Information Watch - October 2011 | October, 2011 |
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Interest rates to remain on hold for longer The Bank of Canada kept its trend-setting Bank Rate at 1.25 per cent on October 25, 2011. This marks the ninth consecutive announcement in which interest rates have been held steady. The tone of the accompanying statement was very dovish, with the Bank noting that “the global economy has slowed markedly as several downside risks to the projection outlined in the Bank’s July Monetary Policy Report (MPR) have been realized.” Of particular note, the Bank said it now expects a “brief recession” in the Eurozone. The Bank remains of the opinion that the euro-area crisis will be contained, but flagged obvious downside risks to that assumption. As a result of this and other factors, the Bank has downgraded its forecast Canadian economic growth this year (2.1% compared to 2.8% in the July MPR) and for 2012 (1.9% compared to 2.6% in the July MPR). That said, the outlook for growth in 2013 was upgraded to 2.9% from 2.1%, indicating the Bank believes that anticipated stronger growth will eventually be achieved. Along with the return of more robust economic activity being pushed further out into the future, core inflation is now expected to remain below the Bank’s 2% target until the end of 2013. What it all means is that interest rates will likely be on hold even longer. Expectations as to how long it would be before the Bank hikes rates had previously centered around the fall of 2012, although it will now more likely be into 2013 before the Bank begins to tighten monetary policy from current levels. As of October 25, 2011, the advertised five-year lending rate stood at 5.29 per cent. This is down 0.1 percentage points from 5.39 per cent on September 7, when the Bank made its last policy interest rate announcement. The Bank will make its next scheduled rate announcement on December 6th, 2011. Canada's housing market: 'Slowdown postponed' Housing outlook A new report on Canada's housing market carries this notable title: "Slowdown postponed." The report from National Bank Financial is in line with other forecasts, projecting the market will slow in 2012 and 2013, but it won't crash. National Bank's Shubha Khan also upgraded his projection for this year because of a stronger-than-expected third quarter and a longer-than-expected timeline for interest rate hikes in Canada. "Given the resulting deterioration in the global economic outlook, the Bank of Canada is now expected to leave its policy rate unchanged until late 2012 or early 2013," Mr. Khan said. "Mortgage rates will almost certainly linger near their current historical lows for at least the next 12 months, which should prevent a pronounced slump in housing market activity. We previously expected rate hikes would materialize as early as [the fourth quarter of] 2011." Mr. Khan projects an 8-per-cent gain in the dollar value of home sales this year, a 3-per-cent dip in 2012 and a 5-per-cent decline a year later. "Given our interest rate outlook, housing affordability is projected to be stable through 2012, which suggests that home prices are unlikely to adjust materially next year," Mr. Khan added in a discussion about the debt service ratio, or DSR, for mortgages. The DSR, or what's needed in terms of a household's disposable income to meet its monthly payments, now stands at 21.6 per cent, compared to a 20-year average of 20 per cent. "In 2013, however, rising interest rates will result in a significant deterioration of the DSR ... pricing many potential buyers out of the market unless (i) home prices decline or (ii) households’ appetite for credit expands (i.e. households tolerate a higher DSR)," he said in the report. "With the weak global economy weighing on consumer confidence and non-mortgage credit at record levels, this appetite is unlikely to grow. Therefore, home prices will have to fall, in our view ... we estimate that the average home price will have to decline by around 9 per cent from current levels if, as we expect, mortgage rates increase by 100 to 150 basis points in 2013." Canadian home sales pick up in September OTTAWA – October 17, 2011 – According to statistics released by The Canadian Real Estate Association (CREA), national resale housing activity picked up in September 2011. Highlights: • Sales activity rose 2.7 per cent in September from the previous month.
• Holding in line with the ten-year average, activity during the first nine months of this year pulled ahead of sales over the same period last year.
• The number of newly listed homes held steady when compared to the previous month.
• The national housing market tightened in September from the month before, but remains firmly entrenched in balanced territory.
• The national average price posted the smallest year-over-year increase since January.
National sales activity rose 2.7 per cent in September when compared to August, and follows three months of stable activity. September’s increase reflects strengthened activity in a number of major markets, led by Toronto. The monthly increase pushed national sales to its highest level since recently tightened mortgage regulations dampened sales earlier this year. Actual (not seasonally adjusted) national sales activity came in 11 per cent above levels in September 2010. As was the case over the summer, the year-over-year increase reflects weakened activity one year ago. A total of 361,749 homes have traded hands via Canadian MLS® Systems to date this year. This is 1.2 per cent above levels for the same period in 2010, and in line with the ten-year average. “The Canadian housing market remains a bright spot against a backdrop of mixed headline news about the global economy,” said Gary Morse, CREA President. “Low mortgage rates continue to draw buyers to the housing market, while recently tightened mortgage regulations are working as intended. That said, housing market trends often diverge from national trends due to local factors, so buyers and sellers should talk to a local REALTOR® to understand housing market trends at play where they live.” The number of newly listed homes nationally was little changed from each of the previous two months. New listings were up from the previous month in a number of major markets including Toronto, Montreal, Ottawa, Oakville and Vancouver, offset by fewer new listings in other markets including Edmonton and the Fraser Valley. The monthly rise in sales resulted in a tighter national housing market that remains firmly planted in balanced territory. The national sales-to-new listings ratio, a measure of market balance, stood at 52.8 per cent in September, up from 51.6 per cent in August. Based on a sales-to-new listings ratio of between 40 to 60 percent, nearly two-thirds of all local markets in Canada were in balanced market territory in September, with an even split of buyer’s and seller’s markets among the remainder. The number of months of inventory stood at 6.1 months at the end of September on a national basis, little changed from the end of August (6.2 months). It represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of balance between housing supply and demand. Months of inventory have held steady at about six months since April. The actual (not seasonally adjusted) national average price for homes sold in September 2011 stood at just under $352,600, remaining below record level heights reached earlier this year. While up 6.5 per cent from September 2010, the year-over-year increase is the smallest since January. “Canada’s housing market remains stable amid continuing financial market volatility, contributing to Canadians’ confidence in the economy and providing support for Canadian economic growth,” said Gregory Klump, CREA’s Chief Economist. “Interest rates are expected to remain low for longer, and evidence suggests that recent changes to mortgage regulations are preventing the kind of excesses they were designed to avert. Both of these developments are good news for the housing market.” PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 99,000 REALTORS® working through more than 100 real estate Boards and Associations. September 2011 Housing Starts OTTAWA, October 11, 2011 — The seasonally adjusted annual rate of housing starts was 205,900 units in September, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 191,900 units in August 2011. “Housing starts picked up in September due to an increase in multiple starts in the Atlantic region, Quebec and in British Columbia,” said Mathieu Laberge, Deputy Chief Economist at CMHC’s Market Analysis Centre. “Multiple housing starts are expected to move back towards levels consistent with demographic fundamentals in the near term.” The seasonally adjusted annual rate of urban starts increased by 8.0 per cent to 185,900 units in September. Multiple urban starts were up by 14.2 per cent to 118,000 units, while urban single starts decreased by 1.5 per cent in September to 67,900 units. September’s seasonally adjusted annual rate of urban starts increased by 47.0 per cent in the Atlantic region, 32.0 per cent in Quebec and by 18.6 per cent in British Columbia, while urban starts decreased by 3.5 per cent in Ontario and by 12.1 per cent in the Prairie region. Rural starts were estimated at a seasonally adjusted annual rate of 20,000 units in September. As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions. Halloween Food Safety Tips Halloween is a fun and exciting time for children, and for adults! However, the excitement of Halloween shouldn¡¯t make us forget about food safety. You should also keep in mind that children with allergies and sensitivities must be especially careful before eating trick-or-treat goodies or certain foods served at Halloween social gatherings. The following steps will help make Halloween an enjoyable experience for everyone. Before Trick-or-Treating - Remind children not to eat any of their collected goodies while out trick-ortreating, until they are inspected by an adult.
- Remind children not to accept and especially not to eat homemade candy or baked goods.
- Give children a snack or light dinner before they go out to help prevent them from munching while trick-ortreating. Don't send them out on an empty stomach!
After Trick-or-Treating - Throw away homemade candy or baked goods.
- Check all commercially wrapped treats. Throw out any treats that are not wrapped, those in torn or loose packages, or those that have small holes in the wrappers.
- Be cautious before giving children treats that could be potential choking hazards, such as chewy candies, gum, hard candies, lollipops, mini-cup jelly products, peanuts, or small toys. Depending on the size, shape, consistency and composition, mini-cup jelly products may become lodged in the throat and may be difficult to remove.
- Wash fresh fruit thoroughly. Inspect it for holes, including small punctures, and if found, do not let children or adults eat the fruit.
- Remember, when in doubt, throw it out!
Children with Allergies and Sensitivities Some Halloween treats may contain ingredients that can cause severe adverse reactions in children who have allergies or sensitivities. These treats often include ingredients such as peanuts, tree nuts, milk and egg - some of the most common food allergens. Some treats, such as chocolate products, may contain allergens that are not declared on the label. The most common undeclared allergens found in chocolate products include peanuts, tree nuts and milk protein. Consuming products with an undeclared allergen can be life-threatening. You should therefore take the following precautions before allowing children with allergies and sensitivities to eat any Halloween goodies: - Throw away homemade candy or baked goods.
- Read labels carefully for all commercially wrapped treats.
- Avoid products that do not have a list of ingredients. Bear in mind that Halloween candies do not always have ingredients listed on their labels.
- Avoid products with precautionary labelling (may contain¡± statements).
- Do not allow your children to consume a particular product if you are unsure if it contains an allergen.
Halloween Parties and Food Safety
When preparing or serving food at Halloween parties, it is always important to follow safe food-handling practices. Here are a few tips you should follow to prevent harmful bacteria from spreading and causing foodborne illness. | 
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