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NEW HOUSING PRICE INDEX...1 W0 O% c6 j+ x: P9 }$ b
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' [& E$ I4 _/ \: R3 M" Y0 j7 tThe New Housing Price Index, has just been released and it provides some very
9 Q1 x" J5 F/ e" p" Kinteresting insights, not only into where the market has moved, but where it
0 V7 K+ y$ P/ X: H% I& Fwill be going.6 b) U3 |+ S5 F4 l
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It proved, once again, the value of looking at fundamentals behind a market.8 y }1 q, Z" a) M6 M( `
- E5 t3 g. R! w8 z& ?3 R( sThe New Housing Price Index is compiled by Statistics Canada and is used by
; j \2 V" M: b) e Y4 q3 S6 Wsophisticated investors to see how much the market has moved, as well as an
9 B U' |! r# C2 k% n3 Zindicator of where re-sale home prices will be moving in the coming six months. : P( A; `& }5 C5 d" x) Y
We look at the ripple effect that new housing prices have on re-sale property+ q* r+ Q* G- T8 a9 R+ u5 }
values and can extrapolate what direction re-sale prices will be moving and by7 ?, ]8 ~$ E2 P# l8 E6 Z6 m! j
how much.0 | F$ J" y8 a2 h1 Y* O
, @9 \& X% `. J* s- C$ pFor instance, for the last three years, we have told investors to avoid Windsor,& X$ i8 ?2 T# X! m4 {
Ontario as an investment area because the underlying fundamentals are not very+ S/ @4 D$ V1 }% M0 F3 S
strong. This has been proven once again with the release of the latest& g' E9 k! w1 g, w9 S9 N. @
findings. New Housing Prices have actually decreased by .5% during June 2005 -
, M% d% v8 C& y# x& jJune 2006 proving that fundamental investing works in helping you pick the best7 c0 |) _$ S# _7 `! D
markets and avoid the flat ones. This .5% decrease should have little impact# d" _" l- d% f& y- h4 z
on 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# W/ U3 l' d5 d: ]
market continues to be super heated. With close to 3,000 net new people into
( U! ~7 P: V# I% jthe city every month, the property market just can't keep up. That is why we) e( Q3 H2 f9 H B
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). - k4 ^0 e* j! l; A( [! R. T; b. s
This is great news for the future of re-sale values in the city as these
! I2 x& N2 C& uincreases will continue to ripple out into the market for at least the next six7 y6 s2 h; U9 u6 c+ `) N4 F
months. 2 g, Y6 d) b" H. Q2 S$ W- r
; P% }. ]4 \: VComparing these two regions is a great illustration of the value of not getting
1 b" b- K/ h5 o2 k- f1 o; Q/ H2 }caught in the 'emotional guessing game' by just focusing on the underlying5 Z0 R# Y! ]& T( J% v V% z
fundamentals. It is sad to see those people who said in the last 2 years that6 e) B" T1 A% A& \; k
the Alberta real estate market was over and they were going to sit back and wait
& g4 K o6 I* ~/ Q; X8 ?) V4 Quntil it drops. Quite obviously, they have missed out on AMAZING gains, all& ]) l& {' m0 P- X! A I1 x
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
3 L6 V" G' n5 W2005 to June 2006), also great news.# b7 c( O$ p* n% l8 c X; c1 k
/ `6 U# a! B, a# Z- WBy comparison across the country, these are the numbers for June 2005 - June
- D) A1 T [+ W) A2006 New Housing Price Index for:
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' ~ B2 ]& w5 w) l9 lVancouver . . . . . . . . +5.2%. K: f1 B& |1 c3 Q) ~
Saskatoon . . . . . . . . +8.5%
; Z, \0 Q3 m+ {3 R, L% x3 l/ FLondon . . . . . . . . . . . +3.0%; ?; l6 c) O% j
Hamilton . . . . . . . . . . +4.9%
$ f- ~6 p1 ~7 O' GSt. Catharines - Niagara . . . . +4.9%
) Z3 M: T( |3 \Toronto and Oshawa . . . . . . . +3.2
5 U6 c- i( Z7 f. P SOttawa - Gatineau . . . . . . . . . +3.1%
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- C3 r0 |2 i( i& wFundamental investing ALWAYS makes you look like a genius - emotional investing
0 @& w0 e7 P& U! ~gives you quick highs, but also quick lows. Well done on your focus!
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2 @ o$ I. G$ {& hAs the fundamentals have been showing all along, the Alberta market continues to& _/ t4 ]2 ]2 G2 Y
be strong, as in-migration and job creation continues to attract people from not
7 b% e6 C! y6 xonly across Canada, but from around the world. Our average wages are7 D; S) m6 I/ p# z0 q
increasing, our population is increasing, our unemployment rate continues to' T; @3 T* a) @5 s% b \
drop and our GDP growth is slated to once again lead the country.- X! N: z/ }) U( I3 \' w' f8 a
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Here are some very interesting facts that are helping to support the strong5 g3 X% E2 @5 B! e, e" C
fundamentals:
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1. The Conference Board of Canada is forecasting strong economic growth in
# x! g& d, }# F P6 R, b i" ]Canada, with Alberta once again leading the way. In fact, the projected growth
' s7 J+ O6 Q9 cfor Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and0 @* F, t& e/ }9 l6 n# b+ o2 d4 ?+ I3 [
this is slated to occur even with the labour shortages we are witnessing.
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2. People are discovering Canada as an investment center from all over the
) \* T4 I5 Q/ r. G$ fworld. Recently, there have been investors coming here from Asia, Australia,2 p! |, Z! _* I
the US, UK and Europe. In fact, if you review the world's press you will see: q8 t" z l1 I! m+ x
that Canada (with a focus on Alberta) is being discussed more frequently. $ E* l% j" i& E
# i# ?9 `4 Z& |# a( ^ l3 l3. Don Campbell has just returned from presenting our Canadian investment0 u* M2 J) n3 [$ N9 L
atmosphere (including Why Alberta - Why Now") to a group of major investors in
6 z! X1 R- H0 s* v% S1 C# BDublin, Ireland, and the response was overwhelmingly positive. In fact, after0 t1 Z) j6 u$ g/ H$ \5 j8 v
Don presented the economic facts, many of these investors (who could invest
c# I4 |. ?; \1 n& janywhere in the world) have already booked their flights to here. Once again2 K$ B3 G4 o. n
proving that when the true numbers of our economy are presented (along with the
, R8 S0 n3 A/ A; qpolitical stability of our country), there is no place in the world that can
2 z$ R/ F* V" ~6 Z! o' ]( Qbeat it for long term investment.
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! B) C, p" D- G5 ^% r1 j4 l4. Job creation continues to be strong (with a small lull in June); definitely5 @$ w1 B/ L; s" }
a sign of strong long-term fundamentals. RBC has also been following the job
4 z+ n: y' H- _creation situation and here is what they are saying: (www.rbc.com/economics)
; ^8 B# x9 C/ i1 n"After generating a substantial 96,700 jobs in May, the largest such gain since
! P" a8 ?& G1 {/ n$ b4 q- zJanuary 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 the F0 {2 R2 |7 v5 \. t
first half of 2006, a feat not matched since the second half of 2002. With the$ ]9 n( x2 U1 r% T( l) \1 A
economy widely expected to grow at a more moderate pace in the second half of9 F7 p( l. K, B5 {1 ?
the year on the back of slowing trade activity, this impressive showing may not
G# _* ?5 |3 _, N) S Q3 D vrepeat itself. We expect that employment grew in July at a pace consistent with
. y5 i! [% f; w/ d, S' rits recent trend of 24,000 jobs a month. Assuming that the labour force grew at" A5 E% ]" j. `, V' ?
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate0 s2 ?; X# F* e6 |7 \
of 6.1%." Overall very good news. Now the key is to ensure that the region in! D; L0 G* w: B6 O7 H( n4 N! _
which you are investing is continuing to generate jobs and increasing incomes.% h; f% H1 c. i5 g! T
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In other words, it is a great time to be taking advantage of this strong4 l) J2 n; W4 H' D7 _" X. `4 b
economy, avoiding 'excuses' and to especially not listen to the uninformed" v+ f" o3 r0 O. T/ U# C; C
'dream stealers.' As long as you stick with your game plan, you continue to do% j Y% S+ W2 T* F
your due diligence, and you remove emotions from the equation, you will see the
, S: N8 H( I: n/ T- B5 P% I" U3 v9 Xopportunities that are right in front of you, right here in Alberta. Let the
/ P$ V/ g1 z$ a6 }'dream stealers' call you 'lucky' 5 years from now as your net worth has soared6 J- D0 w& H' x' i, D2 N9 z2 c
and your financial freedom has surpassed even your wildest expectations.
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5 h3 @0 y# Y1 J; e9 v A) eCapital Gains Comparison.
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KPMG has recently released a comparison of the true Top Federal and Provincial- T2 M. {9 W* O7 C
Marginal Capital Gains Tax Rates per province. It is very interesting to see
! _9 c5 `5 P( |: U+ _/ uhow these will affect your exit strategy. Here are the numbers:; k) w4 R% P) O; \3 P
, {. ~/ ]* C2 J) U' A- x# C$ \BC . . . . . . . . 21.9%
* u( o8 Y& Q3 gAB . . . . . . . . 19.5%
. v( T/ }1 \) d, ?% s8 ISK . . . . . . . . 22.0%
, m1 G. W0 Q4 QMB . . . . . . . . 23.2%7 P4 _6 F W6 X
ON . . . . . . . . 23.2%
% f8 X, m' |9 N( HQC . . . . . . . . 24.1%
& j% t' f/ h' BNB . . . . . . . . 23.4%
( f& J3 `' s) ~$ z; G, eNS . . . . . . . . 24.1%
7 p6 Z9 G) m; g, OPE . . . . . . . . 23.7%
6 s, J3 @$ c8 N1 d0 r$ [, C |NF . . . . . . . . 24.3%
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Lower capital gains tax increases investment and stimulates the long term, b5 S/ g4 `4 o1 d7 b- S
economy of the province. It also allows real estate investors to keep more of
+ s0 ~. N1 V8 ^$ ~+ k& o$ ^" Qtheir 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
7 f ~4 g2 E! Z/ ]/ w& T; vopportunity to create financial freedom of which others can only dream. Of
: d$ Y; K" X" {, r" R l# B) m# ~course, the key word is focus. And with an August line-up of 'Members Only'3 ~6 M& L2 W, H7 z
events like this, you can't help to become a real estate investment champion
! @( L' q; u- H: Z( `& ~4 z: }when you take action as a full REIN Member.
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6 `4 f0 j6 a' A4 z: DFocus on the fundamentals, keep emotions out of your decisions, and enjoy the3 B2 J2 D9 Z8 i) h
results in just a few short years. |
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