Wednesday, April 30, 2008

Canadian economy rattled

Weakness in manufacturing and wholesale trade undermined Canada's economy in February, leading to a 0.2 per cent contraction compared to a month earlier – a much poorer performance than economists' expectations of a 0.2 per cent expansion.
“Very little to cheer about in February,” said Stewart Hall, market strategist with HSBC Securities Canada Inc.
The February contraction means that over the past three months, Canadian economic activity declined 0.7 per cent at an annualized rate – the deepest three-month contraction since 1997 and the first such contraction since November 2001, when the U.S. was dealing with a recession, notes Michael Gregory, economist at BMO Nesbitt Burns.
“Canada's sturdy domestic demand is being nearly offset by the headwinds coming from U.S. recession, a strong loonie and credit conditions,” Mr. Gregory said.
Statistics Canada said wholesale trade and manufacturing were mainly responsible for the decline, but declines were also noted in retail trade, oil and gas extraction, transportation and the financial sector.
The weak February real gross domestic product comes after a 0.6 surge in January, and a 0.7 decline in December.
Tourism, government and construction activity all rose in February, but not enough to offset the declines in the other six sectors of the economy, Statscan said.
Economists immediately began scaling back their expectations for annualized growth in the first quarter of 2008. The Bank of Canada said last week it expects a 1 per cent expansion, at annualized rates, in the first quarter, but after seeing the February GDP details, economists said first quarter growth would barely be on the positive side of zero.
“Right now, assuming GDP comes in flat in March, first quarter GDP is on track for a mere 0.2 per cent annualized gain, which is well below the Bank of Canada's forecast,” Jacqui Douglas, economics strategist at TD Securities, wrote in a note to clients.
Wholesale activity, especially in motor vehicles and building supplies, dropped 1.4 per cent in February, reversing a big climb in January, Statscan said.
Manufacturing activity fell 0.7 per cent on the month. Even though production of motor vehicles registered a healthy advance, February saw big drops in output of wood products, and petroleum and coal products.
The energy sector dropped 0.9 per cent, dragged down by a 0.7 per cent contraction in oil and gas extraction.
And retail trade activity dropped 0.6 per cent because of sparse activity at pharmacies, clothing stores and car dealerships, Statscan said.
In a sign that the global credit crunch is taking a toll in Canada, activity in the finance and insurance sector slid 0.2 per cent as the volume of trades on stock exchanges fell.
Overall, goods production dropped 0.4 per cent in February, the fourth month in the last six to register a contraction. Output of services dropped 0.1 per cent in February, the second time in six months for a small decline.
Compared to a year ago, economic activity in February advanced 1.5 per cent, with a 2.0 per cent contraction in goods output offset by a 3.2 per cent advance in services.

HEATHER SCOFFIELD , Globe and Mail Update

Tuesday, April 29, 2008

Make Green Homes Attainable

A simple incentive to purchase new green homes would improve attainability for homebuyers, lay the foundation for incentives to renovate existing homes and help the government meet its greenhouse gas (GHG) emissions reduction targets faster.

According to the Canadian Home Builders’ Association of BC (CHBABC), new homes that meet a green standard cost approximately 4 to 6 per cent more than conventional homes and account for less than 1 per cent of the overall housing stock in BC. The cost to renovate the remaining stock of homes to a green standard can vary widely.

Cash-strapped homebuyers may be more likely to buy new green homes and existing homes that meet a green standard if an up-front financial incentive was provided.

Pilot Project

This could be achieved by investing a small portion of the Property Transfer Tax (PTT) revenue (which exceeded $1 billion in 2007-08) into a pilot project that reduces transfer tax costs as a consumer incentive to buy new homes that meet or exceed Built Green™ standards.

Built Green™ is a national standard that qualifies new homes on criteria of energy efficiency, indoor air quality, resource use management and overall environmental impact. Each Built Green™ BC Gold home has the potential to eliminate 2.5 tonnes of GHG emissions annually over the life of the building, reports CHBABC.

In 2007, 771 Built Green™ BC homes were completed across BC, representing about 5 per cent of all new housing starts. In 2008, about 1,500 Built Green™ BC Gold level homes will be introduced, representing about 3 per cent of forecasted starts and resulting in reduction of GHG emissions equivalent to taking 165 cars off the road.

The project would be a cost-effective investment by the government to encourage homeowners to reduce their ecological footprint and deliver valuable data to assist further reduction of GHG emissions from existing homes and commercial properties.


Quality of Life will improve in several ways if this project proceeds. Reducing the cost to purchase a new, green home will help make those homes more attainable. That's a direct benefit to consumers and the environment, and also to the government in two ways.

First, it would provide choice to consumers and support the principle of revenue neutrality associated with the new carbon tax. Legislation will require the government to demonstrate how revenue raised from that tax is returned to businesses and individuals. In this instance, the revenue returned through the project would be directly linked to consumers, making greener housing choices that reduce GHG emissions.

Second, the project is an opportunity to make greater GHG emission reduction strides in the future by gathering data on the effectiveness of this particular incentive to inform future programs and incentives. This is critical, since approximately 11 per cent of BC’s
annual GHG emissions are attributed to the operation and maintenance of residential and commercial buildings, as reported by the Pembina Institute.

In budget 2008, the government emphasized measures to encourage greener choices by consumers and reduced GHG emissions. BCREA believes this project supports that theme perfectly, and will encourage the government to adopt it during its Government Liaison Days conference in April.

“Copyright British Columbia Real Estate Association. Reprinted with permission.”

Thursday, April 24, 2008

Park Given Green Light

The issue of the former gravel pit in Fairview rocked city council Monday night as politicians shoveled aside public opinion and approved the sale of a portion of the land to pay for the remainder of the park.

There was palpable tension in the room as city staff prepared to give a presentation on Davies Street Park.

It had been building during the four-and-a-half hour committee of the whole meeting, breaking into a flurry of confrontation even before nine people who showed up for the public meeting had settled into their chairs after a brief recess.

“Can I ask a question?” Councilor Gord McAdams directed towards city manager Kevin Cormack. “Is this the same proposal that we got before?”

Cormack said it was. It was the resolution of council to bring the option for the park back in the form of a public meeting he said.

“It wasn’t advertised as a new option,” Cormack pointed out.

Councilor Marg Stacey chimed in, expressing her displeasure with the time frame between the public meeting and the subsequent council vote right after.

“Actually I was hoping to give the public more of a chance to have some input on this,” she said.

The confusion for McAdams was he thought city staff would be bringing back a full report on the pros and cons of each of the six recommendations for the park.

Cormack said there would be a staff report on how the recommendation would work after council voted.

The presentation was to give the public a chance to hear about the details of the option, proposed by city staff, said Cormack.

City staff had presented city council with a presentation March 3 on what they had heard from 55 written comment sheets obtained from two separate public meetings, and then incorporated in some new elements to pull it all together.

The idea was to expand the area of the park to both sides of Anderson Creek, Cormack had told council previously, and then connect to the BNR trail.

“If council doesn’t feel the report we put together was sufficient they can vote it down,” said Cormack.

“But we heard this report already,” McAdams replied, “I’m just wondering about the sequence of events. None of us knew about this [item] until late.”

Mayor John Dooley stepped in at this point.

“Is this a wrong thing to do tonight?” he asked. “I’m quite happy to not have a presentation and schedule another public meeting. I personally didn’t think this was a bad thing.”

He pointed to the handling of the skateboard park at last city council meeting, which was placed on the agenda just prior to the start of the meeting by McAdams, as equally “blindsiding” as Davies Street park was.

The chair of the committee of the whole meeting, Councilor Deb Kozak, asked council if they wanted to defer the matter to a public meeting instead of continuing Monday night.

The idea agreed with McAdams.

“I don’t know how we can give out comment sheets and then make a decision a half hour later.” He said.

The comment incensed Dooley, and he questioned the strength of character of those who waited almost three hours to ask for deferment of the public meeting.

“Anybody who doesn’t think we should have had this presentation here tonight should have said at 5 pm and questioned why we don’t go to a public meeting,” he said.

“But to have these people [in the audience] sit here for two-and-a-half hours and then say we should go to another public presentation, it’s not fair.”

And so the presentation went ahead.

The new park could become the third largest in the city at 4.8 hectares, up from 2.8 hectares that was presented at the two public meetings. That would put it 1 hectare behind Rosemont Park and 4.8 hectare of Lakeside Park.

However, the city staff proposal also included selling off the front lots on the park land and have a smaller playing field at .71 hectares, down from 1.12 hectares. That area was eight per cent of the larger park size, or 33 per cent of the flat area.

Other options for funding the park include selling other city property (like right of ways), access funds from reserves (water license, capital projects, land sale) or increase taxation.

If the city opted to increase taxes and borrow the money to pay for the park, over 10 years that would result in a one percent increase in taxes, said Cormack.

The city currently has $53,000 available to develop the park and complete Ninth Street to city standards, the cost to develop Ninth Street is $154,000.

The net proceeds from the sale of the lots, minus the cost to develop the street, would be between $495,000 and $660,000 said Cormack. Any net profit would be split evenly between the province and the city, which could be up to $80,000.

A grant of $45,000 has been secured by the city from BC Transit to be used for creating the pathway from BNR trail along the slope following Anderson Creek. The city is applying for another $45,000 grant for that aspect of the plan.

Council voted later in a special meeting with councilors McAdams, Kozak and Robin Cherbo against the motion, to go with city staff’s option to sell part of the park to help pay for it.

Timothy Schafer Nelson Daily News Staff April 23, 2008

Wednesday, April 23, 2008

Rising housing values and lack of inventory challenge first-time buyers, says RE/MAX

While higher housing values and tight inventory levels have hampered home-buying activity so far this year, longer amortization periods and alternative housing types have offset the impact on most major markets across the country, according to a report released today by RE/MAX.

Despite a higher degree of frustration in the marketplace than in previous years, the RE/MAX Affordability Report found that first-time buyers, in particular, remain steadfast in their determination to purchase a home. In fact, entry-level purchasers are adjusting their expectations by sacrificing size, location, and even long-term financial freedom, to overcome challenges such as rising prices and serious supply issues. Innovative financing has become key to home ownership in today’s environment – with longer amortization periods gaining favour in 62 per cent of the major centres surveyed. Low or no down payments were popular with first-time buyers in 38 per cent of markets.

“First-time purchasers continue to play a pivotal role at both a local and national level,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “The impact they have on the housing market is significant, as they are the impetus for sales in the mid-to-upper price ranges. As long as this segment of the market remains healthy, the real estate outlook will continue to be favourable.”

Inventory levels, however, remain one of the foremost concerns facing purchasers across the country. A shortage of available entry-level product was identified as a major obstacle impeding buyer intentions in three-quarters of markets surveyed in the report, including St. John’s, Moncton, Fredericton, Halifax-Dartmouth, Ottawa, Greater Toronto Area, Hamilton-Burlington, Niagara Falls, Winnipeg, Regina, Saskatoon, Greater Vancouver, Victoria and Kelowna.

“Doom and gloom reports coming from south of the border have yet to hinder overall momentum,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “First-time buyers are still leading the charge, taking advantage of every resource available to achieve home ownership. They’re determined to get into the market sooner rather than later. If suburban locations, smaller condominiums and town homes, or a little sweat equity is what it takes to get into the market, these purchasers are game.”

Although average price is the barometer for housing values in most major centres, first-time buyers looking to achieve home ownership consider starting prices a more meaningful gauge of affordability. Starting prices can be substantially lower than the market average. For example, average price has surpassed the $600,000 benchmark in Greater Vancouver, while the starting price for a detached home can hover as low as $237,500 in the peripheral areas.

The best value for the dollar continues to be found in the suburbs. For those unwilling to sacrifice on location, small condominium units in new developments and condominium conversions of rental buildings offer up the next best alternative. Condominium conversions in some of the country’s major centres can be picked up as low as $150,000 to $175,000.

RE/MAX Western Canada April 22, 2008

Friday, April 18, 2008

BC Home Sales Down in First Quarter

Vancouver, BC – April 18, 2008. British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC dipped 1.8 per cent to $8.9 billion during the first quarter, compared to the same period in 2007. Residential unit sales declined 13.5 per cent to 18,635 units during the same period. The average MLS® residential price in the province reached $478,423, up 13.5 per cent from the first quarter of 2007.

"The housing market lost some steam during the first quarter," said Cameron Muir, BCREA Chief Economist. "Eroding affordability has squeezed some potential buyers out of the market, while uncertainty about the duration and impact of a weak US economy and housing recession likely has some consumers sitting on the sidelines."

"Despite weakness in the forest sector, economic fundamentals in the province remain strong and continue to underpin housing demand," added Muir. "A 25 per cent increase in the number of homes for sale is providing home buyers with more selection and reducing the chances of competing bids on the same property."

March MLS® residential sales volume fell 12.4 per cent to $3.48 billion compared to March 2007. Residential unit sales declined 22 per cent to 7,128 units in March, while the average MLS® residential price increased 12.3 per cent to $488,796 compared to March 2007.

Vancouver, BC – April 18, 2008. British Columbia Real Estate Association (BCREA)

Housing Market Softens - No Meltdown, but homes-for-sale signs sprout

Canada's once-hot housing market is clearly cooling, with sales falling and the number of unsold homes on the market hitting record highs in the first quarter of the year.
Despite an uptick in sales in March from a three-year low in February, sales of existing homes were down 7.1 per cent in the first quarter from the final quarter of last year, and 15.4 per cent from the first quarter of 2007, the Canadian Real Estate Association reported yesterday in its preliminary housing market report for March.
And prices were up only 5.5 per cent from a year earlier to an average of $327,620, the smallest increase since the final quarter of 2001, which followed the Sept. 11 terrorist attacks in the U.S.
But there will not be any meltdown in the housing market here as has occurred in the U.S., the group said.
"The residential average price continues to increase, unlike conditions in many U.S. markets," said association president Cal Lindberg. "The size of the increase is returning to what we consider more normal levels for most markets in Canada, reflecting a sound but cooling market for existing homes."
Sales in the quarter were down in a number of major markets, led by Toronto, which accounts for about one-quarter of all sales in the country. The market softened in Vancouver and Calgary, but remained strong in other markets.
Meanwhile, the number of homes listed for sales swelled to a record high.
"The credit crunch has had limited impact on Canadian mortgage lending to date," said the industry association's chief economist Gregory Klump. "Resale-housing activity will continue to be supported by rising after-tax incomes, high employment, upbeat consumer sentiment and declining interest rates."
The average price increased four per cent year-over-year last month to $329,383 with new price records being set in a number of cities, including Saskatoon, Winnipeg, Hamilton, Ottawa and Halifax.
The level of sales will likely remain below last year's levels as buyers show caution in the face of the U.S. downturn, but home prices should continue to post modest gains.

© The Vancouver Province 2008 Eric Beauchesne, Canwest News ServicePublished: Friday, April 18, 2008

Monday, April 14, 2008

Wal-Mart a Signal Something is Happening

Years ago we used to look at the 'Big Mac Index'. This looked at the price of a Big Mac in different cities and based on what prices were (i.e. $1.50 versus $3...) we could understand the relative strength of the economy in that city. Then we looked at the Costco index. Wherever a Costco store opened ... a good place to buy real estate as that company clearly did its research before opening a store.

Well, now ... it is clearly the Wal-Mart index. Or at least ... follow Wal-Mart when buying real estate.

When Wal-Mart Canada announced it had chosen Duncan for its first Supercentre (Supercentres have approximately 30% more sales floor than traditional Wal-Marts) in British Columbia, it raised some eyebrows and sparked real estate interest in the southern Vancouver Island town. But why Duncan?

"It was both because of a space opportunity and the potential of the area," explained Kevin Groh, a Toronto-based spokesman for the world's largest retail chain. "We look at locations on a macro and micro scale," Groh said.

Groh explained that Wal-Mart does indeed have an extensive research department that zeroes in not only the current trading area of any location, but at the potential of future growth. "Our check list of considerations is substantial," Groh said.

Duncan, with proximity to Victoria and Nanaimo and the growing population base of southern Vancouver Island apparently fit the bill for Wal-Mart, which moved an existing store to a new retail power centre in the town. The store will open by this summer, Groh said.

Groh said Merritt was chosen for a new store in 2006 - not, as some thought because the Wal-Mart family had bought the nearby Douglas Lake Ranch - but because the town of about 5,000 is seen as emerging as a retail and service hub.

So where else is Wal-Mart looking in B.C. and Alberta?

- Recent B.C. openings include Squamish, and the relocation and expansion in Penticton.

- South Surrey: a new Wal-Mart opens later this year.

- Victoria: existing Wal-Mart re-constructed as part of the new Town and Country shopping centre development opens this year. "We have additional plans for BC, but none have been made public," Groh said.

- Wal-Mart is much more active in Alberta. Last September, Wal-Mart opened five new Wal-Mart Supercentres across Alberta. The Wal-Mart Supercentres are located in Wainwright, Vegreville, Lethbridge, Pincher Creek and West Edmonton.

Major Point - Keep reading the company news. When they open stores you can be sure that research shows it is a growing community ... and you can be sure you have tenants.

Ozzie Jurock Published in the Vancouver Sun, Thursday, March 06, 2008

Tuesday, April 8, 2008

Housing Starts Brisk in March

The seasonally adjusted annual rate of housing starts was 254,700 units in March, slightly down from 255,600 units in February, according to Canada Mortgage and Housing Corporation (CMHC).

“The high level of starts posted in February continued in March, thanks to the multiple segment and particularly condominium starts, which registered a significant rise in Alberta” said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. “Nevertheless, the single-detached component, which is usually a strong trend indicator, decreased slightly. This is consistent with our view that the housing market will moderate gradually throughout 2008.”

In March the seasonally adjusted annual rate of urban starts edged down by 0.4 per cent to 221,500 units compared to February. Urban multiples were up 1.1 per cent to 141,000 units, while singles decreased 2.9 per cent to 80,500 units.

The seasonally adjusted annual rate of urban starts went down in three of Canada's five regions in March. Urban starts registered a decrease of 2.3 per cent in Ontario, 16.8 per cent in Quebec and 37.1 per cent in British Columbia. Meanwhile, urban starts jumped in the Atlantic and the Prairies with increases of 75.0 per cent and 52.5 per cent, respectively. These significant increases were mainly attributable to the urban multiple start segment which posted declines in the other regions of the country. Urban singles were up in all regions except Quebec and Ontario.

Rural starts were estimated at a seasonally adjusted annual rate of 33,200 units in March.
For the first quarter of 2008, actual starts, in rural and urban areas combined, were up an estimated 12.8 per cent compared to the same period last year. Actual starts in urban areas alone increased by an estimated 15.8 per cent year-to-date. Actual urban single starts for the first three months were 10.7 per cent lower than they were a year earlier, while multiple starts increased by 35.6 per cent over the same period.

CMHC Ottawa April 8, 2008