DundeeWealth Economic Forecast

The march edition of the Economic Monitor by DundeeWealth has been released. Interesting read as it tries to forecast both short and long term economic implications of the situations in Libya and Japan. Below are excerpts from the report as it relates to Real Estate.

The BANK OF CANADA is expected to remain on hold over the summer, raising rates again in September, December and March 2012 – by 25 basis points each time. While economic growth is expected to accelerate (a spillover from accelerating US growth), domestic growth is likely to be only modest, with high consumer indebtedness and the recent tightening of mortgage regulations curbing domestic demand somewhat. Domestic credit growth has been flat (apart from home mortgages) and inflation has been lower than expected, notwithstanding fairly strong wage growth. Core inflation fell to just 0.9% in February, well below the Bank’s 2.0% target. The core rate is not expected to exceed 1.5% until near year-end. The Bank is likely to be wary of increasing interest rates before the Fed does as it could cause a further rise in the Canadian dollar, which would further dampen domestic growth prospects.

The FED Funds target rate is likely to remain in the 0% to 0.25% range for the remainder of this year, though the Fed may encourage a rise to the top of that range toward September whilst it contemplates the prospects for growth and employment, and inflation into 2012. At this point we have the Fed raising rates by 25 points in January and again

in April 2012. The Fed is expected to end its current round of quantitative easing as scheduled in June, even though the pace of economic growth is improving and is set to benefit further as a result of the 2011 payroll tax holiday and a new measure to allow much faster depreciation this year. Despite the improving growth picture, unemployment remains high and core inflation very low, although rising energy and food prices have already pushed headline CPI up to 2.1%.

The CANADIAN DOLLAR is expected to trend relatively flat, somewhat above parity, during the next six months or so, then move higher. While the Fed’s quantitative easing program could help boost commodity prices and the loonie further in the near term, a modest slowdown in emerging market economic growth is likely to serve as a counterweight. Mid-east unrest is a wild card. Extended political troubles in Libya and elsewhere could add to upward pressure on oil prices and also the loonie, whereas an early resolution could see oil prices and the Canadian dollar both fall. In any event, periodic commodity price corrections are expected in the first half of the forecast.

The complete report can be found here

Spring Home Maintenance Checklist

Spring

• After consulting your hot water tank owner’s manual, carefully test the temperature
  and pressure relief valve to ensure it is not stuck. Caution: This test may release hot
  water that can cause burns.
• Check and clean or replace furnace air filters each month during the heating
  season.
• Ventilation system, such as heat recovery ventilator, filters should be checked
  every two months.
• Have fireplace or wood stove and chimney cleaned and serviced as needed.
• Shut down, drain and clean furnace humidifier, and close the furnace humidifier damper on units with central air conditioning.
• Switch on power to air conditioning and check system. Have it serviced every two or
  three years.
• Clean or replace air-conditioning filter, if applicable.
• Check dehumidifier and drain — clean if necessary.
• Turn OFF gas furnace and fireplace pilot lights where possible.
• Have well water tested for quality. It is recommended that you test for bacteria every
  six months.
• Check smoke, carbon monoxide and security alarms, and replace batteries.
• Clean windows, screens and hardware, and replace storm windows with screens. Check screens first and repair or replace if needed.
• Open valve to outside hose connection after all danger of frost has passed.
• Examine the foundation walls for cracks, leaks or signs of moisture, and repair as
  required.
• Ensure sump pump is operating properly before the spring thaw sets in. Ensure
  discharge pipe is connected and allows water to drain away from the foundation.
• Re-level any exterior steps or decks that moved as a result of frost or settling.
• Check for and seal off any holes in exterior cladding that could be an entry point for
  small pests, such as bats and squirrels.
• Clear all drainage ditches and culverts of debris.
• Repair and paint fences as necessary — allow wood fences to dry adequately
  before tackling this task.
• Undertake spring landscape maintenance and, if necessary, fertilize young trees

Good Luck

Calgary Real Estate Market Forecast & Predition

According to many real estate experts, the Canadian housing market is expected to stabilize in 2011 returning to more normal long-term growth patterns after a decade-long bull run.

The housing sector has avoided two extreme bubble-and-crash scenarios over the past three years when resale prices dropped sharply in 2008, then quickly rebounded as low mortgage rates and lower prices supported the turnaround.

Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer of 2010 as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.

In 2011, interest rates are expected to hike further as the economy improves. While still at historical lows, any hike in interest rates have big effects on mortgage rates. If interest rates are raised too quickly, this will further dampen real estate prices. On the other hand, if the government decides to lower the rates once again, as unlikely as this may seem, then home sales might surge slightly.

Government and institutional lending policies will also affect real estate prices. As banks and governmental policies become increasingly strict, more people will be turned down for mortgages. At the very least these potential home buyers will need to choose from more modest homes if their mortgage is declined.

In 2011, Canada will experience an overall decline of 0.9% in home prices. Not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others.

While real estate prices might remain fairly stable, buying activity is expected to slow down significantly. The Canadian Real Estate Association expects a 7.3% decline in home sales. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.

The drop-off in home sales comes from an anticipated slowing of economic growth along with a reduction in consumer spending. Less free floating capital means fewer large purchases.  Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.