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NEW HOUSING PRICE INDEX.../ K( u! s9 `* w/ @7 d. x
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. |, i4 N( z- @# O0 h# Z8 |The New Housing Price Index, has just been released and it provides some very
) u$ o4 w) V6 T3 }interesting insights, not only into where the market has moved, but where it
, v' n+ J( @# w3 z3 y9 Hwill be going.( u8 E& S% ]: |: e6 g& y
! k j, G e; ~It proved, once again, the value of looking at fundamentals behind a market.( X& c3 a# W- q$ ~7 }9 t1 U
/ i; u. U% d3 F" Q7 t; N/ FThe New Housing Price Index is compiled by Statistics Canada and is used by$ M+ v3 ?; Q& @, F( S
sophisticated investors to see how much the market has moved, as well as an& `0 T' g! R: t G0 N
indicator of where re-sale home prices will be moving in the coming six months. * R, B' ?* \5 Z3 A, g1 Y, P1 Z/ I
We look at the ripple effect that new housing prices have on re-sale property
6 Q5 j. \% l. ^6 vvalues and can extrapolate what direction re-sale prices will be moving and by/ J5 u& K$ [- v# M6 t/ F
how much.; y& L6 S4 a" I$ T; L
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For instance, for the last three years, we have told investors to avoid Windsor,- F& Y4 V" \" ]* d
Ontario as an investment area because the underlying fundamentals are not very! S! K6 t( P1 G# e0 m
strong. This has been proven once again with the release of the latest
0 h E& Z7 i4 c7 w% z$ M* vfindings. New Housing Prices have actually decreased by .5% during June 2005 -5 `7 [ a4 a- w' A. W( C, h
June 2006 proving that fundamental investing works in helping you pick the best/ ?7 x3 t/ S" S w
markets and avoid the flat ones. This .5% decrease should have little impact
5 U6 N d# h& Fon average re-sale values in the Windsor region.
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) r! h' W# k0 V( V% j$ A% pTo contrast this, the fundamentals we discuss are so strong in Calgary that the
9 E& X; T0 e+ c5 amarket continues to be super heated. With close to 3,000 net new people into
* t& W1 `$ c4 I2 @the city every month, the property market just can't keep up. That is why we
7 u6 H% _- ^8 V5 a: b9 t6 fsaw the New Housing Price Index increase by 49.2% (June 2005 to June 2006).
) @/ Z7 i- {' R' LThis is great news for the future of re-sale values in the city as these
) H3 r) @) [" q# `! fincreases will continue to ripple out into the market for at least the next six
6 t6 w4 g) x9 Q8 xmonths.
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4 s' ^4 F$ Z3 v. D* cComparing these two regions is a great illustration of the value of not getting
/ P% b, q& j. h3 i) ]% k( Pcaught in the 'emotional guessing game' by just focusing on the underlying
, e2 ]) Q8 B2 c" O( afundamentals. It is sad to see those people who said in the last 2 years that3 ]) C" Y# x0 J$ d
the Alberta real estate market was over and they were going to sit back and wait
* n3 H/ G: s$ x t( o4 E; c8 r" buntil it drops. Quite obviously, they have missed out on AMAZING gains, all" H, w' `' K, W6 F' l7 A2 ?8 h
because they didn't follow fundamentals, they just led with their emotions.2 h" r& g+ A- h* s( L9 Q
" m+ u& ~% |6 z. Y# o! HBy the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June
# t" k' z2 O: k# z$ f1 g# F2005 to June 2006), also great news./ S$ U0 h; ~* O
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By comparison across the country, these are the numbers for June 2005 - June
4 R/ C2 B' v2 o2006 New Housing Price Index for:1 g Y% \" S2 S0 |$ v# K- a
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Vancouver . . . . . . . . +5.2%
5 c6 }. e) T' P. b F; S5 C( t" hSaskatoon . . . . . . . . +8.5%, h8 C% j3 S" b$ ~
London . . . . . . . . . . . +3.0%
. s3 A6 j ?5 R: QHamilton . . . . . . . . . . +4.9%0 V3 k) }8 b) I; m2 i' }% D
St. Catharines - Niagara . . . . +4.9%
/ b* m/ v. [! U- t5 ~Toronto and Oshawa . . . . . . . +3.2
# U! N! O% c4 x& _- Z* C4 f4 ~Ottawa - Gatineau . . . . . . . . . +3.1%4 t2 D! O) v" n2 O7 p/ j
8 b+ I$ C* ~& ~( G' T4 D) bFundamental investing ALWAYS makes you look like a genius - emotional investing
5 V- M3 a6 _- ?# E( V' vgives you quick highs, but also quick lows. Well done on your focus!+ i! ]- Y* [ Y" h% d) T
9 d7 f T! \# T6 U. Q- pAs the fundamentals have been showing all along, the Alberta market continues to# q% Q# V4 A- p" w: C, G* p
be strong, as in-migration and job creation continues to attract people from not
( L+ h& o' Y6 v- U6 q3 bonly across Canada, but from around the world. Our average wages are
+ N' r/ y) _7 B' aincreasing, our population is increasing, our unemployment rate continues to' Y) B! h% \- j# N/ K
drop and our GDP growth is slated to once again lead the country.. ^# `& d6 w$ v' w4 a& i
# m* c. J: \& x+ I2 ~1 UHere are some very interesting facts that are helping to support the strong
. d* |3 V" r$ L* j8 P- \fundamentals:* f& e3 W( \) l, e) a
& R3 @. Y- B' j0 U6 e1. The Conference Board of Canada is forecasting strong economic growth in9 E; M0 g F" T0 R
Canada, with Alberta once again leading the way. In fact, the projected growth, K6 O2 {8 h7 n4 v9 |, x+ e
for Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and
7 x: u3 @& r& r2 Dthis is slated to occur even with the labour shortages we are witnessing.# P; Y- p, V* |7 ]
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2. People are discovering Canada as an investment center from all over the3 G x# \) }5 }& `' c
world. Recently, there have been investors coming here from Asia, Australia,
5 n1 x+ B1 Y8 A! B( d5 Q* G0 ythe US, UK and Europe. In fact, if you review the world's press you will see
' j2 f: S( _9 x; H5 @that Canada (with a focus on Alberta) is being discussed more frequently.
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0 ?/ p, u( w" Y' r+ ]$ A( s3. Don Campbell has just returned from presenting our Canadian investment0 [) {0 {9 L, N- z7 E
atmosphere (including Why Alberta - Why Now") to a group of major investors in
( t$ U" H3 Q- N x8 Y3 B; pDublin, Ireland, and the response was overwhelmingly positive. In fact, after2 l( M2 R; n; {- n' Q
Don presented the economic facts, many of these investors (who could invest! I1 w) [! \5 b3 y$ z3 m, E- i3 ^
anywhere in the world) have already booked their flights to here. Once again7 L* [/ j5 v0 Z3 H" ]7 E. ^
proving that when the true numbers of our economy are presented (along with the, T2 s5 l) [! s$ y6 {
political stability of our country), there is no place in the world that can
& f+ ^* P& J% qbeat it for long term investment.
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4. Job creation continues to be strong (with a small lull in June); definitely
J9 ?. r5 V- K% ha sign of strong long-term fundamentals. RBC has also been following the job' \' K: @( }: h, b \
creation situation and here is what they are saying: (www.rbc.com/economics)
# L F& I' E9 h; e T"After generating a substantial 96,700 jobs in May, the largest such gain since
6 q0 _$ ^/ h* D* U0 ?" }1 RJanuary 2002, the economy lost a modest 4,600 jobs in June...
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, n' W; q; \+ pStrength in the Canadian economy contributed to a gain of 215,600 jobs in the
5 e! S/ S5 y# p. _first half of 2006, a feat not matched since the second half of 2002. With the
. d3 g' H# p, l# h/ O5 f7 ]% Jeconomy widely expected to grow at a more moderate pace in the second half of2 D# q5 d2 E% n8 |
the year on the back of slowing trade activity, this impressive showing may not& }3 U9 H& L, l8 U) S
repeat itself. We expect that employment grew in July at a pace consistent with. N) a4 i1 g% c$ b: ^: i
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at" y! t/ s) Q6 }4 [# P. y( i5 K6 p
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate5 V4 z2 v0 A' \
of 6.1%." Overall very good news. Now the key is to ensure that the region in
& }" }5 b) g% |0 Hwhich you are investing is continuing to generate jobs and increasing incomes.5 H2 C, ~8 ?' {6 M1 U
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In other words, it is a great time to be taking advantage of this strong
. K0 t" y, W% N: peconomy, avoiding 'excuses' and to especially not listen to the uninformed& S% U( D6 _- ~6 a) n
'dream stealers.' As long as you stick with your game plan, you continue to do: l& D/ h6 B6 S$ K- t! f
your due diligence, and you remove emotions from the equation, you will see the9 A+ X& I, q' I, j
opportunities that are right in front of you, right here in Alberta. Let the. W- X9 _. }- U. {
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared
7 c4 x: w6 j6 E, D7 R* Y% uand your financial freedom has surpassed even your wildest expectations.
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: [. N: S) n# q* r: U- iCapital Gains Comparison.
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KPMG has recently released a comparison of the true Top Federal and Provincial
+ f4 A7 o: Z$ ?' L7 k: ~Marginal Capital Gains Tax Rates per province. It is very interesting to see! j7 R4 p* r5 q% I" O
how these will affect your exit strategy. Here are the numbers:) h2 i% n/ L, y3 L( f
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BC . . . . . . . . 21.9%
4 Y7 L$ ] E) }; S5 \7 r( V rAB . . . . . . . . 19.5%9 Q. L1 A: H* G; T. F
SK . . . . . . . . 22.0%; R9 A( m% f3 a! a: q7 ]* ~9 D
MB . . . . . . . . 23.2%) I# e) U" U/ @2 [
ON . . . . . . . . 23.2%+ z" T y' Z" N" a
QC . . . . . . . . 24.1%
0 T! h# l- l( x G+ t6 A- k& {NB . . . . . . . . 23.4%
9 Q d& t! @- K& ~3 @/ hNS . . . . . . . . 24.1%% h7 i4 d: {% o3 y G
PE . . . . . . . . 23.7%
2 x- l7 p. f2 T# vNF . . . . . . . . 24.3%
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7 u" d, t' `1 t" cLower capital gains tax increases investment and stimulates the long term8 \& E6 v' r& S% Y" x) n8 l! B
economy of the province. It also allows real estate investors to keep more of
: f3 Z! S" ^0 k9 Vtheir 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
$ r: a2 \8 W5 Q0 T/ X9 |4 i0 G" Zopportunity to create financial freedom of which others can only dream. Of6 s% j$ S0 W! l" C/ n, x/ v: K7 ^& X
course, the key word is focus. And with an August line-up of 'Members Only'* A" Z9 k5 l+ \- J4 t0 A7 o: b3 [
events like this, you can't help to become a real estate investment champion( u8 d' d3 V5 u! O* V6 n9 Q
when you take action as a full REIN Member.3 b9 |. U; T" {+ g# Y) P, V
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the% u9 ]. }; W9 c2 m0 J6 Y& G: n U: l
results in just a few short years. |
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