Archive for the ‘Canada’ Category

Vancouver a graveyard for job seekers?

Wednesday, April 16th, 2014

There’s been some discussion lately about the temporary foreign worker program (TFW) and whether Canada needs to import workers, skilled or unskilled.

This of course brings up the debate: companies say they can’t find people to fill positions, workers say thats just because you aren’t paying enough.

Is there something special about Vancouver that enables lower wages to be paid or are is it not true that Vancouverites tend to be underpaid?

Atomic Frog had this to say:

Here are some of the facts that I know of

Highly skilled and highly in demand workers do not stay in Vancouver. You get paid higher in another city and cost of living is likely lower than living in Vancouver. Local companies ALWAYS have problem hiring qualified applicants and if this snowball, they cannot stay in business for very long or be very competitive in their sector. What kind of industry is doing very well in Vancouver anyway these days? Movie industry? Mining? Tech? I work in the local IT industry for the last 20 yrs. I saw all kind of IT ppl who came to town, found a job and eventually left town after a couple of yrs because they had found a much better paying job in another city.

As a result, Vancouver is considered to be a graveyard for job seekers. Even for those who have a job, local salary has been stagnant for yrs. Without a steady stream of local workers who should see their annual salary go up steadily every yr, it is very difficult for this local property bubble to continue.

There are many cases in other parts of the world where property value goes up and stay there. Main reason being foreign investor, but the locals also keep making more money over the yrs. Prices that were higher five yrs ago may not seem to be that high for those cities. However, can we say the same thing for Vancouver?

Do you know skilled workers that have sought better career opportunities outside of Vancouver or are you and your coworkers properly compensated and happy to stay?

Taxpayers funding condo flippers?

Monday, April 14th, 2014

By now everyone knows about the high cost of the Olympic Village project.

Current estimates are that it will cost taxpayers between $400 – $600 million to pay this off.

There are 68 units still left unsold over the last six years, but over at the ‘Canada House’ building it looks like a number of units have been bought and flipped, at least one for more than $400k profit in a month.

Hat tip to Mac who pointed out this article in the Province.

So whats going on here? Should these units have been priced higher or considering the tough sales across this project were they right to unload them quickly even if there were buyers willing to pay more?

Pimco talking down Canada again

Monday, March 3rd, 2014

The worlds biggest bond fund seems to think there’s some sort of an issue with the Canadian real estate market.

Ed Devlin sees a decline somewhere in the range of 10-20 percent for home prices across the nation.

“And if you get that kind of 10-, 20-per-cent real correction, that should alleviate some of the stresses,” he added in an interview with our real estate reporter.

“And so that’s kind of what what we’re seeing. It will start this year, it could be bumpy along the way.”

To be clear, Mr. Devlin is not forecasting a sudden crash, but he joins a chorus of voices, from Deutsche Bank to the Organization for Economic Co-operation and Development, in raising red flags.

Deutsche Bank, for example, believes the Canadian housing market is the most overvalued in the world.

Read the full article here.

RBC warns of mortgage rate increases

Tuesday, February 25th, 2014

RBC sees mortgage rates going up instead of flat or down.

Their forecast is for housing to get less affordable due to rate increases.

The Royal Bank of Canada says the ability of Canadians to keep up with housing costs has been improving of late, but warns that’s about to change.

RBC’s latest housing affordability measure shows home servicing costs relative to incomes dipped slightly in the last three months of 2013 after having risen the previous two quarters.

But the relief will be temporary, the bank says in a new report, because mortgage rates are due to start rising this year.

“RBC anticipates that as longer-term interest rates begin to moderately rise, the costs of owning a home at market value will gradually outpace (growth) household incomes by late-2014, leading to strained affordability in several markets across Canada, much like the trend in Toronto,” RBC chief economist Craig Wright said in the report.

The finding bucks the recent trend, which has seen mortgage rates remain stable or even moving lower, with some brokers offering five-year fixed rates below three per cent.

Read the full article here.

Excess of rental units in Toronto and Vancouver?

Thursday, February 13th, 2014

A new report from CIBC is warning of an excess of rental units in Toronto and Vancouver.

They are basing this outlook on the large number of condos being built in both cities and predict a less than half point rise in vacancy rates, so ‘warning’ sounds a bit strong.

The concern is that increased competition for good renters could drive owners to sell their condos, leading to a further downturn in the condo resales market.

Economists and policy makers have worried that an “increased supply of rental units will flood the market and will lead to a wave of sales by disappointed investors with no bargaining power,” Mr. Tal writes in the report. The Bank of Canada highlighted concerns about the condo market in December when it outlined the key risks to the economy.

“A sharp correction in the condominium market could spread to other segments of the housing market with stretched valuations, as buyers and sellers adjust their expectations of the future path of house prices,” the central bank warned. “Such a correction could also have significant repercussions on the real economy, since the construction sector is an important component of economic activity.”

Read the full article here.

Canada plans to stop selling citizenship

Tuesday, February 11th, 2014

The federal government has announced that they are closing the immigrant investor program.

So how does this wash out with Vancouver HAM-hype?

If prices crash now does that mean that all the salespeople that used ‘foreign money’ instead of ‘in debt locals’ as a justification for high prices were correct?

A source said the government is acting based on data that show that, 20 years after arriving in Canada, an immigrant investor has paid about $200,000 less in taxes than a newcomer who came in under the federal skilled worker program, and almost $100,000 less than one who was a live-in caregiver.

In the past 28 years, more than 130,000 people have come to Canada under the investor program, including applicants and their families.

And what about those ‘in debt locals’?

Turkey shared some interesting numbers on the sheer size of Canadian debt growth:

Let’s start with non-mortgage debt:

Equifax said Monday that its figures show that consumer debt, excluding mortgages, rose to $518.3-billion through the end of November 2013. That was up 4.2 per cent from $497.4-billion a year earlier.

Up 20 billion dollars in a year; the total is 520 billion. That works out to about $15k per Canadian man, woman, and child.

Meanwhile, overall consumer debt, including mortgages, also continues to rise — up 9.1 per cent to $1.422-trillion from $1.303-trillion a year earlier.

Up 120 billion dollars in a year; the total is 1.42 billion. That’s about $41k per Canadian man, woman, and child.

Now the editorializing bit.

High debt levels are not a big concern in current conditions, which signal a stabilizing economy, improvement in the unemployment rate and an anticipated gradual increase in interest rates.

An increase in debt, by itself and without context, is not a troubling sign in an improving economy. It’s the friggin’ size of the thing that’s a catastrophe! These numbers are absurd. Plus, BC’s numbers have traditionally been worse.

TD: Houses 10% overpriced nationally

Wednesday, February 5th, 2014

Somebody over at TD bank looked in their crystal ball and saw interest rates rising.

They say that a combination of factors including increasing supply, softening demand and the expectation of rising interest rates mean that home price across the nation are overvalued by about 10%.

It says markets such as Toronto, Vancouver, Montreal and Ottawa are likely more overvalued than markets in the Prairie and Atlantic regions, and will likely see more of an impact.

The national housing market and worries about a real estate bubble have been key concerns for policy-makers for several years.

Recent indicators have suggested the market may be headed for a soft landing instead of a bubble bursting, but concerns have persisted.

Full article here.

Cult of ownership in trouble?

Wednesday, January 22nd, 2014

The Globe and Mail has an article about shifting perceptions on home ownership in Canada.

Based on a very small sample size, they are predicting that young people in Canada are becoming less willing and able to buy property.

“Last year, in a class of 29 students, a clear majority said they would buy,” Prof. Harris wrote me in an e-mail. “I was surprised because I had spent a lot of time speaking about the dangers of price bubbles, and about the opinion of most experts that the markets in many Canadian cities had moved, or were moving, into bubble territory.”

This year, only five of 23 said they’d buy and 18 chose to rent. “Although the assignment was the same and the content of my lectures pretty much the same, the pattern of response was very different,” Prof. Harris wrote.

Its certainly not what you’d call a wide ranging survey, so what do you think?  Are attitudes towards home ownership changing in Canada or do all the kids still want real estate?

Should bank CEOs be worried about housing market?

Wednesday, January 15th, 2014

Who should worry most about an overheated housing market?

Overstretched owners with big debt? Renters who want to buy? Government?

What about Bank CEOs?

TD CEO Ed Clark says that bank CEOs ‘should be worried’ about the Canadian housing market.

While he isn’t worried about a full-blown bust, Mr. Clark believes chief executives simply can’t ignore warning signs in the market – particularly the sudden run up in prices for real estate of all stripes. “If you run a bank, you should be worried about it,” he told the audience at a bank conference in Toronto.

Now if banks start to worry about insured mortgages, maybe the taxpayers insuring them should be worrying a bit too.

Of course other bank CEOs have said that there is no problem and lending has been prudent and restrained.

That article ends up with possibly the weirdest last paragraph of the year so far:

Mr. Clark’s comments Tuesday weren’t the first he’s made on the topic, but this time he went into more detail on how his bank is changing its behaviour.

“We’re saying ‘no’ lots of times” to potential real estate borrowers,” he said, some of whom are big, lucrative clients. Mr. Clark wouldn’t name names, but he noted that in one instance, Tim Hockey, the bank’s head of Canadian retail and commercial banking, was “virtually in tears” for having to turn the client down.

The austerity! it hurts!

30% of retirees return to work to pay bills

Monday, January 13th, 2014

ING has released the results of a survey they did showing that 3 out of 10 retired Canadians ended up having to return to work to pay bills.

Many retirees simply hadn’t saved enough or underestimated the cost of living.

The surveys portray a notable disconnect between Canadians’ expectations of life after the workforce and the reality of the cost.

ING Direct said that respondents wished they had found more ways to save for retirement, that they had started saving earlier and hadn’t “spent money so mindlessly.”

“The reality of retirement for many Canadians is a sobering reminder that you can’t put your financial future on the back burner,” ING Direct president and CEO Peter Aceto said in a release.

“Among the many other financial priorities we face during our prime working years, we need to make sure that retirement planning doesn’t get overlooked.”

So how are your retirement plans dear reader? Are you betting it all on a house in Vancouver?  Are you just starting out and saving and investing, or are you finding it difficult to put enough aside for your golden years?

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