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NEW HOUSING PRICE INDEX...3 V7 L1 n) t2 Q& x/ ~# N: d
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The New Housing Price Index, has just been released and it provides some very5 ?+ E: E9 M9 D* Q5 W C
interesting insights, not only into where the market has moved, but where it& ?3 U( d8 H: U; L1 T5 V
will be going.* I' m4 y! e1 V) E
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It proved, once again, the value of looking at fundamentals behind a market.1 t+ `# H: m4 a7 E
+ W0 t- s4 }2 } R5 c+ q' G% J% NThe New Housing Price Index is compiled by Statistics Canada and is used by
' R0 W* _1 D+ q( g2 ?) E( Asophisticated investors to see how much the market has moved, as well as an
1 l4 W F0 x/ L' p" w1 V! G1 N n& d" Bindicator of where re-sale home prices will be moving in the coming six months.
d! h3 m* G& E+ j5 TWe look at the ripple effect that new housing prices have on re-sale property
\" Q h6 |0 i* r5 W7 Avalues and can extrapolate what direction re-sale prices will be moving and by
! x1 ]; ~7 f, M) N" m- ?how much.
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( K: R5 X$ K" {For instance, for the last three years, we have told investors to avoid Windsor,
# }5 u U5 s- }# \( cOntario as an investment area because the underlying fundamentals are not very9 g9 i. |) E3 U! {/ e
strong. This has been proven once again with the release of the latest1 C' q4 z& E# P! R
findings. New Housing Prices have actually decreased by .5% during June 2005 -/ s% }1 g1 v5 h, [! ^0 d U
June 2006 proving that fundamental investing works in helping you pick the best
+ x6 V- A1 ^# ~7 _" ~, i4 f. Rmarkets and avoid the flat ones. This .5% decrease should have little impact/ f( V& l! }! j' Y( d. G
on average re-sale values in the Windsor region.2 T n+ E/ o {+ Y& d- n
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To contrast this, the fundamentals we discuss are so strong in Calgary that the/ l& Y' U' k0 ~1 `
market continues to be super heated. With close to 3,000 net new people into
3 U; U5 v0 D1 V" `7 w- e" L& ~7 @* Rthe city every month, the property market just can't keep up. That is why we" |) V) G. @3 t- u/ R+ G
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). 7 {2 f \. L8 H! U. A
This is great news for the future of re-sale values in the city as these; i& V, q1 `! K' w! x; @
increases will continue to ripple out into the market for at least the next six- \7 O* i" G) _! i
months. 1 D9 ]* G# {) F2 V- Y2 A, ]- _! ^/ X
% J; ~& w9 v! B6 @Comparing these two regions is a great illustration of the value of not getting( t1 U" C3 |9 o. v% M" s
caught in the 'emotional guessing game' by just focusing on the underlying( w# y! K4 D: O% b
fundamentals. It is sad to see those people who said in the last 2 years that
" q9 O) d$ p P8 @2 X+ _$ athe Alberta real estate market was over and they were going to sit back and wait3 q- |+ I' a: P! g9 d" r3 k
until it drops. Quite obviously, they have missed out on AMAZING gains, all
* ?- C# Q( i5 _4 Pbecause they didn't follow fundamentals, they just led with their emotions.
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2 E4 {2 b- J: b, P% {2 J6 v( OBy the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June: \; \- L; P- o& L: Q! m5 }: V( Y
2005 to June 2006), also great news.2 m" P$ `( A+ o) x- a7 h
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By comparison across the country, these are the numbers for June 2005 - June0 H$ M* Q! i8 i
2006 New Housing Price Index for:4 I: j' s/ j2 { i
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Vancouver . . . . . . . . +5.2%" V2 {. A0 m( i3 K7 u
Saskatoon . . . . . . . . +8.5%
3 p9 t. O& A5 {+ u- yLondon . . . . . . . . . . . +3.0% e- z# ~3 H; o& f- y A
Hamilton . . . . . . . . . . +4.9%
* _' P: p9 `% F' X$ e+ vSt. Catharines - Niagara . . . . +4.9%
& n5 @+ B' @ m- D! Q7 J: [Toronto and Oshawa . . . . . . . +3.2* O \& G1 i2 Q! f f0 E% J( \
Ottawa - Gatineau . . . . . . . . . +3.1%, j, z5 {) l) R5 _- j. t* d. }
, I% z) i. | b# }Fundamental investing ALWAYS makes you look like a genius - emotional investing
3 k6 c' m+ N+ O7 agives you quick highs, but also quick lows. Well done on your focus!
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As the fundamentals have been showing all along, the Alberta market continues to
6 T, Z& b% w2 U. |3 X* dbe strong, as in-migration and job creation continues to attract people from not
3 {& d# I; X% d# K/ Lonly across Canada, but from around the world. Our average wages are% S0 u4 v8 _! y2 e r' G- h' y
increasing, our population is increasing, our unemployment rate continues to. u& \+ x- I i) C' o
drop and our GDP growth is slated to once again lead the country.0 s1 @6 _7 k7 N7 c' c1 }9 y# M
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Here are some very interesting facts that are helping to support the strong
7 Y' |3 d( E3 A6 B1 M# sfundamentals:
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* {4 s+ v* V# X4 S1. The Conference Board of Canada is forecasting strong economic growth in
* X) N* I& J+ }Canada, with Alberta once again leading the way. In fact, the projected growth
) ~& M6 t6 o( L* |. z3 R4 T2 ]& gfor Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and
' S* a% S J7 K8 ^this is slated to occur even with the labour shortages we are witnessing.0 ^0 L. q+ C3 v2 g
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2. People are discovering Canada as an investment center from all over the
+ ?$ v! x4 b( D7 P, g, [0 @world. Recently, there have been investors coming here from Asia, Australia,
; Z9 f. W) r; A$ B# c2 w" _* } lthe US, UK and Europe. In fact, if you review the world's press you will see
) c% I" }( q% othat Canada (with a focus on Alberta) is being discussed more frequently. , d3 {6 f% x+ o, |8 i1 e" {
* L# G* K' E: X( j3 ]% U, u3. Don Campbell has just returned from presenting our Canadian investment8 {3 F! M0 i @0 e- X
atmosphere (including Why Alberta - Why Now") to a group of major investors in
4 `7 P8 |& U6 M D# n4 Q: w ?Dublin, Ireland, and the response was overwhelmingly positive. In fact, after! f6 l+ f4 C9 O0 \9 ]$ f) U
Don presented the economic facts, many of these investors (who could invest; f4 X* S7 t1 n; R0 u; s/ f8 T, r- ^
anywhere in the world) have already booked their flights to here. Once again- T, R S6 E; _" ^" n; n
proving that when the true numbers of our economy are presented (along with the
; C: h; S% _' |+ g# Gpolitical stability of our country), there is no place in the world that can, A' f/ E$ v$ }# W, T3 q( o: g
beat it for long term investment.
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+ C7 Q8 T7 Z+ ]4 l# Q! z9 q/ d/ Q4. Job creation continues to be strong (with a small lull in June); definitely3 ]3 l& T8 ~: R+ G, J
a sign of strong long-term fundamentals. RBC has also been following the job
4 v1 z" i+ g" I$ w- o6 Zcreation situation and here is what they are saying: (www.rbc.com/economics)
- K, U9 i4 ]& i! n1 h+ Z* D% c9 G"After generating a substantial 96,700 jobs in May, the largest such gain since
; q& f; e/ S3 C& LJanuary 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 the8 r5 e, T% ?: F3 X( U' `- \+ h
first half of 2006, a feat not matched since the second half of 2002. With the
1 t0 p4 r+ \5 G! p1 L+ {economy widely expected to grow at a more moderate pace in the second half of
- g0 h" R- \3 P7 Y0 Y- Cthe year on the back of slowing trade activity, this impressive showing may not
+ C) J% R; j1 T! R! y S( ?repeat itself. We expect that employment grew in July at a pace consistent with$ C. _8 }) K7 \: p/ b2 A
its recent trend of 24,000 jobs a month. Assuming that the labour force grew at; I0 E) L( B& ^$ @
its trend rate, a gain of 24,000 jobs will lead to a national unemployment rate& \5 E5 `- R# r3 q2 {: ]
of 6.1%." Overall very good news. Now the key is to ensure that the region in$ a' ?/ x0 R* ]; l. B$ {/ K$ |: _3 i
which you are investing is continuing to generate jobs and increasing incomes.% {" Y+ Y. \1 l+ a5 F% Y
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6 M# I. V5 B& V+ YIn other words, it is a great time to be taking advantage of this strong
5 Y8 A$ B& W: ^6 R$ teconomy, avoiding 'excuses' and to especially not listen to the uninformed
# L" X u4 B& V( b- d'dream stealers.' As long as you stick with your game plan, you continue to do* v( L( g( `" L \- T4 y
your due diligence, and you remove emotions from the equation, you will see the
( t; q) y- X! I& r% Iopportunities that are right in front of you, right here in Alberta. Let the
+ F' @: U0 f3 ]+ G ?; J# n'dream stealers' call you 'lucky' 5 years from now as your net worth has soared T/ M- X! q1 j' s
and your financial freedom has surpassed even your wildest expectations." A4 b, B) F% G5 A" E$ a/ ^* A* r
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Capital Gains Comparison.
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( s3 M2 l+ W. `0 c/ x; ^KPMG has recently released a comparison of the true Top Federal and Provincial! @1 M$ U* M. L: o
Marginal Capital Gains Tax Rates per province. It is very interesting to see
) G8 b6 _8 j2 v4 `8 d0 P, [# whow these will affect your exit strategy. Here are the numbers:
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! V" k+ u8 F% B. } |BC . . . . . . . . 21.9%
) y; |4 C, {% b9 K' sAB . . . . . . . . 19.5%4 D1 h& U' ?# N3 R& J0 t. ^4 k
SK . . . . . . . . 22.0%
% q9 w: @0 q$ `7 \/ Z* g# QMB . . . . . . . . 23.2%! k8 ^, c4 Z! ~# |7 Z8 m, z
ON . . . . . . . . 23.2%
0 S- |+ ]# i2 cQC . . . . . . . . 24.1%2 N+ F7 l8 E) R3 a& \
NB . . . . . . . . 23.4%/ t' h4 t/ ?8 s0 Y0 K
NS . . . . . . . . 24.1%: [- r" G0 w4 F( o, p/ A4 `" w$ ~
PE . . . . . . . . 23.7%
! p" {' D/ ]: m4 WNF . . . . . . . . 24.3%
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3 t" \7 ]. A1 ~0 ]# }3 |1 E6 lLower capital gains tax increases investment and stimulates the long term
7 ]8 z' C, m+ X! T, ueconomy of the province. It also allows real estate investors to keep more of
& {: V6 R, Q$ L& W0 `, w% C Vtheir profits at exit time. Always a good number to pay attention to.
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' J7 A' K( ?1 y6 Z2 Y2 l$ JOverall, by staying focused for the next short period of time, you have the
6 }5 \6 v# F) Eopportunity to create financial freedom of which others can only dream. Of' j8 v$ r z7 {3 X
course, the key word is focus. And with an August line-up of 'Members Only'
1 {; j6 v9 o7 devents like this, you can't help to become a real estate investment champion0 H- d$ y- g4 B5 x5 |0 \+ b
when you take action as a full REIN Member.
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# o9 q L5 @5 LFocus on the fundamentals, keep emotions out of your decisions, and enjoy the$ q0 K) A. n5 S( B- K7 p* K/ w; l
results in just a few short years. |
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