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NEW HOUSING PRICE INDEX...
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/ j2 o! g! m' v6 `7 V! hThe New Housing Price Index, has just been released and it provides some very
) b) p+ {% G# \interesting insights, not only into where the market has moved, but where it, L& h4 v- G0 Z
will be going.
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It proved, once again, the value of looking at fundamentals behind a market.- K0 B# u7 _9 A2 T; H
0 X8 y2 X# m( Z$ n1 ` mThe New Housing Price Index is compiled by Statistics Canada and is used by; e' ^' V& g4 s' `9 p
sophisticated investors to see how much the market has moved, as well as an# p! V, J, @6 R: r* U8 e
indicator of where re-sale home prices will be moving in the coming six months. ' F9 S) X0 h4 ^& u- @
We look at the ripple effect that new housing prices have on re-sale property s4 D+ N- N) G
values and can extrapolate what direction re-sale prices will be moving and by
3 }. l, W5 x5 A7 g! O+ @/ x4 `how much.7 i8 N: }# H' e4 P2 ^
* Y4 p" r( S. ^" N7 |For instance, for the last three years, we have told investors to avoid Windsor,
5 V1 x+ p/ u* t' T8 lOntario as an investment area because the underlying fundamentals are not very
- M1 i: V2 t+ Y. rstrong. This has been proven once again with the release of the latest
0 z0 u# z" j6 g8 r9 S% q+ wfindings. New Housing Prices have actually decreased by .5% during June 2005 -
5 q% {1 X& q9 s U7 [5 zJune 2006 proving that fundamental investing works in helping you pick the best8 |3 a7 v2 ~8 M3 e ?
markets and avoid the flat ones. This .5% decrease should have little impact4 p; ~! x3 D* Z; X
on average re-sale values in the Windsor region.
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To contrast this, the fundamentals we discuss are so strong in Calgary that the5 G$ a- e _3 Z7 A
market continues to be super heated. With close to 3,000 net new people into
1 T3 e" L- O8 F0 ^the city every month, the property market just can't keep up. That is why we8 J2 Z7 j3 _, \& S6 j/ P. |) f: a: H
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). 6 x8 c) F+ j# d, I9 E% P" X
This is great news for the future of re-sale values in the city as these/ @! [/ W8 y& b6 |
increases will continue to ripple out into the market for at least the next six$ p& r K" n4 d, k; V! X% U: N* n
months. 1 f f# g- I7 J" [
6 a r- W7 k2 M4 G) S) y, n, A2 UComparing these two regions is a great illustration of the value of not getting1 T: z8 {5 }7 ~: F
caught in the 'emotional guessing game' by just focusing on the underlying
6 c7 m3 Q/ p, E. i6 @. W* W" @7 Vfundamentals. It is sad to see those people who said in the last 2 years that( D, x; X* c B1 |, s/ ~3 Y
the Alberta real estate market was over and they were going to sit back and wait
5 d" o: ?# h; w; {% e+ euntil it drops. Quite obviously, they have missed out on AMAZING gains, all
* M/ T P, q' N; \$ E2 ?0 W$ f/ xbecause they didn't follow fundamentals, they just led with their emotions.: Q, i) {9 ^; ~$ A# [/ I- ~4 [2 F
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By the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June
: V$ K" m2 G! ]$ `" _2005 to June 2006), also great news.: h" l* c3 L7 i4 F
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By comparison across the country, these are the numbers for June 2005 - June8 n5 r( w; w4 [, C, H9 ?
2006 New Housing Price Index for:
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Vancouver . . . . . . . . +5.2%& T6 }- s, g$ k" B& ~
Saskatoon . . . . . . . . +8.5%5 i1 q, V, ^4 k: z* T) `; d
London . . . . . . . . . . . +3.0%3 K# j5 V; n4 R# _; f* C8 ?
Hamilton . . . . . . . . . . +4.9%
0 a* z% k) a" j2 J+ BSt. Catharines - Niagara . . . . +4.9%
# o/ S7 p3 Z( N; h. W$ [Toronto and Oshawa . . . . . . . +3.27 Y0 K9 G7 I. \3 [% A
Ottawa - Gatineau . . . . . . . . . +3.1%
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- z! j0 X- _9 J4 W6 @% ]5 mFundamental investing ALWAYS makes you look like a genius - emotional investing
K& W4 _) c$ y9 hgives 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) E% W% L' Q) N; w& m& g
be strong, as in-migration and job creation continues to attract people from not
5 b2 z3 [; B& qonly across Canada, but from around the world. Our average wages are
. G4 C- }% Q" n9 x7 e4 hincreasing, our population is increasing, our unemployment rate continues to* x% J6 J4 t' w' q
drop and our GDP growth is slated to once again lead the country.3 [2 K' C, V1 S, a4 l& P
" H: l# D9 D- KHere are some very interesting facts that are helping to support the strong8 h$ v9 R% l* {' R3 }
fundamentals:3 d9 w h N( y* T6 H* E
3 R% s; e% ^) R. o" C1. The Conference Board of Canada is forecasting strong economic growth in" L+ Z7 G s2 E2 B( k
Canada, with Alberta once again leading the way. In fact, the projected growth
0 L* S' y# n. f/ @) `for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and8 J% z' X6 T. e
this is slated to occur even with the labour shortages we are witnessing.- b5 O* q) E1 B3 f
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2. People are discovering Canada as an investment center from all over the
a, d" g) ~' l7 Fworld. Recently, there have been investors coming here from Asia, Australia,9 c8 |! q2 \! @3 ^ R2 j
the US, UK and Europe. In fact, if you review the world's press you will see7 D7 }; T7 B+ ]1 u: s% H# P7 q
that Canada (with a focus on Alberta) is being discussed more frequently. ( z1 E2 F" g7 E4 \, ~! _
3 W) D3 x8 J" ?0 K; u* U3. Don Campbell has just returned from presenting our Canadian investment5 w* O, C- `8 f
atmosphere (including Why Alberta - Why Now") to a group of major investors in, j) |# A, O# |0 V
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after, T! R6 S( s# I, y* z& h2 O0 u! ?* e
Don presented the economic facts, many of these investors (who could invest
$ P$ {1 N+ Z' ]+ t) w7 P$ m4 uanywhere in the world) have already booked their flights to here. Once again, d9 J, s4 q- B% z3 s! }
proving that when the true numbers of our economy are presented (along with the' f9 Y* C$ B+ r5 g7 \# M
political stability of our country), there is no place in the world that can N7 L+ N" j/ B( { V" F2 R8 U
beat it for long term investment.2 ]& }5 i# [% T1 R5 [- ]* ^, A
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4. Job creation continues to be strong (with a small lull in June); definitely$ u. v% r2 Y. _# C% Z
a sign of strong long-term fundamentals. RBC has also been following the job" A) E9 t8 e# x' f# g9 |/ W X
creation situation and here is what they are saying: (www.rbc.com/economics)
! g, S3 i5 M; Q- @/ I9 Z: Z/ y. ~& B"After generating a substantial 96,700 jobs in May, the largest such gain since
0 @) H# w# `$ p, u" X- yJanuary 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. B+ @3 V$ v" n6 w
first half of 2006, a feat not matched since the second half of 2002. With the( ?3 L/ @% G* P( U" K
economy widely expected to grow at a more moderate pace in the second half of
1 s0 \( A* s1 w- k" Rthe year on the back of slowing trade activity, this impressive showing may not+ s+ C9 w& C, R# g3 i
repeat itself. We expect that employment grew in July at a pace consistent with
- t- M, t8 Z) I4 V2 W# G# jits recent trend of 24,000 jobs a month. Assuming that the labour force grew at
; T6 z7 [( o4 H5 ^its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
! |9 f! @- h. n# kof 6.1%." Overall very good news. Now the key is to ensure that the region in, D/ i: e D5 ]' i
which you are investing is continuing to generate jobs and increasing incomes.; h! [3 [6 V' A. Q8 P" q* L
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( a6 P8 H. L W* @) UIn other words, it is a great time to be taking advantage of this strong& I: C/ t4 P# @: q* H A# Z
economy, avoiding 'excuses' and to especially not listen to the uninformed8 T' h. E3 s; K' R w
'dream stealers.' As long as you stick with your game plan, you continue to do
5 l6 R1 L2 I; M2 x g: U* Gyour due diligence, and you remove emotions from the equation, you will see the/ p$ F; K2 b; `2 z4 y' b
opportunities that are right in front of you, right here in Alberta. Let the' g4 k3 p _6 F. U1 R' R
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared/ a8 D5 P, r \3 a5 [
and your financial freedom has surpassed even your wildest expectations.9 {$ w; i! z" i; {/ n
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Capital Gains Comparison.
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$ R4 l4 M9 m7 PKPMG has recently released a comparison of the true Top Federal and Provincial4 a+ [; C( v) M3 R$ ?# d
Marginal Capital Gains Tax Rates per province. It is very interesting to see
1 Q9 i! K% g: }4 ^* Ihow these will affect your exit strategy. Here are the numbers:- U# y9 n& K- {6 U) u0 E/ h
1 `9 K+ [* a1 X& LBC . . . . . . . . 21.9%% G. z/ x& |& s& x$ {
AB . . . . . . . . 19.5%
b x# Z8 Z# FSK . . . . . . . . 22.0%. u- @/ q. w$ b, f: x+ C! A9 W
MB . . . . . . . . 23.2%* L+ R8 U0 M4 }% m
ON . . . . . . . . 23.2%4 r: g* w, o, f. q% E# J' P
QC . . . . . . . . 24.1%3 W s) d* P% j, [5 {8 f, o1 w
NB . . . . . . . . 23.4%
" H* t$ J# m/ }) q2 t$ PNS . . . . . . . . 24.1%; R: K' m0 c/ M: e
PE . . . . . . . . 23.7%7 w3 j" u' V# P7 G# H/ a* K" s
NF . . . . . . . . 24.3%
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' T) U& p8 w5 M |Lower capital gains tax increases investment and stimulates the long term
& m+ d" v( O! J% T" x8 @# Weconomy of the province. It also allows real estate investors to keep more of- N% l, w1 |, m% U1 h& R
their profits at exit time. Always a good number to pay attention to.
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0 ^& j k3 s/ t5 R2 F3 ]Overall, by staying focused for the next short period of time, you have the5 |' z# w- S+ U9 A8 M8 ~
opportunity to create financial freedom of which others can only dream. Of
; U% x# u1 `2 |% f! H$ U3 T4 Jcourse, the key word is focus. And with an August line-up of 'Members Only'5 O0 Y8 k p0 Z6 V) M% b2 x6 Y
events like this, you can't help to become a real estate investment champion; r( w6 \) k- F8 ?% \4 M3 A, v
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
' [% x0 y% R) m# V9 qresults in just a few short years. |
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