15 Nov

October Homes Sales Edged Up in Canada, But Declined Again in Vancouver.

General

Posted by: Anne Martin

 

House hunting

The Canadian Real Estate Association released its national real estate stats for October which showed increases in home sales, new listings and prices. Most provinces and major cities enjoyed these increases except for Vancouver which is seeing decreases due to the new tax on foreign buyers.

It is too soon to tell if the tightening of mortgage rules by the finance minister has had any affect in slowing price increases and sales rates.

A slowing of price points in areas where there have been heavy increases in previous years is considered a good thing because it will positively impact affordability which will encourage more sales and stimulation of the economy.

The Canadian five year government bond yield has risen and we are already seeing increases in interest rates. This may also be caused by the federal government resent changes which affected how mortgage lending institutions secure their mortgage investments.  These lenders are now sourcing new methods of securing their portfolios which are expected to cost the lender more who will in turn pass these costs on to borrowers.

First time buyers in Ontario got a boost with an increase in the First Time Homebuyer rebate.  Hopefully, this will help out some new home buyers.

In the meantime, many markets including Barrie are experiencing a sellers market driven by short supply of listings.  Many offers to purchase property are experiencing multiple offer situations.  

For more info. click on this article written by Dominion Lending Centres chief economist Dr. Sherry Cooper.  http://us7.campaign-archive1.com/?u=e22472ccf910e7bde7d3d0632&id=6ad4799db1&e=78effd522a

14 Nov

Land transfer tax rebate for first time buyers to double.

General

Posted by: Anne Martin

First Time Home Buyers Tax rebate

Finance Minister Charles Sousa announced that the first time home buyers land transfer tax rebate will be doubled to equal a maximum $4000.  

Land Transfer Tax is paid every time a home changes hands in many Canadian provinces.  In Ontario this tax is calculated by .5% of the first $55,000 of the purchase price, 1% from $55,000 to $250,000, 1.5% of the amount between $250,000 and $400,000 and 2% from $400,000 to $2 million.

Currently, a first time home buyer in Ontario will be rebated up to $2000 of the purchase price by the provincial government, however today, as per the announcement, new home buyers will be rebated up to $4000. So technically, if a home is purchased by a first time home buyer up to a purchase price of $368,000, they will not pay land transfer tax.

Will this make a huge difference for many first time buyers, maybe not if you are living in Toronto where prices are out of this world, but the rest of the province will see the benefit more readily. 

Please see the following government website for more info, the rebate amount has not been updated as yet. http://www.fin.gov.on.ca/en/refund/newhome/index.html

Read the following article in the Toronto Star for more info and watch the video for the announcement.

https://www.thestar.com/news/queenspark/2016/11/14/first-time-home-buyers-to-get-4000-land-transfer-rebate.html

4 Nov

Cdn employment rose in October but mostly because of part time work.

General

Posted by: Anne Martin

Canadian Jobs Blew Through Estimates, But Devil Is In the Details

Canadian Jobs Blew Through Estimates, But Devil Is In the Details
 
Canadian employment rose 44,000 (+0.2%) in October–much stronger than expected. But all of the gain was because of more part-time work, as full-time employment fell. The unemployment rate remained unchanged at 7.0% as more people joined the labour force. 

Compared to one year ago, the total number of hours worked was little changed and employment rose by 140,000 (+0.8%, mostly in part-time work (+124,000 or +3.6%). This will certainly keep the Bank of Canada from following the US Federal Reserve’s likely rate hike next month. Indeed, we cannot rule out the possibility of a BoC rate cut next year, although Governor Poloz would likely prefer to see fiscal stimulus do the heavy lifting, particularly given the concern about out-sized household debt levels. 

By industry sector, construction employment continued to enjoy gains, mostly in Ontario and Quebec–notably, not in BC. Manufacturing continued weak with payrolls down -0.4% last month and down -1.5% over the past year. Natural resource payrolls were up on the month, but still down a whopping -5.6% year-over-year, dragging down the overall goods producing sector of employment.

Job gains in the service sector were better, although still lacklustre. Leading the way in this sector last month were trade, educational services, and public and other services. 

Regionally, jobs were up in Ontario by 25,000 last month as the jobless rate fell two-tenths to 6.4%. In BC, employment rose by 15,000, but the unemployment rate increased 0.5 percentage points to 6.2% as more people entered the labour force. Nevertheless, BC still boasts the lowest jobless rate among the provinces. Year-over-year, job growth in BC was the strongest in the country at 2.4% (+56,000). Employment declined in Newfoundland and Labrador, taking the jobless rate up to 14.9%–the highest among the provinces (see table below).

Despite the strong headline number for employment growth, this report continues to reveal a Canadian economy that is underperforming. All of the gain was in part-time work, the manufacturing sector remains weak, and there is no indication of more than a modest pace of economic activity this year, in line with this week’s fiscal update.

Provincial Unemployment Rates in October In Descending Order (per cent)
(Previous months in brackets)

   — Newfoundland and Labrador    14.9 (13.6)
   — Prince Edward Island              11.7 (10.8)
   — New Brunswick                      10.0 (9.3)
   — Alberta                                  8.5 (8.5)
   — Nova Scotia                            7.6 (8.1)
   — Saskatchewan                          6.9 (6.8)
   — Quebec                                   6.8 (6.9)
   — Ontario                                    6.4 (6.6)
   — Manitoba                                  6.4 (6.4)  
   — British Columbia                        6.2 (5.7)

4 Days From Election and US Jobs Strengthen

Although the headline payrolls gain of 161,000 missed estimates slightly, the jobless rate fell back to 4.9%–the cycle low–and most notably, wage gains accelerated to 2.8% year-over-year, their strongest pace since the financial crisis. The prior two months’ jobs gain was revised upward by 44,000, another piece of good news. Most would argue that despite the continued long-term underemployment of some workers, the US economy is at or near full employment. The strengthening wage growth is an indication of this, and it will boost the Fed’s already-high probability of hiking rates in December.

There remains a challenge to fill highly skilled jobs. Workers have been in short supply for 13 consecutive months, according to the Institute for Supply Management survey of service-industry companies, which make up almost 90% of the US economy. 

On the disappointing side, however, was the fall in the labour force participation rate and the weakness in manufacturing employment. The number of part-time workers and the long-term unemployed remain higher than before the last recession. These disaffected workers are an important component of the Trump base of support. The US underemployment rate dropped to 9.5% in October from 9.7%, while the number of people working involuntarily less than full-time remained unchanged. An estimated 5.89 million American employees were among this group. 

Expect a Fed rate hike in December–the first one this year. The Fed last increased the overnight fed funds rate in December of 2015, and many had expected additional rate hikes this year. These were postponed repeatedly owing to weaker-than-expected GDP growth and low inflation. US inflation has edged up recently and the Fed signaled strongly earlier this week that a rate hike is likely when they meet next month.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca