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NEW HOUSING PRICE INDEX...6 ]3 P. s7 v8 K& \( n
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The New Housing Price Index, has just been released and it provides some very
# |6 ?; w' F, ~4 _- Kinteresting insights, not only into where the market has moved, but where it
- V9 F) ^ G$ j/ }2 a; Swill be going.4 F( D; f' [; ?# i0 e/ q* |# h
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It proved, once again, the value of looking at fundamentals behind a market.
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The New Housing Price Index is compiled by Statistics Canada and is used by8 o/ L# n" U/ W1 q8 }; D! k/ ` _+ \
sophisticated investors to see how much the market has moved, as well as an# n* \+ J7 j' `
indicator of where re-sale home prices will be moving in the coming six months.
4 y$ Y% M6 a5 @We look at the ripple effect that new housing prices have on re-sale property, B& w) ~5 h# U: l$ k
values and can extrapolate what direction re-sale prices will be moving and by
7 ~. B0 z6 K" @+ k% q, z8 chow much.
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2 s' A6 t/ c4 L3 p7 S9 Y3 A4 WFor instance, for the last three years, we have told investors to avoid Windsor,3 m) e3 D0 O7 p/ o4 `; `
Ontario as an investment area because the underlying fundamentals are not very8 o5 u8 c% [5 q9 B5 Y) {' g: q2 U
strong. This has been proven once again with the release of the latest0 }0 u: S& s+ D& j8 N- u! U) R
findings. New Housing Prices have actually decreased by .5% during June 2005 -
- B7 s5 t9 A# N) G+ yJune 2006 proving that fundamental investing works in helping you pick the best
3 M* B' E6 b+ N1 ~4 B$ q1 P' nmarkets and avoid the flat ones. This .5% decrease should have little impact
" i) X, s8 u- y% c) N- Z; don average re-sale values in the Windsor region.9 d: w% c& h8 `2 I, `' F1 F1 O
% Z1 o$ f) R$ B' {# {To contrast this, the fundamentals we discuss are so strong in Calgary that the& l. u! x9 W% p* z( e+ I
market continues to be super heated. With close to 3,000 net new people into
4 r1 F# {% o% A( kthe city every month, the property market just can't keep up. That is why we9 f. ^/ M& R: Q% ?( G5 E
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006).
) }) G. Z7 K( BThis is great news for the future of re-sale values in the city as these* j R- c2 ]2 y7 c9 J
increases will continue to ripple out into the market for at least the next six7 O S* n9 y- x- C# v3 u4 B
months.
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Comparing these two regions is a great illustration of the value of not getting
: R p) L; ~" ^/ ]caught in the 'emotional guessing game' by just focusing on the underlying, ]) a6 f- @( S( m7 |: G" \
fundamentals. It is sad to see those people who said in the last 2 years that) A7 @/ r: X4 r' Z6 w
the Alberta real estate market was over and they were going to sit back and wait9 T% {! T G8 Y* g& A
until it drops. Quite obviously, they have missed out on AMAZING gains, all
8 E* m1 G9 C8 Y Dbecause they didn't follow fundamentals, they just led with their emotions.
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By the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June( _, X& g2 `% D2 Y5 X6 R& P$ S
2005 to June 2006), also great news./ @, I, G6 C& [0 U2 e2 ^& J) K
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By comparison across the country, these are the numbers for June 2005 - June; w2 w! |4 t' a. K2 D
2006 New Housing Price Index for:
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Vancouver . . . . . . . . +5.2%
- F/ ^$ t" O* f& J* D) c: m3 VSaskatoon . . . . . . . . +8.5% R% l' f, D1 w- {6 B
London . . . . . . . . . . . +3.0%& u8 M& _. d/ W( m$ n) g
Hamilton . . . . . . . . . . +4.9%
' X% U! a$ i- n' M/ oSt. Catharines - Niagara . . . . +4.9%4 A% |5 g+ h! Y: j* E1 n
Toronto and Oshawa . . . . . . . +3.2$ s- m7 h, J& B }+ h# y9 _" Z* {
Ottawa - Gatineau . . . . . . . . . +3.1%' n* R% g- U7 _: B
: F0 m0 w6 K% U" r& PFundamental investing ALWAYS makes you look like a genius - emotional investing
& ` B e# x/ h D; f( fgives you quick highs, but also quick lows. Well done on your focus!
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As the fundamentals have been showing all along, the Alberta market continues to. N0 r d1 o3 r2 l# w4 R7 P
be strong, as in-migration and job creation continues to attract people from not i( U& @1 F" C Z& n. @5 c
only across Canada, but from around the world. Our average wages are
4 g* i# a$ j+ Q7 N6 C, nincreasing, our population is increasing, our unemployment rate continues to, Z' E9 b7 i8 ] \& @* |. I4 O5 g
drop and our GDP growth is slated to once again lead the country.
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Here are some very interesting facts that are helping to support the strong
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1. The Conference Board of Canada is forecasting strong economic growth in
) e* ~- ~- n' N0 k. i" _ p$ m3 tCanada, with Alberta once again leading the way. In fact, the projected growth; t4 X: H( B2 `9 |1 h( `) S
for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and
3 E0 X) V* l ]7 T4 J" P$ u; kthis is slated to occur even with the labour shortages we are witnessing.: I$ \/ @$ x7 {
; \( Y' _7 C3 C$ M6 C0 M) A6 e2. People are discovering Canada as an investment center from all over the
, |. ]1 T# Y/ T0 Mworld. Recently, there have been investors coming here from Asia, Australia,8 y, ?7 F8 t+ P8 r. ?5 D
the US, UK and Europe. In fact, if you review the world's press you will see
# T" q5 r! X( j" w. v$ Pthat Canada (with a focus on Alberta) is being discussed more frequently.
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! `5 ~9 c$ h! R$ H" m- T$ M9 W3. Don Campbell has just returned from presenting our Canadian investment
5 V6 w3 Z6 `. t3 A8 L/ q. E* {atmosphere (including Why Alberta - Why Now") to a group of major investors in. W& M4 h; t6 j. m G
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after7 d3 L5 ?6 V/ z8 P
Don presented the economic facts, many of these investors (who could invest! B% p$ w& j7 }6 `9 C2 i& A
anywhere in the world) have already booked their flights to here. Once again+ c% D1 M" t4 g+ U) K0 L& o
proving that when the true numbers of our economy are presented (along with the% e( H) g6 R- J
political stability of our country), there is no place in the world that can j+ d2 W, V/ ~% S
beat it for long term investment.3 g% U& {1 m( T: q: G) r
# G; v" s9 k2 X# V$ y4. Job creation continues to be strong (with a small lull in June); definitely9 P# w$ ?! H, T0 Y$ \$ |
a sign of strong long-term fundamentals. RBC has also been following the job
! e. c) m/ ]" xcreation situation and here is what they are saying: (www.rbc.com/economics): U5 b+ L! L3 x) j; R/ X2 e" z2 p: z
"After generating a substantial 96,700 jobs in May, the largest such gain since# g0 {- o( T* }0 p4 Z; K' Q
January 2002, the economy lost a modest 4,600 jobs in June...
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Strength in the Canadian economy contributed to a gain of 215,600 jobs in the
9 n* U1 H( a8 k! C7 b S% Cfirst half of 2006, a feat not matched since the second half of 2002. With the6 @/ J V( }0 e) U
economy widely expected to grow at a more moderate pace in the second half of
) w2 Y# ^$ J2 |2 a/ `6 M- \( T0 qthe year on the back of slowing trade activity, this impressive showing may not. ?$ X1 H3 g6 e+ `2 u% q) \6 F3 |
repeat itself. We expect that employment grew in July at a pace consistent with m8 q" p9 U( Y. ^
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at+ A3 @# P L& _2 J0 {
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
9 ~6 ]- R5 `( O" A5 m, L2 {6 X0 Dof 6.1%." Overall very good news. Now the key is to ensure that the region in
0 o) l+ u: u% ~+ Z/ Lwhich you are investing is continuing to generate jobs and increasing incomes.
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In other words, it is a great time to be taking advantage of this strong B- i% c% O9 Y
economy, avoiding 'excuses' and to especially not listen to the uninformed
$ N+ v7 I* p7 [6 d }' Y! s'dream stealers.' As long as you stick with your game plan, you continue to do+ ^% j. o# E) X
your due diligence, and you remove emotions from the equation, you will see the5 C# J5 S% o" b' Z- `
opportunities that are right in front of you, right here in Alberta. Let the
! A! ^! L* R' u4 T4 {7 I3 e% l'dream stealers' call you 'lucky' 5 years from now as your net worth has soared# z- U2 V$ ]! z4 W; n" y
and your financial freedom has surpassed even your wildest expectations.; O- m; y9 ]8 e u X: P" F
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# ?) X5 y7 q6 L( MCapital Gains Comparison.; s2 _! q$ a# c6 _' u8 B2 C
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KPMG has recently released a comparison of the true Top Federal and Provincial* L4 `+ b' }. O# _
Marginal Capital Gains Tax Rates per province. It is very interesting to see) b+ s) T7 {+ g6 J# C. t3 E1 F
how these will affect your exit strategy. Here are the numbers:
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BC . . . . . . . . 21.9%
( f; A7 n2 d3 CAB . . . . . . . . 19.5%
, o, E0 k7 o \SK . . . . . . . . 22.0%+ Z4 S' ~' D h, t
MB . . . . . . . . 23.2%
; {' I9 l% p5 B7 }- ?ON . . . . . . . . 23.2%
4 R1 m2 i' N! S6 R8 @$ nQC . . . . . . . . 24.1%1 m# C8 P% E" v4 N
NB . . . . . . . . 23.4%, f9 x: G8 E# d" j" T% N- }
NS . . . . . . . . 24.1%# s' \' x% c: D1 t- W$ F( l
PE . . . . . . . . 23.7%
7 q5 H3 h7 W; HNF . . . . . . . . 24.3%! g3 { Z' F' X5 A& l
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Lower capital gains tax increases investment and stimulates the long term
5 X" R: Q5 c. X4 T6 Oeconomy of the province. It also allows real estate investors to keep more of: P" a, ]% {" E0 H
their profits at exit time. Always a good number to pay attention to.
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" [4 R2 x0 [! W' f" |Overall, by staying focused for the next short period of time, you have the( e9 `5 H$ p# V/ R, N( X- L
opportunity to create financial freedom of which others can only dream. Of
' G( Y5 O1 s2 {course, the key word is focus. And with an August line-up of 'Members Only'
, D, x9 b& E; | \7 cevents like this, you can't help to become a real estate investment champion
1 |' t; X7 N$ W/ l, H5 Gwhen 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
J2 P+ q( f t1 o; R% r3 Q( bresults in just a few short years. |
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