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NEW HOUSING PRICE INDEX...& W# @* S. o* C# c: d- e* t
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" e& a* w; o) j) ~ _+ Z6 IThe New Housing Price Index, has just been released and it provides some very
4 l: M5 w7 F) l1 e8 h1 Dinteresting insights, not only into where the market has moved, but where it2 H! { y0 X% p: Z
will be going.0 o& J6 |& r& l
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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 by
6 d7 C5 E( V7 V1 f ^sophisticated investors to see how much the market has moved, as well as an
' u' Z8 j2 [/ y6 u3 b* K. `indicator of where re-sale home prices will be moving in the coming six months. - G- u( ]/ ^4 [6 |8 e0 a: D
We look at the ripple effect that new housing prices have on re-sale property
$ k5 n- n* [# v* k+ S. b+ @' T: yvalues and can extrapolate what direction re-sale prices will be moving and by
0 |; u1 V' H4 f5 L3 mhow much.
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3 w9 L7 i9 e* {For instance, for the last three years, we have told investors to avoid Windsor,- d3 q5 j/ S" R% y0 S
Ontario as an investment area because the underlying fundamentals are not very" l6 C1 C1 e; {5 |- E
strong. This has been proven once again with the release of the latest4 S( L U, O4 b+ S+ e+ q" ~1 B
findings. New Housing Prices have actually decreased by .5% during June 2005 -! d1 J4 X& ^# e5 x
June 2006 proving that fundamental investing works in helping you pick the best
0 J# D5 d* C9 Y' a# Mmarkets and avoid the flat ones. This .5% decrease should have little impact) Y# C" r7 h/ p) m2 l: P/ x: a
on average re-sale values in the Windsor region.# y# l5 M- c4 d6 p# c
; i. e) ^6 s" c# zTo contrast this, the fundamentals we discuss are so strong in Calgary that the% ~$ r' c5 ]. M+ u) A- j
market continues to be super heated. With close to 3,000 net new people into
0 |9 ^- d/ K4 M jthe city every month, the property market just can't keep up. That is why we
/ A0 u- T) f6 O2 L1 D3 h, Esaw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). 2 h0 }9 V0 n" s+ }: V% \( S' a
This is great news for the future of re-sale values in the city as these, q1 x; d( [: F2 U! j2 {* B5 W
increases will continue to ripple out into the market for at least the next six
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Comparing these two regions is a great illustration of the value of not getting
! |) w; W: n7 Q# n. D4 z- q: Jcaught in the 'emotional guessing game' by just focusing on the underlying
, s* z- |' V: w" w% efundamentals. It is sad to see those people who said in the last 2 years that& s& @$ a: A$ r3 {- _
the Alberta real estate market was over and they were going to sit back and wait
; |/ }) ^8 d4 g, nuntil it drops. Quite obviously, they have missed out on AMAZING gains, all
# K/ J/ }! G& N; ]because 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
8 q( J, R9 N6 R6 |% n7 v$ J4 ^2 |2005 to June 2006), also great news.
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By comparison across the country, these are the numbers for June 2005 - June6 d; O: o% x3 x+ h6 M! T
2006 New Housing Price Index for:
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Vancouver . . . . . . . . +5.2%
. q" z6 e& I& @5 x$ ^3 y. h6 x5 ESaskatoon . . . . . . . . +8.5%
) Z% ~- h- P2 ^: VLondon . . . . . . . . . . . +3.0%
$ `% w3 v" a m8 h3 H2 mHamilton . . . . . . . . . . +4.9%
7 n8 s2 x2 {! B+ i* ?St. Catharines - Niagara . . . . +4.9%4 T$ O5 b- Z6 c5 Z
Toronto and Oshawa . . . . . . . +3.2* y5 n( e) ]1 E1 ^/ I: T
Ottawa - Gatineau . . . . . . . . . +3.1%; i8 V: D3 _5 d6 E$ k
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Fundamental investing ALWAYS makes you look like a genius - emotional investing5 ?7 D1 l' T% H6 b6 l! y4 d: w
gives 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, C9 z q: `7 E
be strong, as in-migration and job creation continues to attract people from not
& O& i( x# }2 f6 ]/ @only across Canada, but from around the world. Our average wages are; X) L: E1 S4 y+ i3 `1 K
increasing, our population is increasing, our unemployment rate continues to
( I- ], K; D( hdrop and our GDP growth is slated to once again lead the country.0 u* k* A1 g1 t. c
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Here are some very interesting facts that are helping to support the strong) e+ _2 W. S3 X- k. m6 g# X
fundamentals:0 _- I8 ]# d; V9 g5 r
7 F) o6 p) Z! ~" s+ L) H: O: s1. The Conference Board of Canada is forecasting strong economic growth in
6 p* H0 E$ x: N: b+ @Canada, with Alberta once again leading the way. In fact, the projected growth5 N# v6 ]/ g8 G1 k+ X3 Z% e
for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and
$ a( C, i) e. H5 `; |this is slated to occur even with the labour shortages we are witnessing.
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# M- G5 V, O& L2 i' z/ {2. People are discovering Canada as an investment center from all over the7 r. B7 l6 l* [! z5 b' b- n: U
world. Recently, there have been investors coming here from Asia, Australia,
+ S+ M6 G2 j4 L: `3 a4 _9 H. dthe US, UK and Europe. In fact, if you review the world's press you will see
% T0 p* r z6 f1 T* M4 ithat Canada (with a focus on Alberta) is being discussed more frequently. 5 {' h+ v8 [3 Y
0 q* s. ^( z4 e- m f" I3. Don Campbell has just returned from presenting our Canadian investment
+ B! l% a' |7 F% c9 p% matmosphere (including Why Alberta - Why Now") to a group of major investors in7 g5 b$ X. U3 c3 u6 H9 d
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after
, A# r* S% e. h# rDon presented the economic facts, many of these investors (who could invest
; E T/ F# r Zanywhere in the world) have already booked their flights to here. Once again
! C$ U. e& P/ B2 F5 _proving that when the true numbers of our economy are presented (along with the
( X' ^/ U4 G& }8 z6 L: gpolitical stability of our country), there is no place in the world that can
. r" p$ H `% X, }% Pbeat it for long term investment.
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' s4 k. F' V$ c5 ?( h' M; h T/ u4. Job creation continues to be strong (with a small lull in June); definitely
5 Y. e0 T$ J% C h! @$ b* Xa sign of strong long-term fundamentals. RBC has also been following the job4 Z1 S, j L* ?% O/ t+ i
creation situation and here is what they are saying: (www.rbc.com/economics)- [; y0 `& J8 }2 W1 L
"After generating a substantial 96,700 jobs in May, the largest such gain since; h- m: n0 Y) u* d# @
January 2002, the economy lost a modest 4,600 jobs in June...
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/ a. A- S6 g" P8 _* P# rStrength in the Canadian economy contributed to a gain of 215,600 jobs in the
S1 i: M9 b1 `" M; e* ^first half of 2006, a feat not matched since the second half of 2002. With the. Y% l/ \) L" W: m. P- S2 E3 d
economy widely expected to grow at a more moderate pace in the second half of
/ v8 {) Y4 [, Y" G9 R! _7 ithe year on the back of slowing trade activity, this impressive showing may not8 E8 k/ A' |, s: t$ C
repeat itself. We expect that employment grew in July at a pace consistent with5 A8 x. D* l6 E' N) t7 B D
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at+ l2 U; ~0 \) `. D u' ?* H4 u/ ^
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate0 C- K- O) W6 C3 U
of 6.1%." Overall very good news. Now the key is to ensure that the region in
6 S* C' F, V9 J& D( y: d; rwhich you are investing is continuing to generate jobs and increasing incomes./ M* z& y: M" k6 b
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In other words, it is a great time to be taking advantage of this strong
7 ^- _1 j' k. O% v Aeconomy, avoiding 'excuses' and to especially not listen to the uninformed
- O9 [3 K2 X$ l/ ^'dream stealers.' As long as you stick with your game plan, you continue to do
# w( _" q$ m' w0 b. B, g3 Byour due diligence, and you remove emotions from the equation, you will see the- Q6 Z, V4 b6 `2 c* O
opportunities that are right in front of you, right here in Alberta. Let the- [/ O0 G' o7 K% |& W X z+ y
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared
9 D# K: D5 c& s- |: Dand your financial freedom has surpassed even your wildest expectations.
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( {, {. r% P, @$ \Capital Gains Comparison.6 C8 ~8 w! f# m
8 |% J d/ s" h8 U1 m6 ~% A( RKPMG has recently released a comparison of the true Top Federal and Provincial7 b, k# b# C- }& b. ]
Marginal Capital Gains Tax Rates per province. It is very interesting to see0 S, x! r; k3 B" G
how these will affect your exit strategy. Here are the numbers:
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5 r7 `& a$ R. CBC . . . . . . . . 21.9%0 m2 `: `6 t6 ]" n; [2 l
AB . . . . . . . . 19.5%3 }- [1 }0 ^$ M# i P3 N
SK . . . . . . . . 22.0%
$ _3 M6 h' T9 u9 ?MB . . . . . . . . 23.2%
# V% _" e: k3 L. G. X2 EON . . . . . . . . 23.2%
" c! G/ m; ^& P( j1 W' K0 XQC . . . . . . . . 24.1%
% Y: l- C. \" E! \8 P. F- ?NB . . . . . . . . 23.4%
$ G8 q' X5 h5 H) INS . . . . . . . . 24.1%9 O( Q3 S, _, w; s
PE . . . . . . . . 23.7%* I0 a/ W7 }9 R' c4 P( e2 |* U, O
NF . . . . . . . . 24.3%
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Lower capital gains tax increases investment and stimulates the long term+ k3 D1 h: C& I! F
economy of the province. It also allows real estate investors to keep more of
8 m% }9 `5 V/ `9 c9 Wtheir 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
3 [' x2 Z, L" |& Yopportunity to create financial freedom of which others can only dream. Of
% Z+ J6 q+ h' N/ Q( [course, the key word is focus. And with an August line-up of 'Members Only' C+ N) c* I) ?6 u! V
events like this, you can't help to become a real estate investment champion) M8 E: T% A, P/ [5 d
when you take action as a full REIN Member.( G7 t# v. g4 D7 Z# z
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the
4 \/ T5 Y" {1 g! [results in just a few short years. |
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