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Bank of Canada lowers overnight rate target to 3/4 percent

by Stewart J Lowe and Anne M Lindsay

Bank of Canada lowers
overnight rate target to 3/4 percentllkkk

 

The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent. This decision is in response to the recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada.

Inflation has remained close to the 2 per cent target in recent quarters. Core inflation has been temporarily boosted by sector-specific factors and the pass-through effects of the lower Canadian dollar, which are offsetting dis-inflationary pressures from slack in the economy and competition in the retail sector. Total CPI inflation is starting to reflect the fall in oil prices.

Oil’s sharp decline in the past six months is expected to boost global economic growth, especially in the United States, while widening the divergences among economies. Persistent head winds from de-leveraging and lingering uncertainty will influence the extent to which some oil-importing countries benefit from lower prices. The Bank’s base-case projection assumes oil prices around US$60 per barrel. Prices are currently lower but our belief is that prices over the medium term are likely to be higher.

The oil price shock is occurring against a backdrop of solid and more broadly-based growth in Canada in recent quarters. Outside the energy sector, we are beginning to see the anticipated sequence of increased foreign demand, stronger exports, improved business confidence and investment, and employment growth. However, there is considerable uncertainty about the speed with which this sequence will evolve and how it will be affected by the drop in oil prices. Business investment in the energy-producing sector will decline. Canada’s weaker terms of trade will have an adverse impact on incomes and wealth, reducing domestic demand growth.

Although there is considerable uncertainty around the outlook, the Bank is projecting real GDP growth will slow to about 1 1/2 per cent and the output gap to widen in the first half of 2015. The negative impact of lower oil prices will gradually be mitigated by a stronger U.S. economy, a weaker Canadian dollar, and the Bank’s monetary policy response. The Bank expects Canada’s economy to gradually strengthen in the second half of this year, with real GDP growth averaging 2.1 per cent in 2015 and 2.4 per cent in 2016. The economy is expected to return to full capacity around the end of 2016, a little later than was expected in October.

Weaker oil prices will pull down the inflation profile. Total CPI inflation is projected to be temporarily below the inflation-control range during 2015, moving back up to target the following year. Underlying inflation will ease in the near term but then return gradually to 2 per cent over the projection horizon.

The oil price shock increases both downside risks to the inflation profile and financial stability risks. The Bank’s policy action is intended to provide insurance against these risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the Canadian economy back to full capacity and inflation to target within the projection horizon.

Contact me for more information on what this change could mean to you.

Information note:

The next scheduled date for announcing the overnight rate target is 4 March 2015. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 15 April 2015.

 

Al Nenshi

Mortgage Associate

403-540-3000

Alnenshimortgages.com

 

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CREB® forecasts price stability amid easing demand

by Stewart J Lowe and Anne M Lindsay

Housing sales are forecasted to ease by four per cent this year, due to market uncertainty and changes in economic climate, while prices are expected to remain relatively stable with a modest increase of 1.58 per cent on an annual basis, CREB® said today in its annual forecast.

Although sales levels are expected to ease, previously tight conditions throughout 2014 indicate that rising supply would push the market into more balanced conditions, supporting price stability in 2015. However, CREB® warns there are multiple risk factors attached to this forecast, which estimates a total of 24,503 homes will be sold in the city this year.

“The housing risks lie mainly with employment levels and net migration, both of which can be more severely impacted by a prolonged period of weakness in the energy sector,” said CREB® chief economist Ann-Marie Lurie. “There is also the impact that energy prices have on consumer confidence. If energy prices stay low throughout the year, concern regarding job stability could cause consumers to delay unnecessary changes regarding housing.”

The report notes that while sales activity is expected to ease in 2015, it remains consistent with long-term levels. By comparison, sales in 2014 were nearly 15 per cent higher than the long-term trends for the city.

“The economic situation is far better today than what is was in 2009, where the fallout of the financial crises resulted in a U.S. recession, weakness in energy sectors, a pullback in investment and ultimately job losses in Calgary,” said Lurie. “With economic indicators remaining more positive in this period, the pullback in housing is not expected to mirror activity during the 2009-2010 period.”

CREB®’s forecast also notes that housing activity can vary significantly depending on location, price range and property type. For example, in 2014, there were less detached homes within city limits available in the lower price ranges. This caused many consumers who were looking for lower priced product to move to the attached and apartment sectors within city limits as well as other surrounding areas. Many consumers turned to the larger surrounding areas of Airdrie, Cochrane, Okotkoks and Chestermere, which all recorded record levels of sales in 2014.

“With more supply in the market expected this year, buyers will likely have more alternatives in all price ranges,” said 2015 CREB® president Corinne Lyall. “It’s a nice scenario for buyers, but it also means that Home selling guide will likely have to adjust their price expectations and be realistic about the amount of time their home will be on the market.” 

“A REALTOR® can help navigate market conditions and real estate options, which are always unique to each consumer,” said Lyall. “While challenges in the market can raise concerns for buyers and sellers, it really comes down to their personal situation and knowing what’s right for them. Real estate is truly local.”

For the entire CREB® forecast, visit: creb.com.

 

Nearly 40 % spike in million dollar homes over last year

by Stewart J Lowe and Anne M Lindsay

Nearly 40 per cent spike in million dollar homes over last year!

There are nearly 40 per cent more millionaire homeowners in the city in 2015 compared to last — at least, if you don’t count what’s left on their mortgages.


According to newly released city assessment figures, 14,207 single-home properties across Calgary were assessed at $1 million or more, a whopping 39 per cent spike from last year’s total of 10,227.
And still holding the crown for the city’s most highly valued property at a colossal $19.6 million is the now-famous home of Alfred Balm on Pump Hill Close S.W., a massive 91-room, 15,450-square-foot mansion.


Joining the list of the top five most valued properties are some newcomers, listed in both mature, inner-city communities as well as newly built, exclusive suburbs. Taking a somewhat-distant second-place is a home on Aspen Ridge Heights S.W. in the new community of Aspen Estates, assessed at $11.2 million.


Third place is on Crescent Road N.W. atop the city’s historic Crescent Heights ridge looking out onto the downtown, assessed at $10.3 million. And fourth and fifth place are also inner city properties, with homes on 4th Street S.W. assessed at $8.7 million and 7th Street S.W. assessed at $8.32 million.
But while the total number of million-dollar homes has spiked, individual values have come down in some cases, including the Balm residence which was assessed at $19.7 million last year and as high as $22 million back in 2008.


“Lots of people can play in the $500,000 market, but only a few can play in the $2-million-plus range, so you’re going to see a lot more volatility in those higher-priced properties,” said city assessor Nelson Karpa.
Felicia Mutheardy, prairies and territories spokeswoman for Canada Mortgage and Housing Corp., says she’s not surprised to see such a huge jump in million-dollar homes over the last year, with Calgary’s growth continuing to surge, including demand for new homes and new home starts.

As well, Calgary’s employment sector continued to see success over the last year, with high employment rates at high salaries.

In fact, between January and November of last year, Calgary’s weekly average earnings were $1,102, significantly higher than the national average of $922.
But with plummeting oil prices in the last few months, she admits the next several months could be extremely unpredictable for Calgary real estate.
“These numbers were seeing came from last year, when we were still looking at oil above $90 a barrel.
“We were still expecting employment growth to come down somewhat this year due to labour shortages, but now with oil prices so low, it could pose a downturn risk in housing.”
Mutheardy added, just because someone owns a million-dollar home isn’t a guarantee that they in fact are millionaires.
“You could just be looking to move up, capitalizing on equity gains, but it’s hard to tell really what your financial situation is in terms of total equity and salary.”

Last year’s figure of 10,227 million-dollar homes is also up from the previous year of 2013, when 9,001 single-family homes were assessed at $1 million or more. That compared to 7,997 in 2012 was a 13 per cent increase.

The previous record of 8,262 homes was set in the early part of 2008, just before the economic collapse later that year.

This year, two more communities, Mayfair and Scarboro were also added to the list of nine neighbourhoods where the typical house is assessed at $1 million or higher.


eferguson@calgaryherald.com

 

CMHC

by Stewart J Lowe and Anne M Lindsay

By Jamie Henry | 08 Jan 2015

First time buyers have something of a mountain to climb these days with price increases pushing the amount needed for a down payment higher during last year. Despite low interest rates it is still a daunting prospect to take on a home loan of the size required for some starter homes; in Toronto it could mean a $500,000 loan for even a modest property. That said, home ownership is still the aspiration of most and experts say that it is still a good option. Dana Senagama of CMHC told CBC that the market is set to remain strong while interest rates are low and houses will still be a hot commodity especially in Calgary, Toronto & Vancouver. Immigrants are an important driver of the housing market she says, with those that have been in Canada for a few years looking to own their own home.  

 

Calgary Luxury Homes

by Stewart J Lowe and Anne M Lindsay

More Rural Luxury Homes in Bearspaw & Springbank are due to come on the MLS in the next few weeks as the 2015 market begins . Watch this space!

Recent article in buzzbuzzhome.com extract for Calgary

Of Calgary’s 836 luxury home sales in 2014, the townhome segment experienced the strongest percentage sales gains, with transactions up 49 per cent compared to 2013. For the luxury condo market, there were actually 22 per cent fewer units sold in 2014 compared to 2013 due to limited inventory. However, single-family high-end home sales were up 14 per cent year-over-year. Going forward, the report notes that recent uncertainty in the oil market may impact Calgary’s luxury home market, however, “the degree of influence is still unknown.”

 

JUST SOLD: 136 HAMPSTEAD CIRCLE NW

by Stewart J Lowe and Anne M Lindsay

Just sold in the North West. We represented the seller. Listed at $589,500

CMHC Where Canada's resale housing market is headed in 2015 & 2016

by Stewart J Lowe and Anne M Lindsay


 

The CMHC does not think resale home prices in Canada’s major cities are about to drop any time soon. Looking into the fourth quarter Housing Market Outlook reports, the agency’s MLS price predictions for the remainder of 2014, as well as 2015 and 2016 are almost entirely on the upward trend.

We took a look at the forecasts from coast-to-coast, focusing on 14 major census metropolitan areas, and found that Fredericton was the only the metro where a price dip was predicted. It’s believed MLS prices in the New Brunswick capital will edge down 0.6 per cent between 2014 and 2015 and a further 0.8 per cent from 2015 and 2016, respectively.

On the flip side, CMHC doesn’t see price growth in Toronto slowing down soon. The agency expects the average MLS price for a Toronto home to hit $558,000 by end of year, a 6.5 per cent increase from 2013. But going into the future, the increases aren’t expected to keep up that pace. Between 2014 and 2015, the price increase is expected to be 2.2 per cent and a more modest 1.8 per cent from 2015 to 2016.

The sales predictions are more varied with Vancouver, Calgary, Victoria and Saskatoon seeing significant growth between this year and last. The CMHC was conservative in their estimates for future sales, forecasting lower levels of sales, even in hot markets in the Prairies in the years to come.

The CMHC doesn’t think resale home prices in Canada’s major cities are about to drop any time soon. Looking into the fourth quarter Housing Market Outlook reports, the agency’s MLS price predictions for the remainder of 2014, as well as 2015 and 2016 are almost entirely on the upward trend.

We took a look at the forecasts from coast-to-coast, focusing on 14 major census metropolitan areas, and found that Fredericton was the only the metro where a price dip was predicted. It’s believed MLS prices in the New Brunswick capital will edge down 0.6 per cent between 2014 and 2015 and a further 0.8 per cent from 2015 and 2016, respectively.

On the flip side, CMHC doesn’t see price growth in Toronto slowing down soon. The agency expects the average MLS price for a Toronto home to hit $558,000 by end of year, a 6.5 per cent increase from 2013. But going into the future, the increases aren’t expected to keep up that pace. Between 2014 and 2015, the price increase is expected to be 2.2 per cent and a more modest 1.8 per cent from 2015 to 2016.

The sales predictions are more varied with Vancouver, Calgary, Victoria and Saskatoon seeing significant growth between this year and last. The CMHC was conservative in their estimates for future sales, forecasting lower levels of sales, even in hot markets in the Prairies in the years to come.

Source: http://news.buzzbuzzhome.com/2014/11/canadas-resale-housing-market-predictions.html

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Displaying blog entries 1-7 of 7

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Photo of Stu Lowe & Lora Greco Real Estate
Stu Lowe & Lora Greco
Real Estate Professionals Inc
202 5403 Crowchild Trail
Calgary AB T3B 4Z1
Direct: 403-850-0669
403.512.1316
Fax: (403) 476-7608

Presented by Stu Lowe & Lora Greco. Licensed Realtors at Real Estate Professionals Inc