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NEW HOUSING PRICE INDEX...! X5 E% ^2 R$ L S6 q, P+ b
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The New Housing Price Index, has just been released and it provides some very2 K2 _9 _# F+ r
interesting insights, not only into where the market has moved, but where it
8 g1 D. Y* `% D5 }2 M- Hwill be going.
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It proved, once again, the value of looking at fundamentals behind a market.
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2 `; O/ q! q) Q- X( N+ j2 @The New Housing Price Index is compiled by Statistics Canada and is used by" b( y+ s: }* k$ W( l
sophisticated investors to see how much the market has moved, as well as an
2 p/ ]6 A" X* M7 m% E6 u* tindicator of where re-sale home prices will be moving in the coming six months. ! x' k* h, \8 S' v+ R$ ], o
We look at the ripple effect that new housing prices have on re-sale property. Y7 |: F# i2 X, k
values and can extrapolate what direction re-sale prices will be moving and by
5 j' h7 B' ?1 o" ^: d2 V+ E) T" `how much.
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For instance, for the last three years, we have told investors to avoid Windsor,
2 Y& z _4 E% {$ Q# qOntario as an investment area because the underlying fundamentals are not very
& n8 N* ]7 J3 x X! x+ Qstrong. This has been proven once again with the release of the latest
! B3 S% Z, `7 |- C* q D+ xfindings. New Housing Prices have actually decreased by .5% during June 2005 -3 i; E' H" |! \! [0 N$ g7 p' F6 W
June 2006 proving that fundamental investing works in helping you pick the best, T+ q6 K5 ]8 L, U5 p" \) G2 C1 Q
markets and avoid the flat ones. This .5% decrease should have little impact
8 M' `' M P2 k/ |& Gon 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
* S4 Q5 Q; u; X- M" O" l. @) Tmarket continues to be super heated. With close to 3,000 net new people into9 p: L Y1 O" d
the city every month, the property market just can't keep up. That is why we9 b" u* H% x* w8 Y
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). " T: r2 m3 C( y$ V
This is great news for the future of re-sale values in the city as these
6 h7 J/ r* X/ R% Q3 T2 o5 bincreases will continue to ripple out into the market for at least the next six5 X; o6 ]# X& d
months. / A$ ~' D. u, |% r7 @
# f7 e) M3 ~( S. t! p0 GComparing these two regions is a great illustration of the value of not getting
4 ]5 N" J9 g A4 f( ]9 zcaught in the 'emotional guessing game' by just focusing on the underlying' l) X0 k }: Y( O' T
fundamentals. It is sad to see those people who said in the last 2 years that
6 H1 F: f% y* Fthe Alberta real estate market was over and they were going to sit back and wait
5 x- m# A, N' K; W" D0 buntil it drops. Quite obviously, they have missed out on AMAZING gains, all
; J5 @9 [9 x; T$ R1 |, x# T6 J% Ybecause they didn't follow fundamentals, they just led with their emotions.
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* z& ?: i- z( Y/ [By the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June
) V2 w/ \" a0 t$ F) L2005 to June 2006), also great news.# b% F6 k0 l1 g$ a7 {& n8 a
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By comparison across the country, these are the numbers for June 2005 - June
; `+ E: \4 G( t$ c8 o# d2006 New Housing Price Index for:( v+ n1 y( J0 z8 O4 s i
5 x1 D$ {: e- J: RVancouver . . . . . . . . +5.2%" E. b- Y. Q& s, q; A1 Z
Saskatoon . . . . . . . . +8.5%
7 [8 v3 C2 x8 SLondon . . . . . . . . . . . +3.0%) c1 G* c, W. m2 c5 Q' o& Q
Hamilton . . . . . . . . . . +4.9%8 D4 M9 I. K4 G1 a
St. Catharines - Niagara . . . . +4.9%
- A! L8 N8 j4 ^; {4 @Toronto and Oshawa . . . . . . . +3.2
. ]5 B! h. [1 ^$ `3 M KOttawa - Gatineau . . . . . . . . . +3.1%
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8 p" q/ F5 `( r! kFundamental investing ALWAYS makes you look like a genius - emotional investing
- U: l0 m6 ^! t8 n6 \8 xgives you quick highs, but also quick lows. Well done on your focus!& f. C4 O R4 X1 X2 _
. p' f8 m% r6 O0 i! X4 sAs the fundamentals have been showing all along, the Alberta market continues to; ~. ~% L C: B* J F( Q* ]- e
be strong, as in-migration and job creation continues to attract people from not
; L* C3 z- i7 G& j" v7 Eonly across Canada, but from around the world. Our average wages are
4 f6 q; D; i5 ?3 d/ m$ oincreasing, our population is increasing, our unemployment rate continues to
: z, W6 i ]# _! v5 Zdrop and our GDP growth is slated to once again lead the country.4 e1 C8 ~+ [1 c# j9 ]
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Here are some very interesting facts that are helping to support the strong* j5 e- D7 C: V- B# `1 t% Y+ Y
fundamentals:' \* f- d& x, ~) x. H# J; `
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1. The Conference Board of Canada is forecasting strong economic growth in. { j& _# x) e+ I/ M. x
Canada, with Alberta once again leading the way. In fact, the projected growth
. o! `8 k8 y5 }7 j8 [/ Qfor Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and: ]( N+ W% ?. z- V+ b
this is slated to occur even with the labour shortages we are witnessing. q* M( R4 J0 u% T5 {
3 _" O; P# M3 w; H; `( ]' |# J2. People are discovering Canada as an investment center from all over the
6 ]7 A+ T) K+ \' e; {world. Recently, there have been investors coming here from Asia, Australia," L7 w+ ^1 a' r7 l
the US, UK and Europe. In fact, if you review the world's press you will see9 ^) i3 ?) y0 Q: D# D' t
that Canada (with a focus on Alberta) is being discussed more frequently. 7 t* `! S$ L, F, q9 }7 \
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3. Don Campbell has just returned from presenting our Canadian investment$ l P, s2 u- r- Q: ^" L/ D
atmosphere (including Why Alberta - Why Now") to a group of major investors in
7 U% U8 u: {# W4 ]Dublin, Ireland, and the response was overwhelmingly positive. In fact, after' m. k, m. J+ {! G
Don presented the economic facts, many of these investors (who could invest8 F. x3 k* p; L5 P% B. i6 x; r
anywhere in the world) have already booked their flights to here. Once again
2 n% g7 Q p8 @; t9 s: S$ ?4 S6 tproving that when the true numbers of our economy are presented (along with the) e9 N! P. N I8 \' N, Q* F7 \
political stability of our country), there is no place in the world that can; y3 o2 U* _2 L6 g9 {! I, ^
beat it for long term investment.& Y/ I# n1 C2 H" x: U6 K
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4. Job creation continues to be strong (with a small lull in June); definitely. b |$ N$ Z: h8 @. H Q6 w
a sign of strong long-term fundamentals. RBC has also been following the job" U8 Z, j7 D3 l" ^7 M6 c
creation situation and here is what they are saying: (www.rbc.com/economics)) Q# ]1 n& r7 }6 I
"After generating a substantial 96,700 jobs in May, the largest such gain since+ n: T& D6 |8 C; Y5 V, P
January 2002, the economy lost a modest 4,600 jobs in June...
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9 `' H0 s, d4 C1 m- s9 NStrength in the Canadian economy contributed to a gain of 215,600 jobs in the \% I+ c5 r- E
first half of 2006, a feat not matched since the second half of 2002. With the6 O! D! G, t) L
economy widely expected to grow at a more moderate pace in the second half of3 f2 I2 I8 n2 d4 c. `. F
the year on the back of slowing trade activity, this impressive showing may not
. \* `5 }% ?# n- f: A, prepeat itself. We expect that employment grew in July at a pace consistent with" G# I* P5 [9 {; s$ O
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at+ a; h0 W {) U& d' b$ A; M" `
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate) `3 p: b: a& s/ i8 m2 G1 n9 H
of 6.1%." Overall very good news. Now the key is to ensure that the region in# Y4 C$ g- f0 B* r% [+ @
which you are investing is continuing to generate jobs and increasing incomes.- s8 P6 Q8 b) L8 a8 E: S$ G
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; Q, J. g* O& ^8 O& Z+ KIn other words, it is a great time to be taking advantage of this strong
' `% X- I, S$ D" L' R. P6 c/ }! @economy, avoiding 'excuses' and to especially not listen to the uninformed Y+ O7 C6 m+ T4 A( w
'dream stealers.' As long as you stick with your game plan, you continue to do
) _* W n( N% ?% `. f3 f0 cyour due diligence, and you remove emotions from the equation, you will see the, I% \# [$ \4 a- u% {( w' O
opportunities that are right in front of you, right here in Alberta. Let the
S/ Y: L8 ?+ U! s'dream stealers' call you 'lucky' 5 years from now as your net worth has soared& w5 d" D. Z8 c: Z4 j* a5 o
and your financial freedom has surpassed even your wildest expectations.
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Capital Gains Comparison.
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KPMG has recently released a comparison of the true Top Federal and Provincial/ T4 {" q: X8 C3 \. ?. e- _
Marginal Capital Gains Tax Rates per province. It is very interesting to see! U, P% |# [) R! i. w, k' a
how these will affect your exit strategy. Here are the numbers:1 m, y# P8 d7 o4 c4 G# c
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BC . . . . . . . . 21.9%
" p4 G: K- z) D) Q5 e7 D: HAB . . . . . . . . 19.5%0 p k, J! H# l# Q2 t' n) [
SK . . . . . . . . 22.0%. ~2 V4 D; y8 H8 X6 W; {' Q- U
MB . . . . . . . . 23.2%9 h6 }7 F2 @9 ~# ~ a7 i$ L9 Y
ON . . . . . . . . 23.2%
! N: z- W5 G: V: s, c* ~5 \5 jQC . . . . . . . . 24.1%
# U" H9 F+ f3 D7 I* D; U8 xNB . . . . . . . . 23.4%
9 Z, ?( O8 K( [/ ]+ {7 J5 TNS . . . . . . . . 24.1%
2 \& C3 c" F* c# @- D7 WPE . . . . . . . . 23.7%2 h8 K# c% J( [
NF . . . . . . . . 24.3%
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Lower capital gains tax increases investment and stimulates the long term8 {+ W- U! e! N% d* e7 @8 [
economy of the province. It also allows real estate investors to keep more of
7 o, X6 d3 @8 @3 L0 ktheir profits at exit time. Always a good number to pay attention to.
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* |) e; [8 s4 F1 QOverall, by staying focused for the next short period of time, you have the6 U$ W+ E' P1 W1 z9 u- j' _
opportunity to create financial freedom of which others can only dream. Of2 l$ u( u/ X1 L3 Q, v
course, the key word is focus. And with an August line-up of 'Members Only'
& m* t" T, c9 A" b) ?" u* A/ nevents like this, you can't help to become a real estate investment champion
+ P* k4 p8 Z( i( G$ f8 q2 \1 Qwhen you take action as a full REIN Member.+ v4 V5 L# i* ?9 j8 s+ _ t2 B
! V4 C3 z: [1 A- Z- D% r% k" R4 VFocus on the fundamentals, keep emotions out of your decisions, and enjoy the4 V1 A. Q' ]0 o- H1 e5 u5 m
results in just a few short years. |
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