report. “Those who held off in late 2010 have finally jumped back into the fold.

“Overall, the majority of entry-level buyers are in their 20s and 30s. A growing number are singles, opting to get into the market earlier in life and build equity. With consumer confidence finally gaining momentum, an improving oil and gas sector and a brightening economy, demand for housing is set to rise this spring, while average price makes modest gains.”

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/First+time+Calgary+homebuyers+back+market+report/4560225/story.html#ixzz1Il9Ba6d3

Kevin Usselman

The world wants what Alberta has an abundance of; namely energy, food, fertilizer and lumber.

Cutting Edge Research President Don Campbell has been tracking Canadian real estate for 19 years and he says the province is in a good position to cash in.

Campbell says vacancy rates are again on the decline while job creation numbers are on the rise.

He says Alberta’s economy is going to act like a magnet in the next 18 to 24 months and people need places to live.

Subsequently, Campbell has a rather bullish economic and housing forecast for the province and for Calgary in particular.

He doesn’t believe Calgarians are going to see another housing boom like the one experienced back in 2006-2007, but thinks sales and prices could rise anywhere from seven to 12 per cent by 2013.

Campbell is also glad to see the city moving forward with major transportation projects like the west leg of the LRT, although he’s disappointed more efforts aren’t being made to address the secondary suite issue.

First quarter see prices, sales and listings fall compared with 2010

CALGARY — Calgary’s real estate market is in balance, with March seeing lower prices, sales and listings compared with a year ago, according to the latest report by an industry association.

That’s good news for people on the prowl for a new home as the average price for a single family home fell by two per cent from a year ago, the Calgary Real Estate Board said Friday.

The average price of $462,947 was virtually unchanged from February, the board said.

During the first quarter, sales were up four per cent to 3,309 from a year prior, driven by a combination of stable prices, low interest rates and stronger job numbers, president Sano Stante said.

“We’ve come to a period where we have a combination of good affordability, low interest rates and large selection,” said Stante. “That makes it a really attractive market to buy in to.”

Single family homes are more affordable in a wider area of Calgary, enabling people to buy into neighbourhoods which used to be out of their price range, he noted.

The less happy news for realtors is the number of single family home sales in the city slid three per cent last month from March 2010, to 1,355.

However, a 19 per cent drop in new listings, year-over-year, could support the market heading toward the spring.

Sales in Calgary’s northwest quadrant were the strongest, seeing a 13 per cent increase over the first quarter in 2010.

The most affordable quadrant in the city remains the northeast, where single family homes averaged around $282,713 during the first quarter.

Meanwhile, the southwest recorded the highest single family average home price during the quarter, at $570,748 compared with an average price of $464,990 in the northwest and $422,821 in the southeast.

The improved sales during the quarter were offset by declining condominium sales, the board said.

Condo sales dropped during the quarter by 11 per cent from a year ago, with prices sliding two per cent on average, excluding the sale of a $4.1-million condominium.

The board considers quarterly results more indicative of overall real estate trends.

More to come …

domeara@calgaryherald.com

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