Good morning everyone;
Many of us have now begun cheering for our secondary teams in the world cup. As stated last week I’m not a huge or knowledgeable soccer fan but I do like the atmosphere that the world cup creates in our city. I also really enjoy watching many people cheer for “their country”. With much horn honking and flag waving it’s a fun time overall.
What stuck out to me over the last week is that out of all the cars that were clothed in flags, only 2 had small but proud Canadian flags flapping in the wind. I don’t have any flags myself, but I think it’s great to support your team/country/culture and at the same time maybe have a Canadian flag to recognise how amazing and wonderful it is (and how lucky we are) to be in a country that can provide for a society that allows and encourages everyone to celebrate their heritage. So if you have gone to the trouble to affix a country’s flag to your car, or anywhere for that matter – continue with that pride by placing a nice little Canadian flag right beside it, simply to acknowledge what a great place we live in! And honk away – Beep, beep, beep, beep!
Out Of Office Alert June 29th –July 6th
As always I will have full coverage while I’m away.
Simply call my Office line at 416-849-2121 and my team of colleagues will take care of your real-estate needs.
U.S. Economy Shrinks By Most Since Great Recession in 1Q
Published June 25, 2014/ Reuters
The U.S. economy contracted at a much steeper pace than previously estimated in the first quarter, but there are indications that growth has since rebounded strongly.
The Commerce Department said on Wednesday gross domestic product fell at a 2.9 percent annual rate, the economy’s worst performance in five years, instead of the 1.0 percent pace it had reported last month.
While the economy’s woes have been largely blamed on an unusually cold winter, the magnitude of the revisions suggest other factors at play beyond the weather. Growth has now been revised down by a total of 3.0 percentage points since the government’s first estimate was published in April, which had the economy expanding at a 0.1 percent rate.
The difference between the second and third estimates was the largest on records going back to 1976, the Commerce Department said.
Economists had expected growth to be revised to show it contracting at a 1.7 percent rate. Sharp revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates.
The latest revisions reflect a weaker pace of healthcare spending than previously assumed, which caused a downgrading of the consumer spending estimate. Trade was also a bigger drag on the economy than previously thought.
The economy grew at a 2.6 percent pace in the final three months of 2013. With the first quarter in the rear view and the April-June period looking stronger, investors are likely to ignore the report.
Data such as employment, manufacturing and services sectors point to a sharp acceleration in growth early in the second quarter. However, the pace of expansion could fall short of expectations, which range as high as a 3.6 percent rate.
Economists estimate severe weather could have slashed as much as 1.5 percentage points from GDP growth in the first quarter. The government, however, gave no details on the impact of the weather.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 1.0 percent rate. It was previously reported to have advanced at a 3.1 percent pace.
Exports declined at a 8.9 percent rate, instead of 6.0 percent pace, resulting in a trade deficit that sliced off 1.53 percentage points from GDP growth. Weak export growth has been tied to frigid temperatures during the winter.
Businesses accumulated $45.9 billion worth of inventories, a bit less than the $49.0 billion estimated last month. Inventories subtracted 1.70 percentage points from first-quarter growth, but should be a boost to second-quarter growth.
A measure of domestic demand that strips out exports and inventories expanded at a 0.3 percent rate, rather than a 1.6 percent rate.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
This report was released before the US economy numbers were released. The Canadian economy may not face inflation pressures going forward if we start to slow down as we are linked to the US economy as well.
The Bank of Canada came under pressure on Friday to stop fretting about low inflation after unexpectedly sharp price gains pushed the rate above the central bank’s target, making it more likely the next move in interest rates will be higher.
Statistics Canada reported the annual inflation rate hit a 27-month high of 2.3 percent in May from 2.0 percent in April. Core inflation, which excludes some volatile items like gasoline, rose to 1.7 percent, the highest since July 2012, from 1.4 percent in April.
As recently as last week, Bank of Canada Governor Stephen Poloz had said the underlying rate of inflation, which he pegged at 1.2 percent, was so low it “leaves us vulnerable to a downside shock at any time.”
The central bank aims for 2 percent inflation and to keep it within a range of 1 to 3 percent. While acknowledging higher inflation readings in its June 4 rate statement, it said increased risks to growth left “the downside risks to the inflation outlook as important as before.”
But economists said on Friday that position was becoming increasingly untenable and said a change in language would be in order, though nobody expects an immediate rate hike.
“The low-inflation ship has sailed in Canada, and I think the Bank of Canada pretty much has to change their rhetoric as of the next meeting,” said Bank of Montreal chief economist Doug Porter.
It may be tricky for the central bank to shift its tone without at the same time causing a strengthening in the Canadian dollar that would hurt exports, similar to sterling’s strong rise when Bank of England Governor Mark Carney said last week rate hikes could happen sooner than expected.
National Bank Financial senior economist Krishen Rangasamy believes the Bank of Canada, formerly headed by Carney, will want to downplay inflationary pressures and reductions in the output gap “so as to keep the Canadian dollar weak.”
“I think they are going to keep spinning that story as long as they can, to keep the Canadian dollar from heading back towards parity. They definitely do not want that to happen because that could choke off the recovery in exports,” he said.
Poloz has repeatedly said the central bank targets inflation and not the currency, but has also expressed disappointment with export growth.
The Canadian dollar rose to a 5-1/2 month high on the inflation data, and on an accompanying report showing retail sales in April rose nearly twice as fast as expected. [CAD/]
Canada was the first among the Group of Seven leading industrialized nations to raise its policy rate after the 2008-09 recession but has kept it at 1 percent since September 2010.
Poloz has said the central bank’s policy stance was neutral, specifying that rates could just as easily fall as they could rise, using dovish language that has kept a lid on rate hike expectations and the currency.
Still, yields on overnight index swaps show rate cut expectations have largely faded.
And even before Friday’s data economists were unanimous that the next rate would be a hike.
MAKEUP OF INFLATION
The median forecast in a Reuters poll of 38 economists released on May 29 was for the Bank of Canada to raise its rate in the third quarter of 2015, with no one expecting a hike this year.
“We are still of the view that any moves on rates are not likely until 2015, but certainly there is now a higher probability of hikes coming sooner rather than later,” said Royal Bank of Canada assistant chief economist Paul Ferley.
May’s inflation readings were well above the second-quarter projection the Bank of Canada made in April of only 1.6 percent overall and 1.2 percent for core.
Last month’s inflation rate also was the highest since the 2.6 percent reported for February 2012.
The year-over-year rise in prices was led by an 8.4 percent jump for energy, including 6.3 percent for gasoline, 21.3 percent for natural gas and 7.0 percent for electricity.
Porter said the bank believed the drop in the Canadian dollar over the past year might have added 0.2 percentage points to core inflation recently.
“I think there is more to this than just food, energy and the Canadian dollar. I do think inflation is starting to creep back up again,” Porter said. Indeed, the monthly rise in core inflation was identical to the rise in overall prices, 0.5 percent.
(Additional reporting by Allison Martell, Euan Rocha and Alastair Sharp in Toronto; Editing by Jeffrey Hodgson and Paul Simao)
CMHC policy change on second homes fails to dent cottage sales
Tara Perkins – REAL ESTATE REPORTER / The Globe and Mail /Published Wednesday, Jun. 25 2014, 12:00 AM EDT
CMHC, the Crown Corporation that dominates Canada’s mortgage insurance market, said in late April that it was no longer going to insure mortgages on second homes effective May 30.
While a full month has yet to pass since the change came into effect, Gurinder Sandhu, Re/Max’s regional director for the Ontario-Atlantic region, says there has been “very little, if any,” impact on the market for recreational properties.
That’s in large part because people who are buying cottages tend to make a down payment of more than 20 per cent, which means that mortgage insurance isn’t necessary. Also, CMHC’s private sector rivals did not tighten their products to the same degree, meaning that insurance is still a possibility for those who have a smaller down payment.
“While some potential recreational buyers may have been discouraged by the Canada Mortgage and Housing Corp.’s recent decision to eliminate insurance on second mortgages, there is little to no material impact expected from this change,” Re/Max says in its 2014 recreational property report, which will be released Wednesday.
The report says recreational property sales and listings have rebounded from the chill that this winter’s cold weather put on the market. Mr. Sandhu expects that an uptick in sales will make up for the slow start to the year.
“What we’re seeing across the board is high single-digit price increases, and by the end of the year the number of transactions will be on par with last year,” he says.
Here are a few highlights from Re/Max’s regional breakdown of the recreational market:
– Overall prices are down about 20 per cent since before the recession.
– A number of vacant lots have been sold this year, meaning more construction is coming.
– The most expensive property sold in Ucluelet so far this year was a beachfront vacation rental home with a caretaker cottage for $1.6-million.
– The most expensive in Tofino was a 1.5-acre, 4,600-square-foot oceanfront property for $7.9-million.
– The market is picking up after suffering a slump following the 2010 Winter Olympics.
– One of the most expensive properties sold in the past year was a 7,000-square-foot, five-bedroom estate with a guesthouse, pool and tennis court on six acres of land for $10-million.
– Including both houses and condos, the average price is about $556,000 and sales have been steady over the past year.
– The average price for a single-family home is $888,000.
– One of the most expensive homes sold recently was a 3,500-square-foot, four-bedroom, four-bathroom property with two fireplaces for about $2.3-million.
Lake Winnipeg West, Manitoba
– Prices start at about $70,000, while the average price of a three-season home ranges from $95,000 to $140,000. Winterized properties are closer to $375,000.
– There has been an increase in inventory in Sandy Hook with discussions under way about installing a sewer system in the area.
– Vacant land sales are becoming increasingly popular, especially among hunters and those looking for recreational land.
– There is roughly a 60/40 ratio of homes and cottages to condos now.
– Recreational property prices have stabilized and are now rising.
– At least 13 properties have sold for more than $1-million this year.
– A typical two-bedroom winterized waterfront cottage ranges from about $450,000 on the east side of town to about $650,000 on the west side.
– Appears to be a buyer’s market.
– Typical cottages start at about $300,000 riverfront or $400,000 lakefront, plus an additional $100,000-plus for ones that are winterized.
– One of the most expensive properties on the market, a 5,500-square-foot home on a 22-acre island, was recently listed for $6.4-million.
North Shore/South Shore, PEI
– Sales have been slow.
– An oceanfront cottage in PEI starts at about $180,000 and increases to about $900,000 depending on size and location.
– One of the most expensive properties listed in the past year was a 2,000-square-foot oceanfront place with five bedrooms and three bathrooms, which sold for $372,450.
Have a wonderful weekend and see you in 2 weeks!