Nov 10

Canadian Retail Sales, August 2010 Release

Date: October 25, 2010

Canadian Retail Sales, August 2010 Release

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/101022/dq101022b-eng.htm

Summary: By dollar volume, retail sales rose 0.5 per cent in August after running level for the two previous months. Six of the eleven major retail subsectors recorded gains. The most significant increase was a 2.1 per cent advance in the value of sales at gasoline stations. Decreases were noted at used car dealers (down 0.5 per cent) and furniture stores (down 0.4 per cent). By province, Alberta saw the largest increase, with sales up 1.5 per cent; in Ontario they rose 0.3 per cent after two months of flat sales.

Analysis: Retail sales have been trending upward in Canada and Ontario since the beginning of 2009, following the steep decline in 2008. It is important to note, however, that the recovery in retail sales has been subject to monthly volatility and this will likely continue moving forward. On balance, the economic situation in Canada continues to improve, albeit at a slower pace compared to late 2009 and early 2010. Given that the value of retail sales has more less recovered to pre-recession levels, it is possible that the annual growth rate in retail sales may moderate. One of the drags on retail sales over the past few months has been slower activity in the housing sector. Since the spring, there have been fewer resale transactions in comparison to 2009. As a result, retail transactions related to housing, including furniture, appliances and home improvement supplies, have declined in some cases or grown at a slower pace.

Source: Toronto Real Estate Board



Nov 10

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Nov 10

Canadian Consumer Price Index, September 2010 Results

Date: October 25, 2010

Canadian Consumer Price Index, September 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/101022/dq101022a-eng.htm

Summary: Canada’s Consumer Price Index (CPI), which measures price growth for consumer goods and services, increased by 1.9 per cent year-overyear in September following a 1.7 per cent annual increase in August. The September increase was driven mostly by a 5.6 per cent uptick in energy costs and a 5.0 per cent rise in vehicle costs reflecting a gradual withdrawal of incentives offered by manufacturers during the recession. The less volatile Bank of Canada Core CPI rose by 1.5 per cent annually, down slightly from the annual growth rate of 1.6 per cent recorded for August.

Analysis: The rate of consumer price inflation is an important indicator to consider when thinking about the future direction of interest rates. The Bank of Canada follows an explicit inflation targeting policy, under which forecast growth in the CPI guides the Bank’s decisions surrounding the level of its target interest rate. The Bank recently downgraded its growth forecast for the Canadian economy and, by extension, its forecast for inflation. With this new, more subdued outlook for growth, the market is expecting interest rate hikes over the next year in comparison to what was expected when the Bank initially started raising its rate target in June of this year.

Source: Toronto Real Estate Board



Nov 10

Canadian Leading Indicators, September 2010 Results

Date: October 21, 2010

Canadian Leading Indicators, September 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/101021/dq101021b-eng.htm

Summary: The Canadian Composite Index of Leading Indicators can be used to estimate economic growth several months in advance of the release of actual GDP numbers. In September, the Index fell by 0.1 per cent – the first decline since April of 2009. The housing component of the index fell four per cent compared to August and the housing related furniture and appliance sector decreased 0.7 per cent for its third monthly decline. In total, five of the Index’s 10 components were down in September.

Analysis: Canadian economic growth in 2009 and the first part of 2010 was driven largely by home-sales and related spin-off purchases. However, as sales of new and resale homes softened in the second half of this year, economic growth slowed. Moving forward, a greater share of economic growth will have to come from business investment and exports, rather than the housing sector and government stimulus. Business investment in machinery and equipment has been slow to recover from the recession, but the Bank of Canada’s latest Business Outlook Survey suggests that businesses have become more upbeat on making capital investments over the next year. The export-related component of the economy is probably the largest question mark. Obviously, the current value of the Canadian dollar vis-à-vis the US is not helpful, but even more concerning is the slow recovery south of the border. Consumer confidence in the US remains low with little recovery thus far in the housing market and most households more likely to save rather than borrow and spend at this point in time.

Source: Toronto Real Estate Board



Nov 10

US Existing Home Sales, September 2010 Results

Date: October 25, 2010

US Existing Home Sales, September 2010 Results

Source: National Association of REALTORS

Link to Release: http://www.realtor.org/press_room/news_releases/2010/10/sept_strong

Summary: US resale home transactions climbed 10 per cent on a month-overmonth basis in September. The seasonally-adjusted annual rate of home sales was 4.53 million, compared to 4.12 million in August. Though this figure was down 19.1 percent compared to the 5.60 million-unit pace recorded in September of 2009, it was the second month-over-month increase in a row. The median selling price fell 2.4 per cent annually to $171,700.

Analysis: In 2010, U.S. consumer confidence has remained low due to the underwhelming performance of the American economy. This lack of confidence has been reflected in the resale housing market. Two consecutive months of sales increases certainly provide some hope that we may be seeing an improvement in housing demand, but given the volatility of home sales over the past two years the recent improvement is far from a trend. Median selling prices remain well below the pre-recession peak, partly because of the high level of supply in the marketplace and partly because of the high percentage of listings accounted for by distressed properties.

Source: Toronto Real Estate Board



Nov 10

Canadian Gross Domestic Product, August 2010

Date: October 29, 2010

Canadian Gross Domestic Product, August 2010

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/101029/dq101029a-eng.htm

Summary: Canadian real Gross Domestic Product (GDP), the most common measure of economic growth, advanced 0.3 per cent in August. While manufacturing (up 0.5 per cent) and oil and gas extraction (up 1.5 per cent) drove the increase, most other sectors also expanded, including construction and real estate, which saw positive results after three months of declines.

Analysis: Growth in the Canadian economy slowed in the spring and summer after very strong monthly and quarterly rates of growth in the fall and winter of 2009/2010. With Canadian home transactions off record highs and housing related spending lower as well, growth moving forward will be based more heavily on business investment and exports. Based on recent Bank of Canada Business Outlook Surveys, businesses are expected to increase investment in machinery and equipment over the next 12 months. The outlook for exports is less clear. The high value of the Canadian dollar vis-à-vis the US dollar presents challenges to Canadian companies looking to sell their goods and services south of the border. In addition, consumer spending in the US remains low as job growth remains weak and problems in the housing market persist. The slower than expected recovery in the US economy, which impacts the improvement in Canadian exports, was a key reason why the Bank of Canada recently downgraded its Canadian GDP forecast for 2011.

Source: Toronto Real Estate Board



Oct 10

Canada’s real estate overvalued, survey says

Canadian house prices are overvalued, but not as much as those in Australia, Hong Kong or France, according to a new worldwide survey.

The data published in The Economist magazine’s annual survey shows Canadian homes cost on average 23.9 per cent more than they are worth.

That’s somewhere around the middle of the pack. The scale ranged from Australia at the high end, where homes are 63.2 per cent overvalued, to Japan at the low end, where houses are 34.6 per cent undervalued.

Canada’s house prices were up 4.5 per cent from one year earlier. And between 1997 and 2010, prices rose a whopping 70 per cent, the report said.

Compared to a year ago, when 15 of the 20 countries on the list were in negative territory, this year only four countries were undervalued.

“Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is down a bit from the summer,” the report states. “House prices in China rose by 9.1 per cent in the year to September, compared with a 12.4 per cent rise in May.”

The Economist’s analysis of “fair value” of housing is based on comparing the ratio of current house prices to rents, with the long term average.

Simply put, the purchase price of a house is divided by the rent it could have earned per year, and the result is the price-to-rents ratio.

A high result could mean a house is overvalued, while a low number means it could be undervalued.

Here are the results of The Economist survey:

Overvalued countries:
Singapore: 19.2 per cent
Hong Kong: 58.1
Australia: 63.2
China: 18.1
Sweden: 41.5
Belgium: 21.6
France: 42.5
Canada: 23.9
Netherlands: 23.6
U.S.: 4.6
Denmark: 19.4
New Zealand: 20.2
Britain: 32
Italy: 10.5
Spain: 47.6
Ireland: 13.2

Undervalued countries:
Germany: -12.9
Switzerland: -6.4
Unites States (Using the Case-Shiller national index): -2.1
Japan: -34.6

Source: CTV.ca



Oct 10

GTA REALTORS® Report Mid-Month Resale Housing Market Figures

GTA REALTORS® Report Mid-Month Resale Housing Market Figures

TORONTO, October 18, 2010 — Greater Toronto REALTORS® reported 3,012 sales through the Multiple Listing Service® (MLS®) during the first two weeks of October 2010.

This represented a 17 per cent decrease compared to the 3,631 sales recorded during the same period in 2009. Year-to-date sales amounted to 71,988, representing a three per cent increase compared to 2009.

“The GTA resale market is balancing out from the record level of sales experienced in the second half of 2009 and first few months of 2010. This is why sales figures have been lower than 2009 levels in recent months. With this said, it should be noted that the annual rate of decline slowed somewhat through the first two weeks of October,” said Toronto Real Estate Board President Bill Johnston.

The average price for October mid-month transactions was $444,644 – up seven per cent compared to the average of $414,479 recorded during the first 14 days of October 2009.

“We are seeing enough buyers relative to sellers to promote continued price growth year-over-year. People are buying because home ownership remains affordable in the GTA. A household earning the average income can comfortably afford a mortgage on the average priced resale home,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Source: Toronto Real Estate Board



Oct 10

Bank of Canada, Overnight Rate Target Announcement

Date: October 19, 2010

Bank of Canada, Overnight Rate Target Announcement

Source: Bank of Canada

Link to Release: http://www.bank-banque-canada.ca/en/fixed-dates/2010/rate_191010.html

Summary: The Bank Of Canada has left its target for the Overnight Lending Rate at 1.0 per cent, reasoning that the rate of inflation will not increase at the pace expected earlier this year. Canadian economic growth is slowing, due to the expected slow-down in domestic housing and related sectors, a weaker than expected U.S. recovery and heightened tensions within the international currency markets. Given this backdrop, the Bank also noted that “any further reduction in monetary policy stimulus [i.e. rate hikes] would need to be carefully considered.”

Analysis: The Bank of Canada’s decision to put its rate hikes on hold was largely anticipated by the market. Expectations for rate increases through the end of 2011 have moderated since the spring. This means that the cost of borrowing, both for variable/adjustable mortgage products based on the prime rate and fixed rate products based on longer-term government bond yields, will remain very low over the next year. Low borrowing costs help ensure that ownership housing remains affordable in the GTA.

Source: Toronto Real Estate Board



Oct 10

New Motor Vehicle Sales, August 2010 Release

Release Date: October 15, 2010

New Motor Vehicle Sales, August 2010 Release

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/101015/dq101015b-eng.htm

Summary: In August, Canadian new motor vehicle sales declined 4.8 per cent to 128,764 units. Sales of both cars and trucks fell. Truck sales were down 5.2 per cent to 73,002 units. Car sales were down 4.3 per cent to 55,762 units. While a 5.7 per cent retreat in sales of North American-built vehicles led the decline, foreign vehicle sales also fell by 2.6 per cent. Alberta, Saskatchewan and Nova Scotia experienced sales gains. In Ontario, sales fell 8.9 per cent to 46,659. On a yearover- year basis, new vehicle sales were up by almost one per cent nationally.

Analysis: The trend in new vehicle sales has generally been pointing upward since the beginning of 2009, albeit with some month-overmonth volatility. The August sales decline is likely explained by monthly volatility. Statistics Canada pointed out that preliminary sales figures for September suggest a four per cent rebound in vehicle transactions compared to August. Canadian households continue to feel much more confident about large-ticket purchases than they were a year-and-a-half ago during the recession. It is also important to note that during the three years leading up to the recession, new vehicle sales in Ontario were consistently in the 50,000 to 55,000 range. With current sales near that range now, it is reasonable to assume that the trend will flatten out moving forward.

Source: Toronto Real Estate Board



Oct 10

US Gross Domestic Product, Second Quarter 2010

Date: September 30, 2010

US Gross Domestic Product, Second Quarter 2010

Source: United States Bureau of Economic Analysis

Source Link: http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp2q10_3rd.pdf

Summary: US Real Gross Domestic Product grew at an annualized rate of 1.7 per cent in the second quarter of 2010, down from an annualized rate of 3.7 per cent reported during the first three months of the year. This deceleration in growth was driven mostly by a decline in private (i.e. businesses’) inventory investment and a sharp increase in imports, which offset the consumption of domestically produced goods and services. The output declines in the above category partially offset increased government spending and an upturn in fixed investments by businesses (i.e. capital investments other than inventory).

Analysis: While the second quarter growth rate was considerably lower than what was reported for the first three months of 2010, the result masked some good news from both the consumer and business sectors in the US. Personal consumption, fixed business investment ( i.e. capital investments other than inventory) and fixed residential construction (i.e. new home construction and related) all increased at greater rates than reported for the first quarter. The fact that more than one sector of the economy is driving growth helps to allay fears of a double-dip recession. However, an annualized increase of less than two per cent points to a more prolonged recovery period than was initially predicted. Slower growth in the US was one contributing factor to slower growth in the Canadian economy in the second quarter as well as the month of July. The Bank of Canada has pointed to growth in the US economy as an important factor that will feed into decisions regarding their policy interest rate.

Source: Toronto Real Estate Board



Oct 10

Canadian Labour Force Survey, September 2010 Results

Date: October 8, 2010

Canadian Labour Force Survey, September 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/101008/dq101008a-eng.htm

Summary: The Canadian economy shed 6,600 jobs in September leaving the employment level in Canada largely unchanged. Gains in full-time work (+37,000) did not entirely offset a 44,000 decrease in part-time positions. The goods producing segment of the economy saw gains, with the manufacturing sector adding 8,200 positions. However, 10,100 jobs were lost in the service sector. Despite the overall decline, Canada’s unemployment rate fell to 8.0 per cent in September, as fewer people sought work. The Toronto Census metropolitan area, which accounts for most of the GTA, largely bucked the national trend. The Toronto area experienced job gains for the fifth straight month. The Toronto unemployment rate also grew, however, as the total labour force (employed and unemployed individuals looking for work) grew at a faster pace than employment.

Analysis: On the whole, the labour market story in the GTA has been a positive one over the past 12 months. All of the jobs lost due to the recession have been more than accounted for and the unemployment rate is down from the peak reached in the summer of 2009. However, the unemployment rate remains elevated. Because labour force growth did not falter to nearly the same degree as employment during the recession, a lot of slack built up in the labour market. Employment will have to grow at a faster pace than the overall labour force over the next two years in order for the unemployment rate to recede back to the pre-recession norm of between 6.5 and 7.0 per cent. The higher than average unemployment rate will result in income growth at or slightly below the rate of inflation over the next two years.

Source: Toronto Real Estate Board



Oct 10

Canadian Housing Starts, September 2010 Results

Release Date: October 8, 2010

Canadian Housing Starts, September 2010 Results

Source: Canada Mortgage and Housing Corporation (CMHC)

Link to Releases:
For CMHC’s GTA release: http://www.cmhc-schl.gc.ca/odpub/press/2010/2010_10_08_0815_EOT.pdf

For CMHC’s national release: http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2010/2010-10-08-0815.cfm

Summary: In September, Canadian housing starts fell for the fourth time in five months, down approximately two per cent to a seasonally adjusted annual rate of 186,400. The overall decline stems from an 8.1 per cent decline in the annual rate of single-detached starts. The annual rate of multiple-family starts (including condominium apartments) remained unchanged in September. In the Toronto CMA, the annual rate of starts was down seven per cent to 31,300 units.

Analysis: Housing starts have not recovered as quickly as existing or new home sales in the GTA. The condominium apartment has become the dominant housing type with regard to new home sales. However, many units that have sold at the pre-construction stage of development have not yet started construction. This is because there are a near record number of condominium apartments currently under construction. At the same time, builders only have access to a certain amount of labour, equipment and materials at any given time. This means that units currently under construction must complete before resources can be shifted to new projects.

Source: Toronto Real Estate Board



Oct 10

Canadian Gross Domestic Product, July 2010

Date: September 30, 2010

Canadian Gross Domestic Product, July 2010

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100930/dq100930a-eng.htm

Summary: Canadian real Gross Domestic Product (GDP), the most commonly cited measure of economic growth, fell 0.1 per cent in July. Output declined in the manufacturing, retail sales, construction and forestry sectors. Within the retail trade categories, those sub-sectors associated with residential construction and the resale home market (for example building and outdoor home supplies) were specifically highlighted by Statistics Canada. Increased output was noted in the mining sector and Finance and Insurance.

Analysis: The decline in GDP was generally expected following lower sales for manufactured goods and lower volumes at retail outlets. Domestically, consumer spending in some categories has slowed due to the balancing out in Canadian home sales during the spring and summer. Following very strong growth in home sales in the latter half of 2009 and first few months of 2010, the pace of transactions slowed as pent-up demand was satisfied, borrowing costs increased and new mortgage lending guidelines came into force. As a result, sales of goods and services related to housing transactions, renovations and construction declined, thereby hampering retail sales. Canadian economic growth has also been hampered by a slower than expected recovery in the United States – Canada’s largest trading partner. Moving forward, GDP growth, while expected to remain positive, will be below what the Bank of Canada forecast in its July Monetary Policy Report. Consequently, the Bank has taken on a more cautious tone regarding future interest rate hikes. This suggests that the odds of an October rate hike have been much reduced.

Source: Toronto Real Estate Board



Sep 10

Canadian Leading Indicators, August 2010 Results

Date: September 21, 2010

Canadian Leading Indicators, August 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100922/dq100922b-eng.htm

Summary: The Canadian Composite Index of Leading Indicators generally points to the direction of economic growth two months in advance of Statistics Canada’s Gross Domestic Product (GDP) release. The Index increased by 0.5 per cent in August, up slightly from July’s 0.4 per cent rise. The manufacturing sector continued to show strength overall, driven by  5.2 per cent increase in orders for durable goods. Notable declines were in the housing component of the index, which dipped by four per cent, and housing-related index components such as furniture and appliance sales.

Analysis: The above average economic growth in the fourth quarter of 2009 and first quarter of 2010 was driven to a great degree by home sales and associated housing-related transactions. Record low interest rates spurred a record number of transactions in many metropolitan areas across the country, including the GTA. Consumer spending on large ticket items like homes and related goods and services was the Bank of Canada’s intent when it lowered interest rates. While we are experiencing a balancing out from the extremely strong housing market activity experienced through the first quarter of 2010, the leading indicator suggests that we will continue to see GDP growth reported by Statistics Canada in the second half of the year. This growth, however, will be more the result of private sector business investment, rather than consumer spending and housing investment. GDP growth for the remainder of 2010 will likely be below the long-term average.

Source: Toronto Real Estate Board



Sep 10

US Existing Home Sales, August 2010 Results

Date: September 23, 2010

US Existing Home Sales, August 2010 Results

Source: National Association of REALTORS

Link to Release: http://www.realtor.org/press_room/news_releases/2010/09/ehs_move

Summary: U.S. existing home transactions climbed 7.6 per cent in August to a seasonally adjusted annual rate of 4.13 million sales from July’s upwardly revised figure of 3.84 million. This figure was down 19.0 percent the rate of 5.1 million reported for August of 2009. The median selling price also increased last month – up 0.8 per cent year-over-year to $178,600. Distressed properties continued to account for approximately one-third of total sales.

Analysis: Record low interest rates coupled with the median selling price wellbelow pre-recession levels has presented very affordable home ownership opportunity for many households in the US. Unfortunately, even with the positive affordability picture, many households are not confident in their ability to purchase and pay for a home over the long term. This lack of consumer confidence has been reinforced recently by a number of less-than-stellar economic releases. This is why, even with strong month-over-month growth in transactions, the annual rate of sales remains well below annual totals reported for 2009, 2008 and 2007. The median selling price has remained flat due to high inventory levels relative to sales and a high proportion of distressed properties that generally sell at a discount to similar non-distressed homes.

Source: Toronto Real Estate Board



Sep 10

Canadian Retail Sales, July 2010 Release

Date: September 21, 2010

Canadian Retail Sales, July 2010 Release

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100922/dq100922a-eng.htm

Summary: The dollar value of retail sales fell 0.1 per cent in July after increasing 0.1 per cent in June. Five of the eleven major retail sub-sectors experienced declines. Declines in sales for housing-related goods were notable, with an 8.4 per cent dip in sales at furniture and home furnishing stores and the value of building and garden materials sales was down 2.3 percent. Regionally, Ontario experienced a 0.3 per cent drop in the value of sales, and BC a decline of 0.4 per cent.

Analysis: Retail sales generally exhibit some volatility on a month-over-month basis. Sales remain well-above last year’s levels in Canada and Ontario, but the annual growth rate in retail sales has edged lower. Economic recovery was initially driven by consumer spending spurred on by low borrowing costs. Home sales were a key driver in this regard, which in turn drove a substantial amount of retail spending. As interest rates have started to rise, it makes sense that growth in some consumer-driven sectors has slowed. Because personal expenditure has historically accounted for approximately two-thirds of Canadian Gross Domestic Product (GDP), it makes sense that GDP growth is expected to be more subdued moving forward.

Source: Toronto Real Estate Board



Sep 10

Canadian Consumer Price Index, August 2010 Results

Date: September 21, 2010

Canadian Consumer Price Index, August 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100921/dq100921a-eng.htm

Summary: Canada’s Consumer Price Index (CPI) – the most commonly quoted measure of price inflation – increased by 1.7 per cent year-over-year in August after a 1.8 per cent annual increase in July. The August result was driven largely by a five per cent rise in energy prices, but prices were higher for seven of the eight major index components. The Bank of Canada’s Core CPI, which strips out the most volatile components in the index, climbed 1.6 per cent in August. The annual rate of inflation was highest in Ontario, where a 2.9 per cent increase in prices was experienced. The annual CPI increase in Ontario was driven by higher prices for gas, electricity, passenger vehicle insurance premiums and estimated  omeowner’s replacement costs.

Analysis: Annual growth in both the “All Items” and “Core” Consumer Price Indices were below the Bank of Canada’s projection for the third quarter. With this in mind, the latest CPI release adds fuel to the interest rate debate in Canada. The calls for the Bank of Canada to halt interest rate hikes until we have a better idea of the economic growth trajectory in Canada will likely become louder. The argument will be that with inflation below the two per cent target we are not experiencing strong upward pressure on consumer prices, so there is no need to hike rates in order to slow spending. However, in recent statements the Bank has argued that consumer and business spending is in line with expectations. This suggests that the Bank may still be considering further rate hikes this year and/or in 2011. C3WHFNSZ29UQ

Source: Toronto Real Estate Board



Sep 10

United States New Residential Construction, August 2010 Results

Date: September 21, 2010

United States New Residential Construction, August 2010 Results

Source: Joint Release from the United States Census Bureau and the
United States Department of Housing and Urban Development

Link to Release: http://www.census.gov/const/newresconst.pdf

Summary: U.S. Housing starts rose 10.5 per cent to a seasonally adjusted annual rate of 598,000 units in August from the downwardly revised rate of 541,000 recorded in July. The August result was the highest rate of starts since April. While the annual rate of single-family starts rose four per cent, most of the August increase came in the more volatile multi-unit category, which experienced a 43 per cent increase. Building permits, which signal future building activity, rose 1.8 per cent.

Analysis: US housing starts remain above the lows reached during the first half of 2009, but remain far below pre-recession levels. In fact, the annual rate of starts in August remained near the lowest levels reported over the past 50 years. The resale home market in the US remains very well supplied with a low level of sales relative to listings. In addition, one-third of resale transactions are distressed in nature (i.e. in foreclosure or in danger of foreclosure), which often translates into discounted selling prices relative to comparable non-distressed properties. The very well-supplied resale market coupled with the availability of distressed properties has meant that very few buyers have been spilling over into pre-construction sales centres. The residential construction sector has suffered as a result. From the perspective of the Canadian economy, the lack of recovery in US home construction is problematic for the export of Canadian-made building materials. The production of these building materials has generally been associated with wellpaying jobs including those in manufacturing.

Source: Toronto Real Estate Board



Sep 10

New Motor Vehicle Sales, July 2010 Release

Release Date: September 14, 2010

New Motor Vehicle Sales, July 2010 Release

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100914/dq100914b-eng.htm

Summary: Canadian new motor vehicle sales rose 2.4 per cent in July to 135,514 units. These gains were led by truck sales (SUVs included), which were up 3.1 per cent to 76,994 units, accounting for 56.8 per cent of total sales – the highest proportion ever. Car sales also rose in July, up 1.6 per cent to 58,520 units. By province, sales increased in eight of provinces last month, including Ontario which experienced a four per cent gain to 51,425 units.

Analysis: July’s new vehicle sales result continued a trend that began at the beginning of last year: gradually increasing sales with some month-to-month volatility along the way. The trend in new vehicle sales basically followed the improvement in consumer confidence that took place over the same period of time. This makes sense given that an individual would have to feel confident in their employment and income prospects over the longer term before they would make a large cash outlay or enter into a financing commitment. For many households, the willingness to purchase on a car or truck could also be associated with a willingness to make other large ticket purchases, including the purchase of a home.

Source: Toronto Real Estate Board



Sep 10

Canadian Housing Starts, August 2010 Results

Release Date: September 9, 2010

Canadian Housing Starts, August 2010 Results

Source: Canada Mortgage and Housing Corporation (CMHC)

Link to Releases:
For CMHC’s GTA release:
http://www.marketwire.com/press-release/Toronto-Housing-Starts-Rise-in-August-1316077.htm

For CMHC’s national release:
http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2010/2010-09-09-0815.cfm

Summary: Canadian housing starts fell for the fourth consecutive month in August. The seasonally adjusted annual rate for starts dipped three per cent to 183,300 units from 188,900 units in July. Declines in both single detached and multiple-family starts were reported. GTA home builders bucked the national trend, as the annual rate of starts in the Toronto area increased by almost 30 per cent due to a surge in new condominium apartment construction. P9RMXZMDZDXV

Analysis: On the national scale, increased supply in the resale market has resulted in fewer buyers spilling over into pre-construction sales centres. However, in the GTA the new home construction trend has been pointing upward, driven by new unit sales in the high-rise category. Strong high-rise sales over the past year continued to convert into starts in August with multiple-family starts jumping close to 50 per cent compared to July. While high-rise starts have proven to be volatile month-over-month, the condominium apartment segment remains the driving force behind new home onstruction within the City of Toronto and many surrounding municipalities as well.

Source: Toronto Real Estate Board



Sep 10

Canadian Labour Force Survey, August 2010 Results

Date: September 10, 2010

Canadian Labour Force Survey, August 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100910/dq100910a-eng.htm

Summary: The Canadian economy added 36,000 positions in August following declines in July. Gains in full-time jobs (+80,000) offset a 44,000 position decline in part-time employment. Job gains were concentrated in the services sector, which added 43,900 positions. The goods producing segment of the economy shed 8,200 jobs last month. The national unemployment rate edged up to 8.1 per cent, as job growth was outstripped by growth in the labour force as a whole. The GTA labour market experienced an increase in the level of employment and a slight decrease in the unemployment rate.

Analysis: Employment in Canada has climbed back to the pre-recession peak. This is also the case in the GTA. Employment levels in both the services and goods producing sectors are well-above the levels reported in August 2009. The steady recovery experienced after July of last year was in line with the overall recovery in the economy. However, while the level of employment has recovered, we have not seen a marked recovery in the unemployment rate because the growth in the total labour force (employed and unemployed persons actively searching for work) continued to grow during the recession. In the GTA, for example, the pre-recession unemployment rate ranged between 6.5 and 7.0 per cent. In contrast, GTA unemployment rate stood at 9.1 per cent – an improvement from a high of 10 per cent during the recession, but a long way from what could be called normal. The implication is that with quite a bit of slack remaining in the labour market, income growth will likely remain at or below the rate of inflation through 2011.

Source: Toronto Real Estate Board



Sep 10

United States New Residential Construction, August 2010 Results

Date: September 21, 2010

United States New Residential Construction, August 2010 Results

Source: Joint Release from the United States Census Bureau and the United

States Department of Housing and Urban Development

Link to Release: http://www.census.gov/const/newresconst.pdf

Summary: U.S. Housing starts rose 10.5 per cent to a seasonally adjusted annual rate of 598,000 units in August from the downwardly revised rate of 541,000 recorded in July. The August result was the highest rate of starts since April. While the annual rate of single-family starts rose four per cent, most of the August increase came in the more volatile multi-unit category, which experienced a 43 per cent increase. Building permits, which signal future building activity, rose 1.8 per cent.

Analysis: US housing starts remain above the lows reached during the first half of 2009, but remain far below pre-recession levels. In fact, the annual rate of starts in August remained near the lowest levels reported over the past 50 years. The resale home market in the US remains very well supplied with a low level of sales relative to listings. In addition, one-third of resale transactions are distressed in nature (i.e. in foreclosure or in danger of foreclosure), which often translates into discounted selling prices relative to comparable non-distressed properties. The very well-supplied resale market coupled with the availability of distressed properties has meant that very few buyers have been spilling over into pre-construction sales centres. The residential construction sector has suffered as a result. From the perspective of the Canadian economy, the lack of recovery in US home construction is problematic for the export of Canadian-made building materials. The production of these building materials has generally been associated with well paying jobs including those in manufacturing.

Source: Toronto Real Estate Board



Sep 10

Canadian Consumer Price Index, June 2010 Results

Date: July 23, 2010
Canadian Consumer Price Index, June 2010 Results
Source: Statistics Canada
Link to Release:
http://www.statcan.gc.ca/daily-quotidien/100723/dq100723a-eng.htm

Summary: The Consumer Price Index (CPI) – Canada’s measure of inflation – rose one per cent annually in June, down from the 1.4 per cent growth rate reported in May. This slowdown was mostly driven by a 2.9 per cent decline in gas prices, with clothing and foot-ware also declining (down 1.9 per cent). The Bank of Canada core CPI, which removes volatile items like gasoline and some foods from its aggregation, rose 1.7 per cent. Ontario experienced the highest provincial rate of increase in the country, with prices climbing 1.6 per cent on price increases for vehicles and vehicle insurance.

Analysis: The consumer price index is the key indicator the Bank of Canada uses in determining the target for its policy interest rate (the Overnight Lending Rate). Over the long-term, the Bank would like to see the CPI grow at two per cent annually. While the rate of CPI growth has been below two per cent for the better part of the last year, the Bank of Canada has raised the Overnight Rate target twice over the past two months. The argument is that economic recovery is well at hand and as growth continues rates must rise to slow consumer spending to ensure that prices for consumer goods and services do not rise at an unsustainable pace. With this said, the Bank has downgraded its forecast for economic growth in 2010 and 2011 along with its outlook for inflation. This suggests that the frequency of interest rate hikes could be less than originally expected when the Bank began raising its rate target in June.

Source: Toronto Real Estate Board



Sep 10

Canada Not in Danger of US-Style Housing Bust

Date: September 9, 2010
Canada Not in Danger of US-Style Housing Bust
ARTICLE REVIEW: Jim MacGee, August 31, 2010, “Not Here? Housing
Market Policy and the Risk of a Housing Bust”, CD Howe Institute.
Link to Briefing:
http://www.cdhowe.org/pdf/ebrief_105.pdf

The CD Howe Institute recently released a study written by Professor Jim MacGee (University of Western Ontario), which poses the question of whether or not the Canadian housing market could experience a US-style bust, including a steep drop-off in the average selling price.

MacGee argues that mortgage underwriting standards evolved much differently in the US and Canada leading up to the economic downturn in both countries. As early as 2003, US sub-prime borrowers (i.e. those with troubled credit histories) were gaining access to more exotic mortgage products that included the option for interest only payments and negative amortization. Riskier borrowers and borrowing terms prompted mortgage defaults and declining average selling prices in advance of the economic downturn in the US. In Canada, in contrast, defaults rose only in conjunction with the
economic downturn and remained much lower than in the US (see Chart 1). The lower default rate in Canada, bolstered by the comparatively low percentage of riskier “exotic” mortgage types in this country, helped support home prices and also supports the view that Canada’s Federal Governmentguaranteed mortgage insurance program is not exposed to the same risk as government sponsored and private insurance programs in the US.

Home price growth in the GTA has been supported by a sustained period of affordability, as evidenced by TREB’s Affordability Indicator (see Chart 2). Even with the strong price increases experienced over the better part of the last year, the average combined mortgage, property tax and utility payment as a percentage of average gross household income remains in line with the accepted mortgage lending standard, which requires a gross debt service ratio (GDS) of 32 per cent or less. C3WHFNSZ29UQ

Source: Toronto Real Estate Board



Sep 10

Bank of Canada, Overnight Rate Target Announcement

Date: September 8, 2010
Bank of Canada, Overnight Rate Target Announcement
Source: Bank of Canada
Link to Release:
http://www.bankofcanada.ca/en/fixed-dates/2010/rate_080910.html

Summary: The Bank Of Canada raised its target for the Overnight Lending Rate 25 basis points (0.25 percentage points) to 1.0 per cent. The Bank reasoned that while economic growth both in Canada and other developed countries like the United States had not unfolded as well as forecast, personal consumption and business expenditure in Canada was progressing more or less in line with expectations. It was against this backdrop that the Bank felt a further rate increase was warranted to ensure that the rate of inflation would remain near its two per cent target. The Bank was non-committal on future rate increases, pointing to “unusual uncertainty” surrounding their economic outlook.

Analysis: The consensus in the Canadian treasury bill market suggests that this latest Bank of Canada hike will be the last until the spring or early summer of 2011. However, if the rate of inflation remains close to the Bank’s two per cent target and consumer and business spending continues to track the Bank of Canada’s outlook, it is possible that the further rate hikes could be brought on line either this year or earlier than expected in 2011. The recent rate hike will impact mortgages and lines of credit which have floating interest rates based on the prime lending rate. Fixed rate mortgage products will not necessarily be affected, given that the market has already priced in expectations for future Bank of Canada interest rate decisions. For example, the yield on five-year government of Canada bonds, which influence five-year fixed mortgage rates, has been dropping in recent months. This reflects the market view that the Bank will not raise its policy rate as much or as quickly as anticipated earlier this year.

Source: Toronto Real Estate Board



Sep 10

US Employment Situation, July 2010 Results

Date: September 3, 2010
US Employment Situation, July 2010 Results
Source: United States Department of Labor, Bureau of Labor Statistics
Link to Release:
http://www.bls.gov/news.release/pdf/empsit.pdf

Summary: The American economy shed 54,000 jobs in August as temporary workers hired for the US census continued to complete their work and were subsequently laid off. In total, census-related layoffs drove a 114,000 job decline in the government sector. Private sector employment actually edged up by 67,000 positions. The largest private sector gains were in healthcare and construction. It should be noted, however, that the majority of construction job gains were due to workers returning to their jobs following a strike. The manufacturing sector shed 27,000 jobs.

Analysis: The US labour market situation report for August presented a good news/bad new story. Obviously three straight months of declines following a short lived period of recovery was not good news. At the same time, however, the job losses in August were much smaller than most commentators were expecting following disappointing economic growth in recent months. The fact that the private sector actually saw positions increase was another positive storyline. With this said, the US economy needs to create 300,000+ jobs on a monthly basis for a sustained period of time before the unemployment rate will trend downward in any meaningful way. Personal consumption, which historically accounts for over 70 per cent of US GDP, is being hampered by the lack of confidence brought about by the high unemployment rate, which in turn hampers job creation. This drag on US GDP growth is problematic for US trading partners like Canada, who provide raw materials, finished goods and services to meet US consumer demand. The potential ripple effect of sluggish US recovery on Canadian economic fortunes is clear.

Source: Toronto Real Estate Board



Sep 10

Canadian Gross Domestic Product, Second Quarter and June 2010

Date: August 31, 2010
Canadian Gross Domestic Product, Second Quarter and June 2010
Source: Statistics Canada
Link to Release:
http://www.statcan.gc.ca/daily-quotidien/100831/dq100831a-eng.htm

Summary: Canada’s Real Gross Domestic Product (GDP), the most common measure of economic growth, increased 0.5 per cent in the second quarter for an annualized growth rate of 2.0 per cent. This is well below the 5.8 per cent annualized growth rate reported for the first quarter of this year. In June, Canadian GDP rose 0.2 per cent over May for the strongest monthly gain of the second quarter. The goods producing sector led second quarter economic growth, while service sector output remained flat.

Analysis: The decline in the GDP growth rate between the first and second quarters can be traced to several sources, but the impact of housing-related sectors was quite notable. Housing investment, which drove GDP growth through much of the initial 2009 recovery, increased by only 0.3 per cent in the second quarter. Economic activity specifically related to real estate agents and brokers was down. Renovation activity also declined. Declines related to residential real estate contributed to an overall dip in consumer spending. A slowdown in the consumer-driven side of the economy was not necessarily unexpected, as second quarter interest rate increases and stricter mortgage lending guidelines came on line. With this said, the second quarter GDP result was well below the Bank of Canada’s latest published forecast of three per cent annualized growth. This coupled with less than stellar employment releases in recent months increases the odds that we could see an earlier than expected interruption in Bank of Canada interest rate hikes.

Source: Toronto Real Estate Board



Sep 10

US Existing Home Sales, July 2010 Results

Date: August 24, 2010
US Existing Home Sales, July 2010 Results
Source: National Association of REALTORS
Link to Release:
http://www.realtor.org/press_room/news_releases/2010/08/ehs_fall

Summary: U.S. existing home sales were sharply lower in July, down 27.2 percent to a seasonally adjusted annual rate of 3.83 million units compared to the downwardly revised June rate of 5.26 million. Compared to June 2009, sales were also down approximately 27 per cent. The annual rate of sales was at the lowest level since 1999. The median selling price rose 0.7 per cent over year-ago levels to $182,600. The percentage of sales accounted for by distressed properties remained at 32 per cent.

Analysis: U.S. existing home sales continued to decline in July as high unemployment, rising economic uncertainty and the expiry of the federal government’s first time buyer’s tax rebate dampened the confidence of potential home-buyers. While prices continued upward in July, a spike in active listings to 3.98 million existing homes available for sale (resulting in months of supply measure jumping to 12.5 months) suggests that sustained price growth may not be a safe bet moving forward.

Source: Toronto Real Estate Board



Aug 10

United States New Residential Construction, July 2010 Results

Date: August 16, 2010
United States New Residential Construction, July 2010 Results
Source: Joint Release from the United States Census Bureau and the United States Department of Housing and Urban Development
Link to Release:
http://www.census.gov/const/newresconst.pdf

Summary: U.S. Housing starts rose to 546,000 units in July, a 1.7 per cent increase from the downwardly revised annual rate of 537,000 units recorded in June. The increase came entirely from within the volatile multiple family category, which rose 17.3 per cent to an annual rate of 95,000 units. Singlefamily starts, a more reliable indicator of the underlying health of the market, fell 4.2 per cent in July to an annual rate of 432,000 units. The annual rate of building permits, which signal future activity, dropped 3.1 per cent to the lowest level of the year. On an unadjusted basis, total starts were also down almost ten per cent annually.
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Analysis: The level of residential home construction has been “flat-lining” since the latter half of 2009, and July building permit data does not point to stronger growth in the fall. A key issue adversely affecting the demand for new homes is the state of the US resale housing market. Because distressed sales account for more than a third of existing home inventory, many home buyers are taking advantage of value that cannot be found at new home sales centres. The value represented by distressed listings coupled with fact that the resale market remains well supplied explains why a small number of households, from a historic perspective, are spilling into the new home market. The US construction sector has strong economic linkages to other sectors of the economy, both in the US and Canada. For Canada in particular, the US construction lull adversely affects the export of raw materials and manufactured goods and the associated creation of well paying jobs.

Source: Toronto Real Estate Board

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