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NEW HOUSING PRICE INDEX..., l* X. A" u& G3 w
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' G3 _6 { g4 g- ^6 \8 ~: Q# sThe New Housing Price Index, has just been released and it provides some very
- F; H* Q8 u, s: }, J$ rinteresting insights, not only into where the market has moved, but where it
3 }' x6 c9 H, L. _' s dwill be going.
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It proved, once again, the value of looking at fundamentals behind a market.
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' u) I+ o6 T; s! n+ {. w0 ^The New Housing Price Index is compiled by Statistics Canada and is used by
8 w) U- ?0 R0 Zsophisticated investors to see how much the market has moved, as well as an$ L: z& n `2 d: z
indicator of where re-sale home prices will be moving in the coming six months. 2 m' z% t1 {1 C k
We look at the ripple effect that new housing prices have on re-sale property+ M) H* X' h7 Y6 D7 M
values and can extrapolate what direction re-sale prices will be moving and by( Q: s- L+ z: U# r
how much.; b( o/ F6 ^5 z1 U
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For instance, for the last three years, we have told investors to avoid Windsor,
9 Y( B- J6 ~- s4 o' }/ m7 JOntario as an investment area because the underlying fundamentals are not very
_" Z8 i( Y3 o! s- {0 J7 [0 cstrong. This has been proven once again with the release of the latest) Q! D& m6 j( G
findings. New Housing Prices have actually decreased by .5% during June 2005 -
0 I) V. H* r8 T* h. {June 2006 proving that fundamental investing works in helping you pick the best7 d! e5 x3 `, n
markets and avoid the flat ones. This .5% decrease should have little impact
! \' T8 P' J: l6 g1 x/ n* don 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( F' g0 E% k3 Q
market continues to be super heated. With close to 3,000 net new people into- ^% N4 E0 H% u9 P2 g" L
the city every month, the property market just can't keep up. That is why we
: ^5 y, @: d3 ?+ g3 msaw the New Housing Price Index increase by 49.2% (June 2005 to June 2006).
" S+ m; e3 K9 @: D+ x; ?7 qThis is great news for the future of re-sale values in the city as these
8 z# V! r' t% y( w3 ^increases will continue to ripple out into the market for at least the next six1 ?5 l$ z, E0 A+ }2 F
months. ! Q) u- u: X6 r8 m
. k9 u, ^ _, r# {Comparing these two regions is a great illustration of the value of not getting
1 n5 T2 [; \- ]0 j* p; q% H) Ucaught in the 'emotional guessing game' by just focusing on the underlying
( r8 m! |* X" O3 Q' u! u: ?fundamentals. It is sad to see those people who said in the last 2 years that) x' W" b1 W; L- ]8 J
the Alberta real estate market was over and they were going to sit back and wait( P* o5 t3 u1 l8 Q0 |; i3 T# W
until it drops. Quite obviously, they have missed out on AMAZING gains, all
& {" {4 n, W( T- f1 D Wbecause 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% t( T# n/ _; f( g5 q
2005 to June 2006), also great news.0 j: M w d. y0 e8 t" `2 K
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By comparison across the country, these are the numbers for June 2005 - June) _5 a! k; J' z: Y
2006 New Housing Price Index for:& x. l0 o6 R1 h7 G
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Vancouver . . . . . . . . +5.2%0 L% F/ B/ a/ f/ I
Saskatoon . . . . . . . . +8.5%
7 r- j- R0 i6 G/ ]5 c" @# kLondon . . . . . . . . . . . +3.0%* w/ t* x( g! t Q: N. d, ?
Hamilton . . . . . . . . . . +4.9%
" h8 ^% s8 d! E) `6 `St. Catharines - Niagara . . . . +4.9%
0 v- K2 {6 P8 J1 m5 L$ IToronto and Oshawa . . . . . . . +3.2" v# A# z6 t. m! H! H/ A7 S
Ottawa - Gatineau . . . . . . . . . +3.1%
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r, g# d( P- JFundamental investing ALWAYS makes you look like a genius - emotional investing" G3 A( Y4 B$ O/ K& N
gives you quick highs, but also quick lows. Well done on your focus!
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& w- X" G" `% ~# C" ]( oAs the fundamentals have been showing all along, the Alberta market continues to
! V1 H( Y" L7 U, j/ c% h0 s7 sbe strong, as in-migration and job creation continues to attract people from not
: {$ s4 q4 J, k9 s- qonly across Canada, but from around the world. Our average wages are/ H% z& j0 I% E& t" H ~
increasing, our population is increasing, our unemployment rate continues to
/ q! t$ h9 N7 p% v- ]* Sdrop and our GDP growth is slated to once again lead the country.$ K, {/ V3 q2 L) O# Y4 y
5 J$ C, j1 G- p7 b' D( K1 r7 ?3 [Here are some very interesting facts that are helping to support the strong
2 x q& b* X: Q9 n. |8 t4 lfundamentals:2 I, T3 h% d; K& v+ h6 L
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1. The Conference Board of Canada is forecasting strong economic growth in, k" L0 D! ] Y4 p; _' c% t5 H
Canada, with Alberta once again leading the way. In fact, the projected growth6 f+ z5 j$ ~: C& \: g5 D6 I$ o' d
for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and+ K. K D! R7 P
this is slated to occur even with the labour shortages we are witnessing.9 T! F4 j% z7 Z O
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2. People are discovering Canada as an investment center from all over the% N a/ ~: b6 x0 t: H8 h: j
world. Recently, there have been investors coming here from Asia, Australia,
$ I3 p( ~% `( {8 \* n3 Fthe US, UK and Europe. In fact, if you review the world's press you will see
4 M! z% b( @# O g- uthat Canada (with a focus on Alberta) is being discussed more frequently.
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& V" r+ w/ @. A; N3. Don Campbell has just returned from presenting our Canadian investment/ X0 s" ?1 N; }+ y3 z
atmosphere (including Why Alberta - Why Now") to a group of major investors in
}* i8 [# N% s, C) JDublin, Ireland, and the response was overwhelmingly positive. In fact, after) A( r& L _+ R, ^% I
Don presented the economic facts, many of these investors (who could invest( ^' P( t9 U" x a# E; M0 |
anywhere in the world) have already booked their flights to here. Once again
* q& V0 m$ ]: G& g$ h7 `! ^proving that when the true numbers of our economy are presented (along with the0 }1 e# y2 C) ~
political stability of our country), there is no place in the world that can
: V: }5 l- l. ]: |6 [% U/ N" I, j( zbeat it for long term investment.9 [; U% t1 ~' _4 J' ~/ i* g( q: s; f
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4. Job creation continues to be strong (with a small lull in June); definitely
% X8 I& B4 N! w/ N7 Y% Aa sign of strong long-term fundamentals. RBC has also been following the job: g( |$ g' B, w0 c
creation situation and here is what they are saying: (www.rbc.com/economics)
3 M! e6 H- |% g" z2 V' I$ b"After generating a substantial 96,700 jobs in May, the largest such gain since$ n' O5 g+ S+ K* V7 K- r. a8 C
January 2002, the economy lost a modest 4,600 jobs in June... : B# |* @: G2 W4 X1 i
8 ^; F& i' J9 F( b$ Q! gStrength in the Canadian economy contributed to a gain of 215,600 jobs in the% I6 ?( o# I: E- R; ~
first half of 2006, a feat not matched since the second half of 2002. With the7 x" N8 q* ^/ F
economy widely expected to grow at a more moderate pace in the second half of
. I9 ?) R p0 u* |the year on the back of slowing trade activity, this impressive showing may not
! r: a6 Q7 n* V S4 Urepeat itself. We expect that employment grew in July at a pace consistent with
* G6 O; Y( z) y, R2 ] P2 |% oits recent trend of 24,000 jobs a month. Assuming that the labour force grew at5 u8 a* q( g& h" j/ u
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
5 O6 S( M6 L# J3 ^. U6 d, Mof 6.1%." Overall very good news. Now the key is to ensure that the region in
: g4 u6 J8 U5 O4 @which you are investing is continuing to generate jobs and increasing incomes.- } e7 o H& ~! t( r, b
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In other words, it is a great time to be taking advantage of this strong! q. j& \* W6 Z4 A* @/ q- \
economy, avoiding 'excuses' and to especially not listen to the uninformed
# I. D* z, W3 R$ M) \# T$ E'dream stealers.' As long as you stick with your game plan, you continue to do
- I1 ]7 m \5 S* `5 G" x& Myour due diligence, and you remove emotions from the equation, you will see the' Q k5 ?7 q G* @% c( [: V
opportunities that are right in front of you, right here in Alberta. Let the
; s1 ]1 |6 R3 _) f: }8 X'dream stealers' call you 'lucky' 5 years from now as your net worth has soared# b% D5 Q# |% @. g
and your financial freedom has surpassed even your wildest expectations.) r6 ~: m0 J8 ^8 o# m. o
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Capital Gains Comparison. }5 X, N& w9 X: G0 n9 l; r
3 v# O# E' C* Z% N3 M! b/ ^* M# w1 i0 FKPMG has recently released a comparison of the true Top Federal and Provincial8 n* e5 |% Z( Q; M7 x
Marginal Capital Gains Tax Rates per province. It is very interesting to see
2 R8 o+ D% o) B$ d- Yhow these will affect your exit strategy. Here are the numbers:; h6 F+ g [5 I. |0 L+ c5 \
$ @0 W4 z; p" DBC . . . . . . . . 21.9%0 \9 F+ l* n; q P$ z+ X
AB . . . . . . . . 19.5%9 a U3 {7 p/ A5 K* O1 T5 k
SK . . . . . . . . 22.0%
) ^. Q5 [% w' W/ {MB . . . . . . . . 23.2%
- z Z; h& U. A& E" \$ @' W& eON . . . . . . . . 23.2%
) ]) c0 M# W s/ O6 R2 \QC . . . . . . . . 24.1%! M& G. {1 U; O7 J$ q
NB . . . . . . . . 23.4%; O" t4 x: L, a) r" W
NS . . . . . . . . 24.1%
- x- H) |2 h" I/ oPE . . . . . . . . 23.7%
, m `2 C% m& z; a0 VNF . . . . . . . . 24.3%2 y/ e; z% z) A$ a. C
. [* u, X' w/ t9 s+ ULower capital gains tax increases investment and stimulates the long term
/ P/ K, p4 L" g# h% y+ V0 T* ~+ U* h$ aeconomy of the province. It also allows real estate investors to keep more of
' X( T! R- _& i2 n% ^! ?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# c% V/ |; S. }% j8 [+ h- m
opportunity to create financial freedom of which others can only dream. Of
/ t3 p* I' X- n$ |. u/ g% v3 l, D pcourse, the key word is focus. And with an August line-up of 'Members Only'
3 i" e( A& U3 n4 P3 U+ ]9 [4 Jevents like this, you can't help to become a real estate investment champion( ^. P9 P5 y( g
when you take action as a full REIN Member.
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; c, j- M8 P% F: |5 e4 s+ QFocus on the fundamentals, keep emotions out of your decisions, and enjoy the8 d [, h1 M# |2 u5 M" b
results in just a few short years. |
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