Financial Post – Mark Carney’s Comments

October 27, 2009

OTTAWA – “Consumer demand is going to be at the heart of this recovery,” Carney said at a news conference in Ottawa on Thursday following the release of the bank’s quarterly monetary policy report.

Carney foresees consumer spending expanding considerably, helping to lift the economy from the depths of the recession in the second half of this year and fuelling growth of three and 3.3 per cent in 2010 and 2011, respectively.  The housing market has been a central facet of this domestic recovery, as record low borrowing costs have driven a strong resale market. Carney acknowledged that dynamic has “raised some concerns” at the central bank, although he resisted attempts to label it a possible bubble.

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Resales of Canadian Homes up 18 Percent in Third Quarter

October 18, 2009

The Canadian Real Estate Association says sales of existing homes during the third quarter were among the strongest on record.  National home resales through the Multiple Listing Service owned by Canada’s realtors totalled 135,182 in the third quarter of 2009, up 18 per cent from a year earlier and the most of any third quarter on record.

It was also the biggest year-over-year gain since early 2002 – another sign that the Canadian housing market is quickly returning to health. The seasonally adjusted number was 127,941 homes resold, up 12 per cent from the second quarter and 48 per cent higher than the fourth quarter of 2008.

Association president Dale Ripplinger attributed the strong quarter to low interest rates and improved consumer confidence, which bought more buyers into the market.

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Consumer Confidence in Canada is on the Rise

October 18, 2009

The Conference Board says consumer confidence in Canada is on the rise, increasing for the seventh straight month in September. The monthly survey finds confidence rising in many of the key indicators, including sentiments among Canadians about their finances, job prospects and about their ability to make big purchases.

The index rose 2.5 points to 90.9 out of 100, the seventh consecutive monthly bump, something that has not happened since 2002.

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Canada Aug new home prices up less than expected

October 18, 2009

New house prices in Canada were higher for a second straight month in August, though not by as much as expected, showing a small sign of fragility among recently robust housing market indicators.

Statistics Canada said on Tuesday that prices for new homes rose 0.1 percent from July, just shy of the 0.2 percent climb expected by analysts surveyed by Reuters. The report on new home pricing is a small blip among other data portraying a recovery in the housing market, helped by rock-bottom interest rates and confidence-boosting signs of an economic rebound. Canada’s housing market has slumped during the recession but did not undergo a U.S.-style crash.

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2.5% Bank Rate by 2011: Economist

October 12, 2009

The rate is now at 0.25 per cent and the central bank has said it will likely stay there until the spring of 2010. Helmut Pastrick, chief economist with Central 1, told CBC News the recovery remains on track, with only occasional data suggesting a setback.

He looked at gains in U.S. housing, manufacturing and government stimulus and predicted the next report on U.S. Gross Domestic Product will show the American economy started growing again this fall, perhaps by as much as four per cent, for the first time in more than a year.

“The general direction of the North American economy is on an improving trend,” Pastrick said. “We can certainly expect industrial production in the U.S. and in Canada to continue to increase in September and October.

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Housing Starts Fall But Beat Forecasts

October 12, 2009

Canadian housing starts fell 4.6 percent in September from August but came in ahead of expectations, increasing optimism that the economy is pulling out of recession.

Canada Mortgage and Housing Corp (CMHC) said on Thursday that housing starts fell in September to a seasonally adjusted annualized rate of 150,100 from an upwardly revised 157,300 in August. The original August figure was 150,400. The number of starts in September topped the consensus forecast of analysts for 148,000 starts.

“In a broader sense, Canadian homebuilding activity is clearly beyond the worst depths of this past spring and in trend recovery mode,” Scotia Capital economists Derek Holt and Karen Cordes said in a note.

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TD Economic Report – Real Estate Comes Roaring Back

October 8, 2009

The performance of Canada’s real estate markets during the economic downturn has been remarkable. In the second half of 2008, there was a dramatic pullback in sales that led to a retreat in prices. However, the weakness proved surprisingly short lived. By the Spring of 2009, there were already signs that activity was coming back to life. This is particularly impressive, as it coincided with a deep economic contraction – accompanied by significant job losses, rising unemployment and weaker personal income growth.

The Bank of Canada’s unprecedented easing of monetary policy in response to the financial crisis set the stage for record low mortgage rates, which when combined with falling home prices, fuelled a sharp improvement in home affordability. Once people realized that the economic downturn was going to be ‘just’ a severe recession, and not a repeat of the 1930s, individuals who felt that their job was secure jumped back into the real estate market to take advantage of mortgage rates that were perceived as ‘too good to last’. At the same time, the Canadian banking system weathered the financial turmoil quite well, with the result that mortgages were accessible to the pool of buyers entering the market. The surge in sales far outpaced listings, supporting a rebound in prices. The Canadian Real Estate Association (CREA) estimate of national homes sales was up 18.5% year-over-year in August and national average home prices had increased 11.3% year-over-year.
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