Mark Herman’s
MARKet Update June, 2011
Now is a great time to buy; mortgage rates are back near all time lows & there is a “no
risk market” with stable prices and good inventory.
Highlights
•
Canadian economy is the strongest of the G7 and recovering. When the recovery takes hold, rates and prices are
expected to rise. Alberta will maintain the strongest economic growth in Canada and America.
•
Mortgage rate 110-year low was 3.60%, is now 3.79%. Variable is at Prime-.8%=3%-0.8%=2.3%. Wow.
•
5% down and 0% down still exist but for how long?
National Data Points
•
The OECD, a leading international think-tank, says Canada will lead
the G7 in economic growth. Canada is expected to grow because of
Western Canada’s resource sector and continued strength in the
housing market in most parts of the country.
•
Canada’s solid recovery has supported a recovery in the labour
market. Since July 2009, employment has increased by more than
460,000 jobs, more than offsetting all of the jobs lost during the
recession.
•
Real GDP growth is expected to remain moderate in the near term,
Canada is expected to continue to have the strongest growth in the
G7 according to IMF forecast of Jan 20, 2011.
•
Canada has had the highest growth in real income per capita of all
G7 countries (1999-2009).
•
Canada is on track to return to a balanced budget by 2015-2016.
Current federal deficit is only $55 billion.
•
Canadian household finances are not as terrible as
previously suggested and won’t hurt consumer spending
in 2011-BMO Capital Markets study. The negative focus
has purely been on household debt reaching a record level
of 140% of household income, but totally missed the fact
that family wealth has risen to 6 X disposable income.
Risks to the Global Outlook
•
The global recovery remains fragile with: uncertain
strength in advanced economies (USA), Japan’s
earthquake recovery, tensions in the Middle East, Libia
and Israel have lead to $100 oil.
•
High government debt levels in Greece, Portugal, Ireland
and Italy is concerning.
•
Global imbalances in trade continue and a strong
Canadian dollar make it difficult for exporters.
One of the Top-10 Brokers at Canada’s Largest Independent Mortgage Brokerage
Mortgage Alliance ••Mobile: 403-681-4376 • Secure e-Fax: 1-866-823-1279
Canada's recovery is forecast as the strongest of the G7.
Mark Herman’s
MARKet Update June, 2011
Alberta
•
Alberta recovers from its severe recession with real GDP
set to grow at 4.3% in 2011, says RBC Economics. In 2011,
RBC projects Alberta's economic growth will be second
only to Saskatchewan, the fastest growth seen since 2006,
due to the booming energy sector and increased job creation
which brought down the stubbornly high unemployment
rate.
•
"Improvements in the employment market help reverse the
out-migration to other provinces that earlier slowed
population growth to the lowest rate in 15 years," said
RBC. "These are the kinds of turnarounds that will spread
the recovery more widely throughout Alberta.”
•
Alberta's employment to lead the country with a rise of
2.3% in 2011, and creation of 37,000 jobs, the highest total
of new employment since 2007, which should ultimately
boost population growth. With interest in developing
Alberta's oil sands growing ever higher, the gush of capital
spending on megaprojects is expected to continue. (See the
first graphic on page 1.)
•
In 2012, the rising tide of energy-related spending will
keep the Alberta at the top of Canada's growth rankings.
Calgary Economy
•
"Calgary home prices rose at their fastest rate in more than
a year." Says an RBC study. "Firmer market conditions
and higher prices had only limited impact on Calgary's
affordability, which remains among the most attractive of
Canada's major cities." RBC's latest report said sales grew
for the 2nd consecutive period in the 1st quarter -the most
growth since the middle of 2009 -helping to remove
market slack.
•
Occupied office space in downtown Calgary has surpassed
the level reached during the height of the real estate
market 2008. Colliers International says occupied space
has reached 33.7 million sq ft. and the overall vacancy rate
has declined. “Oilsands companies continued to grow,
with numerous new projects on the horizon creating
additional office space requirements,” said the report.
“Most of the activity can be attributed to the strong oil
prices.”
One of the Top-10 Brokers at Canada’s Largest Independent Mortgage Brokerage
Mortgage Alliance ••Mobile: 403-681-4376 • Secure e-Fax: 1-866-823-1279
Homes are now as affordable as they were before the
boom in 2006 and similar to buying in 1988.
The dollar is expected to stay close to par with the US
Consumer confidence has returned and Canadians
are now spending at pre-recession levels after holding
onto funds during the recession.
Mark Herman’s
MARKet Update June, 2011
•
Calgary is #3 on a score card that ranks
prosperity in a number of cities around the
world, besting all other Canadian metros on
the list. Strong population growth, a young
workforce, disposable income, affordable
housing and clean air helped boost the city to
the #3 spot behind Paris and San Francisco.
The Conference Board of Canada compiled
results including commute time, income
equality, gross domestic product and
productivity — to compare 24 major cities.
“Calgary’s success comes from a combination
of solid fundamentals in both (economy and
labour attractiveness), not just from a robust
economy. With the fastest population growth
of all metros, Calgary proved that it was an
attractive place for people seeking work.
“Calgary’s housing affordability and clean air
provide further evidence of its livability.”
Mortgage Rates: Retracing back to previous long term averages
The graph above shows the Bank of Canada’s plans for interest rates. These rates are what banks borrow funds at,
consumer Prime is 2% above these rates. The graph shows an expcted 2% rise by the end of 2011.
Today the 5 year fixed is back near all-time lows, about 3.89%, and the variable is about Prime -.75%. Getting a pre-
approval to buy at these rates or re-mortgaging with other debt rolled into your mortgage would be a very smart move.
•
Mortgage rates are back at historic lows and holding until the recovery finds a stronger foot hold.
•
Expectation: fixed mortgage rates will begin to rise late-2011 to just over 6% by end of 2012.
•
5-year rate review: May ’08, 5 yr =7.25%, April ‘09 = 5.25%, June ‘10 = 4.39%, June ‘11 = 3.89%
The Mortgages are Marvellous Advantage
For Calgary houses, Calgary condominiums and other Calgary real estate , Contact Elizabeth Chalmers
- Calgary real estate agent and specialist in the buying and selling of Calgary condominiums.
©2004 Elizabeth Chalmers, Calgary real estate agent
ELIZABETH CHALMERS
YOUR REAL ESTATE AGENT WITH THE PERSONAL TOUCH
Sutton Group - Canwest
Calgary , Alberta, Canada
Office (403) 245-5248 Cell (403) 860-6234 Fax (403) 592-9420