US – All Commercial Real Estate Sectors Continue to Improve, Multifamily Strong

May 31, 2012

Shaking off a prolonged impact from the recession, fundamentals are gradually improving in all of the major commercial real estate sectors, according to the National Association of Realtors(R) quarterly commercial real estate forecast. The apartment rental sector has fully recovered and is growing.

Lawrence Yun, NAR chief economist, said new jobs are the key. “Ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending,” he said. “The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth.”

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US – Single Family Case-Shiller home prices decline 2% in Q1 to new post-crisis lows

May 31, 2012

Home prices nationwide continued to decline in the first quarter of 2012, but at a moderate pace, according to the latest Standard & Poor’s/Case-Shiller Home Price Indices. S&P called the drop in prices as hitting “new post-crisis lows.”

The national composite index fell 2% over the fourth quarter in Q1 and 1.9% from the year earlier period, S&P said. The 10- and 20-city composite indexes had annual returns of -2.8% and -2.6%, respectively, for the month of March.

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US – Fitch predicts single family housing bottom in 2013

May 31, 2012

U.S. home prices could drop another 7.8% before reaching bottom next year, Fitch Ratings said in a report released Thursday.   States like Arizona and Michigan, which were hit with hefty price declines, are starting to see a turnaround, Fitch asserted.

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US – Commercial Loans (CMBS)

May 31, 2012

Roughly 45% of the commercial loans originated between 2005 and 2008 will likely not qualify for refinancing at their maturity in the next year, said Richard Parkus, who heads CMBS research at Morgan Stanley. He said that could reach higher than 50% as more loans mature in 2015 and beyond.

Both Merriam and Parkus sparred with CMBS special servicers while on a panel at the Mortgage Bankers Association commercial real estate and technology conference Tuesday. The issue was that as more of the loans will transfer from the master servicer to the special servicer, investors want more disclosure from the new special servicer about any potential conflicts of interest.

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Alberta economic snapshot for May 2012

May 31, 2012

Canadians in other provinces may have noticed a bit of sticker shock in April, but shoppers in Alberta were more likely to notice some price relief – especially for energy.

The annual rate of inflation (as measured by the Consumer Price Index) was a mere increase of 0.8 per cent last month in Alberta. That was by far the lowest rate of price increase across the country, and the lowest consumers in the province have seen since the depths of the recession in late 2010.

Canadian consumers overall saw general prices rise by 2.0 per cent year-over-year, up a bit from 1.9 per cent in March. The Bank of Canada’s core index – which strips out of the basket the eight items with the most price volatility – rose by 2.1 per cent.

Alberta’s dropping rate of inflation is not a reflection of weakening consumer demand or a slowing economy. The lower pace of inflation was driven almost entirely by a 27.7 per cent drop in natural gas prices and a 19.4 decrease in the price of electricity. These two items had been responsible for most of the inflation the province had seen in previous months. On the other hand, year-over-year prices for fresh fruit rose 9.6 per cent, auto insurance premiums rose 6.4 per cent and personal health and grooming products rose 5.1 per cent.

The modest increase in the national rate of inflation should do nothing to impact the Bank of Canada’s longer term view on the economy, nor will it prompt the Bank to accelerate its intentions to raise interest rates. The Bank’s target for overall inflation is 2.0 per cent – precisely the rate in April.


The Canadian Real Estate Association (CREA) released April’s resale housing statistics this week. After rising relatively rapidly over the last couple years, the pace of growth has declined significantly. National average statistics edged up 0.9 per cent in April relative to a year ago, hitting $376,000.

The data reflects an important regional dimension. The year over year increase in Saskatchewan, Newfoundland and Nova Scotia jumped over 10 per cent, but British Columbia’s housing market looks to have cooled considerably, where prices dipped 11 per cent. It should be highlighted that because of the high average price of real estate in B.C. that even a small percentage change represents a very significant amount of money (the 11 per cent drop represents $65,000, for example).

U.S. inflation

The Bureau of Labor Statistics released consumer price data for April 2012 this week. It indicates that inflation remains well contained, coming at 2.3 per cent in April, which is the lowest annual increase since February 2011. Energy prices appeared to be falling, relative to previous months, causing the rate of inflation to decline.

The relatively tame inflation numbers will leave the Federal Reserve with some room to increase monetary stimulus if the economic recovery falters – something that was alluded to in the minutes of April’s rate setting meeting.

U.S. housing

Two important indicators for the United States housing market were released this week: housing starts and the National Association of Home Builders (NAHB) Housing Market index. Both numbers came in better than expected.

Housing starts for April came in at 717,000, up 2.6 per cent from last month’s revised 699,000 figure. This is the highest recorded number since the end of 2008, but a far cry from the 2,000,000 annualized peak that Americans were building at the height of the building frenzy.

The reading from the NAHB housing market index was extremely optimistic, coming in at the strongest level since May 2007. The index is constructed from a survey that asks builders whether their sales expectations of single family homes was good, fair or poor and whether buyer traffic was high, average or low. The index is a forward looking index, meaning builders expect housing starts to rise higher over the coming months.


Natural gas prices have plunged recently, dipping below $2/btu, but the price has since come back somewhat, hitting $2.63/btu this week. What’s interesting to note is how unstable the price uncertainty is with respect to the future path of natural gas prices.

According to the short-term energy outlook from the Energy Information Administration (EIA) in the United States, natural gas prices aren’t expected to top $4/btu before 2014. The EIA used volatility in the market for the contracts that are paid for future delivery of the commodity (out to 2014) to construct a confidence interval. That is to say, the price is still pretty fluid for the commodity and there’s certainly a high probability for surprises to the upside as well as down.

Foreigners reducing Canadian debt

According to Statistics Canada, non-residents reduced their holdings of Canadian financial assets slightly in March by $2 billion. The decline was not in keeping with recent trends. Since March of last year, non-residents have purchased $50 billion worth of bonds, $15 billion worth of stocks and put $23 billion in Canadian money-markets – meaning foreigners have put a collective $87 billion into Canada.

Canadians, on the other hand, increased their holdings of foreign financial assets by $7 billion in March. Over the year, however, Canadians have been far less aggressive in buying foreign assets than the reverse – buying $20 billion in foreign assets, almost all of which being made up of foreign stocks.

Source: Troy Media

Canada Currency Tumbles As Europe Crisis Overshadows Data

May 31, 2012

Canada’s dollar dropped the most since November, falling for a third straight week as concern Europe’s debt crisis will worsen overshadowed government data showing inflation and factory sales rose more than forecast.

The currency touched a four-month low versus its U.S. counterpart, which rose against all of its 16 most-traded peers except the yen on demand for safety. Commodities dropped.

“Canadian metrics are very positive — employment, housing, inflation — but these external headwinds are far too great,” Dean Popplewell, chief strategist in Toronto at the online currency-trading firm Oanda Corp., said in a telephone interview yesterday. “It’s having a compounding effect on all high-yielding, commodity-sensitive currencies.”

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Canada March building permits surge, housing cools

May 29, 2012

The value of Canadian building permits unexpectedly climbed in March even while plans for home building softened for the third straight month, Statistics Canada reported on Monday, likely calming nerves among policymakers troubled by soaring property prices and debt.

Building permits issued by municipalities jumped 4.7 percent from February t o C$6.5 billion ($6.5 billion), confounding market expectations of a 2.8 percent decline.  The increase followed a 7.6 percent gain in February, according to revised figures.

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