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NEW HOUSING PRICE INDEX...
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) X% a$ ~! a# o, b' |The New Housing Price Index, has just been released and it provides some very0 J7 }' b5 k$ U0 G2 ?
interesting insights, not only into where the market has moved, but where it
2 _6 m+ `! A ^4 v4 _- R$ J3 Vwill be going.) _5 C7 j9 h% N, [# E0 f; F( S% `; a
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It proved, once again, the value of looking at fundamentals behind a market.! @& A+ R; { c
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The New Housing Price Index is compiled by Statistics Canada and is used by
0 h/ {& \, D: c- x6 zsophisticated investors to see how much the market has moved, as well as an
' z+ r* ^ f' _indicator of where re-sale home prices will be moving in the coming six months. , d7 n$ w: K! x% F: H' Y( {* L
We look at the ripple effect that new housing prices have on re-sale property/ Z. G2 J+ H& H2 r. |/ _
values and can extrapolate what direction re-sale prices will be moving and by
j% s( A. Z9 {) @( x; R, g3 Q) l/ xhow much.
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For instance, for the last three years, we have told investors to avoid Windsor,+ B% d$ ~1 d7 d5 C8 Z& r+ k
Ontario as an investment area because the underlying fundamentals are not very4 i8 u% N. \2 g i
strong. This has been proven once again with the release of the latest. i! l8 f4 b4 }3 k. C3 |
findings. New Housing Prices have actually decreased by .5% during June 2005 -7 M- S" A" G: W
June 2006 proving that fundamental investing works in helping you pick the best9 ?; ^! {; F! b0 @
markets and avoid the flat ones. This .5% decrease should have little impact; M4 X2 l! p6 \; o
on average re-sale values in the Windsor region.
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/ W" s+ I; h0 r1 D/ ZTo contrast this, the fundamentals we discuss are so strong in Calgary that the% f) K# ^& b8 G
market continues to be super heated. With close to 3,000 net new people into- ]9 q0 Y/ _ f. L& a% g; p! O
the city every month, the property market just can't keep up. That is why we
1 s$ E P+ m0 I/ H2 ?6 Y. o( M/ u+ [saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). " U3 Q4 Z4 L o( }/ Z6 n) V3 O
This is great news for the future of re-sale values in the city as these
3 u7 z4 S. S2 h+ e1 ]1 z; vincreases will continue to ripple out into the market for at least the next six0 ~3 M) G0 L( ^# y! Z K3 _# Y8 F
months.
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! v: L5 }+ N- M2 r# V: DComparing these two regions is a great illustration of the value of not getting
; g$ |1 c- b; s; `; J. Gcaught in the 'emotional guessing game' by just focusing on the underlying
& Z) e, Q5 K/ T) ~2 x/ Ffundamentals. It is sad to see those people who said in the last 2 years that
9 }1 L8 L X( o" D6 L4 W$ Pthe Alberta real estate market was over and they were going to sit back and wait
) x* V7 ~# m$ d; ~) _- Wuntil it drops. Quite obviously, they have missed out on AMAZING gains, all' D# z1 L1 g' ]: Z
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$ a4 P+ @( d; M6 P
2005 to June 2006), also great news.' A: }" L0 Q* X7 U% T
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By comparison across the country, these are the numbers for June 2005 - June
) Q4 N$ q0 X+ o4 t7 @2006 New Housing Price Index for:
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2 U/ U7 v5 Z ]5 OVancouver . . . . . . . . +5.2%
6 O# s' M' v Z* \Saskatoon . . . . . . . . +8.5%- Z1 i. p9 |& E% q, ^9 `, n8 W
London . . . . . . . . . . . +3.0%2 K0 K* n+ k+ W- y4 n+ C( L
Hamilton . . . . . . . . . . +4.9%& p5 V! O1 }+ c4 @' o* B, I; o
St. Catharines - Niagara . . . . +4.9%
4 k* K& w; N% c, `6 F1 t* ^Toronto and Oshawa . . . . . . . +3.2# ?: s9 e2 E: [" n n/ S, N
Ottawa - Gatineau . . . . . . . . . +3.1%
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* d& ^: N8 }" ^# TFundamental investing ALWAYS makes you look like a genius - emotional investing
% t2 i D7 R7 d) Sgives 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
! b$ A7 E4 ^. x4 o8 J7 `be strong, as in-migration and job creation continues to attract people from not. {0 r1 w- p4 o% Q/ ^* m* P
only across Canada, but from around the world. Our average wages are
8 ?2 J) i6 Q' x7 J4 pincreasing, our population is increasing, our unemployment rate continues to
0 K) I3 f% G+ ~+ udrop and our GDP growth is slated to once again lead the country.
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) ?4 j* h, e `9 _1 kHere are some very interesting facts that are helping to support the strong
* m8 o" ], [9 O$ l Y- Afundamentals:" h @4 ~5 G9 b
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1. The Conference Board of Canada is forecasting strong economic growth in3 m7 h1 u0 V3 {; X, w
Canada, with Alberta once again leading the way. In fact, the projected growth
, L+ G4 ~+ X1 ~for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and# g/ {4 \; Y1 [/ ^: {8 i/ T4 @
this is slated to occur even with the labour shortages we are witnessing.% r& ]! Y( O) Q
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2. People are discovering Canada as an investment center from all over the/ b. A+ Q5 s0 X! ? Y
world. Recently, there have been investors coming here from Asia, Australia,# X' o0 y! }+ D; l: o8 n0 X$ Z! q1 m
the US, UK and Europe. In fact, if you review the world's press you will see
- d3 i) H# N. D* T& uthat Canada (with a focus on Alberta) is being discussed more frequently. - B9 w6 _) `$ i w9 D- g' \' B
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3. Don Campbell has just returned from presenting our Canadian investment% @$ F1 l7 v) F" D
atmosphere (including Why Alberta - Why Now") to a group of major investors in
' @- n1 I9 @; l K: [Dublin, Ireland, and the response was overwhelmingly positive. In fact, after1 D) N7 a$ U& G# q6 I
Don presented the economic facts, many of these investors (who could invest# D2 c7 |& l! a& N( z
anywhere in the world) have already booked their flights to here. Once again; a0 s/ ]. _- P3 K
proving that when the true numbers of our economy are presented (along with the' F d. H1 n6 q$ ~ j# U. R% R
political stability of our country), there is no place in the world that can4 z" n2 b8 C ]$ G/ i K! ^. ?
beat it for long term investment.
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4. Job creation continues to be strong (with a small lull in June); definitely2 C! _# l) g& E# X- f( R4 d
a sign of strong long-term fundamentals. RBC has also been following the job
! X- B2 y, P6 Xcreation situation and here is what they are saying: (www.rbc.com/economics)" n( R4 i/ n% I) c
"After generating a substantial 96,700 jobs in May, the largest such gain since" w x G- P" Y+ G" C
January 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 the8 g; x+ v; v. ^3 ^, ]
first half of 2006, a feat not matched since the second half of 2002. With the: U3 v3 H. k% ?/ L
economy widely expected to grow at a more moderate pace in the second half of
% d( c7 \: y9 K4 x% J. h- Q4 @the year on the back of slowing trade activity, this impressive showing may not& ^ Z8 P2 S" C& D% o
repeat itself. We expect that employment grew in July at a pace consistent with
# i. r4 q7 K2 G# E/ h1 b" O$ zits recent trend of 24,000 jobs a month. Assuming that the labour force grew at
, H3 ~% D2 v1 R9 l6 `its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
6 d( K3 z9 j% t+ E4 c! Pof 6.1%." Overall very good news. Now the key is to ensure that the region in# I n9 c$ P# X5 V; ~
which you are investing is continuing to generate jobs and increasing incomes.& T* z4 G; w7 i$ q
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9 \$ o0 b4 ~( s+ M7 ?# ^In other words, it is a great time to be taking advantage of this strong* G0 {! {: L% {4 y; `6 r4 V7 D& A
economy, avoiding 'excuses' and to especially not listen to the uninformed I: ]+ e1 d, a+ l9 F3 [
'dream stealers.' As long as you stick with your game plan, you continue to do" l' c& c H" G) [1 l
your due diligence, and you remove emotions from the equation, you will see the4 P$ \( B7 M) }3 I
opportunities that are right in front of you, right here in Alberta. Let the; G/ H" d4 I, j# c4 }( ~- N
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared
( I7 I- y+ K1 b8 g$ Fand your financial freedom has surpassed even your wildest expectations.
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Capital Gains Comparison.
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4 s7 b' Y6 `. t* j$ a+ iKPMG has recently released a comparison of the true Top Federal and Provincial5 s4 n6 r0 s2 r6 c0 h2 L8 `1 C* }) w
Marginal Capital Gains Tax Rates per province. It is very interesting to see
3 V5 ?1 `, V' K& o+ H+ Zhow these will affect your exit strategy. Here are the numbers:* b- @7 {- v z6 D: s
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BC . . . . . . . . 21.9%5 }8 n/ E7 u& _: Z
AB . . . . . . . . 19.5%
1 \3 K8 ^# M0 p2 s' h! hSK . . . . . . . . 22.0%
' S# A! {7 b8 l5 [ n$ z2 g" IMB . . . . . . . . 23.2%
3 y3 B( L+ U4 Q9 x, TON . . . . . . . . 23.2%
1 J2 ?: f; t0 j; \5 |3 qQC . . . . . . . . 24.1%- [& I! D7 b/ b, i4 i& J0 B
NB . . . . . . . . 23.4%" C' A1 @6 ^: k) W6 S$ Q
NS . . . . . . . . 24.1%
! I- N9 I$ e( {6 tPE . . . . . . . . 23.7%$ R. @* F5 x5 u* c' t
NF . . . . . . . . 24.3%! W/ x$ @$ j6 E) _/ u
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Lower capital gains tax increases investment and stimulates the long term9 o, q- r9 K! ]
economy of the province. It also allows real estate investors to keep more of
! X' r7 n6 j6 m. `; T/ M: s: Ftheir profits at exit time. Always a good number to pay attention to.( x& e! O# P* U7 s
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Overall, by staying focused for the next short period of time, you have the; o' e7 ?! t, Z6 r
opportunity to create financial freedom of which others can only dream. Of
; V `7 n4 P4 a, x; W4 xcourse, the key word is focus. And with an August line-up of 'Members Only'% Z8 X4 ?( r' s' @: ]* E( O5 J& F
events like this, you can't help to become a real estate investment champion; b3 |- l# D) A. `# `
when you take action as a full REIN Member.& t$ o( Z" t% V& u% x
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the
2 x) B6 `2 q/ p% f5 V2 |2 Cresults in just a few short years. |
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