After two years of sharp declines, and coming off from a decade of annual housing starts largely above demographic needs, new housing construction is set to stabilize in 2009. Amid emerging positive signs in both the economic and financial fronts, total residential construction in the Kingston Census Metropolitan Area (CMA) will rise by 5.2 per cent this year, with 707 new starts.

In addition to the boost to homeownership demand due to low interest rates, the prospects for increased spill-over demand from a recovering resale market will likely result in a faster year-over-year pace of starts during the first half of 2010. As a result, total starts next year will reach 690 units for a slight 2.4 per cent decrease, thus stabilizing construction activity at a pace more in line with household formation.

Coming off from a historically challenging economic environment, the short-term forecast for Kingston’s residential construction industry remains for the most part optimistic. The substantial monetary easing and fiscal stimulus measures in Canada’s Economic Action Plan will improve economic fundamentals. This will renew household’s appetite for big-ticket items in the face of low interest rates.

While spill-over demand from the resale into the new home market typically takes time to fully materialize, Kingston’s new home market looks ripe for a modest recovery. First, new listings for resale have declined substantially from last year, thus lowering supply competition. Second, the level of unabsorbed new home inventories has returned below the long-term average. Finally, the year- to-date pipeline of properties under construction is substantially lower than for the same period last year, which means that there are resources available for future projects.

In-migration and low mortgage rates will lend
strength to the housing market this year and next. Residential construction is expected
to rebound in 2010 following declines in 2009, according to Canada Mortgage and
Housing Corporation’s (CMHC’s) Housing Market Outlook released today.
“Single starts in Charlottetown are expected to record an increase in 2010, while
multiple starts will slow slightly from the near record level of activity in 2009,” said Jason
Beaton, market analyst with CMHC in Prince Edward Island. Positive in-migration and
low interest rates will be supportive of housing demand in both 2009 and 2010. As a
result housing starts are expected to remain strong into 2010. Single-detached
construction will reach 275 units in 2010, while multiples construction will slow to 240
units.
Existing home sales are expected to decline this year before rebounding slightly in 2010.
Expect to see 550 units sell in 2009 and 575 units in 2010. The average price of an
existing home is expected to climb to $186,000 by the end of next year.
As Canada’s national housing agency, CMHC draws on more than 60 years of
experience to help Canadians access a variety of quality, environmentally sustainable
and affordable homes. 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 vital decisions.

Residential construction and existing home sales levels
in Halifax are expected to rebound in 2010 following declines in 2009, according to
Canada Mortgage and Housing Corporation’s (CMHC’s) Housing Market Outlook
released today.
“New home construction in Halifax will rebound by 16 per cent in 2010,” said Matthew
Gilmore, senior market analyst with CMHC’s Atlantic Business Centre. “Employment
and wage levels have hit new record highs in 2009 while interest rates have been
historically low. These factors will be supportive of growth in the industry in 2010,”
Gilmore said.
Apartment-style construction will outpace other styles with 800 units expected to start in
2010 – an increase of 33 per cent.
Existing home sales will rebound by over six per cent in 2010. The average price of an
existing home is expected to climb by 2.5 per cent reaching $243,500 next year.
As Canada’s national housing agency, CMHC draws on more than 60 years of
experience to help Canadians access a variety of quality, environmentally sustainable
and affordable homes. 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 vital decisions.

Home sales will continue at a brisk pace through the remainder of this year and into 2010. More sales combined with fewer active listings will push the average MLS® home price higher in 2010.

Home starts will pick up over the next 15 months, but remain below levels recorded in recent years. The upturn in the resale market will contribute to an increase in home starts as builders see demand returning to the market. New and resale home inventories are being absorbed, providing an incentive to start new residential projects.

Steady population growth through migration, an improving job market and low mortgage rates will provide support for homeownership demand through 2010.

Housing market conditions in Greater Vancouver1 will favour home sellers into the first half of next year. The recovery of home sales that began during the spring and summer months will continue into 2010. Home sales ramped up during the past few months due to lower home prices and low mortgage rates. These two factorscombined with increasing real wages, have meant improved affordability for home buyers. While home prices are rising, continued low mortgage rates into mid 2010 will keep home buyers active. Home sales in the first few months of 2010 may be below average, as transportation route changes associated with the Olympic Games hamper mobility.

The number of active resale listings will be near the five-year average level next year. After peaking in fall 2008, active listings have trended lower. While the flow of new listings entering the market has been increasing, high sales levels have kept the total stock of active listings dwindling in recent months. The recent upturn in home prices may draw more sellers to the marketincreasing the supply of homes for sale. Look for more balanced market conditions to prevail in the second half of 2010.
Home prices in most Vancouver

municipalities will continue to trend up in 2010, but at a modest pace of two to four per cent. Home prices hit their lowest point in March of 2009, having fallen 17 per cent from their peak level. In just six months, thaverage price in Greater Vancouver saapproximately two per cent below thpeak value. However, the recovery in home prices has been uneven across the region. While prices in the City of Vancouver have already surpassed the previous peak, prices in other centres remain well below peak levels(see figure 2). These centres with prices still below peak, will see prices trending up over the next 15 months, as buyers take advantage of lower prices and favourable mortgage interest rates.

The Capital Region will experiences increases in existing home sales, and significant residential construction in 2010. Employment growth, continued migration, and low mortgage rates will contribute to the stabilization of Greater Victoria housing demand. After a slow 2008 and first quarter of 2009, lower home prices and low mortgage interest rates contributed to a significant rebound in resales in mid-2009. Expect both resales and average home prices to experience small increases in 2010.

Housing starts will bounce up in 2010, following two years of reduced levels of residential construction activity. The mid-2009 surge in resale activity combined with less supply (fewer homes under construction, and fewer existing and new homes for sale) will boost the number of new homes breaking ground in Greater Victoria next year.

Modest growth in existing home sales is projected for 2010, following a slight rebound in 2009. The growth will result from a stabilizing economy and continued sales by those looking to take advantage of low interest rates and ample, but shrinking supply. The recent up tick in resale prices (after bottoming out in the first quarter of 2009) combined with the anticipation of higher mortgage rates next year have led some potential home buyers to believe that Victoria-area homes will become more expensive. The favourable buying conditions will elevate sales through the remainder of 2009 and into 2010.

After six years of above average resale activity across the Capital region, a significant lull in existing home sales was observed in 2008 and through the first quarter of 2009. Since then, resale conditions have rebounded strongly due to relatively low mortgage rates and a downward adjustment in resale prices observed between the first quarter of 2008 and 2009.

The improved affordability that has been observed across Greater Victoria is evidenced by the reduced average mortgage payment that is required to purchase a home. In inflation- adjusted terms, the monthly payment associated with purchasing a single- detached home in Victoria declined 17 per cent between the peak of unaffordability (Q2 2008) and the August 2009 level.2

Affordability became a major issue for potential homebuyers during the extended upswing in resale prices that took place between 2001 and 2008. Over this period, the average resale home price in Greater Victoria increased at an average rate of 12 per cent per year. The recent improvements in affordability have been a breath of fresh air for those who previously could not afford home ownership, or were waiting for a more opportune time to enter the home ownership market.

A return to more balanced resale market conditions will occur in 2010, as both resale demand and supply stabilize. The strong demand recorded this summer has reduced the number of active MLS® listings considerably since reaching a peak last fall. As resale market demand stabilizes in 2010, so too will the supply of existing homes in Greater Victoria.

The fluctuations in existing home sales observed over the past two years have impacted average resale prices across the Capital region. After an extended period of steady and significant price gains, the average resale price declined 12 per cent from peak to trough in response to weak resale demand. Since bottoming out, the average Greater Victoria resale price has been edging up and currently sits three per cent below the peak level. With resale market conditions stabilizing, this will translate into minor price appreciation next year.

My problem is as follows: I am an immigrant who has been in Canada for 6-7yrs and have no RRSP room to speak of, and can only count on a small CPP. All my savings and investments are in a non-registered account.

My allocation if I include property is about 60/40 FI/Equities.

Inflation is certainly a hot topic for many investors since every pundit in the media has an opinion of where inflation will appear and to what degree of severity with hyperinflation being a term that’s been thrown around far too loosely as governments attempt to stimulate economies.

Any conservative investor, regardless of risk or investment style, needs to concern themselves with inflation in all market conditions because inflation affects the real value of your investments. If your investment portfolio returned 4% after costs last year and the inflation rate was 2% your real return for the portfolio was only 2%. What an investor wants to do is achieve returns in their portfolio that outpace inflation over the long-term and provide them with equal or greater purchasing power in the future.

Investing for inflation is really not much different than wanting a raise each year that matches your increases in the cost of living. Essentially your portfolio should be giving you a raise each year in your income to offset the increasing prices of goods and services you use.

To answer Vince’s answer directly it’s not whether he should invest in only short-term bonds, real return bonds or common shares but how much of each to hold over the long-term.

Short-term bonds provide decent inflation protection at the expense of a much lower yield than a longer yielding bonds because you’re not taking on the same interest rate risk. Real return bonds maintain your investment from inflation and you only need to buy a weighting large enough for your desired allocation. Common shares, specifically ones that pay dividends, offer an investor a few advantages in terms of protecting against inflation. Companies that own/operate inflation sensitive assets such as real estate, commodities and infrastructure tend to fare better in valuation terms than other companies. Some dividends stocks pay a dividend and increase that dividend on a yearly basis above the annual rate of inflation then have already achieved your desired goal if the dividend continues to be paid regardless of the effect on share prices. Because dividends, for Canadians, are eligible for the Dividend Tax Credit in a non-registered portfolio the taxation of dividends is less than that of gains from interest (bonds & GIC’s) or from capital gains.

http://www.nurseb911.com/2009/07/protecting-investments-from-inflation.html

reviewed by Moishe Alexander, CFC canadian funding corp CEO

London, Ontario - Credit b0ratDI, Flickr

London Ontario has had a small decrease in housing starts and is returning to the historical low levels of housing starts of years gone by and the housing starts are down 29%. CMHC is forecasting 732 units single-detached starts, 15 semi-detached units, 10 apartment condominium ownership units, and 10 apartment rental units, for a total of 767 housing starts for 2008. This will decrease by 400 units in 2009.

SINGLE-DETACHED FORMS OF HOUSING POISED FOR ANOTHER STRONG YEAR

This year Canada Mortgage and Housing Corporation predicts that London Ontario will surpass the housing start levels of 2006, and 2007 by pouring more than 700 foundations. However, in 2009 Canada Mortgage and Housing Corporation predicts that there will be only 400 single-detached homes started, a decrease of 29% from 2008.

LONDON’S RESALE MARKET WILL BE MODERATE

Canada Mortgage and Housing Corporation states in its outlook report that after 6 years of consecutive double-digit price growth, the resale market in London will balance itself off in 2009. In 2007, the average MLS price for a detached home is currently $205,000.00 in 2008 and we will see a 2.5% increase in 2009, to push the resale average price to $211,000.00.

LONDON MARKET TIPS INTO BALANCED CONDITION

As London Ontario has experienced substantial price growth over the past 3 years, Canada Mortgage and Housing Corporation predicts that there will be continued but moderate growth in 2009. However, in major commercial projects there will be over $15 million worth of projects that are commencing in 2009 for London and the surrounding areas, concentrated in London Ontario.

MORTGAGE RATES

Canada Mortgage and Housing Corporation predict that interest rates will decline by a further 25-50 basis points from their current levels in 2009. However, due to the cost of borrowing to the Canadian banks from the markets, the mortgage interest rate will marginally increase in the latter half of 2009, but not significantly enough to negatively affect the housing market in London and surrounding areas.

You can find the entire report in PDF format through the following link:
http://www.cmhc-schl.gc.ca/odpub/esub/64327/64327_2008_B02.pdf