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Economy Headed For Tougher Times


mrlupin

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Is your single objective to prove me wrong Mizar?

I heard the same report from CBC. Economy creates approx 30000 jobs.

You can't rely on the monthly unemployment numbers by themselves to gauge the health of the economy, they are too volatile. If you look at Dec, you lost 44000, so your almost back to where we were in Nov. Wait and see what February ,March and April bring. Then we will have a better idea of the employment trend.

In Canada, consumer spending represents 58% of GDP at the moment. If the consumer reduces spending (ie average debt level @165% of salary) what do you suppose would happen to the economy? Strangely enough, the last 3 times consumer spending went to 58%, we had recessions. Only the recession of the early eighties does not corrolate. Wait and see...

Instead of just posting article after article to prove me wrong, try to understand what affects the economy and how those factors interact with each other...

Unless you get off on proving strangers wrong on internet forums....

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Mr. Lupin

What you fail to grasp is that who is right or wrong does not matter. What matters is accuracy. If someone is wrong, they should happily admit it and move on.

Example: In a review of some of this thread, i discovered in post #29 I said that " I would like to emphasize the original portions of this thread which had nothing to do with real estate but with the economy heading downhill due to layoffs in certain area" In fact, I was wrong. A look at your first post shows that(assuming you didn't modify it) you did post about real estate. I was wrong and it was sloppiness on my part for not reviewing more thoroughly. One of the best qualities a person can have is to easily admit error. Many people are unwilling and it is a big weakness. It applies especially so for us aviators. Once you can release yourself to harsh analysis and truth, it is much easier to have common sense opinions based on reality. Political correctness flies in the face of this by the way.

I'm not trying to prove you wrong. I enjoy posting accuracy about subjects when I see inaccuracies. I am trying to prove that the economy is doing reasonably well(and I have added good stewardship as a reason why) and have underlined some stuff on this thread about this not being just about December but the long term trend. I am just trying to relay accuracy. We had a blip in December and there will likely be more blips. We should be happy about the news posted and if I were you, I would be very happy to be wrong about the title of this thread which, by the way, is a very strong statement about a subject affecting millions. It appears to be wrong, and not indicative of a subject about the factors that affect the economy.

As said before, I appreciate the other information you have brought forward but based on reactions posted it seems that a compliment by me gets ignored and factual information causes bother to you.

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Mr Lupin

Also remember that what happens in one region of Canada does not mean that it will happen in all regions of Canada no will it mean that the average for Canada will be similar.

For sure...

Different areas will be affected differently. One would be hard pressed to compare Calgary and Waterloo for employment and same thing for real estate.

I spent the last month in YYZ learning how plastic airplanes work. While, there, I stayed downtown. I was surprised to see all the empty condo towers! One can't throw a snowball without hitting a condo sales office. I really wonder who will be buying all these new units comming on the market.

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Word has it that a lot of those empty condos have been purchased by people from put of country(unstable countries) that are parking their money in safe havens such as Canada. What that means for the market I don't know. But it does show confidence in the country. Peaceful, reasonably well run and besides the weather for them, a pretty decent place.

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"Word has it." If ANYbody has ANY issue with that authoritative FACT, then you're wrong. I guess that means this thread is finished! :Dancing-Chilli::Clap-Hands::icon_butt:

Once again, someone posts their usual level of capable contribution to a thread. Kip mentioned about this earlier.

Anyways, I'll continue to post updates about the economy. Strangely, I think the usual crew is praying for a downturn to think they somehow proved me wrong. But all I post is the truth, not right or wrong. And if mistaken, an admission instead of disappearance.

Fortunately, as usual, I can back up my statements as seen and underlined below.

http://www.theglobeandmail.com/life/home-and-garden/real-estate/foreign-investment-cuts-both-ways-in-toronto-condo-market/article4246468/

Foreign investment cuts both ways in Toronto condo market

Talking about Toronto’s condo craze has become something of a sport for residents of Canada’s largest city, where soaring real estate prices and a forest of construction cranes have fed speculation of a real estate bubble.

But the big question is how much of the market is fuelled by cash-rich foreign investors, and whether they, seeking to capitalize on more than a decade of rising prices, are preventing the market from a soft landing.

“Lots of people think that offshore buyers are just coming in to buy, buy, buy. That’s completely wrong, because they’re more cautious than local buyers,” says Tony Ma, president of HomeLife Landmark Realty Inc Brokerage in suburban Toronto.

Mr. Ma’s 500 real estate agents, most of them Mandarin speakers, sold more than 1,280 unbuilt condominiums in Toronto last year to ethnic Chinese buyers hungry for Canadian real estate.

Canada, along with Australia, is a popular destination for global real estate investors seeking a safe and stable place to park their money, given the two countries’ stable economies and financial systems that were mostly untouched by global turmoil.

“There is definitely a foreign investment component to the new condo industry – it makes up the vast majority of sales right now,” said Al Daimee, a real estate agent with Royal LePage who specializes in downtown Toronto condo sales.

Mr. Daimee spots foreign buyers and sellers by the presence of a power of attorney on condo documents – a sure sign, he said, that foreign buyers are using a local contact to close a deal. In fact, he’s done such deals himself.

“The power of attorney approached me directly, saying ‘I have someone to buy in this particular building,’” Mr. Daimee recalled. “The owners were in Beijing but the power of attorney was local. They wanted to flip it right away.”

Canada does not keep figures about foreign buyers in its real estate sector. While anecdotes about foreign buyers abound, developers argue there is no swell of unsafe investment from abroad, in part because there is enough demand domestically and in part because developers want the safest buyers possible.

“If we have a foreign purchaser, it is difficult for us to mitigate our risk against a loss. So if they decide for whatever reason not to close the transaction, all I have is a deposit. I can’t deal with it beyond that,” said Jim Ritchie, vice-president of sales and marketing for condo developer Tridel.

Mr. Ritchie said 95 per cent of Tridel’s last 2,100 unit sales went to local buyers, although he notes foreign buyers can use a local relative.

With no hard data to distinguish between a Canadian with an ethnic name and a foreign investor with no ties to the country, anecdotal evidence mostly informs the debate over what is driving the development boom.

“I honestly believe that is quite a myth – I don’t think there is a lot of foreign investment happening,” said John Andrew, director of Queen’s University Real Estate Roundtable.

“I think there is a certain amount of investment happening by people the sales people may mistake for foreigners, because they are landed immigrants or they may not be Caucasian.”

Even if foreign investment could be quantified, experts disagree on the impact it may have.

A report released by the Office of the Superintendent of Financial Services, the Canadian bank regulator, pointed to the prevalence of cash deals by foreigners, a trend that mitigates the risk to developers and lenders.

“There is basically a two-tier market with high-end purchasers often paying cash for high-end units while others are often able to put sizable down payments for lower-priced units,” the report said. It noted that many developers have marketing teams dedicated to foreign buyers.

Mr. Andrew, the real estate professor, said the cash purchases are a big plus for the market and the economy.

“When we first started hearing reports of significant foreign investors, I took that actually as good news, because they are less likely to have leveraged that purchase than Canadians are,” he said.

“That’s actually great for the industry, because as long as they are paying cash, they will not be dumping their product on the market (when interest rates rise).”

Even if cash-heavy foreign investment does not threaten Canadian banks because little leverage is involved, it may drive up demand and inflate prices. Or it may pop a bubble if circumstances abroad cause money to dry up.

Still, with few other options for investors from China – who are limited as to what they can buy at home and in countries like Australia – OSFI said even a price correction “would not lead to a substantial foreign withdrawal from (the) market.”

From all appearances, the allure of condos in multicultural Toronto – where half the population was born outside of Canada – may come down to price. With an average price of $368,000, Toronto offers a reasonably low entry point to a market that still offers more long-term return than stocks or bonds.

“If you price right, the project will sell,” said Mr. Ma. “The demand is still there and we have lots of investors.”

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At the risk of feeding the troll...

[Q]Strangely, I think the usual crew is praying for a downturn to think they somehow proved me wrong.[/Q]

Really? People on a mostly anonymous message board are praying for a downturn just so they can prove another poster on the same mostly anonymous message board wrong?

We get it. Under your various handles you have bomabrded the board with a mass of copied articles found on the internet to back up what you believe.

This doesn't make you a purveyor of truth, it makes you someone who places importance on the feeling of being right on a message board. I don't know that it contributes to a discussion and I don't know if it compensates for something else in real life.

Regardless, keep being you, count your message board "likes" as some sort of validation and have a nice day.

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Mizar: you said:

I don't think anyone on this forum would consider comments by any poster to be that important. :biggrin1:

Are we dealin with a case of:

"avoir la grosse tête"

In terms of myself? Could be. One has to keep an open mind and analyze themselves as much as anyone else or even more so. On this thread, I would say that I have been persistent but posted useful articles. I would say that I have posted credible articles to back up my arguments. I welcome any analysis of my statements and have thanked a poster more than once for information provided(about real estate) that improved my knowledge. I have admitted an error made and said that it was sloppiness on my part and would do so again. I have said that I don't have the expertise to give an opinion on a certain portion of the subject. I have stated that I can't predict what the final outcome will be on the subject and I have avoided complaints instead of posting facts.

The thread has pretty much come down to changing the subject so I will only ask people to re-read a few posts and ask themselves if what has been posted by those several recent posters has contributed to the threads subject. They complain about my style and post no factual information, only putdowns. It is a continuing trend by a few. As stated, I don't think that it contributes to the discussion and may very well compensate for something else in their life.

Are comments by any one poster that important? Most of us place quite a bit of emphasis on our small little world and no doubt consider their comments to be somewhat significant. Which explains the emotion sometimes seen in posts. The reality is that, this forum like so many others and its contents are not even a drop in the bucket in a country that is pretty small in the overall world. The economy is what it is and there are probably thousands of comments every day.

But, I would say that at least a few readers including myself have learned something useful by reading this thread. That is a good thing.

Someone mentioned that "This doesn't make you a purveyor of truth, it makes you someone who places importance on the feeling of being right on a message board.". This is incorrect of course. The importance is that what is right is posted regardless of how it comes about.

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you have bomabrded the board with a mass of copied articles found on the internet to back up what you believe.

This doesn't make you a purveyor of truth, it makes you someone who places importance on the feeling of being right on a message board. I don't know that it contributes to a discussion and I don't know if it compensates for something else in real life.

Thanks for your opinion Chock. Interestingly, below are just a few of your posts in the last few months that just happen to have links and copies of articles from the internet to back up what you believe. Hmmm, there are many more but I have to go to work soon. They say it takes two to tango.

1. I am not a big fan of discussions that turn into a contest of who can post the most links but I found this reasonably compelling. http://theairlinewebsite.com/topic/402120-climate-change-101-with-bill-nye-the-science-guy/page-2

2. http://theairlinewebsite.com/topic/402082-i-am-not-numb/#entry1621074

3. http://theairlinewebsite.com/topic/402322-the-gift-that-keeps-on-giving/#entry1622590

4. http://theairlinewebsite.com/topic/402354-who-needs-a-passenger-bill-of-rights/#entry1622780

5. http://theairlinewebsite.com/topic/400572-legaliiize-it/page-3#entry1619136

6. http://theairlinewebsite.com/topic/401846-sadly-another-senseless-shooting/#entry1618788

7. http://theairlinewebsite.com/topic/401684-cool-story-canjet-fas-to-receive-bravery-awards/#entry1617704

8. http://theairlinewebsite.com/topic/401490-friday-food-for-thought/page-3#entry1616658

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Mizar,

you said:

Word has it that a lot of those empty condos have been purchased by people from put of country(unstable countries) that are parking their money in safe havens such as Canada. What that means for the market I don't know. But it does show confidence in the country. Peaceful, reasonably well run and besides the weather for them, a pretty decent place.

And then you posted this article and link;

http://www.theglobeandmail.com/life/home-and-garden/real-estate/foreign-investment-cuts-both-ways-in-toronto-condo-market/article4246468/

What were you trying to show us? Did you even read the article you posted? Is it possible you were tired and/or your reading comprehension was not up to par? Had you been drinking? What did you understand the article to say? Do you feel it vindicates and justifies your "word has it..." post?

Try reading an entire article prior to underlining the data you believe to be fact... You might learn something.

No one will argue with you that some foreign buyers are buying in Canada. It's just that it isn't believed to be a very important part of the market...

I guess you won the link contest...

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Mizar,

you said:

And then you posted this article and link;

http://www.theglobeandmail.com/life/home-and-garden/real-estate/foreign-investment-cuts-both-ways-in-toronto-condo-market/article4246468/

What were you trying to show us? Did you even read the article you posted? Is it possible you were tired and/or your reading comprehension was not up to par? Had you been drinking? What did you understand the article to say? Do you feel it vindicates and justifies your "word has it..." post?

Try reading an entire article prior to underlining the data you believe to be fact... You might learn something.

No one will argue with you that some foreign buyers are buying in Canada. It's just that it isn't believed to be a very important part of the market...

I guess you won the link contest...

Dear Mr. Lupin,

I wasnt aware you felt that there was a link contest. However, I did notice that you posted several links that were quite credible. It appears that my doing the same as you invites your diatribe that appears so angry. Kind of like Chock. Interesting but a little odd.

As you may have noticed in the last article posted by myself, there is another small section that I did not underline but is just as important . it says, “There is definitely a foreign investment component to the new condo industry – it makes up the vast majority of sales right now,” said Al Daimee, a real estate agent with Royal LePage who specializes in downtown Toronto condo sales.

That sounds sort of important to the market, at least in my opinion anyways if I were trying to sell a condo. And it is in line with that minor post I made that has these several few characters so riled up. You might notice that this statement comes from an agent of a major real estate company in the area discussed, not some theoretical university professor opinion.

However, I always like to learn things.Like I did about the CMHC, so feel free to help me learn something.

In the end, my small statement of foreign purchaser rate of Toronto seems to have somehow appears to have riled up a few. There seems to be initial mocking of this small statement made and then when I show some evidence, it morphs into outright anger. Whereas when you posted some very useful information about CMHC; well, I think I have thanked you more than once for that. All seems so odd somehow.

Anyways, back to either sleep or the booze :biggrin2: .

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You dont seem to be able to post what you are hinting at(unlike me) so I guess there is nothing there.

Bottom line, Lots of foreign purchases of condos, economy is doing relatively well and under good stewardship. Feel free to show otherwise.

I guess that means this thread is finished.

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An article from the Conference Board of Canada on the effects of the boomers downsizing and getting out of the real estate market as they age...

Just another one of many factors affecting that will affect the economy in years to come. Basically, (historically) once people get to be 55 and older house ownership (in %) declines...

Don’t Ignore Boomers’ Impact on Canadian Housing Market

http://blogs.wsj.com/canadarealtime/2013/07/29/dont-ignore-boomers-impact-on-canadian-housing-market/

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House to rent calculations:

A ratio used to see if prices are inflated or not. As house prices increase, if the price of rent doesn't get the corresponding increase, people become less and less likely to buy a house or condo since renting is significantly cheaper. Here is a chart from the OECD with world price to rent ratios.

Column 2 has price to income. The values are indicated in % over the historical average.

ScreenHunter_904-Jan.-17-11.32.jpg

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I just found an interesting dynamic website from economist.com

You can compare the following:

-House price index

-Price in real term

-price against average income

-Price against rent

-Percentage change in house prices. (interesting metric, you can compare it with how much wages have gone up (adjust for inflation) if you can find that data on the stats canada web site.)

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Malcolm,

There are many factors affecting the economy, provincial policy would of course be one, but really, it's effect would be marginal unless the policies are really draconian.

As an example, a province threathening to separate would have an effect (ie Quebec) but I doubt Ontario can do much to change the confidence of business leaders there.

For the subsidies, they are often a way to support an industry that would move out if no measure were taken. It's really unclear who they benefit... Sometimes it's the workers, sometimes the company but often the benefit isn't for the normal citizen... (Some exceptions exists at both extremities of the subsidy programs... some good and some bad, it depends on the final objective)

As far as business climate is concerned, I doubt Ontario is that far from other provinces (for policies,tax rates, subsidies) but I haven't followed them closely enough. These do have the potential of scaring away business but again, only when the advantage is considerably bigger than the cost of closing and moving.

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mrlupin, you could indeed be right but I guess only time will tell. Let's keep our fingers crossed and hope our economy continues to be positive. One good note based on posts by those who blamed our strong dollar for a decline in our manufacturing industry ( I think dagger was one), is our weaker dollar but that will of course only yield positive results as long as we have a manufacturing base.

Hi Malcolm,

Historically, it usually takes between six months to a year for a lower canadian dollar to generate more growth here.

Where I am from in northern Ontario, the lumber mills are likely to start going again. Activities such as soft wood lumber aren't that fast to come to market, the rebound comes later in the year. (they have to order the wood cut and then get it out prior to thaw out or face a waiting period for the roads to be practicable again prior to getting all the wood out.)

We will see how it all pans out but the high level of consumer debt has no short term solution unless the central bank can get inflation up and makes historical debts less significant. That isn't happening right now. Inflation is quite low...

On a related point the way inflation is calculated also affect the economy but that can be a point for another thread.

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First TD bank, now BMO forcasting the economy might be jeopordized by high housing prices and high consumer debt.

http://www.theglobeandmail.com/report-on-business/top-business-stories/surging-toronto-home-prices-pose-big-economic-risk-in-2-3-years-bmo/article16776671/

Toronto prices a concern
The surge in Toronto prices is shaping up as a major economic threat, Bank of Montreal warns in a new report.

In an economic forecast for North America released today, the bank noted three "risks," including those from newly embattled emerging markets, the continuing tussle over the U.S. government debt ceiling and, on the domestic front, residential real estate in Canada's biggest city.

"In Canada, accelerating home prices in Toronto (7.1 per cent year-over-year in January) risk straining affordability further, causing a correction when interest rates normalize and the market is trying to absorb a record number of newly built condos," said senior economist Sal Guatieri.

Mr. Guatieri's comments follow last week's report from the Toronto Real Estate Board, which showed the average selling price in January surged more than 9 per cent to $526,528 from a year earlier. The so-called benchmark price rose 7.1 per cent, as the BMO economist noted while warning that real estate price growth is outpacing family income.

On the home front, this is one of the bigger risks, more so to the local economy, Mr. Guatieri added in an interview. But because the local economy is such a big part of the national scene, there's an impact, he noted.

Mr. Guatieri doesn't see a near-term threat, but one that could spark trouble over the next few years as interest rates rise.

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If you think it's getting better, here's some headlines from where it is worse than here....

http://online.wsj.com/article/BT-CO-20140109-703093.html

Greek unemployment at a record 28%, youth unemployment at 61%.

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statistics

And the rest of Europe still at historically high unemployment levels.

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Thanks De-icer. As you have posted, the economic condition of several European countries is terrible.

An example to all of us of what happens when you live beyond your means. High government spending well above the amount taxes bring in, strict rules not allowing layoffs, excessive bureaucratic red tape, intransigent unions that refuse to consider raising pension ages or making work rules more flexible(even as Greece enters crisis among other nations) have been significant factors in all this.

Food for thought I would definitely say.

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