Nov
28
CMHC 2008 Canadian Observer
Filed Under CMHC, Canadian Economy | Leave a Comment
CMHC came out with their 2008 Canadian Observer today… In going through it, there were many interesting and informative graphs that I wanted to highlight and pass on to you.
Looking forward to hearing any comments or future predictions on the real estate market in Calgary or even in Canada…
Oct
16
Canadian Rules will Prevent U.S.-Style Crisis
Filed Under Canadian Economy, News Articles, US Economy, US Housing Market | Leave a Comment
We’ll (Canada) feel some ripple effects, but growth here should remain positive…
Canada’s banking system is not only number one in the world right now, but rather we do things a bit different than the US as well… Our banking system is made up of what is called Deposit Banks, where the banks that do investments also are the same ones that you and I, as Canadians hold our chequing and savings accounts in. The banks are much, much more regulated and supervised here in Canada vs. the US.
In Canada and most other industrial nations, investment banking — which can include stock trading, packaging and selling securities, corporate advice on mergers, and making investments for profit — is mostly done by the same commercial banks that offer savings and chequing accounts through branches on every street corner.
Commercial banks are closely supervised by government regulators and their leverage — the amount of borrowed money they use to do business — is limited to a fraction of that formerly found in the lightly regulated U.S. investment banks.
That means they can never earn the fabulous profits reaped by the U.S. investment banks in good years. But it also means that they have much less risk in bad years. Better still, they are cushioned by profits from their more stable consumer and business lending, and their large pool of depositors’ money means they’re less dependent on borrowing in bond markets to do business.
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The good news for Canada is that this country doesn’t have serious problems with its financial system or a collapse of home prices. We’ll be hurt by the U.S. slowdown, but our internal strength means that growth here should remain positive.
Oct
11
CMHC is Purchasing $25 Billion in Insured Mortgages
Filed Under Canadian Economy, Finances, Mortgages | Leave a Comment
Canada Mortgage and Housing Corporation(CMHC) will purchase up to $25 billion in insured mortgage pools as part of the Government of Canada’s plan, announced today, to maintain the availability of longer-term credit in Canada.
Now this is not a bail out plan like in the US. Rather this is an attempt by the current government of Canada to keep the banks wanting to loan out to Canadians for Cars, Homes etc. By buying some of the insured mortgages, key word is insured (unlike the US), it frees up some of the banks money, and will allow to also lend to other banks and not keep such a tight guard on lending. To explain how banks and bankers work, they have suspenders, a jock strap and a hard hat… they are always protecting themselves too much, which in our case right now is good. The government is doing this, so there is less pressure by the world markets.
The first purchase of $5 billion will be made October 16, 2008 through a competitive auction process. The mortgages involved are high-quality assets that are already guaranteed through government-backed mortgage insurance. The Government will announce a schedule of future purchase dates to take place over the coming weeks.
Canada Mortgage and Housing Corporation (CMHC) has been Canada’s national housing agency for more than 60 years. CMHC is committed to helping Canadians access a wide choice of quality, affordable homes, while making vibrant, healthy communities and cities a reality across the country.
Please refer to the this link to see a detailed layout of how they choose the mortgages, and the auction works.
Oct
10
Canada Has Best Banking System in The World
Filed Under Canadian Economy, Finances, News Articles | 2 Comments
So it appears that Canada has the best rated banking system in the world as a survey done by the World Economic Forum has found as financial crisis and bank failures shake world markets.
For years, other countries would mock Canada on being so tight, and conservative, but look at us now.
Canadian banks received 6.8 out of 7, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).
UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland’s banking system scored the same in 16th place, as did Singapore (13th).
The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.
The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF’s banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.
Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.
At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).
You can view the whole report here….
And to be honest, if Canada has the best banks in the world, and Alberta is number 1 in Canada in majority of areas, we are in a good spot right now. We will be able to weather the economic storm that is over us. We are not immune to it, but have a strong economy that will be able to push through..
I’m glad to be Canadian!
World Bank Rankings
- Canada
- Sweden
- Luxembourg
- Australia
- Denmark
- Netherlands
- Belgium
- New Zealand
- Ireland
- Malta
- Hong Kong
- Finland
- Singapore
- Norway
- South Africa
- Switzerland
- Namibia
- Chile
- France
- Spain
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39. Germany
40. United States Of America
44. Britain
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124. Kazakhstan
125. Cambodia
126. Burundi
127. Chad
128. Ethiopia
129. Argentina
130. East Timor
131. Kyrgyz Republic
132. Lesotho
133. Libya
134. Algeria
Oct
9
Canada to lead G7 in GDP growth in ‘09: IMF
Filed Under Canadian Economy, World News | Leave a Comment
Canada will lead the other G7 countries in economic growth in 2009, a muted honor considering that the global economy should slow markedly, according to a new IMF study released Wednesday.
The International Monetary Fund said this country should see economic growth in the range of 1.2 per cent next year, less than half of what Canada experienced in 2007, but the best performance among Japan, the United States, Italy, France, Germany and the United Kingdom.
Still, Canada’s economy is not immune from the ongoing global financial collapse, said the international monetary think-tank.
“Although resource-intensive sectors have benefited from high commodity prices, the lagged effects of past real appreciation of the Canadian dollar, together with the United States slowdown, has hit manufacturing hard,” said the IMF’s World Economic Outlook, produced just ahead of a two-day meeting between IMF and World Bank officials.
Overall, the world economy will grow by 3.9 per cent in 2008 and three per cent in 2009. That level is 40 per cent slower than the five per cent increase it averaged for 2004-2007.
The IMF anticipates the U.S. economy will stumble badly next year, posting a microscopic growth rate of 0.1 per cent next year, a far cry even from this year’s expected GDP increase of 1.6 per cent.
All of the major industrialized countries are grappling with the worst economic crisis since the Great Depression in the 1930s, the IMF said.
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It is truly amazing how this article has been hidden from mainstream media. This is an excellent example of why listening to the media and following their every move can hurt us as a nation. Canada will be effected by the global melt down, but it will not destroy us. We are in the number 1 spot right now to lead the G7… This is awesome news…
This is what I like to read about, instead of reading how we are going to be going into another depression, recession etc. The best apart about it is the within the country to lead the G7, which of those provinces will lead that nation? That’s right… ALBERTA… I don’t know about you, but I’m continuing to put my money into real estate here.
What do you think?
Oct
4
Robert Shiller ‘Popping the Bubble’?
Filed Under Canadian Economy, Finances, US Housing Market | 3 Comments
Jacqueline Thorpe’s interview with Robert Shiller sparked a lively reader discussion on the value of Canadian home prices. Shiller, an economist at Yale University and the namesake behind the Case/Shiller Housing Price Index, predicted both the tech and the U.S. housing bubble. He said Canada could see a similar housing bust, particularly in the Calgary and Vancouver markets.
Here’s a selection of some of those comments from readers, some slightly edited. You can find the original comments attached to the online story.
I would like to say that the first three comments below are exactly how we at The Calgary Real Estate Blog view the economy and in Alberta specifically. We will be able to weather the storms that are brewing to the south as the economy/housing is different in Canada. We have not had Sub-Prime lending and selling the mortgages out the back door to third party investors. Our government has now taken the 40 year mortgages and zero % down away, which was a good plan, but on the flip side, would have never taken us as far as our friends to the south.
Summer6727: People like Mr. Shiller are the very people that create fear with the lack of confidence. Fear drives the markets, which is, sorry to say our own doing by the way of technology, via email, TV, word of mouth. I sometimes think people like Mr. Shiller love to watch people panic and worry. To see what is unfolding in the U.S. makes others look at the current situation within and adjust.
Rockie Bear: Summer6727 is dead on. The American economic wizards frequently don’t understand their own system let alone the country next door. This type of commentary shouldn’t be published in Canadian newspapers.
jscheema: Mr. Shiller: We didn’t do any sub prime lending in Canada as was done in U.S. House prices rose steadily not doubled in just six months as in many parts of California. Canada is far better than the U.S. on employment, wages, interest rates, financial institution liquidity. Please do not cause panic and … fear mongering among Canadian people.
vancouver guy: Here in Vancouver I am witnessing people with part-time jobs and not much in terms of income put 5% down on $300,000+ properties. And sometimes the 5% down payment comes from racking up the credit cards. How is this not subprime? And it is all with 35- or 40-year mortgages. How is this sound borrowing when those 40-year mortgages come at odds with basic human life-expectancy data? “Please God, just one more bubble before I die.”
IndexTrader: I can’t understand folks who think that the housing meltdown in the U.S. will mysteriously miss Canada. These bubbles are global. Blaming Robert Shiller for the problem is like blaming the water for a sinking ship that hit a reef. Global asset bubbles have impacted nearly every major and minor economy around the world. The greater that a market appreciated, the greater the correction it will feel. Unfortunately, the fact that we don’t want the meltdown has little bearing on the outcome.
What do you think? Will the US melt down effect Canada, specifically Calgary and Vancouver? In Calgary we haven’t seen super spikes in prices over extreme short periods. If you look at a past post about the prices over the last few years, the graph there shows that since 2000 we have had steady growth with some small jumps, which will happen in a heated economy like Alberta. The GDP of Edmonton and Calgary region is one behind China. This is a strong economy.
What do you think?
Oct
3
DON’T VOTE!!! OCT. 14, 2008
Filed Under Canadian Economy | Leave a Comment
Watch the video, then read below…
It’s simple… we all, if we are able to, should vote… the number of people who don’t vote that can is ridicolous.. In Canada in 2006 was 47% of the population or blazing 64.7% of registered voters vs 59% in the US. Honestly, that’s it. If we truly care about our country, and what is happening in the world, it’s time to stand up and saw our piece. If you don’t vote, you don’t have the right to complain once it’s in stone.
If you don’t know where to go to vote… Go HERE… to the elections Canada website. Put in your postal code and it will tell you the location, date and days the advance polls are happening.
OCTOBER 14, 2008. No reason to not vote!
Oct
3
Calmer Housing Market Brings Opportunities for First-Time Buyers
Filed Under Buying, Canadian Economy, Home Prices | Leave a Comment
The numbers are in, and they bring good news for Canadian homebuyers. Price growth is beginning to ease up across the nation, according to Genworth Financial Canada’s Metropolitan Housing Outlook report. For new and resale homes, price growth has quadrupled since 2001, but is expected to slow over the next five years, allowing potential homebuyers to feel a little breathing room.
If you are in the market for a new home you may want to check this out…
Calmer market ahead
In 2008, the rate of price growth should drop about 50% from last year for both new and resale homes across Canada. The return to historically normal levels will give consumer incomes a chance to catch up and buyers should feel less pressure and more opportunity to explore all the choices and financing options available to them.
“Now we’re seeing a calmer market,” said Peter Vukanovich, president of Genworth Financial Canada. “That translates into better opportunities for first-time homebuyers to make an informed decision.”
For homebuyers, this more stable growth is a welcome change from the increases in recent years. Both 2006 and 2007 saw an 8.7% increase in the price of new homes, and there has been a 10.2% average jump in the price of resale homes each year since 2002.
“Rapid price increases, which were virtually unsustainable in regions like Alberta, had begun to erode affordability and put a lot of pressure on first-time homebuyers in terms of their decision-making process,” said Vukanovich.
Housing market still strong
Overall, Canada’s housing market is expected to remain strong, supported by steady demand and modest price increases across the country. This year’s national average new home price is forecast at $397,789 (a 3.8% increase) with the 2008 average resale home price expected to reach $322,424 (a 5.1% increase). Regionally, the strongest housing demand can be found in B.C., Manitoba, Alberta, and Saskatchewan, as a result of the commodity-fuelled economic growth in the West.
National housing starts, however, are expected to ease to just below 215,000 units this year and 194,000 units in 2009. This represents a 15% drop, after eight years of steady increases. The drop in single-unit starts is expected to be greater than for multiples, reflecting the number of empty nesters looking to downsize and the affordability of these properties for first-time buyers.
Mortgage rates to drop
Mortgage rates will also see a drop this year as the lowered Bank of Canada interest rate flows through to the mortgage market. The average five-year conventional mortgage rate is expected to be 7.0% in 2008, dropping slightly to 6.7% in 2009.
For further report details, including regional numbers, download the full report.
More modest increases ahead
Canadians can look forward to more moderate price increases for new and existing homes across the country in the years ahead.
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Jul
17
Finance Minister Ain’t Gonna Worry
Filed Under Canadian Economy, Mortgages | 2 Comments
Federal Finance Minister Jim Flaherty shrugged off housing worries in Canada Wednesday, saying there is no bubble and that the subprime-mortgage woes crippling financial institutions in the United States are not threatening banks north of the border.
“There is no bubble in the Canadian housing sector,” he told reporters after speaking to roughly 400 people at a Calgary Chamber of Commerce event.
“That’s not been our concern. Our concern has been a tendency for longer amortization periods, like 40 years, and for purchasers putting very little money down. We’ve seen nothing in Canada like the U.S. subprime situation.”
He goes on to say that with the new tightening of the rules with down payments on mortgages and amortization periods, he is not fretting about the banks and the woes that are happening in the US. He ends the article by saying… that he acknowledged that the economy is going through “turbulent times,” it still remains healthy.
“Our economy is strong,” he told the audience.
The Chamberlain Group
