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NEW HOUSING PRICE INDEX...
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The New Housing Price Index, has just been released and it provides some very
: i3 D- ?( Q: y3 }4 i( U) y# Winteresting insights, not only into where the market has moved, but where it
0 E' e5 A- W! Ywill be going.- s8 i9 v2 b0 F! e% q2 S) y9 `: m& Q
. A0 P8 o. m# N, S" ~& ?It proved, once again, the value of looking at fundamentals behind a market.. T( k3 ^2 o8 i
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The New Housing Price Index is compiled by Statistics Canada and is used by
9 j8 E; K( H# z8 X8 }" esophisticated investors to see how much the market has moved, as well as an
w; M" r7 X$ ?- lindicator of where re-sale home prices will be moving in the coming six months.
4 K& @( }+ M$ }* wWe look at the ripple effect that new housing prices have on re-sale property& B5 k7 B8 P) }2 q- Z4 t
values and can extrapolate what direction re-sale prices will be moving and by# s& `% O {; V+ v
how much.7 Z3 x8 x; \8 O+ t& M7 f" D ^
* h1 ~* W+ N c @. J/ { D: RFor instance, for the last three years, we have told investors to avoid Windsor,/ i/ @) u0 w4 q8 X
Ontario as an investment area because the underlying fundamentals are not very# `1 \' x2 d6 d( @
strong. This has been proven once again with the release of the latest
3 `) y: U, w' n3 z( ?) T, lfindings. New Housing Prices have actually decreased by .5% during June 2005 -
$ o& y1 n* p7 I$ f& x4 H/ d( ~June 2006 proving that fundamental investing works in helping you pick the best4 d! I6 I4 V' u& ~; a1 t# b
markets and avoid the flat ones. This .5% decrease should have little impact
0 k. Z7 F- |9 y1 s4 g: |) t. c0 uon 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 the* M1 R4 w( d: J0 G' w
market continues to be super heated. With close to 3,000 net new people into
; R/ P% B5 q9 l' j; b: q' v5 p6 R0 Tthe city every month, the property market just can't keep up. That is why we
3 |+ L/ f9 F' t h! p) |" Asaw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). 1 V/ I- j# S/ A% Z
This is great news for the future of re-sale values in the city as these! W$ }$ u. |4 l; t5 X( M
increases will continue to ripple out into the market for at least the next six) N- \8 W6 ]4 Z$ h1 |6 E b5 K$ I) Q
months.
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( Y! ?0 J8 N& fComparing these two regions is a great illustration of the value of not getting6 l0 |- y* f1 [6 a/ K4 q
caught in the 'emotional guessing game' by just focusing on the underlying% k/ I. v. j4 L2 x
fundamentals. It is sad to see those people who said in the last 2 years that* d( Y; ^' Y# R& n9 b
the Alberta real estate market was over and they were going to sit back and wait0 f& r+ m8 s5 X: o2 ^6 a
until it drops. Quite obviously, they have missed out on AMAZING gains, all
% e3 P. Q* M- e+ O) G+ c% u% [because they didn't follow fundamentals, they just led with their emotions.6 O/ t( q$ \! U/ k+ Y" K
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By the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June
$ O5 `' h$ A D8 J9 i+ e2005 to June 2006), also great news./ l% ~ X& ^- _) k+ B0 x) S
5 G; m0 N' {; p& i0 l8 wBy comparison across the country, these are the numbers for June 2005 - June) g6 ~% s, Q$ J! M4 d. x
2006 New Housing Price Index for:
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9 a( q2 i! v6 F$ H2 G0 F) u/ \! IVancouver . . . . . . . . +5.2%% Q6 Y6 A9 \& r& J% n0 l& ~
Saskatoon . . . . . . . . +8.5%$ o! W/ p8 w# y* U8 i- m
London . . . . . . . . . . . +3.0%
: c! X* h$ H7 w' }Hamilton . . . . . . . . . . +4.9%! v) F1 _- m# n
St. Catharines - Niagara . . . . +4.9%! T( V1 [! `& q$ q7 V" @2 i3 o
Toronto and Oshawa . . . . . . . +3.2& k- a5 M9 ^4 q0 F+ W b3 F( V0 x
Ottawa - Gatineau . . . . . . . . . +3.1%
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8 ?$ z7 R. G; H9 V8 u" y# @3 PFundamental investing ALWAYS makes you look like a genius - emotional investing7 ^: [; U/ X, e- r" g$ {1 ]. v
gives you quick highs, but also quick lows. Well done on your focus!
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; l% y; G2 u* F" M) W1 m JAs the fundamentals have been showing all along, the Alberta market continues to
g$ }$ |; P7 n- H5 r4 vbe strong, as in-migration and job creation continues to attract people from not% J! B5 k9 e+ m4 f @
only across Canada, but from around the world. Our average wages are. l6 J: W! A$ G. M
increasing, our population is increasing, our unemployment rate continues to6 E# h% P/ M* Q6 {" V6 t3 d
drop and our GDP growth is slated to once again lead the country.
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0 O- ~7 F% y+ vHere are some very interesting facts that are helping to support the strong5 g! K, R5 i H
fundamentals:) _8 r2 s, a4 |: b3 M% s4 N. H6 E/ \
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1. The Conference Board of Canada is forecasting strong economic growth in* V5 B2 w9 w) S- b( r' A
Canada, with Alberta once again leading the way. In fact, the projected growth5 H- U1 C* H1 l0 C( y' o- b- x
for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and
7 d! @3 _* D6 @8 athis is slated to occur even with the labour shortages we are witnessing.' U" b1 j4 j4 v/ h
5 z/ R8 F1 j4 f T1 N2. People are discovering Canada as an investment center from all over the1 }& ^ e. K) y$ @" S
world. Recently, there have been investors coming here from Asia, Australia,. S9 x& w0 P5 ], V
the US, UK and Europe. In fact, if you review the world's press you will see# n/ N+ J: Y2 }# L7 r7 {* O
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 investment, J* P" d* y/ a* I- L0 T# ]
atmosphere (including Why Alberta - Why Now") to a group of major investors in$ L7 R7 P. Y" W. R/ z
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after& a/ [4 G' {0 P+ W" p6 _
Don presented the economic facts, many of these investors (who could invest
& g8 G6 n9 n- }( \, [& ganywhere in the world) have already booked their flights to here. Once again$ u: z" b) J# r" W5 x! m1 H
proving that when the true numbers of our economy are presented (along with the& K# d% Q8 L- J4 N
political stability of our country), there is no place in the world that can1 w. }. N1 @" ~4 y( {/ J) h
beat it for long term investment.- m, B) F1 j L# b" o |2 I
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4. Job creation continues to be strong (with a small lull in June); definitely" `- N" f) @- [, \5 c2 g' p
a sign of strong long-term fundamentals. RBC has also been following the job# X7 c3 ^. l }1 @0 J3 ^; \ c3 O4 d
creation situation and here is what they are saying: (www.rbc.com/economics)7 x. n5 T6 x1 R# m6 x3 Z* n
"After generating a substantial 96,700 jobs in May, the largest such gain since6 x7 ~' L6 u" K" M9 P, b7 g Z* R
January 2002, the economy lost a modest 4,600 jobs in June... + `( n. Q- h K0 Q3 y. W
: }+ c% R. l9 H$ t& l& nStrength in the Canadian economy contributed to a gain of 215,600 jobs in the5 ]1 p: w1 e7 M8 D* K
first half of 2006, a feat not matched since the second half of 2002. With the
6 ?6 M8 i9 [# T) c" seconomy widely expected to grow at a more moderate pace in the second half of
& q% [5 ~$ M3 C2 Ethe year on the back of slowing trade activity, this impressive showing may not
4 @5 x, E* ^. M; [( n4 Frepeat itself. We expect that employment grew in July at a pace consistent with
" S* \ ~4 J+ J fits recent trend of 24,000 jobs a month. Assuming that the labour force grew at
" t$ x+ B) u2 S) t' H9 }its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate* G% c# |( n# ]' r+ Q, L) b
of 6.1%." Overall very good news. Now the key is to ensure that the region in
! P4 b0 c/ G* _! A! `/ C+ a7 uwhich you are investing is continuing to generate jobs and increasing incomes.
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$ r) F* w# `7 ^! UIn other words, it is a great time to be taking advantage of this strong
0 ~3 P3 a! Q ^ Xeconomy, avoiding 'excuses' and to especially not listen to the uninformed- g" p" B% W/ @" G
'dream stealers.' As long as you stick with your game plan, you continue to do* G6 A; \& Z9 k& h" H# s* u7 u
your due diligence, and you remove emotions from the equation, you will see the
8 i/ ]: ?. {5 Eopportunities that are right in front of you, right here in Alberta. Let the7 d9 d7 Y3 k, o4 P8 O/ U! S. ]; W
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared+ Y) J& w: l6 \1 {0 l- K( e
and your financial freedom has surpassed even your wildest expectations.
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/ o0 C+ j+ a+ c) Q4 m2 v1 V% {Capital Gains Comparison.) L/ _6 K# l0 p+ K8 A
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KPMG has recently released a comparison of the true Top Federal and Provincial. H. p) N! Y4 S
Marginal Capital Gains Tax Rates per province. It is very interesting to see: Y* f. Y! J/ k, k; Y' g* S+ B
how these will affect your exit strategy. Here are the numbers:
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5 e% u4 J5 l6 l/ n" xBC . . . . . . . . 21.9%
* L' u5 `4 Z: s3 VAB . . . . . . . . 19.5%
7 Z* Z/ `# z& g# Q0 ^7 L H, Y& MSK . . . . . . . . 22.0%
) ` [! @$ r" ^% b# e/ v- lMB . . . . . . . . 23.2%
. w+ v+ d' F! m( j' P" d6 {; _& aON . . . . . . . . 23.2%
8 O2 f. u/ g. ?. t5 B: C( N" sQC . . . . . . . . 24.1%. O6 Y) j* l0 A# l+ I! [, _
NB . . . . . . . . 23.4%3 h* {% j, t" D# S4 z5 j ^
NS . . . . . . . . 24.1%
% X6 q; E* u0 {/ n, d! P. a" U4 XPE . . . . . . . . 23.7%5 x; d/ B" J! t/ N" v
NF . . . . . . . . 24.3%7 r7 K/ v% Y; h1 s$ Q) E
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Lower capital gains tax increases investment and stimulates the long term2 v( h. x9 v1 h1 _* Q& _# f
economy of the province. It also allows real estate investors to keep more of4 N- Z `. ]! q4 p, a, e" i
their profits at exit time. Always a good number to pay attention to.
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Overall, by staying focused for the next short period of time, you have the
1 j6 P& J/ m6 y6 z0 d: Y q& eopportunity to create financial freedom of which others can only dream. Of6 @" U) E5 U6 K, ]
course, the key word is focus. And with an August line-up of 'Members Only'; r, c& s2 Z* `. \' D
events like this, you can't help to become a real estate investment champion
2 N. G! z; O) q* V+ E c- a2 Iwhen you take action as a full REIN Member./ P3 e5 d- {8 J
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the5 ^& V- x) g# w2 f. f* @
results in just a few short years. |
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