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NEW HOUSING PRICE INDEX...9 N! G$ t4 e% A1 X% }2 e8 Y; ?
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The New Housing Price Index, has just been released and it provides some very
3 {1 {! i. F7 M* h* n# [9 O: _; W4 uinteresting insights, not only into where the market has moved, but where it6 | G. F( V C$ K
will be going.
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3 S2 C0 z8 d# \ k) {It proved, once again, the value of looking at fundamentals behind a market.% M/ y+ y' B7 q, z
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The New Housing Price Index is compiled by Statistics Canada and is used by4 b0 U+ L" y' z8 G
sophisticated investors to see how much the market has moved, as well as an/ ?) r+ t& {: @4 Y$ f
indicator of where re-sale home prices will be moving in the coming six months. s1 h( G$ u4 Y6 L8 N) V/ V
We look at the ripple effect that new housing prices have on re-sale property* S8 L/ g; f7 i( h" X& v) F
values and can extrapolate what direction re-sale prices will be moving and by/ O& z0 ?5 T2 R7 b
how much. E$ s+ z6 `2 b) l, C% |
$ G4 P+ d7 F# e( |2 hFor instance, for the last three years, we have told investors to avoid Windsor,
$ P. _7 A* h9 z- Y2 Q4 k8 POntario as an investment area because the underlying fundamentals are not very
! }" h1 B+ D( }3 C! _3 x% q9 k. tstrong. This has been proven once again with the release of the latest x( ?$ s2 |8 r: b1 k; v2 G
findings. New Housing Prices have actually decreased by .5% during June 2005 -
' Q# V0 n* j' }; b" {June 2006 proving that fundamental investing works in helping you pick the best
4 @9 F; Y& f" I R" Amarkets and avoid the flat ones. This .5% decrease should have little impact0 K0 D7 j+ ^( n! A
on average re-sale values in the Windsor region.
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9 n1 Z" T/ I2 T# l; iTo contrast this, the fundamentals we discuss are so strong in Calgary that the
* w3 G4 R1 u5 n9 Y Gmarket continues to be super heated. With close to 3,000 net new people into! r. d: `/ T O% C( t
the city every month, the property market just can't keep up. That is why we
) z- o" N, _* a; P/ ysaw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). , y% O* }3 g1 J0 C u2 n
This is great news for the future of re-sale values in the city as these
4 H/ }& l% J) w) iincreases will continue to ripple out into the market for at least the next six
1 y3 y) H; C% [( Y$ P) k: d. Amonths.
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' C9 }( d1 O7 k MComparing these two regions is a great illustration of the value of not getting
M m( C; d9 n6 Q$ T7 Ocaught in the 'emotional guessing game' by just focusing on the underlying7 k, I, O1 Q5 Y1 F0 v, E
fundamentals. It is sad to see those people who said in the last 2 years that( @4 ?( w) ~( u A* L4 Z& T
the Alberta real estate market was over and they were going to sit back and wait
1 i, P2 V& x8 H/ |) ?( F7 \( _until it drops. Quite obviously, they have missed out on AMAZING gains, all' _2 N8 v' f& L8 g3 n
because they didn't follow fundamentals, they just led with their emotions.1 W8 V) O+ u4 I# c9 Q- ]. G
/ m! ^, ]& `* K3 n9 Z0 r& gBy the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June
/ n( n* t7 L$ w( R% Z) T2005 to June 2006), also great news.
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By comparison across the country, these are the numbers for June 2005 - June9 N) V* T0 P2 S" f j# U$ _
2006 New Housing Price Index for:3 @ F4 s" A9 d5 V& n
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Vancouver . . . . . . . . +5.2%7 Q, m! |3 o, n4 X3 S
Saskatoon . . . . . . . . +8.5%
/ Z0 m( e! M- B# t( @, \$ L8 pLondon . . . . . . . . . . . +3.0%9 N2 y$ T# h! e0 P
Hamilton . . . . . . . . . . +4.9%# b7 [" @7 n1 M+ h W
St. Catharines - Niagara . . . . +4.9%* g+ s- y# r6 ^2 R' T
Toronto and Oshawa . . . . . . . +3.24 H, j$ X6 z; v8 z4 C% r, `
Ottawa - Gatineau . . . . . . . . . +3.1%
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8 m4 c4 l) v# W! C" bFundamental investing ALWAYS makes you look like a genius - emotional investing
# g, C' k& @8 W4 J- B8 ?( bgives you quick highs, but also quick lows. Well done on your focus!* r: y3 ]9 v7 a6 Y( n6 d5 v
$ Q9 Q+ T; T! E" JAs the fundamentals have been showing all along, the Alberta market continues to
; O3 T8 k: u: Dbe strong, as in-migration and job creation continues to attract people from not- Q \$ l: H4 F& r% x7 B
only across Canada, but from around the world. Our average wages are
5 d$ P. P. B6 iincreasing, our population is increasing, our unemployment rate continues to
- d9 F2 X5 }' jdrop and our GDP growth is slated to once again lead the country.9 o0 r# J7 T* C8 |& G
8 P' y9 `3 L) D! `Here are some very interesting facts that are helping to support the strong! |( L( N% B9 C/ d+ a
fundamentals:
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1. The Conference Board of Canada is forecasting strong economic growth in
3 ?3 d( Y) u9 W) J' \. b' qCanada, with Alberta once again leading the way. In fact, the projected growth* F ?$ B) l3 I5 L' i" M
for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and' b% v& D" j7 Q% |, ~6 e
this is slated to occur even with the labour shortages we are witnessing.
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2. People are discovering Canada as an investment center from all over the
/ K% y+ u# g5 |9 Z8 Uworld. Recently, there have been investors coming here from Asia, Australia,
8 J. g. g+ B# ]) o' Y8 i- B) Tthe US, UK and Europe. In fact, if you review the world's press you will see( S! z) ~8 u, D8 C- S
that Canada (with a focus on Alberta) is being discussed more frequently.
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3. Don Campbell has just returned from presenting our Canadian investment1 C v1 _. f( C5 D5 p) P' a: ?( K5 }
atmosphere (including Why Alberta - Why Now") to a group of major investors in
" Y" Q3 E7 H# J( G7 u# D6 FDublin, Ireland, and the response was overwhelmingly positive. In fact, after( H H9 a* O; v' {& P B1 _- `
Don presented the economic facts, many of these investors (who could invest
6 _6 Y0 }- r! R+ N$ ^anywhere in the world) have already booked their flights to here. Once again! c. K! I, g; L8 j, Q5 ^% B2 v
proving that when the true numbers of our economy are presented (along with the
& \8 }% v" j5 \# {$ y/ ?political stability of our country), there is no place in the world that can% f# R1 l; L7 ~/ `* t
beat it for long term investment.2 O ?1 V+ l" o& u& K
8 I, n2 d# ~/ ?6 F. V4. Job creation continues to be strong (with a small lull in June); definitely, A5 w# j3 |6 S3 {: t n' u% M
a sign of strong long-term fundamentals. RBC has also been following the job$ M& V6 E; l6 w0 \ f, W; s
creation situation and here is what they are saying: (www.rbc.com/economics)
4 X* d4 W9 @0 ?( d8 i6 a& E7 a"After generating a substantial 96,700 jobs in May, the largest such gain since
) v+ s9 N) M+ o' uJanuary 2002, the economy lost a modest 4,600 jobs in June...
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- D3 M# b' n* j& ~Strength in the Canadian economy contributed to a gain of 215,600 jobs in the6 s* Y9 \4 D( |
first half of 2006, a feat not matched since the second half of 2002. With the( B0 ^% J: x4 P U
economy widely expected to grow at a more moderate pace in the second half of! ~ a( E# K+ S9 p" t* E
the year on the back of slowing trade activity, this impressive showing may not
4 t) `+ {+ K' J1 h- h, q+ yrepeat itself. We expect that employment grew in July at a pace consistent with' s3 B3 P( h7 p1 Y7 ^. k
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at
9 j3 b9 m$ R/ [its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
8 n3 j. Y' V2 f1 q9 hof 6.1%." Overall very good news. Now the key is to ensure that the region in4 r5 u$ M+ n, O
which you are investing is continuing to generate jobs and increasing incomes.
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& p, C! e# S* ?7 V0 c& oIn other words, it is a great time to be taking advantage of this strong; k: I( l% v( y$ l; O6 |. j& F
economy, avoiding 'excuses' and to especially not listen to the uninformed
0 S P- Z8 [ v! `- f j# H'dream stealers.' As long as you stick with your game plan, you continue to do
$ G* L7 K- o, C) p) U& n/ dyour due diligence, and you remove emotions from the equation, you will see the* c, \% q( v" `. Z
opportunities that are right in front of you, right here in Alberta. Let the
7 G( d7 Z( g& a8 R! p* Y: c) C'dream stealers' call you 'lucky' 5 years from now as your net worth has soared8 q) S8 V5 W2 `# C" g
and your financial freedom has surpassed even your wildest expectations.# g9 {& G, q# S4 g8 g
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# k- U- P; h, v& s% hCapital Gains Comparison.
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KPMG has recently released a comparison of the true Top Federal and Provincial
% N7 B2 U- m* rMarginal Capital Gains Tax Rates per province. It is very interesting to see
( j# \3 }" s( Zhow these will affect your exit strategy. Here are the numbers:5 {4 T+ D8 l0 c4 w" N+ c
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BC . . . . . . . . 21.9%
8 I( l5 A9 S! e. u! V6 k# \: X1 M7 uAB . . . . . . . . 19.5%
8 R& S, O0 U1 S* _SK . . . . . . . . 22.0%/ G: ~( h$ q; u
MB . . . . . . . . 23.2%
& O' F4 U$ a8 A4 j1 WON . . . . . . . . 23.2%
: a6 J2 R6 N& `QC . . . . . . . . 24.1%
: g' c2 V s6 z" p$ b; Z% ]4 @NB . . . . . . . . 23.4%
9 g0 }. k9 Q2 w; o$ ] c" N8 \+ ONS . . . . . . . . 24.1%
1 }( F. \+ p# k0 ^PE . . . . . . . . 23.7%0 }, p) z S8 t* w4 O. e; t
NF . . . . . . . . 24.3%# Q7 s7 ]# B* S6 v( L, r# m, d
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Lower capital gains tax increases investment and stimulates the long term
! Y8 [) W& _; J! @4 Feconomy of the province. It also allows real estate investors to keep more of
3 G D b* I% u0 e/ [& o; u5 ?their profits at exit time. Always a good number to pay attention to.
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0 |2 p1 y# H! {" D( g7 YOverall, by staying focused for the next short period of time, you have the
3 Z# S: ]9 H" [$ J8 L: C* Eopportunity to create financial freedom of which others can only dream. Of
. ^% H, C7 Z- Kcourse, the key word is focus. And with an August line-up of 'Members Only'
% a5 L1 I. c, J+ Devents like this, you can't help to become a real estate investment champion
8 E6 [4 K9 U& a3 s1 @when you take action as a full REIN Member.
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the
( H8 |' H5 C5 n( N$ q/ R& J* f- p# ]( Nresults in just a few short years. |
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