“Being defeated is often a temporary condition.   Giving up is what makes it permanent.” – Marilyn vos Savan

 

 

Would you like to have a weekly or monthly update on Canada’s economy….housing in your area…employment, Bank of Canada….mortgage rates….etc….just email us and we will be happy to send the information your way!

 

GET CANADA'S FINANCIAL PICTURE FOR THE WEEK. EMAIL US AT:

jjohnstone@kwottawa.ca and we will send the report from TD Canada Trust asap;

                                                                               HIGHLIGHTS:

• Weakness in U.S. data seal the deal on additional Fed rate cuts

• Central banks increase liquidity injections in efforts to stave off further deterioration in credit markets

 

Want to understand the US subprime market.........

From our TD Canada Trust Mortgage Broker......Andrew Thake

"This is one of the best explanations of the subprime meltdown. This really gives us an idea of what has transpired in the areas hardest hit by the subprime issue. The map showing houses in default in one California community alone is shocking.

It is worth the 15 min to watch and gives valuable insight as to why Canadian lenders are not introducing teasers and not lending for more than 100% of the value."

Here is the link to the 60 Minutes segment (just get past the ad):

http://www.cbsnews.com/sections/i_video/main500251.shtml?id=3756665n&channel=/sections/60minutes/videoplayer3415.shtml

  

 

  !!We would greatly appreciate it if you could send us a quick email to let us know this information on our "Team's Market Update" is useful to you.  And, if you have  questions or would like any information on any topic within the Real Estate world, we will do our best to get you an answer or explanation.     Judy

 

THIS WEEK - PAST, PRESENT, & PROSPECTS  -  GLOBAL ECONOMIC RESEARCH

Carry On Canada

 

The Canadian economy has lost considerable momentum in recent months, but still appears to be clearing a large number of hurdles in its way. These include the U.S. downturn, the spillover from the credit crunch, ongoing global competitive pressures, and a strong loonie, alongside the ongoing rise in food and energy costs.

Canada has a natural hedge to these real concerns. The ‘commodity super-cycle’ has unleashed a powerful development and construction boom that touches virtually every resource and province. Energy is at the forefront, but mining and agriculture are also in high-growth mode. Every province is benefiting from ramped up infrastructure expenditures, with non-residential building reinforcing the forward momentum. The large and growing service sector is also benefiting

from the comparatively strong pace of domestic activity, the increasing demand for business services and technology applications, as well as continuing large international immigration.

Policy in Canada is also decidedly pro-growth. Both the federal and provincial governments are using their combined surpluses to increase expenditures, trim taxes, and pay down debt. And from a monetary perspective, the subdued performance of consumer price inflation — notwithstanding the aforementioned food and energy increases, and rising wages, particularly in the resource-rich regions that are experiencing chronic labour shortages — have provided the central bank with the flexibility to lower interest rates during these challenging times in financial markets.

That’s not to say that the country cannot or has not already stumbled. The economy’s trade performance was already reeling from competitive and currency issues, with the compression on exports exacerbated by the intensifying slowdown underway south of the border. Much of the impact has occurred in Ontario, the country’s manufacturing giant, where output is estimated to have recorded essentially no growth in 2007Q4, a very weak hand-off to 2008 that is reeling from additional auto/parts production cuts.

 

 

The Week Past, Present & Prospects

The drag on production and shipments is visible in our overall trade performance. Through the first two months of 2008, Canada’s merchandise trade surplus has averaged a respectable $46 bn (annualized), though it is down $20 bn from the cycle high in 2004. But reflecting the diverging provincial economic performances, the surplus in resource-related activity — energy, minerals, agriculture, forestry and chemicals — has averaged a hefty $122 bn (versus $98 bn), with foreign-bound shipments gaining from both volume and price increases. Accordingly, the residual balance - largely manufactured products - is now in deficit to the tune of $76 bn (versus $32 bn), highlighted by the rather rapid shift in the auto/parts balance to a deficit of $11 bn from a surplus of $13 bn just four years ago. The cyclical component of our overall trade and economic performance will eventually take care of itself, though the expected slow-motion U.S. recovery will likely push off any meaningful growth until the second half of 2009, at the earliest.

However, the secular competitive issues will takelonger to resolve, especially with the Canadian dollar expected to remain a strong currency, with meaningful micro-adjustments likely delayed by the caution associated with the compression on earnings in the current economic environment. In the meantime, Canadian manufacturers must accelerate their efforts to bolster their productivity. Companies must continue to trim costs, with strategic initiatives, capital investments including machinery and equipment, as well as corporate restructuring, needed to build efficiencies. Innovation is also key, whether in products or in production processes, to ensure that we can continue to meet the ongoing challenges presented by lower-cost overseas competitors. ■

 

 

Wither Inflation

Notwithstanding the sticker shock facing drivers as they fill up at the pump, Canadians are enjoying enviable inflation relative to

most other nations. Headline and core inflation eased further in March, to 1.4% y/y and 1.3% y/y, respectively — both firmly below the Bank of Canada’s (BoC) 2% target. On a seasonally adjusted month-to-month basis, total and core consumer prices were flat in March. Underlying inflation will likely drift a bit lower still over the next few months, possibly hitting the lower bound of the central bank’s 1-3% target range, assuming an average monthly increase of 0.1%.

The precipitous easing in domestic price pressures in recent months owes to a

number of developments. Retailers have been aggressively discounting their

merchandise since last fall in a bid to stem rising consumer complaints and a tide of

cross-border shoppers heading to the United States to take advantage of the strong

Canadian dollar. This price level adjustment now appears largely complete based on a

comparison of Canadian-U.S. pricing differentials. Store-bought food has also been a significant source of recent disinflation. Prices for fruit and vegetables, which account for about 20% of the typical household grocery bill, have fallen sharply over the past year, with import costs dampened by the dollar’s appreciation as well as more favourable growing conditions in many markets. Meanwhile, despite rising feedstock costs, the retail price of meat (another 20% of the average

bill) has been capped by efforts to cull high livestock herds.  Heightened competition among grocery stores has reinforced the downward pressure on retail food prices.

Margin pressures may eventually force retailers to pass on pipeline cost increases. Respondents to the BoC’s quarterly Business Outlook Survey expressed much greater concern over rising input costs relative to recent surveys, and on balance expect to raise their own prices at a

faster pace over the next twelve months. Overall, however, cyclical factors are inherently deflationary, with the same survey pointing to an easing in economy-wide capacity pressures.

Importantly, the recent slowing in home price appreciation is beginning to alleviate one of the more significant sources of upward pressure on underlying inflation in recent years. ■

 

 Review

Business Outlook Survey — Canadian firms are

becoming more pessimistic alongside a weakening

U.S. economy, tighter credit conditions and rising input

costs. The balance of opinion on future sales growth in

the BoC’s latest quarterly survey turned slightly

negative for the first time since 2001. Hiring intentions

were little changed, though capital investment plans

softened. Fewer firms reported capacity pressures or

labour shortages. Overall business sentiment remained

highest in Western Canada.

Manufacturing Shipments — Shipments rose 1.6%

m/m in February following a 1.3% gain in January as

the auto sector continued to rebound from earlier plant

shutdowns. Excluding autos, shipments rose 0.8%,

supported by gains in aerospace and primary metals. In

constant dollars, sales were up 2.7%. The underlying

trend in factory activity remains weak, however, with

sales volumes still off 4% from their mid-2007 peak.

CPI — See focus article

Existing Home Sales — Canada’s decade-long

housing boom finally appears to be losing steam

alongside reduced affordability and depleted pent-up

demand. MLS home sales fell for a second consecutive

quarter in Q1, down 7% q/q. With the number of new

listings climbing 5% over the same period, overall

market conditions were much better balanced; national

price increases averaged 5.5% y/y in Q1, the slowest

pace in six years.

Adrienne Warren  (416) 866-4315

adrienne_warren@scotiacapital.com

 

Property Tax Assessment

Assessing a property’s value for the purpose of calculating property tax is a complicated process involving many variables (and a lot of math). Fortunately, the Municipal Property Assessment Corporation (MPAC) has recently made some changes that can help homeowners gain a better understanding of how their property is assessed – and what that means for their tax bill.

A three-year freeze on property assessments ended on January 1 of this year, and MPAC staff is currently engaged in reassessing every property in Ontario. New assessments will be mailed to property owners in September, and will be effective for the 2009 through 2012 tax years. >From now on, property values will be reassessed regularly every four years.

Assessments are intended to determine the “current value” of each property. Current value means the price a property might reasonably be expected to sell for, in its current condition, on the open market. The newly-redesigned MPAC web site (www.mpac.ca) contains a wealth of information about how properties are evaluated. According to MPAC, the 5 major factors that account for about 85 per cent of the value of any residential property are:

• Age of the house
• Building area
• Location
• Lot dimensions
• Quality of Construction

Other features that may affect value include number of bathrooms, fireplaces, garages, pools, and whether the property has water frontage. All these features are analyzed with sales of comparable properties in the community to determine the current value assessment.That number is used by the City of Ottawa to calculate the owner’s property tax bills for the next 4 years. (If a property increases in value, the increase will be phased in over the 4 years; if it decreases, the entire decrease will come into effect immediately.) The city multiplies a home’s assessed value by the tax rates for each of the municipal and education portions of the bill, and adds the two numbers together to determine the amount an owner pays.

A section of MPAC’s web site called “About My Property” allows any property owner to review their assessment, along with those of up to twelve other properties of their choice, to compare assessment information for similar properties and help determine whether their property's assessed value is accurate.

What if an owner feels that his or her assessment is inaccurate? A brochure sent out with all assessment notices includes information about how to report inaccuracies and file a complaint or challenge. A page on MPAC’s web site called “Resolving Assessment Concerns” offers a direct link to the Request for Reconsideration form, as well as details on how an appeal to the Assessment Review Board (ARB) can be made.

In the case of an appeal, a REALTOR® member of the Ottawa Real Estate Board may be able to provide some assistance; as with any professional advice, there may be a cost for this service. Anyone, including a REALTOR®, may be called by an appellant to provide evidence at an ARB hearing. Whether they will be considered to have sufficient expertise to offer opinion evidence as an expert is up to the ARB.



The President's Pen column was prepared by the Ottawa Real Estate Board and first appeared in the (date) issue of the EMC community newspapers.

 

ONTARIO EXPANDS LAND TRANSFER TAX REFUND PROGRAM
First-time buyers of resale homes to benefit from new tax measure

TORONTO – The McGuinty government is giving all first-time homebuyers a break on land transfer tax by proposing to expand the Land Transfer Tax Refund Program to include purchases of resale homes, Finance Minister Dwight Duncan announced today.

“Expanding this Land Transfer Tax refund is an important part of our government’s commitment to helping Ontarians buying their first home,” Duncan said.

Effective midnight tonight, first-time buyers of resale homes, as well as newly constructed homes, would be eligible for a refund from the provincial government of up to $2,000 of the Land Transfer Tax paid.

The expanded Land Transfer Tax Refund Program for First-time Homebuyers is part of a package of new tax initiatives announced in the 2007 Fall Economic Outlook and Fiscal Review that would provide $1.4 billion in provincial tax relief for business and people over three years.  The government is making strategic investments in people, communities and infrastructure to strengthen Ontario’s economic advantage and help manufacturers and other sectors challenged by current economic conditions.

 

  

How Would the U.S Market Crunch Affect Canadian Real Estate in 2008? The market crisis along the south border has many homebuyers wondering how it will affect the housing market in Canada, but Canadian market analysts feel the problems the U.S. is experiencing should have little impact on real estate in this country. Canada is not expected to experience the same downturn as the U.S. market for many reasons. First, the Canadian economy is simpler and the investment environment is more conservative than the United States. Secondly, Canadian federal surpluses have given consumers more confidence which has led to increased spendings on homes, retail goods, and business expansion. Additionally, the Canadian housing market has not been artificially driven by bad lending practices. And, unlike the U.S., all mortgages in Canada are insured. However, Canada’s booming housing market could loose heat by the end of the year. The impact of the U.S. sub-prime crisis is expected to be felt by Canadians in three different ways: First, a tightening of credit markets will occur as lenders move to correct their losses because of the investments in commercial papers. To borrowers, this may also mean smaller discounts off the posted mortgage rate. Secondly, due to the overall economic impact and the soaring Canadian dollar, the impact will also be felt. There may be a slowdown in some business sectors related to housing and that may impact Canadian consumer confidence. Thirdly, the impact on our economy could come form the falling purchasing power of the U.S. consumers, which in turn impacts large ticket purchases that involves Canadian made products - the auto sector is a good example. "The Canadian housing market will slow down a bit in 2008, but that slowdown will be nothing compared to what happened in some U.S. markets in 2007. In Canada, the housing market has been setting records for volume and units sold for five consecutive years. We believe things are just moving back towards a more "normal" growth pace, but that still means the 2008 MLS® home sales activity will be the second highest on record, second only to the overall record was set in 2007.", says CREA's Chief Economist. CREA's market analysis for 2008 also does not show any dramatic adjustment in the average MLS® residential price, again contrary to the conditions in some U.S. markets. CREA's analysis shows prices setting new records in every province in 2007 and in 2008, but price increases will be smaller in 2008. In effect, price increases will become smaller as the resale housing market becomes more balanced. Manitoba and Nova Scotia are expected to post an increase in average price of 7 per cent or more in 2008, while New Brunswick and Newfoundland are expected to show the smallest increase in average price of 4 per cent annually. The national average residential MLS® price is expected to increase 5.5 per cent. "The housing market is expected to grow at a more moderate pace this year. However, this will be the result of decreasing affordability rather than the impact of U.S. sub-prime woes", said Craig Alexander, deputy chief economist at Toronto-Dominion Bank. To conclude, markets will remain tightest in the western provinces in 2008. Even though Alberta and British Colombia are expected to pull back from the blistering pace they set earlier in 2007, housing there will remain in high demand. The days of 25 or 30 per cent increases in average price are over, but prices are forecasted to go up in Alberta and British Colombia by 5.2 and 5.1 per cent, respectively. Ontario's market and other eastern provinces are expected to keep its momentum with a slight slow down.

                        

  Also, You may have been wondering........................... 

 

 

Privacy and the Real Estate Transaction

These days, the security of personal information is big news. Nearly every week there’s another story in the media about protecting our identification and making sure not to give out too much personal data. So when you enter into a relationship with a REALTOR®, and he or she requests personal information from you – name, address, banking information, e-mail addresses and phone numbers, and so forth – you should know that your information is being handled with the utmost care. It’s taken so seriously, in fact, that the Canadian Real Estate Association (CREA) has its own Privacy Code, in addition to adhering to the federal Personal Information Protection and Electronic Documents Act (PIPEDA). CREA’s Privacy Code states that a REALTOR® will: ·                     Obtain your consent when they collect, use or disclose your personal information; ·                     Only use the information for the purposes they have discussed with you; ·                     Allow you to have access to your information; and ·                     Have privacy policies that are clear and understandable. The personal information that your REALTOR® collects from you is used to facilitate the real estate transaction, particularly in marketing your house when you are selling. In order to effectively advertise your house in various media, including newspapers and web sites, and in providing other salespersons and their prospective buyers with information about your home, some disclosure of personal information is necessary. This does not generally include your e-mail address or phone number, though your name and the name of any co-owners of the home will appear on your MLS® listing, viewable by other REALTORS® and anyone authorized to use the MLS® system, such as appraisers, but not by the general public. Once your home is sold, the sellers’ names are removed from the listing, though the listing itself will remain in the database as historical data, which is essential to the operation of the MLS® system. The purchase price will be recorded on the listing file. The real estate firm that you worked with will keep your name and other information in their company’s files. By agreeing to list your home on the MLS® system, you are agreeing to allow the ongoing use of listing and sales information about your home. If you purchase a home listed on the MLS® system, your name will not appear on the listing; only the name of the REALTOR® you worked with and their firm’s identification code appears. Generally speaking, most of the personal information that your REALTOR® collects about you will be obtained directly from you; however, they may also obtain information from other sources such as credit bureaus and government agencies as necessary. You will always be informed that this information is being collected and what purpose it will be used for; your REALTOR® must obtain your consent to do so. In any event, you can rest assured that your REALTOR® will never ask you for any information that is not essential to the marketing, sale or purchase of your home, and that he or she will not share that information with anyone who doesn’t have a direct interest in helping to accomplish those goals.