U.S. confidence data drives sharp loonie rally -TSX rallies as BMO tops estimates-Oil hits six-month high on consumer confidence
§ TSX+216.40 to 10,285.90 climbed to their highest closing level since October on a big jump in U.S. consumer confidence this month and a favourable start to second quarter bank earnings releases.
§ DOW +196.17 U.S. data showed that consumer confidence rose in May to its highest level in eight months.
§ Dollar +.45c to 89.46USD touched its loftiest level in more than 7 months, spurred by a rise in oil prices and by upbeat U.S. economic data that whetted investor appetite for risk.
§ Oil +$.78 to $62.45US per barrel hit a fresh 6-month high, bolstered by U.S. consumer confidence data and comments from OPEC kingpin Saudi Arabia that prices may continue to rise.
§ Gold -$5.60 to $953.30USD per ounce
§ Canadian 5 yr bond yields +.09bps to 2.37- Four weeks ago it was 1.93. The spread, based on 5 yr rate of 3.89%, so is now lower again at 1.52%.
§ http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us
Historically spreads have been closer to 2% or 2.25%. In January the spread was 3.30, however cost of funds had risen drastically with the “credit crunch” With today’s spread of 1.52%, half of January’s, rates are artificially low. Watch for fixed rate increases-two lenders increased yesterday already.
The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise
Transmitted by CNW Group on : May 26, 2009 06:00
Affordability and job security most important factors for first-time homebuyers New government incentives help but market fundamentals more important,Canadians say TORONTO, May 26 /CNW/ - Canadians who are considering purchasing theirfirst home are primarily motivated by lower home prices and very low interestrates, but some require confidence in the economy and their employmentprospects before they will enter the market, according to a report releasedtoday by Royal LePage Real Estate Services. Eighty-six per cent of potentialfirst-time buyers say low interest rates make them more likely to purchase ahome; 81 per cent cite lower housing prices as a motivating factor; while 76per cent cite job security and 64 per cent say a stable economy is animportant factor in their decision to buy. Potential buyers were asked to rank their top incentives for purchasing afirst property. While home prices and interest rates took the number one andtwo rankings, respectively, the third most popular incentive was theFirst-Time Home Buyers' Tax Credit. The recently introduced Home RenovationTax Credit for 2009 was cited by 42 per cent of potential first-time buyers aseither 'very likely' or 'somewhat likely' to impact their purchasing decision.
"When first time buyers stepped out of the market in the fourth quarterof 2008, at the height of the global recession, their absence was profoundlyfelt. Without significant volumes of entry-level homes trading hands, theentire market limped through the winter months. First time buyers are back inforce this spring, and with them the beginnings of a market recovery. Whilethese consumers appreciate government incentives such as tax credits, greaterRSP deduction limits and rebates on home renovations, it is markedly improvedaffordability that is proving to be the powerful drawing card," said PhilSoper, president and chief executive of Royal LePage Real Estate Services."Our survey demonstrates how important affordability factors such as interestrates and house prices are in stimulating demand."
Across the country, potential first-time homebuyers agreed thataffordability was their top consideration, however the survey also revealeddifferences amongst buyers in various regions of Canada. In provinces such asBritish Columbia where high housing prices have kept some buyers out of themarket in recent years, 92 per cent of potential first-time buyers are nowmotivated by low interest rates and 96 per cent say lower home prices arelikely to prompt them to buy. In Atlantic Canada, where local economies have been resilient in the faceof a worldwide recession and housing markets remain stable, 43 per cent offirst-time buyers say they that job security is a factor in their decision tobuy, while 84 per cent of buyers in British Columbia and Alberta said jobsecurity will influence them.
Atlantic Canadians were less motivated than other Canadians by declininginterest rates, with only 72 per cent saying it will likely prompt a buyingdecision, compared to 86 per cent of Canadians overall. Buyers in Ontario andQuebec rated the Home Renovation Tax Credit as a bigger factor in their buyingdecision, compared to the Canadian average. Mr Soper continued, "The significant response differences from region toregion show how closely the residential real estate market is tied to broadereconomic trends and consumer confidence. Buying your first home is a majorlife decision, and people are more likely to purchase a home if they feelcomfortable about the state of the economy and confident that they will have ajob to support their new mortgage obligation."
Top Incentives for First-Time Buyers Across Canada
Potential first-time buyers were asked to choose their number one incentive for purchasing a first property. The table shows the percentage of respondents who selected each factor as their top incentive. ------------------------------------------------------------------------- BC & Overall Territories Alberta Prairies Ontario Quebec Atlantic ------------------------------------------------------------------------- Lower Housing Prices 33% 49% 48% 55% 32% 13% 26% ------------------------------------------------------------------------- Low Interest Rates 27% 32% 29% 4% 23% 41% 17% ------------------------------------------------------------------------- First-Time Home Buyers' Tax Credit 12% 3% 10% 22% 15% 11% 10% ------------------------------------------------------------------------- Job Security 10% 6% 5% 2% 10% 16% 15% ------------------------------------------------------------------------- Additional Government Actions to Stabilize Housing less less Markets 3% 3% than 1% 10% 3% 4% than 1% ------------------------------------------------------------------------- Home Renovation less Tax Credit 2% 1% than 1% 1% 1% 3% 11% ------------------------------------------------------------------------- Stable less less less Economy 2% 2% than 1% than 1% 3% 2% than 1% ------------------------------------------------------------------------- Greater RSP Deduction less less less Limits 1% than 1% 1% than 1% 1% 1% than 1% ------------------------------------------------------------------------- Stable Financial less less less less less less Markets than 1% than 1% than 1% than 1% 1% than 1% than 1% ------------------------------------------------------------------------- REGIONAL SUMMARIES
Atlantic
Overall activity in the housing market has remained steady in theAtlantic region with first-time homebuyers continuing to enter the market. Lowinterest rates and recent government incentives, such as the Home RenovationTax Credit, greater RSP deduction limits and the First-Time Homebuyer's TaxCredit speak to affordability. Buyers in this area are entering the marketthat would not have a few years ago, due to these influencing factors.Entry-level buyers in Newfoundland, Prince Edward Island, New Brunswick andNova Scotia continue to search for detached bungalows, with the average priceranging from $157,000 in Charlottetown to $215,667 in Halifax during the firstquarter of 2009.
Quebec
First-time buyers continue to pursue the dream of home ownership inMontreal, as the number of entrants to the housing market has remainedrelatively stable. Low interest rates are contributing to increased marketentry with 41 per cent of first-time buyers suggesting this is the keyincentive driving the purchase of their first property, followed by 13 percent who suggest lower housing prices might influence their buying decision.With 47 per cent of new buyers in Quebec planning to settle in urban areas,buyers are planning to invest and live in their first home for ten or moreyears. Fifty-six per cent of first-time buyers hope to purchase a property inthe $150,000 to $300,000 price range.
Ontario
Encouraged by recent government initiatives, home ownership in Ontario isbecoming a reality for an increasing number of younger purchasers. AcrossOntario, 36 per cent of potential first-time buyers are most likely topurchase property in an urban setting. Condominiums continue to attractfirst-time buyers in the Greater Toronto Area with urban communities ataccessible price points appealing most to market newcomers. In addition toaffordability, location is a leading factor dictating condominium appeal.Neighbourhoods in Toronto's east and west downtown core are popular withfirst-time buyers. In Ottawa, affordability continues to drive activity andmost first-time buyers are opting to purchase in suburban areas whereproperties typically cost $50,000 to $75,000 less than in the city centre.Active first-time buyer markets include Orleans, Barrhaven and Kanata.
Manitoba & Saskatchewan
Thirty per cent of Prairie buyers planning on purchasing their first homein the next three years will choose a detached bungalow. The second-mostpopular choice for first-time buyers is condominiums at 21 per cent, followedby detached two-story homes at 15 per cent. In Winnipeg, up-and-comingneighbourhoods for first-time buyers include River Heights - which hastraditionally been attractive for people entering the market - Fraser's Groveand East / North Caldonin. With a good selection of older bungalows and twostory homes, Broders Annex is the hottest neighbourhood for first-time buyersin Regina.
Alberta
Alberta's urban centres continue to be popular with first-time buyers,who make up nearly a third of home sales in both Calgary and Edmonton.Condominiums and detached bungalows are the most popular choices forfirst-time buyers in Edmonton, where lower housing prices and low interestrates are the biggest incentives for buyers entering the market for the firsttime. Popular areas for new buyers include the suburbs, where a newcondominium may be within budget, the university area, where many parents arebuying for their kids, Allendale and McKernan. In Calgary, new buyers are mostinterested in inner city condominiums and detached houses in the suburbs, withmany seeking new or renovated homes.
British Columbia
With home prices either flat or declining in many communities in BritishColumbia and with interest rates at record lows, first-time buyers are takingadvantage of greater affordability, with female buyers leading the trend.Sixty per cent of the buyers getting into BC's housing market for the firsttime are women. In British Columbia, 40 per cent of prospective first-timebuyers intend to purchase a 'fixer-upper' while 80 per cent would takeadvantage of the Federal Government's Home Renovation Tax Credit in makingupgrades to a home. First-time buyers in Vancouver are favouring condominiumsand townhomes, however an increasing number of entry-level buyers are findingaffordable detached homes outside the city in the Fraser Valley suburbs.
The survey portion of the Royal LePage First-Time Homebuyers' Report wasconducted by Pollara from April 29, 2009 to May 8, 2009 among 474 first-timehomebuyers in Canada. The online survey was conducted among arandomly-selected sample of 474 adult Canadians who are likely to purchasetheir first home in the next 3 years. A probability sample of this size with a100% response rate would have an estimated margin of error of +/- 4.5 %, 19times out of 20. The data was statistically weighted to ensure the sample'sregional and age/gender composition reflects the actual Canadian populationaccording to the most recent Census data. About Royal LePage
Royal LePage is Canada's leading provider of franchise services toresidential real estate brokerages, with a network of over 13,000 brokers andsales representatives in 600 locations across Canada. Royal LePage is managedby Brookfield Real Estate Services, and is part of a brand family thatincludes Royal LePage, Johnston and Daniel, and La Capitale Real EstateNetwork. An affiliated company, Brookfield Real Estate Services Fund, is a TSXlisted income trust, trading under the symbol "BRE.UN." For more information visit www.royallepage.ca or www.brookfieldres.com. /For further information: or a copy of the Royal LePage First-Time Homebuyers' Report 2009, please contact: Tammy Gilmer, Director, PublicRelations and National Communications, Royal LePage Real Estate Services Ltd., (416) 510-5783; Melissa Cassar, Vice President, Fleishman-Hillard Canada,(416) 645-3647/
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