CALGARY - Housing starts in the Calgary census metropolitan area soared in June compared with a year ago.

According to preliminary data released today by Canada Mortgage and Housing Corp., total starts during the month were 685, up by 57.8 per cent from June 2009.

Single-detached starts jumped to 531 from 374 last year, a 42 per cent hike while multiple-family starts rose by nearly 157 per cent from 60 in June 2009 to 154 last month.

To the end of June housing starts have increased in both categories year-to-date. There have been 4,617 total starts in the first half of this year compared wtih 1,981 for the same period a year ago. In the single-detached category, starts have increased from 1,549 last year to 3,335 this year while the multi-family category has seen a rise from 432 last year to 1,282 this year.

“This marks the 12th consecutive month where single-detached starts have increased on a year-over-year basis,” said Richard Cho, senior market analyst for Calgary for the CMHC. “Builders in the last several months have taken the opportunity to replenish their inventory levels.”

But Cho added that the year-over-year gains have started to moderate.

He said that despite the rise in multi-family production activity so far this year is behind last year’s level.

“Elevated apartment inventories have contributed to fewer apartment projects breaking ground, keeping multi-family production below historial averages,” said Cho.

In Alberta’s seven largest cities, housing starts increased 33 per cent in June from 1,446 units in 2009 to 1,926 last month.

mtoneguzzi@theherald.canwest.com

© Copyright (c) The Calgary Herald

Calgary house prices remained strong in the second quarter compared to the same period in 2009, but they are expected to decrease slightly over the remainder of the year, according to the Royal LePage House Price Survey released today.

“Overall, prices are still higher than they were a year ago,” said Ted Zaharko, broker and owner of Royal LePage Foothills. “But as the second quarter ends, we are seeing the market lean in favour of the buyer.”

The report says that sales in the Calgary market have decreased and inventory levels have risent slowly compared with this time last year, but the prices still remain higher than a year ago in most housing categories except standard condominiums, which saw a 0.2 per cent decline to $251,756 due to its large inventory levels. Standard two-storey homes posted the largest year-over-year price increases, rising 5.5 per cent to $422,078. Prices for detached bungalows increased 4.6 per cent compared with the second quarter of 2009 to $419,978.

“Buyers don’t feel the urgency to make decisions when inventory levels are high,” said Zaharko. “However, we expect to see a slight increase in the number of sales and a decrease in the amount of inventory as we continue through 2010, but we also anticipate overall prices to soften in the second half of 2010 as buyers continue to remain cautious and inventory levels continue to remain higher than in past years.”

MTONEGUZZI@THEHERALD.CANWEST.COM

BY SUNNY FREEMAN, THE CANADIAN PRESS

TORONTO — A majority of Canadians who just bought or are about to buy their first home expect to pay less than the asking price and prefer newer and detached homes over older and semi-detached homes or condos, according to a TD Bank survey.

But the report questioned whether the homebuyers had unreasonable expectations, considering that nine out of 10 took out or expect to take out a mortgage for their home.

“It’s only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford,” said Farhaneh Haque, a mortgage specialist at TD Canada Trust.

Six in 10 first-time homebuyers said they were worried about being able to afford their home should interest rates rise — a scenario that economists say is inevitable after an era of historically low rates sparked a rush into the housing market.

Only 30 per cent said they plan to or already have more than a 20 per cent down payment, and the remaining 70 per cent will require mortgage insurance. Eight of 10 buyers reported putting down as much as they can afford.

But Haque advised that prospective first-time homeowners consider a larger down payment because paying 10 per cent or more will make a big difference, bringing down the time it will take to pay off a mortgage and possibly affecting regular payment amounts.

“It may mean that you need to save longer before buying your first home, but it will pay off in the end.”

The vast majority of those surveyed said they made informed financial decisions before buying, with nine in 10 homebuyers getting pre-approved mortgages and calculating closing costs before buying.

However, closing costs, land transfer tax, and legal fees were the top three costs buyers felt unprepared for.

Six in 10 first time home buyers said they bought or intend to buy a fully detached home and three-quarters want a new home.

Meanwhile, survey respondents were equally split between preferring a smaller home closer to work and 45 per cent would prefer a larger home with a longer commute.

Almost all respondents, 99 per cent, said price was the most important factor when considering what kind of home to buy.

The report compiled 1,000 results from an online survey between June 8 and 21 of Canadians who had purchased their first home within the past 24 months or intended to purchase their first home within the next 24 months.

First-time homebuyers in B.C. bucked a national trend and said condominiums were their No. 1 choice. They were also most concerned about being able to afford their homes if interest rates rise.

Respondents from Atlantic Canada were most likely to have their hearts set on new, large and fully detached homes. They are also most likely to prefer a larger home even if it would mean a longer commute.

Quebecers browsed through the fewest number of homes while shopping for their first, but were most likely in the country to live in their first home for their entire lifetime, the report found.

More first-time buyers in Alberta expected to pay less than asking price than those in any other province.

In Ontario, more homebuyers than the national average planned to put more than 20 per cent toward a down payment.

More than in any other provinces, people in Manitoba and Saskatchewan said they would prefer a newer home over an older home if price points were similar.http://news.therecord.com/Business/article/740718

- TD Canada Trust releases 2010 Home Buyers Report -

TORONTO, July 5 /CNW/ - Are Albertans better negotiators than the rest of Canada? More than any other province, first time home buyers in Alberta are expecting to pay less than the asking price for their home (71% vs. 65% nationally). One-quarter (26%) expect to pay asking price and only 3% expect to pay more than asking price. This is according to the first TD Canada Trust Home Buyers Report, which surveyed Canadians who have purchased their first home in the past 2 years or who intend to purchase a home in the next 2 years.

More than in any other province, Albertans report putting down as much as they can afford for a down payment (95% vs. 88% nationally). Sixty-five per cent say they saved or plan on saving for two years or less for their home purchase. Despite the majority putting down as much as they can afford, only 25% plan to have more than a 20% down payment. The remaining 75% will require their mortgage to be insured by organizations like the Canada Mortgage and Housing Corporation (CMHC). Two-thirds (65%) are worried about being able to afford their home if interest rates rise.

“It’s only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment and what that will mean for both the type of home you buy and for your mortgage payments over time,” says Farhaneh Haque, Regional Sales Manager, Mobile Mortgage Specialists, TD Canada Trust. “I advise first time home owners to consider a larger down payment because a 10% or greater down payment will make a big difference. It may mean that you need to save longer before buying your first home, but it will pay off in the end. Speak with a representative at your bank about setting up an automatic savings plan to help you save.”

Seventy-three per cent of those surveyed in Alberta have or plan to have a fixed-rate mortgage. “Historically you are more likely to save interest costs with a variable rate or short-term mortgage option, so if they can handle some volatility then I recommend buyers choose a variable rate. If people are adverse to interest rate fluctuations then a fixed-rate is best,” says Haque.

Albertans are doing their homework:

Nearly all home buyers are making informed financial decisions before buying their home. Top activities before buying a home include getting pre-approved for a mortgage (94%), learning about mortgage options (93%), calculating closing costs (89%) and speaking to a mortgage lender before shopping for a home (89%). However, land transfer tax, closing costs and property taxes were the top costs that buyers felt unprepared for (53%, 51% and 48% respectively).

What type of home do Albertans want?

Fifty-nine per cent of Albertans prefer fully detached homes, followed by condominiums (17%) and semi-detached homes (14%). If two homes were at the same price point, 68% would prefer a newer home over an older home. Albertans are split about the preferred location for their home; for the same price, 55% would prefer a smaller home closer to work and 45% would prefer a larger home that requires a longer commute to work.

Home shopping process:

People in Alberta do their due diligence when searching for a home, spending almost 9 months looking for a home and viewing on average 13 homes. They spend a lot of time shopping in Alberta because they plan to live in their first home for longer than people in other provinces. In fact, only 5% of people plan to spend less than 3 years in their first home (compared to 11% nationally). Thirty-nine per cent plan to spend more than 10 years in their home or to never sell.

Eric Lam, Financial Post · Friday, Jul. 2, 2010

With Canada’s economy stumbling in April, adding fuel to speculation the country’s roaring recovery that began in September 2009 was coming to an abrupt end, economists warned Canada’s central bank will have to tread carefully on its plan to raise interest rates for the rest of the year.

Derek Holt and Gorica Djeric, economists with Scotia Capital, said the Bank of Canada “was not likely to be swayed” by Wednesday’s economic data. The pair maintain a forecasted 1.25% benchmark rate by the end of the year.

“There should be enough strength in the underlying economic momentum to dismiss the drag on GDP in April as something that does not portend the start of a new trend,” the pair say in a note.

In April, Canada’s gross domestic product neither expanded nor contracted, compared with 0.6% growth in March. Economists surveyed by Bloomberg had been forecasting 0.2% growth in GDP for April.

This is the first time in eight months Canada’s economy did not expand.

In its report, Statistics Canada blames the stagnant April on a “large decline” in retail trade of 1.7%, after a 1.9% gain in March. Declines in manufacturing and utilities also contributed to the underperformance while advances in mining, wholesale trade, the public sector and construction helped to offset the decreases.

Krishen Rangasamy, economist with CIBC World Markets, said it was too soon to jump to conclusions.

“It’s too early to conclude from this GDP report that the recovery is already waning,” he said in a note on Wednesday. “The excellent handoff from March means that we’re starting the second quarter from a higher base, which sets Canada up for a decent quarter despite a slow start.”

Michael Gregory, senior economist with BMO Capital Markets, said that while the 3% growth now expected is respectable, it is a bit of a letdown compared with the 5% to 6% growth figures seen earlier.

“It’s kind of like driving on the highway at 100 kilometres an hour, then getting off and going 50,” he said in an interview. “But 3% growth is still all right and where we see it for this year.”

The second half of the year will likely move quite sluggishly, however, as a lot of spending in housing, renovation and other big-ticket items was “pulled forward” due to the HST, introduced in July in Ontario and British Columbia. Mr. Gregory expects growth of about 2% on average in the fall and winter months.

Canada’s economy also faces headwinds from the sovereign debt crisis in Europe, an even worse slowdown in the United States, and possible fallout in China, he warned.

Warren Jestin, chief economist with Scotia Economics, said in a note on Wednesday that Canada’s position as a resource leader should help keep it afloat in the face of other developed countries, although “this won’t be a hard race to win.”

The situation in Europe is troubling for Mr. Gregory, but he suspects the combination of weakening housing, high unemployment and zero credit growth will hurt the United States.

“That buzz you hear about a possible double-dip recession is legitimate and will remain a worry for markets the rest of the summer and into the fall,” he said. “It’s why we think the Bank of Canada will be on hold for a while after July.”

Mr. Gregory figures the central bank will raise rates 25 basis points at its next meeting in July, then go on hold to see how things play out in Canada the rest of the year. It is likely the BoC will push rates to 1% by the end of 2010 and add another 1 percentage point to 1.5 percentage points in 2011.

“An environment of 3% growth is still something that requires higher interest rates,” he said. “Rapid buildup in household debt is a long-term risk.”

Read more: http://www.financialpost.com/Weak+Canadian+puts+spot/3226392/story.html#ixzz0sWmoS1qa

Not too hot, not too cold — Canada’s inflation rate is about where Bank of Canada governor Mark Carney would want it leading into his next big decision on interest rates.

Statistics Canada reported Tuesday that annualized inflation dipped four-tenths of a point to 1.4 per cent last month, and the central bank’s core index slipped one notch to 1.8 per cent, well below the bank’s preferred target of two per cent.

With temporary factors the only major contributors to above-target inflation, analysts said Carney may still go ahead with his second interest rate hike in two months on July 20, but it won’t be because inflation is keeping him up at a night.

A BMO economist noted, however, that the Canada’s central bank is still charging a very low rate for overnight loans — which are only available to a small number of very large financial institutions.

“It’s true this inflation rate is quite benign, but the bank’s overnight rate (0.5 per cent) is below the inflation rate. That’s quite rare,” noted Douglas Porter, deputy chief economist with BMO Capital Markets.

“There’s no urgency, but over time the trend will be to get those interest rates at least back to inflation if not a bit higher.”

The big unknown is how fast and how high. Porter sees the central bank pausing after another quarter-point hike to 0.75 per cent next month, while the TD Bank said Tuesday it believes Carney will bring the policy rate to 1.5 per cent by year’s end, “barring any financial market flareups.”

CIBC’s Krishen Rangasamy said May’s soft prices report again underlines the sizable economic slack still present in Canada, despite two consecutive quarters of 4.9 per cent and 6.1 per cent growth.

The Bank of Canada believes growth is moderating, however, and the economy won’t return to full capacity until sometime in the middle of next year.

Most of the inflation numbers point to a moderating trend.

On a month-to-month basis, Canadians paid 0.3 per cent more for goods last month than they did in April.

Excluding energy, the national inflation rate stood at a tepid one per cent.

Overall, six of the major components tracked by Statistics Canada recorded price increases, most moderate.

Transportation prices rose 4.1 per cent, largely due to gasoline, while shelter costs rose 1.3 per cent as a 4.4 per cent rise in the price of homes was offset by a 5.4 per cent decline in mortgage interest costs.

Food prices, a key element of the index, went up a tame 0.8 per cent, the smallest increase since March 2008.

The agency said gasoline prices were still 6.2 per cent higher than they were 12 months ago, but that is a huge drop from the 16.3 per cent difference that existed in April. On a monthly basis, gasoline was actually 0.5 per cent lower in May than in April.

The only major inflation bump in the future will come in the next few months when Ontario and British Columbia move to a harmonized sales tax, but because it is a one-time adjustment, the change won’t affect the central bank.

Read more: http://www.articlesbase.com/mortgage-articles/canada-inflation-rate-2740091.html#ixzz0sAZsaU4U
Under Creative Commons License: Attribution

Average weekly earnings in Alberta tied with Saskatchewan for the fastest year-over-year rate of growth in April.

Statistics Canada reported today that earnings rose by 5.7 per cent in those two provinces from April 2009.

Alberta continued to have the highest average of weekly earnings including overtime of all provinces at $989.93. However, that number fell by 0.3 per cent from March.

At the national level, average weekly earnings rose by 0.5 per cent from March and by 3.3 per cent on an annual basis to $845.25. It was the largest pace of annual growth in the country since August 2008.

Non-farm payroll employment rose for the third consecutive month in April, increasing by 35,600 in Canada to 14.6 million. This brings total gains since the start of the upward trend in August 2009 to 166,900 (1.2 per cent), said Statistics Canada.

In Alberta, employment was down 0.3 per cent from a year ago but up 0.3 per cent from March to just over 1.7 million people.

The federal agency said April’s increases in Canada were widespread among services industries, with the largest gains in retail and wholesale trade; amusement, gambling and recreation; professional, scientific and technical services and administrative and support services.

There were also gains in the goods sector in April, as the number of jobs continued to grow in construction and in mining, quarrying and oil and gas extraction.

Statistics Canada said average weekly earnings grew in six of Canada’s seven largest industrial sectors. From April 2009 to April 2010, growth was above average in educational services (8.6 per cent), retail trade (5.2 per cent), manufacturing (4.2 per cent), and accommodation and food services (4.2 per cent). Over the same period, average weekly earnings declined in health care and social assistance (2.0 per cent).

MTONEGUZZI@THEHERALD.CANWEST.COM

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Alberta+Saskatchewan+lead+country+wage+growth/3200281/story.html#ixzz0sABA2JQI

CALGARY - The number of Albertans receiving regular Employment Insurance benefits in April declined for the sixth consecutive month, reported Statistics Canada today.

The federal agency said that number dropped by 2,500 people during the month to 49,900.

And Calgary experienced its first year-over-year decline in EI beneficiaries since the beginning of the economic downturn in the fall of 2008.

Since the peak of June 2009, the number of beneficiaries in Alberta has fallen by 20.6 per cent, the second fastest rate of decline after Ontario (26.5 per cent), said Statistics Canada.

In April, 667,400 people across the country received regular EI benefits, virtually unchanged from the previous month. The number of people receiving regular EI benefits has declined by 161,900 since the peak of 829,300 reached in June 2009, a drop of 19.5 per cent.

“Claims have generally been declining since their peak in May 2009. Although there was little change in April, the number of claims received has declined by 30.5 per cent since the start of the downward trend in May 2009, with the fastest rate of decrease in Alberta (41.1 per cent), Ontario (37.9 per cent), and British Columbia (23.6 per cent),” said the federal agency.

“Compared with April 2009, the number of EI beneficiaries was down in nine of the 12 large centres in Alberta in April 2010. This was a marked change from previous months when virtually all large centres in the province posted year-over-year increases. The most pronounced percentage decline occurred in Lloydminster. In Calgary, the number of beneficiaries edged down by 370 to 17,600 and in Edmonton, it decreased by 680 to 15,800. These are the first year-over-year declines for both Calgary and Edmonton since the beginning of the economic downturn in the fall of 2008.”

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Number+recipients+Alberta+drops+sixth+straight+month/3171091/story.html#ixzz0rDdZSxNK

Paul Vieira, Financial Post · Angel Gurria is never short of words, or emotion. The secretary-general of the Organization for Economic Co-operation and Development will talk about almost anything economic-related, and do it with a passion that’s to be expected from a native of Mexico. Mr. Gurria, a former finance and foreign affairs minister in Mexico, has been head of the Paris think-tank since 2006, and has tried to provide a voice of reason during the economic crisis. In its most recent outlook, the OECD said developed economies should begin the process of budget-cutting and get debt levels back to more reasonable levels. And in Montreal this past week for the International Economic Forum of the Americas, the multi-lingual Mr. Gurria warned economies have a tough dilemma ahead: They have to maintain fiscal policies that lead to job creation, while at the same time get their own fiscal houses in order. Mr. Gurria talked to the Financial Post’s Paul Vieira in Montreal. This is an edited version of the interview:

Q Is the euro crisis the beginning of new woes, or did the crisis that broke in 2008 really end?

A You are absolutely correct. The euro crisis is just a different phase of the crisis. And just like the first manifestation of the crisis, this deals with overleverage. First it was overleverage of the banks and the stabilization of the financial system, plus the drop in government revenues due to recession, plus the increase in automatic stabilizers, plus stimulus spending. All this produced these exorbitant deficits and this mind-boggling accumulation of debt, which we would have just laughed at a few years ago of ever happening. The euro crisis is the same problem of overleverage, but has moved from the private sector to the public sector. This is just unsustainable and has to be fixed.

Q Any surprise by the drubbing in the markets, due mostly to Europe? And any shock at how intense it has been in such a short time?

A I think at some point in time, governments took the first decision to do whatever it takes. No more failures of banks. That has consequences. The second decision was to say, “We will go out and stimulate.” That was a deliberate, co-ordinated, co-operative type of decision, and something which we are seeing the consequences of now.

The first decision was linked to stabilizing the financial system. The second decision was a little bit different because, objectively, everyone went into some kind of stimulus, with China doing 15% of GDP, and the United States did something like 6%. The difference was the degree of response that the economies had. And then there was the result of the economy. And that’s when revenue drops, and you have to spend automatically [on unemployment benefits]. That was not planned. It is the result of a general economic situation. Countries were having enough trouble just with that, on top of digging into their pockets and going into deliberate deficit spending. And now we see the consequences.

Q The US$1-trillion rescue package from European policymakers was meant to calm markets and support the euro, but that has yet to materialize. What happened?

A It is going to. It was only on [Monday] night that European policymakers got it together in term of finalizing the conditions. The proposal has been going through legislatures. Germany got its passed two weeks ago, but some of the other countries have been circling the wagons because their parliaments were reticent. But let’s assume everyone chips in, and they are in. Then that’s done. Once the money is in place and ready to be triggered, it is going to produce a lot more peace of mind than it has right now.

There were a lot of skeptical voices out there because they did not see the package gelling. What they don’t understand is the way Europe works, or how things happen. They happen slowly, there’s always a little bumpiness, but it happens. And there was enough resolve. This is sorting itself out.

Q What topic, or topics, is going to dominate the G20 leaders summit in Toronto?

A In 2008, the G20 was focused on stabilizing the financial system, and avoiding a cataclysmic disaster. In 2009, it was about growth. This meeting in Toronto is going to be about a more balanced, more nuanced, more complex formula for growth. The balance has to do with the situation where you need to put an emphasis on growth but also on fiscal consolidation, or deficit adjustment. That balance, and the need to be looking at both sides, will be much more apparent now.

There is also a need for countries not to withdraw the stimulus just yet. The monetary tightening is something that is going to happen by next year. Countries have to roll out all the stimulus packages –some of them are finished, but some of them are still happening. So don’t interrupt until you are through with them. Finish the plan. And don’t start cutting the budget just yet, maybe start in 2011. Leaders need to, at the very least, strongly signal how they are going to address the deficit and debt issues. How are they are going to bring down the deficit to a manageable level, but ensure a soft landing. Then the ultimate issue is, whether markets will be more or less tolerant and patient
Read more: http://www.financialpost.com/subprime+crisis+developed+into+euro+crisis/3145815/story.html#ixzz0qpgBSZDN

Homes are a long-term investment

“Ups and downs of the housing market is near-impossible, so the best time to buy is when you can afford it.”

‘You know, you’re making the biggest mistake of your life. The housing market is going to fall.”

I got this great piece of advice from another journalist at the Financial Post, who has since left the newspaper, after buying my first home. Not exactly the type of thing you want to hear after taking on huge debt and making the biggest financial decision of your life.

Lucky for me, I didn’t heed that advice about Toronto’s red-hot real estate market — in 1998. I’m not going to say I made a shrewd business decision 12 years ago, or even six years later when I bought a larger house.

For me, it wasn’t a case of not following what turned out to be bad advice from a fellow business journalist. Nor was it about trying to time the market.

I was simply following the same pattern as most Canadians: I got married and decided to stop renting and buy something. Later came the need for a bigger home when the second kid was on the way.

Which brings us to today. The supply of housing is rising fast as people try to list their homes for sale before the market “crashes.” This is happening at the same time that demand is starting to wane. Economists and even the real estate industry, are all predicting a correction — the only argument being how severe it will be.

So, the question for anyone buying is: should you wait?

Don Lawby, chief executive of Century 21 Canada, thinks the strategy of waiting for a crash is not going to work during this economic cycle. “For a market to crash, you have to have people who are desperate to sell,” says Mr. Lawby. “People will [only sell] if they can’t afford their mortgage or they don’t have a job.” He doesn’t see a decline in prices, “unless you are predicting that mortgages will renew at a hefty premium — which is not the case — or a whole bunch of people are going to lose their jobs.” Mr. Lawby believes neither will happen.

And, he adds, you are really into a risky game if you are timing the market. “A house is a home. If all you are doing is looking at it as an investment — that’s what happened the last 15 years — it’s not just that. It’s a place to live and a place to raise a family,” says Mr. Lawby. Even Benjamin Tal, a senior economist with CIBC World Markets, who, last month, said in a report that Canadian housing is 14% overvalued, has doubts about playing the market. But he suspects that’s exactly what some Canadians will do.

“Is there a sense that prices will go down and people will wait? I think it might be an issue,” says Mr. Tal. “It won’t be the main reason [people don't buy], but it will happen at the margins. The fact that people sell at the peak and wait to buy is a normally functioning market.”

But even if you do make the right call on housing prices, it could end up backfiring on you in other ways. For example, if interest rates rise fast enough, any gains you make on price could be erased by interest charges, says Mr. Tal. Edmonton certified financial planner Al Nagy says you need to think of your house the way you think about any long-term investment. “Whether it’s an investment for use in your retirement or a house to live in, it’s a long-term thing. The timing becomes less critical than it would be if it is a speculative [investment].”

And he says making a call on the housing market is as tricky as any other investment call. “It’s very rare you catch the bottom. You can’t let the market dictate when it’s time to buy. The time to buy is when you can afford it,” says Mr. Nagy.

I’m not sure that philosophy would fly with my former colleague, but the problem with timing the market is: what if your timing is off ?

gmarr@nationalpost.com