February 2010

www.caamp.org

December 8, 2009

0.25%

January 19, 2010

0.25%*

March 2, 2010

Next meeting date

December 9, 2009

2.25%

January 20, 2010

2.25%

March 3, 2010

Next meeting date

December 24, 2009

0.9525

January 15, 2010

0.9714

January 27, 2010

0.9392

Bond Type

December 23, 

2009

January 13,

2010

January 27, 2010

1 year Treasury Bill

0.66%

0.60%

0.56%

3 year Benchmark 

Bond Yield

1.82%

1.80%

1.66%

5 year Benchmark 

Bond Yield

2.70%

2.72%

2.46%

10 year Benchmark 

Bond Yield

3.57%

3.61%

3.35%

Province

October
2009

October
2008

November
2009

November
2008

December
2009

December
2008

Newfoundland/Labrador

2,900

3,100

3,200

2,700

4,200

4,000

PEI 

1,200

600

1,000

800

1,300

900

Nova Scotia

4,000

4,300

2,800

3,600

2,900

3,000

New Brunswick

3,600

5,000

3,900

3,900

3,600

3,000

Quebec

37,200

48,400

40,400

48,200

51,600

44,000

Ontario

57,600

82,600

53,000

58,300

56,300

66,100

Manitoba

4,200

5,800

4,200

5,900

3,400

6,400

Saskatchewan

3,600

4,900

6,100

5,700

4,500

4,700

Alberta

25,000

24,700

24,800

20,400

27,800

20,000

British Columbia

18,200

32,300

19,200

22,400

22,200

23,100

Canada

157,400

211,800

158,500

172,000

177,800

172,200

City

December 2008

December 2009

Halifax

$234,063

$246,380

Saint John

$156,923

$178,037

Quebec

$203,239

$231,235

Montreal

$267,050

$285,356

Ottawa

$272,672

$311,604

Toronto

$361,284

$411,931

Hamilton/Burlington

$240,073

$285,795

Winnipeg

$182,814

$209,963

Saskatoon

$266,411

$291,554

Calgary

$362,557

$394,300

Edmonton

$310,974

$319,201

Vancouver

$560,953

$627,582

Victoria

$444,222

$522,211

Market

Q4 2009
Average

Last Quarter
Average

Q4 2008
Average

Bungalow
% Change

Halifax

Market Statistics January 2010

2010-01-08 | 15:20:53

January 2010 For complete details visit www.caamp.org Bank of Canada Interest Rate October 20, 2009 0.25% December 8, 2009 0.25%* January 19, 2010 Next meeting date Source: Bank of Canada *Bank of Canada statement included reference to hold rate to end of second quarter 2010   Bank Prime Lending Rate October 21, 2009 2.25% December 9, 2009 2.25% January 20, 2010 Next meeting date Source: Bank of Canada   US Federal Reserve Board Discount Rate November 4, 2009 0.00% ˆ 0.25% December 15, 2009 0.00% ˆ 0.25% January 27, 2010 Next meeting date Source: US Federal Reserve   Exchange Rate $CDN($US) November 27, 2009 .9421 December 11, 2009 .9434 December 24, 2009 .9525 Source: Bank of Canada   Government of Canada Bonds Bond Type November 25,  2009 December 9, 2009 December 23, 2009 1 year Treasury Bill 0.48% 0.53% 0.66% 3 year Benchmark  Bond Yield 1.62% 1.67% 1.82% 5 year Benchmark  Bond Yield 2.41% 2.47% 2.70% 10 year Benchmark  Bond Yield 3.25% 3.32% 3.57% Source: Bank of Canada   Total New Housing Starts (Seasonable adjusted and annualized) Province September 2009 September 2008 October 2009 October 2008 November  2009 November 2008 Newfoundland/Labrador 2,800 3,200 2,900 3,100 3,200 2,700 PEI  700 500 1,200 600 1,000  800 Nova Scotia 4,500 4,400 4,000 4,300 2,800 3,600 New Brunswick 2,900 4,500 3,600 5,000 3,900 3,900 Quebec 41,300 70,100 37,200 48,400 40,400 48,200 Ontario 50,200 84,200 57,600 82,600 53,000 58,300 Manitoba 4,400 5,600 4,200 5,800 4,200 5,900 Saskatchewan 3,700 6,400 3,600 4,900 6,100 5,700 Alberta 22,600 57,300 25,000 24,700 24,800 20,400 British Columbia 16,200 43,900 18,200 32,300 19,200 22,400 Canada 149,300 281,300 157,400 211,800 158,500 172,000 Source: CMHC Housing Now ˆ December 2009 and December 2008. This seasonally adjusted data goes through stages of revision at different times of the year.   Average MLS resale price for local markets City November 2008 November 2009 Halifax $239,438 $239,514 Saint John, NB $153,036 $178,484 Quebec $191,885 $215,487 Montreal $262,772 $282,665 Ottawa $291,695 $314,071 Toronto $368,582 $418,502 Hamilton/Burlington $284,469 $310,377 Winnipeg $182,286 $202,128 Saskatoon $278,495 $278,885 Calgary $384,243 $401,201 Edmonton $318,588 $318,482 Vancouver $510,465 $622,564 Victoria $429,204 $490,892 Source: Canadian Real Estate Association

Real estate market expected to remain strong in first half of 2010

2010-01-08 | 12:22:36

Canada's residential real estate market is expected to remain unusually strong through the first half of this year after a strong finish to 2009, according to a survey published Thursday by Royal LePage. 

The Royal LePage analysis is consistent with other recent reports on the state of the Canadian real estate market, which has rebounded over the past 12 months after sales dried up in late 2008 and hit a multi-year low in January 2009.

The Canadian market's sudden plunge was sparked by a credit crunch that originated in the U.S. housing and lending industries - eventually spreading globally, causing a worldwide recession in the late summer and early fall of 2009.

However, the Canadian real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

Royal LePage executive Phil Soper says Canada's real estate market enters 2010 with "considerable momentum from an unusually strong finish to the previous year."

The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity to new highs, he said in a statement.

Royal LePage says house prices appreciated in late 2009, with fourth-quarter price averages higher than in the fourth quarter of 2008.

The average price of detached bungalows rose to $315,055 (up six per cent), the price of a standard two-storey home rose to $353,026 (up 5.2 per cent), and the price of a standard condominium rose to $205,756 (up 6.4 per cent).

Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C.

Vancouver, which is frequently Canada's most expensive real estate market, experienced a particularly robust quarter, with home prices rising across all housing types surveyed.

"No other sector of the economy has been as highly affected by economic stimulus as housing," said Soper.

"As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property."

Royal LePage estimates that Vancouver's real estate prices will rise a further 7.2 per cent this year, although February may be soft because of the Olympic Winter Games that will be held in the city and nearby Whistler, B.C.

Detached bungalows in Vancouver sold for an average of $828,750 in the fourth quarter, up 11.4 per cent from the same period last year. Standard condominiums in Vancouver went up 11.8 per cent year-over-year to an average of $452,750. Prices of standard two-storey homes in Vancouver rose 9.6 per cent year-over-year, selling at $917,500.

In Toronto, the average price of a standard condo rose 2.9 per cent to $309,316, detached bungalows rose 9.9 per cent to $446,214 and standard detached homes increased 3.5 per cent to $564,175.

In Montreal, the average price of a detached bungalow rose to $245,125 (up 3.1 per cent; a condo increased to $216,667 (up 16 per cent) and a two-storey house increased 12.3 per cent from a year earlier to $345,789, Royal LePage said.

The Greater Montreal Real Estate Board reported Thursday that the number of sales last year increased 41,802, up three per cent from 2008. The median price of a single-family home was $235,000 last year, up four per cent from 2008.

"Although sales decreased the first four months of 2009, Montreal's real estate market rebounded and finished the year on a positive note," said Michel Beausejour, the Montreal board's chief executive.

The group that represents Toronto-area realtors reported Wednesday that there were 87,308 transactions last year through the Multiple Listing Service, a 17 per cent increase over 2008.

In December, there were 5,541 sales in the Greater Toronto Area (average price $411,931), up from 2,577 sales in December 2008 (average price $361,415), according to the Toronto Real Estate Board.

The Toronto board also said the number of sales of existing homes rebounded in the latter half of 2009 after a slow start at the beginning of last year.

Royal LePage's average price estimates for other Canadian cities include:

-St. John's, N.L.: Detached bungalow, $217,167 (up 14.3 per cent); standard two-storey house $298,833 (up 14.1 per cent).

-Halifax: Detached bungalow, $238,000 (up 10.7 per cent); standard two-storey homes, $265,333 (up 1.8 per cent).

-Charlottetown: Detached bungalow, $160,000 (up 1.9 per cent); standard two-storey $195,000 (up 3.7 per cent).

-Saint John, N.B.: Detached bungalow, $228,000 (up 1.3 per cent); standard two-storey $299,000 (up 1.5 per cent).

-Moncton, N.B.: Detached bungalow, $152,300 in the fourth quarter (up 1.5 per cent); standard two-storey home, $131,000 (up 4.0 per cent)

-Fredericton: Detached bungalow, $182,000 (up 12.3 per cent); standard two-storey, $210,000 (unchanged).

-Ottawa: Detached bungalow, $332,417 (up 3.4 per cent); standard two-story home $331,917 (up 3.7 per cent).

-Winnipeg: Detached bungalow, $241,650 (up 9.9 per cent); standard two-storey home $275,500 (up 10 per cent).

-Edmonton: Detached bungalow, $299,286 (down 0.7 per cent); standard two-storey home, $340,557 (down 1.2 per cent)

-Calgary: Detached bungalow, $412,478 (up 0.5 per cent); standard two-storey home, $427,067 (up 2.3 per cent).

DAVID PADDON, THE CANADIAN PRESS

Five things to be aware of about the unfolding economy.

2009-12-29 | 09:45:29

Looking into the economic crystal ball, the vast majority of private sector and institution forecasts agree that the scary global recession of last year is past and that normal times are just around the corner.

Forecasters caution that the degree of uncertainty and doubt about their baseline forecasts - or most likely scenarios - has seldom been higher.

In fact, many, including the world's central bankers, say substantial risks lurk around that beckoning corner and some are serious enough to send the whole edifice of economic stability crumbling.

Bank of Canada governor Mark Carney refers to the economic landscape as filled with "significant fragilities" which encompass everything from steady growth going forward to a second recession.

"It's a pretty dangerous economy out there," agrees TD Bank's chief economist Don Drummond.

"This should be the easiest of times to do a forecast because you are at the bottom, so you know which direction you are going to go. But I do think there's almost an unparalleled degree of uncertainty out there."

First the baseline. No matter which source is consulted, from the Bank of Canada to the U.S. Federal Reserve, the International Monetary Fund or any number of private-sector forecasters, 2010 is the year Canadians, Americans and the world get their economic mojo back.

The recession ended some time in the second half of 2009, the logic goes, and with trillions of government money still being poured into global economies, growth in 2010 appears as certain as the sun rising in the east.

Growth rates vary from country to country, but the important thing is that they are all positive. In Canada, forecasts fall in the 2.5-per-cent to three-per-cent range - not a big rebound given that last year's slump knocked $30 billion off the economy's bottom line.

But those are baseline, most-likely forecasts. Things could also turn ugly again, economists caution.

"I'd say there's an about one in five chance of a double dip recession, or a hard W as we call it," said Nariman Behravesh, chief economist with one of the world largest forecasting firm, IHS Global Insight of Lexington, Mass.

What could go wrong? From interviews with a half-dozen economists from Canada and the U.S., here are the five most dangerous pitfalls:

-Inflation: It seems absurd to worry about inflation right now. Canada's is at one per cent and the Bank of Canada says it isn't worried about it reaching its target of two per cent for another year or two.

But the world's printing presses have been busy flooding financial markets with money, and governments have been spending like drunken sailors in an effort to keep the Great Recession from becoming the second Great Depression. It worked, with a cost.

"I don't see how we can increase the money supply the way we are increasing it and avoid inflation," says James Gillies, professor emeritus at York University's Schulich School of Business.

"I can see it happening everywhere around the world, and with heavy, heavy inflation, we'll see rapidly rising interest rates," he adds. Gillies believes that will bring the recovery to a grinding halt, possibly as early as the end of 2010.

Other economists also worry about inflation, but say it will take longer to exert itself. The end result is the same, however.

High inflation triggers a policy response from central banks in the form of high interest rates, which causes businesses to stop borrowing and consumers to stop buying. That's how the recessions of the early 1980s and 1990s started.

-Policy-makers get it wrong: The flip side to real inflation is that the fear of inflation will cause governments and central banks to stop stimulating the economy too soon.

The growth that currently exists in many economies, particularly those of the U.S. and Europe, is due to unprecedented levels of government spending, bank and industry bailouts, super-low interest rates and money market liquidity infusions.

Nobody knows for sure when the private sector economy will be ready to stand on its own two feet and how it will react when the public sector crutches are removed, as G20 leaders are already discussing.

"They can make a mistake on both sides. They can withdraw the stimulus too early and we get something like a double-dip... as soon as late next year," said Douglas Porter, deputy chief economist with the Bank of Montreal.

"The other side is they leave the stimulus too long and we end up with an inflation."

Drummond says deciding when to exit from stimulus will require almost "surgical precision."

The trouble is, governments and central banks have never attempted the surgery before, which is cold comfort to the patient.

-The United States economy suffers a repeat pratfall: America is going great guns now, but again that's based on temporary government largesse and the need to refill empty warehouses.

That doesn't mean anyone will buy the products once the inventories are replenished.

Scotiabank vice-president of economics Derek Holt says he believes the U.S. economy will slow to about two per cent growth in the latter half of next year, and if the inventory restock is too aggressive, a double-dip is not out of the question.

"What could happen is we go through a temporary growth spurt and then it's the Emperor has no clothes all over again and the consumer is exposed," Holt explained.

Behravesh also calls the U.S. consumer the biggest wild card for the next year or two. Households may come to the realization that the wealth hit they took when their home values collapsed is permanent, and continuing high unemployment may spook them into hibernation.

For Canada, a second collapse in U.S. consumption will devastate the export sector, the auto industry in particular, and derail the recovery, Holt said.

-Global imbalances: Buyer economies like the U.S. are transferring unsustainable amounts of wealth to seller economies like China, which become the world's pre-eminent creditors, until a reckoning comes and the indebted nations can no longer borrow.

The recession was supposed to help resolve the problem, and to some extent it has. U.S. exports have risen and imports have fallen, which is one reason Canada fell into a slump.

But the U.S. still imports way more than it exports, and Drummond says Washington's response to the recession has added a second front to the imbalance.

"Those global imbalances are worse now than they were before," he said. "The U.S. consumer did fall back, but the U.S. government more than filled the vacuum. U.S. debt is even higher than it was two years ago."

Many industrialized countries have mortgaged their futures. Japan's debt to gross domestic product now stands at 227 per cent; Italy at 120 per cent, the U.S. and the United Kingdom are at 94 per cent, Germany and France at 83 per cent.

-Financial market shock: The collapse of Wall Street investment house Lehman Brothers is credited, or blamed, for being the final straw that broke the global economy's back last September.

Nothing of that magnitude has occurred since, although Dubai World's surprise request for a standstill on payments of about US$50 billion briefly sent shivers through overseas stock markets in late November.

Dubai proved a false alarm. But Peter Morici, the former chief economist at the U.S. International Trade Commission, says there are enough ghosts in the closets of the U.S. financial sector to keep policy-makers awake at night.

"The banks are back to their old tricks, at any point in time the banks here can be counted on to cook up some kind of scheme that will collapse on them," he said.

One danger signal starting to emerge revolves around the troubled U.S. commercial real estate market, which could spark another round of losses for banks in 2010. Most economists, however, say it won't be as serious as the 2007 subprime mortgage meltdown in residential real estate, but financial institutions are also less able to withstand shocks now.

Most of the risks identified by economists would emerge, if they do, from beyond Canada's borders, particularly in the U.S., economists say. But that is also how the 2008-2009 recession happened, they point out.

"Canada's exposure to the U.S. economy has diminished a little bit from what it was in the past, but you guys will still get clobbered if we go down the tubes," noted Behravesh.

JULIAN BELTRAME, THE CANADIAN PRESS

Ontario passes bill to create HST

2009-12-10 | 11:44:24

Legislation to create a single 13 per cent sales tax in Ontario passed third and final reading Wednesday despite strong objections and delaying tactics by the Opposition.

Finance Minister Dwight Duncan told the legislature that blending the five per cent GST with the provincial tax will lower costs for businesses, allowing them to lower prices for consumers and hire more staff.

“Doing nothing is not an option (and) the status quo is just absolutely the wrong thing,” Duncan said in third reading debate.

“This package will create jobs.”

The government estimates the HST will help create almost 600,000 jobs in Ontario over the next decade.

In an interview from Mumbai, India, Premier Dalton McGuinty said he is convinced the HST is critical to help reposition Ontario as it comes out of a recession in which the province lost hundreds of thousands of jobs.

“I think people understand in their heart of hearts that our world has changed and the old world is not coming back,” said Mr. McGuinty.

“There are a number of things that we need to do to adjust to the new reality and secure a better future for our families, and one of those is to put in place a modern, competitive tax system.”

The opposition parties failed to convince the government to hold public hearings on the HST bill across the province, and accused the Liberals of being afraid to face a voter backlash against the new tax.

The Liberals used their majority “to ram through the HST bill as quickly as possible and with little debate as possible,” said NDP Leader Andrea Horwath.

The Progressive Conservatives reluctantly admitted defeat after weeks of trying to block the HST, including a 44-hour occupation of the legislature by two Tories, asking for frequent votes to delay proceedings, and repeatedly calling Mr. McGuinty a liar.

“When the Liberals walked out of committee hearings, they hammered home their contempt of those in this chamber, and in the public, who dared to get in the way of their rush to whatever is left in our wallets,” Opposition critic Lisa MacLeod told the legislature.

“Some may talk about antics, they may disparage stunts and they may even dismiss this fight against the HST, for them I feel regret.”

The legislation also includes cuts to corporate and income taxes that take effect Jan. 1, and one-time rebates of up to $1,000 for some families to offset the impact of the HST, which takes effect July 1.

The Tories call the HST a greedy tax grab and complain it will apply to many items exempt from the PST, including gasoline, home heating fuel and cable TV bills.

British Columbia is also set to merge its provincial sales tax with the GST on July 1, something Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador have already done.

The Canadian Press.

Bank of Canada expected to hike interest rates in mid-2010

2009-12-09 | 11:34:40

TORONTO — The Bank of Canada repeated its pledge Tuesday to keep interests rates at historic lows until the middle of next year to stimulate growth and a sense of stability in the midst of a slow economic recovery.

But, economists are calling for rate hikes as much as a full percentage point or more later next year, and say the bank’s commitment to keep its key rates at 0.25 per cent creates a false sense of security in borrowers who have taken on debts larger than they could normally afford.

The C.D. Howe Institute’s 12-member monetary policy council’s median target for the overnight rate was for one per cent in the second half of 2010.

The council said the central bank should give a strong signal that when the overnight rate moves up, it may be quick and large. They also suggested the bank rein in the housing market by raising the required down payment on government-insured mortgages.

C.D. Howe president and CEO William Robson says a rapid rise in interest rates expected late next year could prove devastating for homeowners who have not evaluated their ability to carry their mortgage at a higher interest rate.

The central bank announced Tuesday the global economy has been slightly more positive than it was at the time of the bank’s October pronouncement, but added “significant fragilities remain.”

The economy grew less than analysts expected in the third quarter and inflation has been slightly higher than the central bank expected.

Diana Petramala, an economist at TD Bank, said as long as those fragilities remain, the Bank of Canada will not be swayed to move quickly with interest rate hikes.

She said TD believes there is more risk associated with the combination of a mild U.S. recovery and strengthening Canadian dollar than the central bank has outlined.

Petramala said the bank’s projection for three per cent growth in 2010 is slightly more optimistic than TD’s forecast of 2.7 per cent growth, adding that she believes the Bank of Canada’s first rate hike will not come until the fourth quarter of next year.

Dawn Desjardins, assistant chief economist at RBC Economics, said still volatile markets and global market uncertainties suggest a significant change to the central bank’s policy is premature.

Given the still-fragile global economy, she said, Canada’s growth rate in 2010 will likely fall short of those recorded during the early stages of past recoveries.

Desjardins added that if the economy continues to build momentum by next summer, the bank will likely hike the rate by one percentage point for the second half of next year.

Michael Gregory, a senior economist at BMO Capital Markets, said there was a faintly more hawkish tone in the bank’s announcement.

“The combination of higher-than-projected global growth and domestic core inflation is a shade more hawkish no matter what prism you’re looking through,” he said.

“The bank is on hold until the end of June, but come next Canada Day the bank will be hoisting its hawkish colours amid all the Canadian flags.”

The Canadian Press