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NEW HOUSING PRICE INDEX...: Z* X1 h3 @$ P. |- |! F
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The New Housing Price Index, has just been released and it provides some very: m3 f4 f2 H6 z* f; d6 N( l; p8 g
interesting insights, not only into where the market has moved, but where it
- e; k7 A+ E- T; C; l [will be going.
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) B, U$ D$ h- y! ^# DIt proved, once again, the value of looking at fundamentals behind a market.
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% K# Y: b& t- rThe New Housing Price Index is compiled by Statistics Canada and is used by: A5 Y5 O5 P0 Y- w1 \8 D9 f9 L; `
sophisticated investors to see how much the market has moved, as well as an
4 e- R9 B& n3 n& S5 Z- Q1 O7 k' Bindicator of where re-sale home prices will be moving in the coming six months.
# o c6 ~2 Q; I: iWe look at the ripple effect that new housing prices have on re-sale property8 K% _6 `# s' n5 @1 J, B
values and can extrapolate what direction re-sale prices will be moving and by+ a0 i& W8 h, S" k. k
how much.
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For instance, for the last three years, we have told investors to avoid Windsor,
0 E! N V; A6 TOntario as an investment area because the underlying fundamentals are not very
% k! j9 |6 u: ]3 m8 A% xstrong. This has been proven once again with the release of the latest7 e- ?7 M+ R( j$ ~
findings. New Housing Prices have actually decreased by .5% during June 2005 -
# F; A2 x4 x; [June 2006 proving that fundamental investing works in helping you pick the best
" _: z* p$ O2 ?- c' N) W" Vmarkets and avoid the flat ones. This .5% decrease should have little impact3 i% p3 c$ _7 [0 |: [+ Y( E
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 the8 ~5 c- d8 y, Z
market continues to be super heated. With close to 3,000 net new people into) Y! q+ N7 U) D' j2 i2 \
the city every month, the property market just can't keep up. That is why we
" h" l' M0 i) r* j6 z8 P, h* gsaw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). ' y4 \& E) E3 i3 l1 g2 M
This is great news for the future of re-sale values in the city as these- c( B/ d3 c0 S
increases will continue to ripple out into the market for at least the next six
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Comparing these two regions is a great illustration of the value of not getting
1 B! v, q6 T% X0 x3 [- {" Kcaught in the 'emotional guessing game' by just focusing on the underlying
7 W( H4 r: L) ^/ pfundamentals. It is sad to see those people who said in the last 2 years that
' L. y9 N7 V u6 Fthe Alberta real estate market was over and they were going to sit back and wait, `, c2 [- A% _0 ]7 o m
until it drops. Quite obviously, they have missed out on AMAZING gains, all \) U* `; H0 F) U3 O5 e: N$ j
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 (June0 A+ O3 b( a: I, ~1 [
2005 to June 2006), also great news.
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% v# u, a6 L1 a* Y x: \By comparison across the country, these are the numbers for June 2005 - June
+ r" {/ j9 S5 T! _+ w$ n" B) f2006 New Housing Price Index for:, @- L: ~; P% y+ u" c2 g% y% M$ ~ f
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Vancouver . . . . . . . . +5.2%
- \- X! w8 k( O0 hSaskatoon . . . . . . . . +8.5%
* C8 \( Z/ k, W% a8 H: iLondon . . . . . . . . . . . +3.0%: E9 |: Q. M* L+ d$ O! P6 i7 P
Hamilton . . . . . . . . . . +4.9%* \+ C% ~/ f( n1 J' f
St. Catharines - Niagara . . . . +4.9%
+ @2 Y, B6 i- u# ?- \* B ], aToronto and Oshawa . . . . . . . +3.2
) G0 l+ d/ J1 s& zOttawa - Gatineau . . . . . . . . . +3.1%' O+ d# Z; M$ L5 G
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Fundamental investing ALWAYS makes you look like a genius - emotional investing
0 m* i9 S a9 p& _gives you quick highs, but also quick lows. Well done on your focus!# C" d7 G4 R- B0 m
7 e% y# V( w# iAs the fundamentals have been showing all along, the Alberta market continues to" q9 k- T+ v" @, F
be strong, as in-migration and job creation continues to attract people from not2 j1 P p- U0 z& P; L L3 D' x; |
only across Canada, but from around the world. Our average wages are- O$ G! w, C; w! h% t1 K9 c
increasing, our population is increasing, our unemployment rate continues to
E+ N% j k n" X" _9 |drop and our GDP growth is slated to once again lead the country.
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0 b5 D, b- {* m$ n2 }+ M2 OHere are some very interesting facts that are helping to support the strong/ o2 G# c6 M" I; `% f0 Q" u
fundamentals:
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( n9 z+ a8 M$ a7 q1. The Conference Board of Canada is forecasting strong economic growth in' g+ v6 e7 N r
Canada, with Alberta once again leading the way. In fact, the projected growth
& w5 C5 y1 _% N; Lfor Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and& _3 q9 V0 N# G% z
this is slated to occur even with the labour shortages we are witnessing.* l' x+ S6 v" W. O& D0 P5 y6 V
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2. People are discovering Canada as an investment center from all over the5 J6 t. ~. f' w, ?# y" H
world. Recently, there have been investors coming here from Asia, Australia,1 n2 J9 J! V, I9 A" T3 k- X
the US, UK and Europe. In fact, if you review the world's press you will see* u2 T) D5 a! h
that Canada (with a focus on Alberta) is being discussed more frequently.
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7 T: ]" m, z) ~6 {) R2 _3. Don Campbell has just returned from presenting our Canadian investment O2 o* u- H( h' K) Q
atmosphere (including Why Alberta - Why Now") to a group of major investors in/ X: I6 M# `0 l" R9 @
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after
( }7 E# j# [& D( C- ZDon presented the economic facts, many of these investors (who could invest0 m, `; r7 i: h3 S2 h( A0 b7 y
anywhere in the world) have already booked their flights to here. Once again3 w% ^) @1 m2 X8 D$ S& W" K+ X
proving that when the true numbers of our economy are presented (along with the2 U6 L! b! {; `* O7 K3 P* t) I+ e
political stability of our country), there is no place in the world that can
2 E5 B8 j% w5 R- Q3 o l/ Hbeat it for long term investment.
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4. Job creation continues to be strong (with a small lull in June); definitely
6 O2 @0 A8 e6 R1 ka sign of strong long-term fundamentals. RBC has also been following the job
6 h' G B- z5 ]0 W5 Q4 B) Lcreation situation and here is what they are saying: (www.rbc.com/economics)5 m8 G9 @' y3 V0 ~0 @
"After generating a substantial 96,700 jobs in May, the largest such gain since6 n$ ]1 a1 m% `" T$ ^
January 2002, the economy lost a modest 4,600 jobs in June...
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' x' M( R+ z1 ^/ S- a% rStrength in the Canadian economy contributed to a gain of 215,600 jobs in the
$ k5 U: C6 y+ t' efirst half of 2006, a feat not matched since the second half of 2002. With the: K! {+ P& B: N8 Y& B6 u6 P
economy widely expected to grow at a more moderate pace in the second half of
?5 ]" }4 C' s8 ]3 V; Vthe year on the back of slowing trade activity, this impressive showing may not
6 V* |. _! O" h# Krepeat itself. We expect that employment grew in July at a pace consistent with& Z# c3 |4 o, ?& S! R/ B
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at
. k7 Y3 f% n0 V+ p2 |2 r/ kits trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
& q! ^" `6 I- e! Cof 6.1%." Overall very good news. Now the key is to ensure that the region in3 \7 }% f2 h4 C5 r A
which you are investing is continuing to generate jobs and increasing incomes.- e" w3 M% c! K# d3 j# r$ Z9 O0 O/ n5 ^
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3 y( }# _! g) F' ?( b9 KIn other words, it is a great time to be taking advantage of this strong
% a( |8 R' a6 e" m4 m0 U0 G+ s* b$ Reconomy, avoiding 'excuses' and to especially not listen to the uninformed8 F1 T# i- J( B3 F' k) a
'dream stealers.' As long as you stick with your game plan, you continue to do
6 D- R- ~3 e) l* ?& a/ ~your due diligence, and you remove emotions from the equation, you will see the
# q; R! x' g- I E- l2 K4 N8 H* \opportunities that are right in front of you, right here in Alberta. Let the, r0 A6 q% C* O
'dream stealers' call you 'lucky' 5 years from now as your net worth has soared
" k: h3 z( F7 B$ F0 `0 Xand your financial freedom has surpassed even your wildest expectations.
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Capital Gains Comparison.
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, I4 C7 y$ ]3 _KPMG has recently released a comparison of the true Top Federal and Provincial3 j: f( {! `3 p
Marginal Capital Gains Tax Rates per province. It is very interesting to see
( r6 W) _# T: R5 L0 Mhow these will affect your exit strategy. Here are the numbers:
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, i# x9 c3 ^: u8 \BC . . . . . . . . 21.9%
5 E+ Y$ r. p, bAB . . . . . . . . 19.5%
6 L% P" a0 S9 U, [SK . . . . . . . . 22.0%6 s& D& @. B0 a, \3 D0 J
MB . . . . . . . . 23.2%0 R- O; M$ b2 A {. s& G
ON . . . . . . . . 23.2%. } \( a+ V1 v8 I
QC . . . . . . . . 24.1%+ V6 ]4 v7 ]2 U2 L) ?6 I
NB . . . . . . . . 23.4%
' Y4 U0 y+ t* e8 m8 V+ U% i2 `NS . . . . . . . . 24.1%0 Y: p) x M- }$ h% ?
PE . . . . . . . . 23.7%- ]5 \/ p# X$ i6 B6 h
NF . . . . . . . . 24.3%
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9 w! P7 t: v: |$ A* ~$ LLower capital gains tax increases investment and stimulates the long term
2 v9 |* F3 a- C b/ b2 l' `$ oeconomy of the province. It also allows real estate investors to keep more of
& d2 b+ R9 _9 E& Q2 w7 j& ?their 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
2 k/ P9 _, H* u' ]0 l5 \$ T1 V" jopportunity to create financial freedom of which others can only dream. Of- k2 `9 ?& ^, T( M4 v, W
course, the key word is focus. And with an August line-up of 'Members Only'
, H& X' L: h s( u, ~events like this, you can't help to become a real estate investment champion! V$ G0 @# q9 l6 F
when you take action as a full REIN Member.3 m* Q4 r7 f: _" M ^* `2 w& _
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the& I% W$ u$ o$ ~
results in just a few short years. |
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