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NEW HOUSING PRICE INDEX...
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; K8 l1 U' @9 U1 |The New Housing Price Index, has just been released and it provides some very
( r7 _+ h% c/ q! F9 iinteresting insights, not only into where the market has moved, but where it! I) Y6 p& Z+ P! k
will be going., T' p% |. G* c& x9 F# l
; N1 v* l9 M* ~8 P- cIt proved, once again, the value of looking at fundamentals behind a market.4 {- n2 c, G* `0 e( |! n
: j4 a" N4 D Q6 i! ?The New Housing Price Index is compiled by Statistics Canada and is used by j0 U$ N- X5 b
sophisticated investors to see how much the market has moved, as well as an4 K/ I' k( [+ S+ ?3 O( I
indicator of where re-sale home prices will be moving in the coming six months.
+ `1 F7 {, s6 i1 ^6 k3 ^We look at the ripple effect that new housing prices have on re-sale property l* K. D. W5 {' b Y
values and can extrapolate what direction re-sale prices will be moving and by4 r& o' d/ B' C- n/ |0 S: c
how much.7 O$ H. B6 { X8 c0 H$ O
% o* l* i4 ^; G; x# \8 m7 R0 p% pFor instance, for the last three years, we have told investors to avoid Windsor,' i" ?( ~* d( \
Ontario as an investment area because the underlying fundamentals are not very
8 H! x4 H' \. l3 ^ _2 ustrong. This has been proven once again with the release of the latest, @- }- v8 S$ _0 I/ n3 j5 j
findings. New Housing Prices have actually decreased by .5% during June 2005 -
7 W4 r8 | ^* oJune 2006 proving that fundamental investing works in helping you pick the best
( _* |& l/ m$ E1 q3 `+ Qmarkets and avoid the flat ones. This .5% decrease should have little impact; \1 b+ Q! \5 I" D! a1 C5 q3 @
on average re-sale values in the Windsor region.! [' J) a, `. D' N* B$ ^6 k
5 i7 H7 g, n) _: B8 CTo contrast this, the fundamentals we discuss are so strong in Calgary that the
% }- o" l+ j* g2 u" zmarket continues to be super heated. With close to 3,000 net new people into/ O x! o! E. u$ Z, G8 S
the city every month, the property market just can't keep up. That is why we$ b6 m# _1 J- Q4 w
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). m u! n/ y, K& q* W, F9 R
This is great news for the future of re-sale values in the city as these
$ b: U2 d, n* w# ~- q# c5 cincreases will continue to ripple out into the market for at least the next six" u s5 H( I# J/ J- v
months.
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Comparing these two regions is a great illustration of the value of not getting
; G$ `3 ]4 Z5 `% f2 m' dcaught in the 'emotional guessing game' by just focusing on the underlying
* K1 z# H% O; G7 y& _- `. O8 ^' _- efundamentals. It is sad to see those people who said in the last 2 years that
! y8 ~/ z& F, xthe Alberta real estate market was over and they were going to sit back and wait
3 x/ d+ I' P: H0 }3 {until it drops. Quite obviously, they have missed out on AMAZING gains, all
% d$ s- d- i' c& e/ |! i/ \; hbecause they didn't follow fundamentals, they just led with their emotions.# Z$ a: H9 _2 [7 O" Z6 L
. c2 c8 T9 u% W& C( e1 YBy the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June
' x9 _. t- ^9 _- j; G% H2005 to June 2006), also great news.
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/ j$ Q0 r/ {" R& Y* g: { i6 ^: X; PBy comparison across the country, these are the numbers for June 2005 - June; r( x; `2 j( k3 s
2006 New Housing Price Index for:
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Vancouver . . . . . . . . +5.2%
8 g" F) V2 {; z0 u5 T4 |4 X/ HSaskatoon . . . . . . . . +8.5%
* Q ]( I) k _, Q5 ALondon . . . . . . . . . . . +3.0%
# l( k, f$ E. b! O. {# i* \ Q' V3 n4 ?Hamilton . . . . . . . . . . +4.9%- m; d# a' A+ S! D: E0 ~. U, ?
St. Catharines - Niagara . . . . +4.9%
( ]5 U1 R, Z% N2 Z' O) NToronto and Oshawa . . . . . . . +3.2, o8 r/ K& h0 U3 `/ R
Ottawa - Gatineau . . . . . . . . . +3.1%% ]$ d$ W/ q) J4 a; V; d
+ v' t( `$ w; u, qFundamental investing ALWAYS makes you look like a genius - emotional investing
$ x/ s! d- [ x: X8 b9 s8 v! Kgives you quick highs, but also quick lows. Well done on your focus!) g+ Q) @1 u& F7 P9 k# V9 N5 b
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As the fundamentals have been showing all along, the Alberta market continues to
4 `: f$ X M- g0 m F5 R# Wbe strong, as in-migration and job creation continues to attract people from not
4 l$ H% o! Z9 J% K8 aonly across Canada, but from around the world. Our average wages are
$ z' u) P* C: N# S+ X) aincreasing, our population is increasing, our unemployment rate continues to
4 E2 w% l! \- B3 ~0 Rdrop and our GDP growth is slated to once again lead the country.
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& o+ h! V: q0 W yHere are some very interesting facts that are helping to support the strong+ Y# X- M9 s& K8 |! @* R& }- A9 R
fundamentals:2 T5 M0 ?5 N/ Y# M9 f" t* M
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1. The Conference Board of Canada is forecasting strong economic growth in
. ~6 ]# k- Y3 O+ {3 DCanada, with Alberta once again leading the way. In fact, the projected growth
`! G0 I3 C- H: O. @0 [for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and1 V0 E* Q- P( \5 U; {
this is slated to occur even with the labour shortages we are witnessing.9 L! u/ A+ w2 y$ c, b4 F5 R
3 C5 u8 t0 ~$ L, X$ c3 d2. People are discovering Canada as an investment center from all over the/ R2 Z3 l2 x8 L( Q, a& o4 e5 O# u
world. Recently, there have been investors coming here from Asia, Australia,
& Q! ?3 t! {: tthe US, UK and Europe. In fact, if you review the world's press you will see
2 r7 V2 h; k" p- [' Q) d- jthat Canada (with a focus on Alberta) is being discussed more frequently. 9 u; C2 U- v) x/ Z( ?6 B, h
( y& \7 s2 j0 u* Z6 D' w8 u3. Don Campbell has just returned from presenting our Canadian investment
2 o, ~, Q. q# A3 O. ^( Zatmosphere (including Why Alberta - Why Now") to a group of major investors in! s7 W& R' m" n P2 k/ @
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after q" {* ^1 D6 l+ Y
Don presented the economic facts, many of these investors (who could invest
+ b6 j+ q/ ~! Fanywhere in the world) have already booked their flights to here. Once again
% t- {, D$ m8 i! y% ]+ C5 Gproving that when the true numbers of our economy are presented (along with the
. N9 h7 r. M0 i9 G; F" N5 L9 L3 npolitical stability of our country), there is no place in the world that can/ ?' [! }) M* w7 x
beat it for long term investment.
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4. Job creation continues to be strong (with a small lull in June); definitely
N: r& w3 c1 g0 Na sign of strong long-term fundamentals. RBC has also been following the job2 a$ r) ~, ~8 x& z' P- Y
creation situation and here is what they are saying: (www.rbc.com/economics)
U7 Y% j9 P# s. e8 [& }"After generating a substantial 96,700 jobs in May, the largest such gain since3 e1 N7 y0 {* t, d
January 2002, the economy lost a modest 4,600 jobs in June...
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; a0 F9 ^- A/ q; G6 d4 KStrength in the Canadian economy contributed to a gain of 215,600 jobs in the
, k( ^; q* G3 n X# K* n7 Mfirst half of 2006, a feat not matched since the second half of 2002. With the. m0 i* |+ U" F
economy widely expected to grow at a more moderate pace in the second half of
$ y# _$ g _3 ~- ~3 bthe year on the back of slowing trade activity, this impressive showing may not1 u" v0 u( E }6 }9 O7 B, K" w
repeat itself. We expect that employment grew in July at a pace consistent with# r7 B# v& [, w# b1 O: [* X
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at( s4 `# ~6 g4 u3 a0 D7 t7 C8 l! i- r
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
5 m, R% U7 g+ e, Oof 6.1%." Overall very good news. Now the key is to ensure that the region in
3 @6 l# _( L! o6 u; fwhich you are investing is continuing to generate jobs and increasing incomes.0 [# ?: S/ R4 D2 J. R; N
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In other words, it is a great time to be taking advantage of this strong. n) m' A9 K+ Z+ R, O1 S& u
economy, avoiding 'excuses' and to especially not listen to the uninformed
8 V# ^) e% W) ^4 H0 Q; S7 Z'dream stealers.' As long as you stick with your game plan, you continue to do6 |% v/ `$ X% i) A
your due diligence, and you remove emotions from the equation, you will see the% O& Y* Q8 H7 h) B: x
opportunities that are right in front of you, right here in Alberta. Let the6 y, `4 k5 T# @
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared) z3 Q3 [( G! q# D9 @8 S8 d
and your financial freedom has surpassed even your wildest expectations.
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Capital Gains Comparison.2 n1 B6 g: x# z
7 z# {* z. B4 d0 T! J0 f, VKPMG has recently released a comparison of the true Top Federal and Provincial
1 I7 Z0 J9 _4 w1 Y0 x: ]Marginal Capital Gains Tax Rates per province. It is very interesting to see
! {9 t- U2 c+ S, D6 l! jhow these will affect your exit strategy. Here are the numbers:$ v5 G5 b# w# x$ T$ F$ l: B- x
6 d5 O' y: F! W) I8 M4 NBC . . . . . . . . 21.9%0 i2 Q" `9 _* w! ~
AB . . . . . . . . 19.5% o( _& M% [9 U+ p2 [
SK . . . . . . . . 22.0%6 q: ^2 p8 c# D& W% F
MB . . . . . . . . 23.2%
" k" y* j5 g& S$ W3 ]ON . . . . . . . . 23.2%
& ^5 j/ X* N9 u& v' s; o- @QC . . . . . . . . 24.1%
# k7 P6 C( s# g# l5 t. LNB . . . . . . . . 23.4%$ X, K7 u5 ~& [: B* o3 M- x
NS . . . . . . . . 24.1%' w5 Y2 }! T7 \; B5 l7 J
PE . . . . . . . . 23.7%) G* t; {$ v. F: |& Y
NF . . . . . . . . 24.3% d+ O) u: r8 F5 e* e
1 F/ s- Y; l, N5 ^& G3 \9 t- BLower capital gains tax increases investment and stimulates the long term1 O3 |) j7 G8 n1 u8 x; P: Z, T
economy of the province. It also allows real estate investors to keep more of
: \0 i- T" R' T7 Y$ {5 i% `9 ntheir profits at exit time. Always a good number to pay attention to." d" _1 |& o; ~
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Overall, by staying focused for the next short period of time, you have the
; @; I9 P4 ?- o; B- \0 ]( U1 X* ]3 a. popportunity to create financial freedom of which others can only dream. Of$ L8 @2 t; a' \1 _4 L8 g/ H" U
course, the key word is focus. And with an August line-up of 'Members Only'5 B6 R' x$ h/ a ]
events like this, you can't help to become a real estate investment champion
! X% @, b6 n9 i; `0 Nwhen you take action as a full REIN Member.
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! D, S- I; R5 x9 t; }8 ?Focus on the fundamentals, keep emotions out of your decisions, and enjoy the
( M6 R8 b+ b B6 W' g' O3 a$ bresults in just a few short years. |
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