Friday, September 10, 2010

Weekend Post

Some thoughts on key events and reports of the last couple days:

Bank of Canada Raises Rates

These rates hikes were mostly symbolic to continue the narrative that "Canada rulz" as opposed to meeting inflation targets. Given these recent hikes, current low level of inflation, unwinding fiscal stimulus and weakening housing market I think the BoC will be under their 2% mandate for awhile.

inflation table

RBC Affordability

Carrying costs in Calgary appear reasonable in RBC's housing affordability report. It is important to note this report looks at monthly payments so the 5-year fixed rate being at historic lows masks absolute price level. However, local affordability is benefiting from a more modest price bounce compared to other centers and continued wage growth.

Although the report downplays the risk of a crash it's not exactly a strong reassurance.
While we agree that housing prices are currently historically elevated, we do not believe that any major slump will necessarily ensue.
Canada Mortgage Trends, report

Labour Market Survey

Another mixed report. While employment increased by 36,000 the unemployment rate also increased as more people entered the workforce.
  • Good news: Full time up 80,000, part time down 44,000.
  • Bad news: Private sector employment down 40,000 while public sector up 58,000 and self employment up 18,000.
  • Statistical glitch - Last month there was a reported loss of 65,000 in educational services while this month there was a gain of 68,000.
Statscan report

Edmonton New Construction Update

More single family homes being built in the face of a weak resale market. A glut is forming in this segment as an increasing level of construction will not be easily absorbed.

Edmonton Real Estate Blog - report

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