Friday, November 28, 2008

I've got a new blog!!

Hi All,

I've got a new blog on my site that I will be updating on a regular basis.


Thursday, November 27, 2008

Open Houses are a powerful marketing tool for Vancouver Real Estate

Open Houses as a Real Estate Marketing Tool by Mike Stewart Downtown Vancouver Realtor By Mike Stewart
View in HD Download 480p Version Visit Mike Stewart's ExposureRoom Videos Page

This video is about the power of Open Houses as a Marketing Tool for Vancouver Real Estate. In the video I mention a listing I sold at 3005-111 West Georgia where a woman walked in and thought her brother would like to and how the brother came back and bought the place. I also mention 3307-193 Aquarius Mews which was a listing I sold to people who came into the open house.

I'd love to hear your comments!

Monday, November 24, 2008

Important Dates in a Real Estate Transaction Part II - The Video!

Important Dates in a Real Estate Transaction By Mike Stewart
View in HD Download 480p Version Visit Mike Stewart's ExposureRoom Videos Page

This video is a follow up to an earlier post of mine on the topic of Important Dates in a Real Estate Transaction. Those dates are the Acceptance Date, Subject Removal Date, the Completion Date, the Possession Date. I'd love to hear your comments!!

Thursday, July 10, 2008

Different Types of Wall Systems Used in Residential Condo Construction in Vancouver - Good for Understanding a Leaky Condo

Read this document on Scribd: Leaky

Hi All,

I have had this tacked to my the wall over my desk for about 6 months and I finally got around to uploading it.

This is a great reference for anyone who has had an building inspection done on an apartment they are buying and they don't understand what was told to them by their inspector or they are dealing with a leaky condo situation.

Should you have any questions about leaky condos or the different types of wall systems used please feel free to contact Mike Stewart

Mike Stewart
Century 21 In Town Realty
421 Pacific Street
Vancouver, BC
Office: 604-763-3136
Cell: 604-763-3136

All Greater Vancouver MLS Listings Updated Hourly at

Email Mike
Mike Stewart's Yaletown, Downtown, Coal Harbour, Gastown and The West End
Freesia Vancouver
1033 Marinaside Crescent Building Website
1067 Marinaside Crescent Building Website
Raffles on Robson 821 Cambie Street

Tuesday, July 08, 2008

CIBC says Canadian Dollar to Rise, High Dollar Means Lower Rates!

Hi All,

A little explanation. Every time the Canadian dollar increases vis a vis the US Dollar, everything we get from the US or priced in US dollars gets cheaper (Its a lot of what we consume). Every time prices go down, inflation goes down with it. Every time inflation goes down the Bank of Canada gets an opportunity to reduce rates. Also every increase in the US dollar makes Central Canadian exports to the US less competitive and gives the BoC another reason to reduce rates.

All of this is great for Vancouver real estate! For more information check out my Downtown Vancouver Real Estate Website, Freesia Vancouver, 1033 Marinaside Crescent Website, 1067 Marinaside Crescent Website, or the Raffles on Robson Website

Undervalued loonie set to rise, economists say

Globe and Mail Update

OTTAWA — The Canadian dollar is undervalued and poised to strengthen, two leading economists say.

“The loonie has ignored oil over $140 (U.S.), a telecom M&A deal go-ahead, and a Bank of Canada move from dovish to neutral,” said Avery Shenfeld, economist at CIBC World Markets. “But a likely delay in Fed tightening until post-election opens the door for a stronger Canadian dollar ahead.”

Similarly, Dale Orr, chief economist at Global Insight Canada, writes that there is no good reason for the dollar not to have followed the oil price higher.

“We conclude that appreciation of the Canadian dollar remains a response waiting to happen,” he said in a note to clients.

“With the price of oil recently being revised upwards, and the other fundamental determinants of the dollar either supporting appreciation or neutral, I believe the Canadian dollar, in the par range to the U.S. dollar, is undervalued.”

In the past few years, the relationship between the oil price and the dollar has been unshakable, until the past eight months, Mr. Orr pointed out.

“Since reaching par, the Canadian dollar has refused to follow the surging price of oil,” he said.

For a while, traders probably believed the rising oil price was a temporary spike, and so didn't bid up the loonie accordingly. But now, it's apparent that high-priced oil is more than a fleeting occurrence, Mr. Orr said. Global Insight, like other forecasters, has ratcheted up its projection for oil to average $131 a barrel this year.

Other factors that usually move the loonie don't really justify the currency's holding pattern either, Mr. Orr argued. Other commodity prices are also moving up, along with oil. And the gap between Canadian and U.S. interest rates is in Canada's favour.

Part of the reason that the loonie is treading water is because traders now favour Australia as a commodity-currency play instead of Canada, said Mr. Shenfeld. Australia looks more attractive than Canada right now because Australia has higher interest rates and is less exposed to U.S. economic weakness.

“Australia's currency gain has been all about high interest rates and capital inflows, while Canada's stagnant loonie has been held back by much lower interest rates and concerns over growth,” Mr. Shenfeld said. “Look for the Canadian dollar to recoup this lost ground in 2009, as the Aussie stalls on the end of [central bank] rate hikes, while Canada sees its central bank initiating its own tightening cycle.”

The Canadian dollar closed Monday at 98.15 cents (U.S.), up 0.11 cents on concerns about rising inflation.

Thursday, June 19, 2008

More Evidence Rates to Stabilise and then Rise

Hi All,

This is an interesting article on the Bank of Canada Governor's defense of his decision to not cut rates over the last few weeks. Like I mentioned in my earlier post on high fuel costs, higher fuel prices are beginning to pinch and the Bank of Canada sees inflation as a threat and that threat is dealt with by raising interest rates. The question is how much and when!

I'd love to hear your thoughts!

Carney defends decision on rates

Globe and Mail Update

CALGARY — Bank of Canada Governor Mark Carney says he needs to maintain a “relentless focus on inflation” during this period of soaring commodity prices to avoid a repeat of the painfully high inflation and unemployment that marred Canada's economy in the early 1980s.

In his first speech since the central bank abruptly switched direction last week and put a halt to the steep interest rate cuts of the past few months, Mr. Carney explained in detail why he could no longer justify adding stimulus to Canada's stagnant economy.

“In the face of the largest commodity price shock in our lifetimes, we cannot be complacent,” he said. “While commodity price shocks raise complex issues, a relentless focus on inflation clarifies policy decisions, makes communications easier and maximizes the likelihood that expectations will remain well anchored.”

Canada's economic activity contracted during the first quarter of 2008, and inflation has remained low and steady, despite soaring energy prices. In May, total inflation increased 2.2 per cent from a year earlier, but core inflation – which excludes the most volatile prices such as energy and some types of food, and is the focus of the bank's monetary policy – was a benign 1.5 per cent, Statistics Canada said Thursday.

The combination of a slowing economy and low inflation had led many economists to expect the central bank to continue cutting rates. The central bank has already lowered its key interest rate from 4.5 per cent to 3 per cent since December.

But Mr. Carney, speaking at a conference titled “Commodities, the Economy and Money” sponsored by the Haskayne School of Business at the University of Calgary, the Bank of Canada and The Globe and Mail, avoided the topic of low growth on Thursday. Instead, he reminded his audience that inflation-fighting is the single priority of the central bank.

During the 1970s, he said, central bankers made a major mistake in cutting interest rates too far to help consumers deal with rising oil prices. At the same time, governments boosted spending as if the extra revenues they were pulling in from high profits in the oil patch would last forever.

“The fallout from these errors in monetary and fiscal policy was severe,” Mr. Carney said. “The global recession of 1981-82 was, in large measure, the end result.”

Canadian inflation and unemployment soared to double digits by the early 1980s, and took years to unwind, he recalled.

Recently, the Canadian economy has been rocked by the U.S. slowdown and financial market turmoil, but the central bank now needs to focus on the effects of rising commodity prices on the Canadian economy, he said.

He pointed out that commodity prices have risen higher than expected – indeed, Mr. Carney had been predicting that they would fall. Since Canada is a major commodities producer, the higher prices will support domestic demand in Canada, as oil and gas revenues flood into the country.

Plus, global growth – and hence, global inflation – has been higher than expected, pushing up the cost of Canadian imports. At the same time, the anti-inflation shield provided in the past year by a rising Canadian dollar is eroding as the currency has stabilized.

And the effects of the credit crunch have improved significantly in Canada, Mr. Carney said.

“This evolution of the global economy and domestic demand was sufficient to alter the view” that Canada needed further rate cuts, the governor said, suggesting the central bank would keep rates on hold for now.

That means the commodities boom, which has been great for Canada, will continue to be beneficial, Mr. Carney argued.

“We are experiencing a commodity supercycle,” he said, during which commodity prices have risen further and stayed high longer than in previous booms.

“Above all, rising commodity prices have made Canada wealthier as a nation,” creating good jobs across Canada and boosting the country's income.

Many economists have argued that rising commodity prices have seriously harmed Central Canada's manufacturing base, and warn that Ontario is on the brink of a recession.

But Mr. Carney said the “stress and dislocation” caused by high commodity prices is unavoidable, and prompts economies to adapt to a more efficient allocation of resources.

The Governor hinted, however, that policy makers need to make sure they don't fritter away the proceeds of the boom, referring twice to a popular bumper sticker seen frequently in the oil patch 20 years ago that reads: “Dear Lord, give us another oil boom and we promise not to piss this one away.”

He predicted that energy prices would remain high, since demand in emerging markets is strong, and the supply response has been “disappointing.”

While commodity prices won't necessarily rise persistently, “this appears to be a durable relative price shift,” Mr. Carney said, adding that there is no clear-cut evidence that speculation is creating a commodities bubble.

But eventually, consumers will find cheaper alternatives, and production costs will come down through the adoption of new technologies.

“Demand and supply will adjust, particularly as prices are passed through.”

Rising Fuel Prices Focusses Bank of Canada on Inflation, Interest Rates to Hold or Rise

Hi All,

I filled up my car yesterday and was shocked to see premium fuel selling for $1.69!!!

That's huge! I usually don't worry about the fuel price as my predilection for high performance cars makes concerns futile, but I was shocked and the increase in fuel prices hit home.

The Bank of Canada pays attention to inflation and the increase in fuel prices has a huge knock on influence as everything we consume is moved by vehicles using fossil fuels. At some point the run up in fuel costs begin to bite and thats when the Bank of Canada is going to be forced to raise rates.

A rise in rates is not necessarily a good thing for Vancouver Real Estate in the short term, but high fuel prices are good for Vancouver Real Estate in the medium term.

This is the reason. High fuel prices focus peoples minds on the costs of less efficient forms of transportation (single occupant cars) and encourages them to use more efficient forms of transportation (walking, public transit, bikes, etc) OR even better encourages them to move into the City! So overall in the medium term (in the long term we are all dead) high fuel prices are good for Vancouver real estate and good for the environment.

Inflation rises to 2.2% in May

Globe and Mail Update

Soaring gasoline prices sent the Consumer Price Index in May to its sharpest monthly increase since January, 1991 – the month the goods and services tax was introduced in Canada.

Year over year, consumer prices rose 2.2 per cent in May, primarily because of higher gasoline prices, which were up 15 per cent from May, 2007, Statistics Canada said Thursday.

The increase exceeded expectations, “which gives a good idea why the Bank of Canada is suddenly becoming much more focused on headline inflation readings,” said Douglas Porter, deputy chief economist at the Bank of Montreal.

The core inflation rate, which strips out the most volatile items such as gasoline and is normally used by the Bank of Canada to monitor the inflation control target, rose 1.5 per cent between May, 2007, and May, 2008, identical to the 12-month increase posted in April.

“While core is still well below the bank's 2 per cent target, it's doubtful they will take much comfort from that fact, with rampaging energy prices clearly threatening broader inflationary expectations,” Mr. Porter said in a research note.

Many economists had been expecting a year-over-year increase of 1.9 per cent, up from 1.7 per cent in April, according to a Reuters poll.

Higher mortgage interest costs, higher house prices and higher food costs all contributed to the increase, Statscan reported.

Canadians paid 1.9 per cent more for store-bought food items, compared with the same month last year, up from the 0.9 per cent posted in April.

“Prices for bakery products increased 13.2 per cent, the fastest 12-month rise since October, 1981,” Statscan said.

The CPI, always a closely-watched economic measure, took on added significance Thursday in the wake of the Bank of Canada's decision last week to hold steady on interest rates because of concerns about inflation. The Bank of Canada said in a statement on June 10 that if current levels of energy prices persist, “total CPI inflation will rise above 3 per cent later this year.”

The central bank's stance has set off considerable debate among economists, who were expected to closely monitor a speech by Bank of Canada Governor Mark Carney on Thursday night in Calgary to gain some clearer insights into his thinking.

In a research note, Toronto-Dominion Bank economist Charmaine Buskas said energy prices clearly played a big role in pushing the overall inflation rate higher.

“Core prices, however, were in line with expectations, rising … 1.5 per cent year over year,” she wrote.

Mr. Porter said “there are signs that the persistent run-up in energy prices is beginning to spill into other goods, although gasoline is still the primary source of inflationary pressures…

“Given today's result, a 3 per cent [year over year] reading as early as June is not out of the question (as prices fell last June),” he wrote.

Wednesday, June 18, 2008

A video of 1199 Marinaside Crescent at the Corner of Davie Street by Mike Stewart Marinaside Realtor

Hi All,

Here is a video I shot today of the intersection of Davie Crescent and Marinaside Crescent when I was doing a showing at my new listing at 503-1199 Marinaside Crescent

Thursday, June 12, 2008

Bank of Canada says Canada's Fine in Global Credit Crunch

Hi All,

Here's more evidence that the sub-prime crisis will not have much effect on us here in Canada. You can thank Canada's regulated financial system system that didn't allow sub-prime mortgages and 100% financing for keeping us in good stead. Then again, is it really worth the years of sub-standard customer service from the big banks?

I'd love to hear your thoughts.

Consumers, banks to feel pinch

Globe and Mail Update

OTTAWA — The global credit crunch has not hampered credit growth in Canada, but banks and household finances will likely feel pinched in coming months, the central bank says in a new assessment.

Global credit markets are still under stress, and spreads won't recede much until well into next year, the Bank of Canada said in its twice-yearly Financial System Review, and both the banking system and consumers remain vulnerable.

“Although there has been some improvement in conditions over the past several weeks, strains in global credit markets have broadened since December,” the review said.

Canadian banks have generally remained solid throughout the past 10 months of turmoil, and are able to tap markets to finance their shortfalls. Plus, they have continued lending to Canadian borrowers, albeit with different types of credit instruments that generally cost borrowers more.

But bank balance sheets “may experience further pressure,” the review stated.

That's because banks in Canada are more exposed to U.S. assets than banks in any other country. And the United States continues to have significant problems, both in financial markets and in its economy.

So Canadian banks will likely see their profits squeezed further, the review warned. Revenues from investment banking will likely fall, since the lucrative securitization market is not functioning. Loan-loss provisions are on the rise. And the financial position of Canadian households and businesses outside the finance sector is deteriorating.

Indeed, Canadian consumers are increasing their household debt levels, and finding that debt more expensive to service, the review showed.

Debt as a proportion of income has climbed steadily for the past 20 years, and now, debt is 131 per cent of income, the review points out.

At the same time, higher mortgage rates have pushed up the cost of carrying a growing debt load. The debt-service ratio was 7.7 per cent at the end of 2007, compared with 7.3 per cent in the middle of last year, just before the credit crisis erupted.

And the number of vulnerable households, with very high debt-service ratios, has climbed recently.

As the housing market comes off its recent highs, Canadian households are poised to feel a bit poorer, especially in Western Canada, the review warned.

“With possible further decreases in financial asset prices and continued slowing in house price increases, the financial position of the Canadian household sector is likely to deteriorate going forward.”

Still, the Bank of Canada is not too concerned. Net worth rose 6.4 per cent in the second half of 2007. Loans in arrears are still at historically low levels. And the personal bankruptcy rate is stable.

“Aggregate indicators of household financial stress continue to suggest that the Canadian household sector is in good financial health,” the bank says.

Consumers and banks are well positioned to handle a bit of deterioration, the central bank said, but their mild discomfort will quickly become intense pain if the U.S. downturn turns into a protracted recession.

That probably won't happen, the bank added, but if it does, the implications for Canada are major.

A long U.S. recession would bite into financial market liquidity again, and force another round of de-leveraging, as well as a “sharp” drop in the U.S. dollar. The effects would spill over into the rest of the world through trade and through financial markets. Commodity prices would be vulnerable.

For Canada, this scenario would mean lower profits for exporters and a spill-over effect on the broader Canadian economy. Banks would have to take further writedowns, while their loan losses would rise, and their capital ratios would be hard hit.

Credit conditions for Canadian businesses and consumers would tighten significantly, defaults would rise, and consumer wealth would drop, especially in the West.

“While the probably of such outcomes materializing is relatively low, they nonetheless warrant careful consideration by financial institutions because of the potentially large negative repercussions,” the central bank said.

Wednesday, June 11, 2008

Inflationary Pressures not as great as Bank Of Canada fears

For those of you on variable mortgages, looks like your payments are going to go down some more over the next year. The Bank of Canada uses Inflation to make its rate decisions and most commentators are suggesting Inflation should continue to stay low. This is good for Vancouver Real Estate. BC and Vancouver's economy is still in good shape from high natural resources prices and with rates coming down, look for more fuel for Vancouver's real estate market.

Inflation? New reports suggest otherwise

Globe and Mail Update

OTTAWA — Inflation? What inflation?

A day after the Bank of Canada said it would no longer be cutting its key interest rate because it was bracing for significant inflationary pressure, two new indicators released Wednesday suggest that what little heat there was in the Canadian economy is actually abating.

The new housing price index, which feeds into the much-watched consumer price index, slid significantly in April. Prices for new homes rose 5.2 per cent between April 2007 and April 2008, the slowest pace in more than two and a half years.

And more slack opened up in the industrial sector in the first quarter too. Industries were operating at just 79.8 per cent of full capacity during the first three months of the year, marking the lowest level in 15 years.

“Disinflation evidence shines through in two Canadian releases today that shed doubt on inflation fears in Canada,” said Derek Holt, economist at Bank of Nova Scotia.

He thinks the central bank will have to reconsider its decision to end its rate cuts. Since inflation is not much of a threat in Canada and the economy seems to be weakening, the Bank of Canada will have to return with more cuts later this year, he said.

The slide in the new housing price index is more proof that the housing market is cooling off in Canada, economists said.

“The report adds to the growing body of evidence that indicates that the Canadian housing sector may be coming off the boil,” said Millan Mulraine, economics strategist at TD Securities.

And the cutback in capacity use in the industrial sector is “further evidence of the retrenchment in economic activity in Canada,” he added.

But Tuesday, the Bank of Canada said it had already done enough to help the stagnant economy, and was now joining the rest of the world in focusing instead on keeping inflation under control.

The central bank aims to keep inflation at a 2 per cent pace, but price increases have been running below that level lately. In April, total annual inflation was 1.7 per cent and core inflation, which excludes volatile prices, was 1.5 per cent.

The Bank of Canada normally pays more attention to core prices, which it has said will remain below 2 per cent for the long term. But it is clear that the central bank has now switched to focus more on total inflation and is worried about the effect of soaring energy prices.

The bank warned that if energy prices stay high, total inflation will rise to about 3 per cent.

Plus, in a separate report, Bank of Montreal is warning that the disinflationary pressure from the strong dollar appears to be coming to an end. The strong dollar has prompted some retailers to cut the prices on some imported goods, especially cars.

But other prices don't appear to be falling to reflect a cheaper import price.

“Looking at a broad basket of items, we find that while there has been some movement in the past year, the price gap remains extraordinarily large, and there are plenty of signs to suggest that the bulk of the discounting is over,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. “In other words, without further pressure, this may be as good as it gets for Canadian shoppers.”

Wednesday, June 04, 2008

OECD Says No Recession for Canada and Hint at Rate Cuts - All Good News for Vancouver Real Estate

Hi All,

There has been some recent economic news using the word recession in relation to Canada. Thank god Canada is not Ontario and Quebec! We here in BC and the West in general will continue to thrive from high natural resource prices and this should keep the Vancouver real estate market in good shape.

Have a look at this article about an OECD report on Canada. It says that Canada WILL NOT go into recession and that the Bank of Canada will be reducing rates which is great news for us involved in the Vancouver real estate market. Like I have said in previous posts, interest rate cuts caused by economic weakness in Central Canada is fuel to the fire for Western Canada's economy already roaring from high resource prices.

I'd love to hear your thoughts!

Continue to cut rates, OECD tells Carney

Globe and Mail Update

OTTAWA — Canada will avoid a recession, but the federal government may dip into deficit, and the central bank needs to continue cutting interest rates to fend off a protracted slowdown, the Organization for Economic Co-operation and Development says.

Faltering exports and trouble in the manufacturing sector have already pushed the pace of Canadian economic growth down significantly, and the economy won't recover until a year from now because the U.S. slowdown is expected to persist, the OECD said in its economic outlook Wednesday.

“But no recession is expected,” the organization stated.

Canada's economy shrank 0.3 per cent in the first quarter, at annualized rates, the first quarterly contraction in five years. Many economists have warned that the second quarter could be equally as weak.

The popular definition of a recession is two consecutive quarters of economic decline, but economists hesitate to describe Canada's economy as recessionary, since the contraction has been slight so far, and job growth remains solid.

The OECD projected growth of 1.2 per cent for 2008, and 2 per cent for 2009. The projections are close to the average projection of private-sector economists.

Still, the economy is weak enough to warrant more rate cuts by the Bank of Canada, the OECD said.

“The monetary policy easing that started in late 2007 needs to continue in order to offset the likely protracted slowdown in the U.S. economy, the impact of the currency appreciation as well as the consequences of financial-sector stresses in the real economy,” the outlook stated.

It's not clear the Bank of Canada will follow that advice. Governor Mark Carney has hinted lately that the aggressive pace of rate cuts that marked the beginning of this year has come to an end, and he now has a wary eye on inflationary pressure.

Economists expect a small rate cut of a quarter of a percentage point next week, but aren't sure where Mr. Carney will head after that.

The OECD also warned Canada's current account will “dip deeper into deficit” mainly because of falling exports.

But economists in Canada are not worried about the current account. Canada initially recorded a small deficit in the fourth quarter of last year, but it was revised away last week. And now, with oil and gas prices soaring, Canada is in solid surplus territory again.

The OECD assumes an average oil price of $120 (U.S.) a barrel - in line with many other economic forecasts.

The OECD also warned Ottawa “may show a small deficit,” as tax cuts and taxes paid by struggling business eat into government revenue.

“Governments will need to hold the line on spending to keep their budgets close to balance,” the outlook states.

But again, economists in Canada don't see the fiscal situation unfolding that way. While output in Canada has stagnated, high oil and gas prices are bringing huge amounts of money into the country, pumping up corporate profits and income.

Nominal gross domestic product is strong, and that's the base Ottawa uses for taxation.

Plus, Ottawa's auction of wireless spectrum this week is bringing the federal government more than $2.5-billion, money that was not included in the last budget, and surpassing the government's internal projections.

At least one economist read the OECD recommendations as a hint of what the Bank of Canada will do next, since the OECD outlook is put together after extensive consultation with government officials.

Ted Carmichael, chief economist at J.P. Morgan Canada said the OECD comments “should be viewed as an indication that policy-makers continue to see further cuts in the policy rate as necessary to offset the strong headwinds provided by the expected protracted U.S. slowdown, previous Canadian dollar appreciation, and the continuing impact of credit market distress.”

The OECD report urges central bankers to put more weight on the slowing economy than on inflationary pressure, Mr. Carmichael said. And the OECD outlook “is usually a view that conforms with the official policy consensus in Ottawa.”

The OECD is essentially recommending that the Bank of Canada cut rates by as much as 75 basis points in the months ahead, added Stewart Hall, economic strategist at HSBC Canada. That's on top of the 150 basis points in cuts already undertaken since December.

(A basis point is one one-hundredth of a percentage point.)

Markets, however, are only pricing in a rate cut of 25 basis points next week, and not much action beyond that, Mr. Hall said.

Tuesday, June 03, 2008

The Importance of Proper Pricing in Today's Vancouver Real Estate Market

Hi All,

The Downtown Vancouver Real Estate Market is changing. This time last year there was so much demand and so many buyers, a very nice over priced listing would get offers that would eventually cause the listing to sell at or near market value.

Today the situation is different. There are 25% more listings and the same amount if not less buyers. This added competition for buyers means over-priced listings that are quite nice will sit on the market and will not get offers.

There are many buyers out there that don't realise that price is negotiable (really) and there are also buyers who realise price is negotiable, but feel it rude or intimidating to put in an offer less than the asking price. The there is the final group of buyers who just disregard an over priced listing as they see the time and effort to bring the buyers around to market realities as a waste of time.

Suites are still selling in Downtown Vancouver. The ones that sell the fastest for the best prices are those that are listed at or near market value and are well decorated and in good condition.

Pricing High with hopes of getting an offer doesn't work in today's market.

Tuesday, May 27, 2008

Private Client Services Gives Full Access to Greater Vancouver Real Estate Listings

Private Client Services is a real estate research tool that tells you whats happening in the Vancouver real estate market in real time. You set your own search criteria, click save and the system gives you full market information on that type of property.

Most importantly the system tells you how much properties sell for when they sell, so you are able to follow the market based on actual sales prices rather than listing prices. The system also gives you Vancouver real estate listings and sold prices 36-72 hours faster than any other online resource including and

Private Client Services has a mapping option utilising Google Earth that allows you to see satellite photos of the property as well as street maps of the surrounding area.

To get access to Private Client Services go to my personal website or my building specific websites and click on the Orange Box. If you have any problems or questions, please email me or call me at 604-763-3136.

Inflation set to rise in beginning in the next few years spurring rising interest rates

Hi All,

The good economic news cannot last forever. The article below discusses something I've been thinking about a lot lately - how high energy prices (over $150/barrel) could begin to push up inflation by making imports from low wage countries expensive. Increased inflation will force The Bank of Canada to raise rates, which would have a downward effect on the Vancouver Real Estate Market. That said, if you already own and have a large fixed rate mortgage at a good low rate, inflation will be good for you because it will erode the value of the mortgage and will your interest costs will remain the steady.

I'd love to your thoughts!

High energy costs will bring dramatic changes in trade: CIBC World Markets

Globe and Mail Update

OTTAWA — The rising price of oil is making international trade of heavy cargo prohibitively expensive, and acting as an incentive for importers to find products such as steel closer to home, new research by CIBC World Markets shows.

For heavy products, rising shipping costs are eroding the low-wage advantage of China over North America, say chief economist Jeff Rubin and senior economist Benjamin Tal.

If oil prices continue to rise, the soaring cost of global transport will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue.

“Globalization is reversible,” they state.

These days, the cost of oil is the equivalent of imposing a tariff rate of about nine per cent on goods coming into the United States. At $150 a barrel, transport costs act like a tariff of 11 per cent. And at $200, all the trade liberalization efforts of the past 30 years are reversed, Mr. Rubin said.

Oil prices now account for about half of total freight costs, and for the past three years, for every $1 increase in world oil, there has been a corresponding one per cent increase in transport costs.

“Unless that container is chock full of diamonds, its shipping costs have suddenly inflated the cost of whatever is inside,” Mr. Rubin said. “And those inflated costs get passed onto the Consumer Price Index when you buy that good at your local retailer. As oil prices keep rising, pretty soon those transport costs start cancelling out the East Asian wage advantage.”

Persistently high oil prices will also cause many commuters to consider moving to the city, reversing the allure of the suburbs, he said. And it could also force a change in eating habits, as foreign food becomes too expensive to ship.

“It means forget about that 50-mile commute from Cooksville to Toronto, and also forget about that avocado salad in January.”

More fundamentally, the soaring oil price will prompt a major rethinking of how production is organized, Mr. Rubin argues, and could even lead to a revival of North American manufacturing.

Already, U.S. imports of Chinese steel are declining dramatically, while domestic production is rising at rates not seen for years, they say.

China's steel exports to the United States are falling at a 20-per-cent annual pace, while U.S. domestic production has risen by 10 per cent in the past year. That makes sense, the economists say, because Chinese steel producers need to import iron ore from the likes of Australia and Brazil, then turn it into steel and then pay huge and rising freight costs to send the hot-rolled steel to the United States.

Regional trade looks much cheaper in comparison, they say.

As oil prices continue to climb, shipments of furniture, footwear and machinery and equipment are likely to meet the same fate, the economists say.

“In a world of triple-digit oil prices, distance costs money,” they say in a paper released Tuesday. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”

At first glance, such developments may seem to favour a renaissance of the moribund steel mills and boarded up furniture plants of Canada. But high oil prices won't eliminate importers' search for cheap labour. Instead, they're eyeing Mexico.

“Instead of finding cheap labour half-way around the world, the key will be to find the cheapest labour force within reasonable shipping distance to your market,” CIBC says.

“In that type of world, look for Mexico's maquiladora plants to get another chance at bat when it comes to supplying the North American market. In a world where oil will soon cost over $200 per barrel, Mexico's proximity to the rest of North America gives its costs a huge advantage.”

While high oil prices will require major reorganization of global supply chains, the bigger danger comes in the form of inflationary pressure, Mr. Rubin warns.

“If you're a steel buyer, your costs are going up regardless of whether you are sourcing it from China or Pittsburgh,” he says, saying the same dynamic applies to Hamilton.

Soon, the United Steelworkers of America will want a piece of that higher price, and wages that have been kept flat for years because of labour competition from Asia will begin to rise.

He doesn't necessarily see a return to the double-digit inflation of the early 1980s, but figures the central banks in the United States and eventually Canada will have to begin raising rates dramatically in order to confront inflation running at around 3.5 or 4 per cent annual pace. Canada's target is two per cent a year.

Friday, May 16, 2008

A High Canadian Dollar Means Low Inflation Paving the Way for Low Interest Rates - Great for Vancouver Real Estate

I know alot of people are feeling the pinch of higher fuel prices, but a high oil price is very good for Western Canada and Vancouver Real Estate in particular.

The Canadian Dollar has been pushed up by high energy prices as the US dollar has sunk because of the Sub-Prime Crisis and their high current account deficit. Canada is the number one exporter of energy to the US and 80%+ of Canada's imports come from the US.

High energy prices push up the Canadian Dollar which makes US imports cheaper which then pushes down inflation in Canada. With low inflation, the Bank of Canada can reduce interest rates thus making Real Estate in Vancouver less expensive for Buyers and giving them an incentive to purchase more Vancouver Real Estate.

I'd love to hear your comments!

Loonie holds above par with greenback

Globe and Mail Update

A strong Canadian loonie was over par with the United States dollar Friday morning, up to $100.34 (U.S.) in early trading, fuelled primarily by high oil prices and generally positive Canadian economic news.

The Canadian dollar opened at 99.92 cents, after briefly nudging above parity overnight, and quickly regained its ground.

“Probably this latest move is just on the back of oil prices moving higher again,” said Camilla Sutton, a currency strategist with Scotia Capital Inc.

As well, she said, “most of the data, with the exception of manufacturing shipments, has been somewhat positive for Canada.”

However, Ms. Sutton did not foresee any major spikes in the near term. The Canadian dollar last traded above par with the U.S. dollar on March 19, when it swung from a low of 98.34 to a high of 101.21 in highly volatile market activity.

“The general sentiment is that we are in this broader range on either side of parity, and we haven't really seen a catalyst yet to break us out,” Ms. Sutton said.

“All in all, we are hovering around parity, but it certainly seems like the Canadian dollar wants to be a little bit stronger than the current levels.”

Still, she added, the “broader six-month range of the Canadian dollar is still very much intact, either side of parity.”

David Watt, a senior currency strategist with RBC Capital Markets, said the Canadian dollar is finally reflecting high oil prices, and a recognition that oil prices are not just moving up because the U.S. dollar is weak.

There is evidence that demand for oil “is still strong enough, despite what is going on with the U.S. dollar,” said Mr. Watt.

Meantime, the U.S. dollar fell against most major currencies Friday.

The euro bought $1.5476, up from the $1.5454 it bought late Thursday in New York.

The British pound bought $1.9479, up from the $1.9451 it bought late Thursday, while the dollar also fell against the Japanese yen, buying 104.75 yen, compared with the 105.26 yen it bought late in New York.

“The dollar is looking slightly weaker on the back of yesterday's manufacturing data but there hasn't been too significant a slump in the greenback so far,” said James Hughes, an analyst at CMC Markets in London.

Thursday, May 15, 2008

The Froth is Off, But Vancouver's Real Estate Market is Still Goo

Hi All,

I have been noticing a change in my business. The mix of clients is shifting and the number of sellers I am working with has increased substantially. There are still buyers, but compared to this time last year, there are significantly less.

Its not a correction in the market, but a gradual shift away from a total sellers market, which is good for buyers and not a problem for sellers who are willing to take efforts to make their home look good and price it according to market conditions.

This article summarises nicely what I have been experiencing.

I'd love to hear your thoughts.

Cracks appear in the real estate market

Globe and Mail Update

The Canadian housing boom is ending, but there is no “major correction” in the cards – and buyers are unlikely to see anything near the bargain-basement prices that currently characterize the United States housing market, the Bank of Nova Scotia said Thursday.

“After many false calls, there is now convincing evidence that Canada's housing market has come off the boil,” the Bank of Nova Scotia in a report on real estate trends.

Canada Mortgage and Housing Corp., in its second-quarter outlook, reported Thursday that new home construction will begin to slow in 2008, “but remain high by historical standards.”

Both Scotiabank and CMHC said the Canadian housing market is fundamentally strong.

However, higher mortgage carrying costs “will be a catalyst for the decrease in residential construction to 214,650 units in 2008, from 228,343 in 2007,” CMHC said in its second quarter housing market outlook.

Bob Dugan, CMHC's chief economist, added that most of the pent-up demand that built up during the 1990s “had now been fulfilled and residential construction activity will gradually move in line with Canadian demographic fundamentals.

“These factors will continue to exert downward pressure on housing starts, which will decline to 199,900 units in 2009,” Mr. Dugan said.

Scotiabank, looking at the resale market, reported that home resales – having fallen for four consecutive months – are running about 15 per cent below last summer's historic peak.

“Average annual home price appreciation has eased back into the mid single digits, as overall market conditions come into better balance,” according to the Scotiabank report.

“Adjusted for inflation, the average resale home price in Canada registered its first quarterly decline in seven years in the first quarter of 2008,” the bank said.

However, senior Scotiabank economist Adrienne Warren said in an interview that the softening market is due to a “cyclical slowdown,” and the Canadian housing market is “fundamentally stronger than the situation we're seeing in the U.S.”

The cooling could bring eventually price relief to buyers, she said.

“The market is becoming better balanced, so there will be more homes listed, which takes a little bit of pressure off prices,” Ms. Warren said.

“But it will take some time, and a number of years of fairly soft prices, in order to bring affordability back to the levels” that are typically seen at the beginning of an upward cycle, she said.

CMHC forecast that existing home sales, as measured by Multiple Listing Service, will fall by 8.5 per cent in 2008 to 475,900 units, and the trend will continue in 2009, with a decrease to 465,000 units.

“Despite a slowdown in MLS(R) sales, demand remains strong by historical standards,” CMHC wrote. Average resale prices will increase by 5.1 per cent to $323,000 in 2008, and by 3.3 per cent, to $333,500 in 2009, CMHC projected.

In line with the CMHC report, Scotiabank noted that “cracks are appearing on the new home front as well.

“While housing starts in early 2008 are essentially tracking last year's elevated levels, demand for new residential building permits has fallen sharply. Price increases for new homes are moderating, while inventories of unsold new homes are trending higher.”

Ms. Warren said she expects overall sales volumes in 2008 to be about 15 per cent below last year's record levels, and home prices to increase on average by about five per cent.

“Price gains should slow further in 2009 with the return of a balanced market for the first time in a decade. Meanwhile, housing starts are projected to gradually moderate, returning toward underlying annual household formation levels of around 180,000 by the end of the decade, from the current 225,000 unit range,” Ms. Warren said.

The report also notes that the cooling in overall activity is most pronounced in many of Canada's hottest urban housing markets in recent years, including Calgary and Edmonton.

“Both centres have officially moved into buyers' territory as soaring prices weaken demand and fuel new listings. More generally, however, economic conditions continue to favour the resource-rich markets in the West over manufacturing-dominated centres in Central Canada. Regina and Saskatoon are currently in the strongest sellers' position nationally, supported by good affordability, rising population inflows and tight supply,” according to the report.

However, risk of a major correction is low, Ms. Warren said.

“Home prices in Canada are not substantially overvalued. Our long-term housing price model puts average home prices in 2007 at about eight per cent above their long-term trend, compared with a premium of 12 per cent and 18 per cent, respectively, at the 1976 and 1989 housing cycle peaks. Recent International Monetary Fund (IMF) estimates placed Canada at the bottom rungs of international home price overvaluation.”

Scotiabank also said in its report that Canada's real estate market is not overbuilt.

“While inventories of unsold homes are trending higher, the number of unabsorbed units, including condominiums, remains well below prior cyclical peaks in most major centres. Tighter lending guidelines and high construction costs have likely contributed to a more cautious approach among builders.

Overall mortgage quality is still sound, Scotiabank said.

“Canada does not have ultra-low teaser rate mortgages that have contributed heavily to U.S. defaults as they reset. Adjustable-rate mortgages, sub-prime lending, borrowing against home equity, and insured investor mortgages all account for a much smaller share of the Canadian mortgage market than in the United States,” the report said.

At the end of the day, we predict a soft landing for the Canadian housing market, with somewhat lower sales and construction, and a period of relatively flat inflation-adjusted home prices,” added Ms. Warren. “While underlying domestic housing fundamentals remain healthy, a major risk to the outlook would be a deeper and more protracted downturn in the U.S. economy, with more serious repercussions for domestic output, employment and income growth.”

Tuesday, May 13, 2008

The Standard Deposit Amount for Vancouver Residential Real Estate Purchases

When one purchases property in Vancouver a 5% Deposit is required either upon acceptance or within 24 hours of the final subject removal date. This Deposit is "Goodwill" money that is held in the Buyers Agent's trust account until the Completion Date when the Buyer takes ownership and the Seller gets their money.

If the Buyer does not complete on the property on the Completion Date the Seller may keep the Buyers 5% deposit and sell the property to another party. If the Seller does not complete on the Completion Date the buyer can get their deposit back and be free of any obligation to complete on the property.

The 5% deposit is designed to protect Sellers from frivolous or unreliable Buyers. The 5% deposit also protects Buyers from unreliable or frivolous sellers not completing, because having the deposit paid is one of requirements if the Buyer wants to bring legal action against the Seller to force them to Complete.

If you are thinking of buying property in Vancouver, be prepared to pay a 5% deposit within a week of having a SUBJECT FREE accepted offer.

If you have any questions on this post please contact me at any time.

Monday, May 12, 2008

Vancouver Property Prices Still Rising!

Hi All,

I have been speaking to alot of people concerned that the real estate market in Vancouver has hit the peak and that the end is nigh. This is not the case.

For quite a while I have been saying that growth in prices will slowly decline, but there will not be a sharp correction. Vancouver's economy and real estate market is benefiting from low inflation, high demand for our natural resources in Asia, and falling interest rates designed to benefit Central Canada's ailing manufacturing sector.

I'd love to hear your thoughts!

New home prices show signs market is cooling

Globe and Mail Update

Ottawa — Prices for new homes in Canada rose 0.2 per cent in March from a month earlier, and 6.1 per cent over the past year, Statistics Canada says.

The month-over-month increase was exactly as economists had predicted.

And the 6.1 per cent year-over-year increase, slightly slower than the 6.2 per cent rise noted in February, also vindicated expectations that housing prices in Canada are no longer rising quickly.

“This deceleration continues a downward trend that started in September, 2006, due mainly to the softening market in Alberta,” Statscan said.

The hottest market in the country, for the 11th straight month, was Saskatoon, where prices for new homes have soared 46.2 per cent from a year ago. That's down from the record-setting 58.3 per cent seen in February.

On the month, Saskatoon prices rose 2.1 per cent.

Regina's new homes rose 27.8 per cent from a year ago, and 1.7 per cent between February and March.

“Saskatchewan is breaking away [from trends in other provinces] as its natural resource sector grows substantially larger and the province increases its efforts to attract migrants to the region to help alleviate the labour shortages,” economists at Bank of Nova Scotia explain.

Builders in Saskatoon, Regina and Winnipeg – where prices rose 15.0 per cent from a year ago – said they raised their prices because of higher material and labour costs, and also because of a strong market and high demand for new homes.

Nova Scotia also saw large price increases in March, with Halifax registering a 12.8 per cent increase from a year ago, because of a strengthening economy, rising costs and healthy demand.

Not so in other markets. Edmonton and Calgary are experiencing slower market conditions, and builders in those cities said they were lowering their prices to stimulate sales. Edmonton new housing prices fell for the third consecutive month, declining 1.1 per cent between February and March.

In Vancouver, prices rose 6.1 per cent from a year ago, while Victoria saw a 1.2 per cent rise year over year.

In Windsor, Ont., where the deterioration of manufacturing has hit hard, home prices dropped 0.6 per cent from a year ago. Generally, prices in Ontario and Quebec were not rising as fast as the national average.

New housing prices are an important contributor to Canada's consumer price index, and a deceleration of the new housing price index will help keep inflation low in Canada, economists say.

Thursday, April 10, 2008

IMF says Canadian Real Estate Market is Undervalued

Hi All,

I have noticed as of late that some buyers have been spooked by whats happening in the US. Fortunately the sub prime crisis will not happen here in Canada.

Have a look at the at this article sourced from the International Herald Tribune originally from the IMF.

It basically says that a lot of housing markets around the world are overvalued, but that Canada's is UNDERVALUED! Read on folks!

As a weakening housing market appears to be dragging the U.S. economy into recession, the International Monetary Fund warned this week that home prices in other industrial countries were even more overvalued.

In its World Economic Outlook report, the IMF also concluded that central banks should pay close attention to home prices and consider raising interest rates when prices are rising rapidly. That conclusion is directly contrary to the established policy of most central banks, including the U.S. Federal Reserve Board, which ignores home prices when they are expanding.

In the current credit crisis, which began with problems in the subprime mortgage market, the Fed has moved aggressively to lower interest rates.

"A central bank that wants to stabilize the economy is better served by responding to house prices, both when they go up and when they go down," said Roberto Cardarelli, a senior economist with the IMF. He said that was particularly important in countries with relatively open mortgage markets, like the United States, which make it easy for homeowners to get access to cash when prices are rising.

The fund looked at trends in housing prices and mortgage debt in 17 countries, and attempted to assess how much of the price changes could be attributed to economic fundamentals, including trends in personal income, demographics and interest rates. It concluded that in mid-2007, house prices in the United States were 11 percent higher than fundamentals would justify.

That overvaluation was barely a third as high as in Ireland, where the IMF estimates that house prices were 32 percent higher than fundamentals would support. The Netherlands, Britain, Australia, France and Norway all showed overvaluations of at least 20 percent.

On the other end of the spectrum, the IMF concluded that homes were undervalued in Canada and Austria.

Cardarelli pointed out that, adjusted for overall inflation, home prices rose at a slower rate in the United States in this decade than they did in many other countries, with the mid-2007 figure up 42 percent from the first quarter of 2000. Comparable figures included gains of 95 percent in Spain, 90 percent in Britain and 85 percent in France.

Mortgage debt has shot up over recent decades in many countries, but there remain sharp variations as some markets make it much harder to borrow or restrict the loan-to-value ratio of mortgage loans.

In the United States, total mortgage debt more than doubled, as a percentage of gross domestic product, going from 34 percent in 1983 to 45 percent in 1990 and then to 76 percent in 2006. But the increases were much greater in some countries. In the Netherlands, the mortgage indebtedness hit 98 percent of GDP, and in Denmark it rose to 101 percent.

Perhaps not coincidentally, when the IMF put together an index of mortgage markets, the most liberal in terms of lending standards was the United States, followed by Denmark and the Netherlands.

Wednesday, March 26, 2008

Canadian households dodge U.S.-style credit woes - No Sub-Prime Crisis in Canada

Hi All,

Here is confirmation of what I have been saying since the sub-prime situation arose in the US. Canada is not going to have a sub-prime mortgage crisis because sub-prime mortgages were never allowed here in Canada. Read on and let me know your thoughts.


Globe and Mail Update

Canadians have dodged the severe credit woes gripping the U.S., where the collapse of the mortgage market has triggered rising delinquency and foreclosure rates and left households saddled with debt, says a report from CIBC World Markets.

The author's report, CIBC senior economist Benjamin Tal, maintains that the credit crunch has not affected the Canadian household credit market in a significant way. And although he expects the U.S. economic downturn will spill across the border and curb consumer spending, Canada will escape the bulk of the carnage.

“It would be naive to assume that the Canadian consumer will totally escape this U.S. credit crunch and weakening American economy, especially in Ontario and Quebec,” Mr. Tal said in an interview. “But it is a question of degree. The likelihood of a consumer-led recession in Canada is very, very remote at this point, because consumers did not get into the same kind of trouble as in the U.S.”

In his mind, the reasons for Canada's more solid credit situation is twofold. “First of all, the Bank of Canada has been very active in cutting interest rates, which has eliminated some of the damage coming from the credit crunch,” Mr. Tal said. “So, if you are a regular person with relatively reasonable risk profile, you probably don't feel the credit squeeze because the rates have not changed in a significant way.”

The other reason is that in the U.S., the kind of high-risk borrowing that characterized the subprime mortgage market made up a significant portion of the credit landscape. In Canada, that type of borrowing was small and has had only a marginal impact on the overall housing market and consumer credit situation.

To date, Canada's mortgage market has stayed defiantly healthy, with the pace of growth in overall residential mortgages outstanding rising by 13 per cent last year, up from 10 per cent growth in 2006, the CIBC report said. Furthermore, data suggest that activity levels remain “very strong” in the first two months of 2008, a direct contrast to the sharp downturn in the United States.

But with economic growth and the housing market set to cool from last year's strong levels, Mr. Tal expects that the overall growth in mortgages outstanding in 2008 will be roughly 8 to 9 per cent.

The U.S. is in the throes of the first consumer-led recession since 1992, Mr. Tal said. The collapse of the housing market, which has been an extremely important factor for the U.S. economy and consumer spending, and the falling stock market are both lowering the wealth effect.

At the same time, the “quality of borrowing in Canada has stayed much better than in the U.S.,” Mr. Tal said.

The arrears rate on mortgages in Canada, which is still “extremely low” at 0.26 per cent, is also forecast to trend higher in the next year. However, a strong jobs market will underpin the economy so that the rate will likely remain low by historical standards, Mr. Tal said.

There has been a rebound in both direct loans and personal lines of credit recently. Overall growth in consumer credit remains strong, rising nearly 11 per cent in 2007, with personal lines of credit dominating growth, the report said. It noted, however, that delinquency rates in the direct loans portfolio are starting to show a “modest” tick higher.

“When adjusted for inflation, credit growth during this cycle was not as strong as in previous cycles,” Mr. Tal said in the report. “This means that any softening in the pace of household borrowing in 2008 will not be as dramatic as in the past.”

Canadian households are juggling higher levels of debt. Overall debt rose 3 per cent in the fourth quarter of 2007 while personal disposable income climbed 1.6 per cent.

The recent drop in stock markets, combined with a slower pace of increase in home valuations, led the debt-to-asset ratio to climb in the fourth quarter of 2007 to 17.1 per cent, its first increase since early 2006, the CIBC report said. Over the past year, the debt-to-income ratio in Canada edged up from 122 per cent to 130 per cent.

“At the same time, the debt service ratio, as measured by debt interest payments as a share of disposable income is still about 30 basis points higher than it was in 2006,” Mr. Tal said. “With widening credit spreads offsetting the declines in both prime and government bond rates, debt interest payment will remain relatively stable over the next few months.”

The number of consumer bankruptcies, which climbed by a mere 1 per cent during the year ending January 2008, is forecast to pick up by as much as 5 per cent this year as the slowing U.S. economy impacts growth in Canada, according to the CIBC report.

Tuesday, March 18, 2008

More Rate Cuts on the Way!

Hi All,

Here's more evidence of rate cuts coming that should have an upward effect on Vancouver Real Estate. Read on and let me know your thoughts.

Inflation rate hits six-month low

Globe and Mail Update

Canada's inflation rate is the most sluggish in six months thanks to a strong dollar, leaving plenty of room for the Bank of Canada to keep cutting interest rates if economic conditions worsen.

The annual rate eased to 1.8 per cent last month, Statistics Canada said Tuesday, as car and car rental prices tumbled at the steepest pace in more than half a century. That said, the more stable core rate edged higher to 1.5 per cent on higher home costs.

Overall inflation has been easing in recent months though, and was markedly slower than January's 2.2-per-cent pace, leaving the central bank the option to cut rates if market turmoil spreads and the economy deteriorates further.

Canadian inflation remains “comfortably within the Bank of Canada's target range,” said Douglas Porter, deputy chief economist at BMO Capital Markets, in a note. “There may be less urgency to cut rates in Canada than stateside, but the bank still has plenty of leeway to do what they see fit in the months ahead.”

Inflation is likely to stay weak for the next few quarters, bottoming out at just over 1 per cent by the middle of the year, said Jacqui Douglas, economics strategist at TD Securities, who expects “a string of further 50 basis-point rate cuts over the next three meetings.”

Canadian inflation remains well below other countries. The average among OECD countries is 3.5 per cent and in the U.S., it's running at 4 per cent.

February's cooling stemmed from less upward pressure from gasoline prices along with tumbling car prices, the report said.

Buying and leasing a car was 6.8 per cent cheaper, the fastest decline since February, 1956, as many dealers cut prices to match U.S. rivals. Factories lowered their suggested prices and dealers discounted 2008 models ahead of the arrival of 2009 models – something that normally only happens later in the year.

Food inflation is a growing problem around the world, but that strong dollar is making Canada an anomaly. Fresh vegetable prices saw their biggest drop in 12 years, with a 16.9-per-cent drop from last year's level thanks to the loonie. Prices were relatively higher last year, due to a California frost.

Fresh fruit prices tumbled 14.5 per cent, led by a slide in oranges and grapes.

Computer equipment and supplies prices continued to fall, led by laptops, and so did women's clothing.

Economists had expected inflation to cool to 1.8 per cent and a core price increase of 1.2 per cent.

On the flip side, gasoline prices were 17.1 per cent higher this February than last as world crude oil prices rocketed, though that's down from the previous month's 20.9-per-cent increase in gasoline.

Housing costs also got more expensive. Mortgage interest cost climbed 8.1 per cent last month, a pickup from January and the eighth straight monthly acceleration. The gain stemmed more from higher new housing prices than a rise in mortgage renewal rates, the report said.

Homeowners' replacement cost, which represents the cost of maintaining a home, rose 4.8 per cent, the second month in a row of increases.

“Builders reported higher labour costs, as well as increases in the cost of certain materials, such as concrete, roofing, exterior siding and heating equipment,” Statscan said.

Among provinces, Ontario consumers experienced the fastest slowdown in consumer prices. As in previous months, inflation was especially strong in Alberta and Saskatchewan.

On a monthly basis, higher hotel and tour prices sent consumer prices 0.4 per cent higher in February after a GST cut prompted a previous monthly 0.2-per-cent drop.

Thursday, March 13, 2008

Why Vancouver's Real Estate Market is Hot and Why It Will Continue to Be So

This article dovetails well with my argument made in previous posts that the Vancouver Real Estate Markets continuing strength is caused by huge demand for BC's natural resources from Asia particularly China, irrespective of the present economic woes in the US.

I'd love to hear your thoughts.


A ravenous dragon

Mar 13th 2008
From The Economist print edition

China's hunger for natural resources has set off a global commodity boom. Developed countries worry about being left high and dry, but the biggest effects will be felt in China itself, says Edward McBride (interviewed here)


BESIDE the railroad track, between two hillocks of rust-red soil in the midst of Congo's mining belt, three Chinese labourers appear as if from nowhere. There are lots of Chinese around these days, explains one of their compatriots, Harvey Lee, who is driving through the scrub to the nearby copper plant he runs for a Canadian metals firm. On his way, he points out several rudimentary smelters. “That one”, he says, waving at a clump of corrugated-iron sheds and belching chimneys, “is owned by a man from Shanghai.” Moments later, when another ramshackle compound comes into view, he adds, “and that one belongs to two ladies from Hong Kong.” In all, he reckons, Chinese entrepreneurs have set up half of Lubumbashi's 50-odd processing plants.

All around Lubumbashi, the capital of Congo's copper-rich province of Katanga, there are signs of a sudden Chinese invasion. Chinese middlemen have begun buying ore from the area's many wildcat miners and selling it on to processing plants like Mr Lee's. Locals point out several villas in the city's leafy colonial cantonment that are occupied by mysterious Chinese businessmen. Katanga Fried Chicken, hitherto Lubumbashi's most popular restaurant, now has three busy Chinese competitors.

If all goes according to plan, these fledgling businesses will soon be overshadowed by Chinese investment on a much grander scale. In late 2007 the Congolese government announced that Chinese state-owned firms would build or refurbish various railways, roads and mines around the country at a cost of $12 billion, in exchange for the right to mine copper ore of an equivalent value. That sum is more than three times Congo's annual national budget and roughly ten times the aid that the “consultative group” of Western donors has promised the country each year until 2010. The Chinese authorities, it seems, are so anxious to obtain enough minerals to sustain their country's remarkable economic growth that they are willing to invest billions in a dirt-poor and war-torn place like Congo—billions more, in fact, than Western governments and investors combined are putting in.

And Congo is not the only beneficiary of China's hunger for natural resources. From Canada to Indonesia to Kazakhstan, Chinese firms are gobbling up oil, gas, coal and metals, or paying for the right to explore for them, or buying up firms that produce them. Ships are queuing off Australia's biggest coal port, Newcastle, to load cargoes destined for China (pictured above); at one point last June the line was 79 ships long. African and Latin American economies are growing at their fastest pace in decades, thanks in large part to heavy Chinese demand for their resources.

China's burgeoning consumption has helped push the price of all manner of fuels, metals and grains to new peaks over the past year. Even the price of shipping raw materials recently reached a record. Analysts see little prospect of an end to the boom; the prices of a few commodities have fallen on the back of America's worsening economic outlook, but others, including oil, wheat and iron ore, continue to set new records. China, with about a fifth of the world's population, now consumes half of its cement, a third of its steel and over a quarter of its aluminium. Its imports of many natural resources are growing even faster than its bounding economy. Shipments of iron ore, for example, have risen by an average of 27% a year for the past four years. Western mining firms are enjoying a sustained boom.

Unwelcome advances

But China's sudden global reach is generating as much anxiety as prosperity. In 2005 America's congressmen, citing nebulous national-security concerns, scuppered the proposed takeover of Unocal, an American oil firm, by CNOOC, a state-owned Chinese one. The opposition candidate in Zambia's presidential election in 2006 made a point of attacking the growing Chinese presence in the country. Residents of Russia's far east fear that China is planning to plunder their oil and timber and perhaps even to colonise their empty spaces.

Some non-governmental organisations worry that Chinese firms will ignore basic legal, environmental and labour standards in their rush to secure resources, leaving a trail of corruption, pollution and exploitation in their wake. Western companies fret that the Chinese state-owned firms with which they suddenly find themselves competing have an agenda beyond commercial gain. The Chinese government, they say, is willing to pay over the odds for mining or drilling rights to secure access to physical resources. It also intervenes unfairly on its companies' behalf, they claim, by offering big aid packages to countries that welcome Chinese investment. All this, it is feared, will dent the profits of big oil and mining firms, stoke inflation and imperil the West's access to resources that it needs just as much as China does.

Diplomats and pundits, for their part, fear that the West is “losing” Africa and other resource-rich regions. China's sudden prominence, according to this view, will reduce the clout of America, Europe and other rich democracies in the developing world. China will befriend ostracised regimes and encourage them to defy international norms. Corruption, economic mismanagement, repression and instability will proliferate. If this baleful influence spreads too widely, say the critics, the “Washington consensus” of economic liberalism and democracy will find itself in competition with a “Beijing consensus” of state-led development and despotism.

Such fears are not entirely groundless if the recent conduct of some of Congo's neighbours is anything to go by. Angola, to the south, has been receiving so much aid and investment from China that in 2006 it decided it had no need of the International Monetary Fund's billions and all the tiresome requirements for transparency and sound economic management that come with them. Sudan, to the north, has shrugged off Western threats and sanctions over the continuing atrocities in Darfur, thanks in large part to China's readiness to invest in Sudanese oilfields and buy their output. Farther afield, China's eagerness to do business in Myanmar, and its consequent reluctance to chide the tyrannical generals that run the place, helped to prevent a forceful international response to the violent repression of peaceful demonstrations there last year.

Nonetheless, this special report will argue that concerns about the dire consequences of China's quest for natural resources are overblown. China does indeed treat some dictators with kid gloves, but it is hardly alone in that. Its companies do not always uphold the highest standards, but again, many Western firms are no angels either. Fifty years of European and American aid have not succeeded in bringing much prosperity to Africa and other poor but resource-rich places. A different approach from China might yield better results. At the very least it will spur other donors to seek more effective methods.

For all the hue and cry, China is still just one of many countries looking for raw materials around the world. It has won most influence in countries where Western governments were conspicuous by their absence, and where few important strategic interests are at stake. Moreover, as China is becoming more involved in places such as Congo, its policies are beginning to change. It has promised to co-operate with the World Bank in its development efforts in Africa. It no longer seems prepared to back its most objectionable allies in the face of international opprobrium. Its diplomats, for example, did eventually stop parroting their line about unwarranted interference in the internal affairs of a sovereign state and allow United Nations peacekeepers to be deployed in Sudan.

The saga over Sudan shows how sensitive the Chinese authorities have become to criticism, despite their impassive reputation. When Steven Spielberg resigned as an adviser to the Beijing Olympics in protest at China's failure to do more about Darfur, a shrill chorus of criticism arose from China's official media—suggesting that such gestures do indeed have an impact.

Chinese companies will inevitably find themselves in fierce competition with Western ones for natural resources, as they must if global markets are to work efficiently. For the most part, however, they do not operate very differently from their peers. To the extent that the Chinese government does subsidise oil production, it helps to bring down the price for everyone else (its subsidies for oil consumption are another matter). As the world's biggest consumer of many commodities, China naturally wants to ensure a steady supply of them to keep its economy going. But markets for commodities are global, and the risk of any one consumer cornering supplies, or securing them at a lower price, is negligible.

Own goal

The worst fallout from China's quest for natural resources will be seen not in the countries they come from, nor in the countries that are competing for supplies, but in China itself. Over the past few years the volume of raw materials it consumes per unit of output has risen sharply. In particular, China has gone from miser to glutton in its use of energy, and is now struggling to diet. That has involved bigger imports of oil, gas and coal, and so more foreign entanglements. But it has also led to the rapid depletion of resources that China cannot import, such as clean air and water.

China is building a huge stock of grimy heavy industry, just as its coastal provinces are getting rich enough to care about the consequences. Protests about environmental issues are on the increase. There is not enough water in the Yellow River basin, which covers a huge swathe of northern China, to supply both farmers and factories. Acid rain from coal-fired power plants is reducing agricultural yields, raising the spectre of increased rural unrest. As it is, the authorities are struggling to ensure that the air will be fit for athletes to breathe at the Olympics in Beijing this summer. All the while, the number of noxious steel mills, cement kilns and power plants relentlessly increases. Global warming, which is fed by their fumes, will make all these problems even worse.

Environmental concerns are unlikely to bring down the Communist regime, or even to stir as much resentment as the arbitrary confiscation of land currently does among China's poorest. But those concerns are certainly prompting the government to reflect on what sort of economic path it wants to pursue. So far, its efforts to temper economic growth, encourage energy efficiency and wean the country off heavy industry have had little effect. But continued failure would eventually make China a less prosperous and more unstable place.