MAJORITY OF ATTACHED HOMES IN FRASER VALLEY FALL UNDER HST THRESHOLD

SURREY, BC – The Fraser Valley will offer buyers of new homes noticeable savings after July 1 when the Harmonized Sales Tax (HST) comes into effect, according to the Fraser Valley Real Estate Board.

Deanna Horn, President of the board explains, “Since the majority of new townhomes, apartments, as well as select, new single family homes in our region sell for less than $525,000, the BC new housing rebate threshold in BC, the impact of the new HST will be lessened.”

On July 1, the seven per cent Provincial Sales Tax (PST) will join the five per cent Goods and Services Tax (GST) for a combined HST rate of 12 per cent. The HST will apply to the sale price of all new residential homes however; the BC government will provide a rebate up to a maximum amount of $26,250. According to the provincial government, homes that sell for up to $525,000 will cost the same or less than what they would have when only the GST applied.

“When the HST was first announced, we were concerned for our clients,” explains Horn, who represents nearly 3,000 REALTORS® working in the Fraser Valley.

“Although the HST impacts new home purchases more dramatically than resale, we’re pleased that through our lobbying efforts alongside other BC housing industry representatives, we were able to convince the government to increase both the threshold for the new housing rebate, and the amount of the rebate itself.

“The result is that most buyers of new, attached homes and select detached homes in the Fraser Valley will be able to maximize the benefit of the government’s rebate program. Just recently, I was recommending a lovely new, single family home in Cloverdale to one of my clients with an asking price of $519,000. A similar home in other Lower Mainland communities could be considerably higher in price and after July 1, will result in higher taxes because it is above the HST threshold.”

According to Canada Mortgage and Housing Corporation (CMHC), the average price of new townhomes in Surrey in May was $475,154 and in Abbotsford $403,469. The average price of new detached homes in Abbotsford in May was $532,129. CMHC also reports new apartments – 1,000 square feet in size – are selling currently on average for $294,860 in Surrey; $232,800 in Abbotsford; and, $273,880 in Langley.

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The Fraser Valley Real Estate Board is a professional association of 2,989 real estate professionals who live and work in the communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission.

Steve Ladurantaye Real Estate Reporter  Globe and Mail

Buyers backed away from Canada’s housing market in May, driving sales lower in what is traditionally the busiest month of the year for the country’s real estate agents.

The housing market has been key to Canada’s economic recovery, as low  interest rates and pent-up demand drove buyers into the market after months of stagnation in 2008. But with interest rates likely heading higher in the second half of the year, many buyers who would have preferred to buy in the fall or early winter chose to buy sooner.

Tougher mortgage rules imposed by the federal government in mid-April also prompted buyers to act sooner, the Canadian Real Estate Association said. Meanwhile, tens of thousands of homeowners have seen the rampant demand and listed their houses for sale to take advantage of high prices.

Sales fell to 8.5 per cent to 40,393 units in May compared with April. Sales remain elevated by historical markers, but are 15 per lower than last fall’s peak.

Prices were essentially flat in May, gaining 0.5 per cent to an average national resale price of $346,881 – the highest on record.

Over $300,000 in renovations, see video tour: http://homesite.obeo.com/viewer/default.aspx?tourid=610351

 For immediate release

The federal privacy commissioner’s report on unsecure mortgage broker practices for protecting client information has further exposed the industry to potential fraud crimes. “If I was a professional criminal, a mortgage broker would be my main target,” said Greg Viger, accredited mortgage professional with Dominion Lending Centres Financial Ltd. in Burnaby, B.C.

“Bad press like this can dramatically change our business and destroy confidences,” remarked Viger. “Consumers who may not have realized before will suddenly become afraid of mortgage brokers, and say I’m going to a big bank where they have vaults for information. But we have to be careful about painting the entire industry with one brush.”

CMP staff writer Heather Li talks further to Greg Viger about how mortgage brokers should protect their clients’ information.

Wal-Mart Stores Inc. changed the face of retail in North America by making life easier for the little guy through its simple formula of cutting prices and cranking up volumes.

Is banking next?

This week the retailing giant won final approval to open a bank in Canada, providing entry to an industry that has been much criticized for perceived high prices and lack of competition.

Andrew Pelletier, a spokesman for Wal-Mart Canada, said the company plans to provide “convenient and value-focused financial products and services” for its customers.

He declined to discuss details of the company’s plans in advance of the official lunch of the new bank, set for June 15.

While the rise of Wal-Mart has been a boon for consumers, it has been devastating for competitors, many of whom ended up being bought out or going out of business.

In the United States, fierce resistance from the banking industry forced the retailer to abandon a bid to buy a bank early in the decade, though it continues to offer services such as cheque cashing and money transfer.

Wal-Mart applied for the licence to the Office of the Superintendent of Financial Institutions, the Canadian banking regulator, nearly two years ago. Mr. Pelletier declined to discuss why the process has taken so long.

If Wal-Mart saw opportunities south of the border where there are more than 1,000 banks fighting it out for customer deposits, there would likely be an even bigger prize waiting in this country, where the industry is dominated by a oligopoly of just six major players.

Consumer groups regularly complain about credit card fees and low interest rates on savings accounts available to bank customers in Canada. Management fees on Canadian mutual funds, most of which are controlled by the big banks, are similarly out of whack compared with the United States and other developed countries.

In the United States, Wal-Mart is a significant player in the money-transfer business, partly because many of its customers are recent immigrants still with family in other parts of the world. Additional services, such as the ability to offer deposits and make loans, would provide further opportunity to the company at a time when profits from its bread-and-butter retail business have come under pressure from the recession.

Wal-Mart would not be the first non-bank to try to break into financial services in Canada. Other retailers such as Canadian Tire Corp. and Loblaw Cos. are also working to establish themselves.

One of Wal-Mart’s main advantages may be its reputation for low prices, which may help it get the word out to potential customers that it can offer a better deal than the competition at a time when Canadian consumers are scrambling for all the savings they can get.

The federal government has recently taken steps to shake up the banking sector, including the decision to make it easier for credit unions to expand across the country and the move to prohibit banks from using their websites to sell insurance.

Opening a bank is a costly undertaking for Wal-Mart and the company will likely move carefully as it plots its moves over the next few years, but it clearly believes the investment will pay off. http://www.financialpost.com/news/financials/Mart+bank+block/3115350/story.html

Pension shortfall hits middle class

About 20 to 25 per cent of Canadians are not saving enough to provide an adequate retirement income, says the chief economist of TD Bank Financial Group.

One of the ironies of that statistic is that these pension laggards fall into the middle class group of those who earn $30,000 to $80,000 a year, Craig Alexander said Thursday in Kitchener.

Every Canadian should have a pension that replaces 60 to 70 per cent of their employment income, Alexander said in an interview. Canadians earning more than $80,000 can generally take care of themselves, while those earning below $30,000 can replace much of that with a variety of government pension supplements, he said.

It’s that middle group that poses one of the biggest challenges, he noted.

Alexander was in Kitchener to attend a roundtable discussion chaired by Ontario Finance Minister Dwight Duncan on ways to improve Canada’s retirement income system. About 30 business, labour and pension experts met with Duncan behind closed doors.

It’s the last of a handful of meetings Duncan is holding across the province in preparation for a meeting of finance ministers in Prince Edward Island on the weekend of June 12-13 to look at Canada’s retirement income system.

While Canada’s pension system is not in crisis at the moment, issues such as pension solvency, volatile financial markets, inadequate savings by some individuals and a decrease in the number of workers with defined benefit plans that provide a fixed source of income all mean we can’t afford to be complacent, Alexander said.

A variety of options have been trotted out, such as raising Canada Pension Plan contributions, supplementing CPP benefits, raising the age at which retirement savings plans can be cashed in, offering better protection for defined benefit plans or more incentives to set up defined contribution plans, he noted.

“I don’t think there is a black and white answer to this one,” he said of the retirement income dilemma.

In any case, politicians need more data, and people need more access and knowledge about how to improve their pension coverage, Alexander said. Solutions could come from either the public or private sectors, he added, noting “I am an agnostic on that issue.”

He would like to see financial literacy courses on such issues as savings, debt, mortgages and pensions taught in school as early as Grade 8.

In an interview prior to the roundtable meeting, Duncan said that with only about 30 per cent of Canadians covered by private pension plans and more baby boomers heading into retirement, governments need to act so that pension obligations don’t cut into health-care spending and other public-sector needs.

The province has already passed one bill on pension reform that addresses some of the less contentious issues, but Duncan said he is planning more legislation in the fall to address more serious issues such as the regulation of defined benefit plans. http://news.therecord.com/Business/article/722251

Outrunning the bear market

by By Alexandra Twin, senior writer
Wednesday, June 2, 2010provided by

After the Dow’s worst May in 70 years, the threat of the stock correction becoming a full-blown bear market has intensified.

But this isn’t new territory for long-term investors. They’ve faced this precipice 29 times since World War II, according to Standard & Poor’s chief investment strategist Sam Stovall.

In 17 cases, they’ve avoided seeing a correction (a decline of at least 10% off the highs) turn into a bear market (a decline of at least 20% off the highs).

In 12 cases, they weren’t so lucky. And in three of those 12 cases it became what Stovall calls a “mega meltdown,” or a decline of 40% or more. In fact, the 2008-2009 stock market bloodletting sent the S&P 500 crashing 57% from an all-time high to a 12-year low.

But as the correction vs. bear market debate continues, what seems to be critical, at least on the technical side, is that the selling not surpass 15%. Historically, if that happens, the correction will become a bear market.

So far this current correction has avoided that 15%. At its worst, the S&P 500 was down 12.3% off the highs. As of Tuesday’s close, the S&P 500 was down 12% from the highs.

But hovering below the 15% mark doesn’t mean the selling is over by any means.

“We don’t know if the market direction is going to be up or down, but we do know it’s going to be up and down day to day,” said Randy Frederick, director of trading and derivatives at Charles Schwab.

The increased volatility increases the likelihood of more selling, particularly with the market in a mode where it retreats on both big news and a lack of news.

The threat of the European debt crisis, the weaker euro, the BP oil spill, increased tensions between North and South Korea and signs that China’s booming economy is slowing all dragged on stocks in May. But there have been numerous days in which there was little relevant news, either on the positive or negative side, and stocks sold anyway. Tuesday’s market, for example.

So correction or bear? Here’s what to consider:

Correction: If the market is in correction mode, it will probably chop around for a few months, then move higher, according to Stovall.

Of the 17 times that the correction didn’t become a bear market, stocks lost an average of 14% over a four-month period. Typically it took stocks another four months to get back to breakeven, and another four months of gains before another correction or pullback kicked in.

A pullback is considered a decline of 5% to 9.99%. They happen frequently and like corrections, are part of normal market functioning. Stovall estimates there have been more than 50 since World War II.

There were only two times (1955 and 1997) that the market “corrected,” recovered and then turned lower right away. More often, the market gets back to breakeven and then gains an average of 10%.

Bear market: S&P research shows that when a correction becomes a bear market, it tends to stretch on for 14 months and yield a decline of 33%, on average. The recovery back to zero tends to take nearly two years.

Stocks currently appear to be in a “garden variety bear market,” pushing toward a decline of 20% to 30% as the mountain of problems becomes too much for investors, according to the editors of the Stock Trader’s Almanac.

Heightened investor worry: In what could be either a bad or good sign, depending on whether you’re a contrarian, investor sentiment took a turn for the worse last week, according to the latest survey from the American Association of Individual Investors (AAII).

Bearish sentiment, or the expectation that stocks will fall over the next six months, jumped 17.2% to 50.9%, marking the highest level of pessimism in the survey since November 2009.

Also, AAII’s monthly survey showed investors pulled money out of stocks last month and reallocated it to bonds, cash or cash equivalents, reflecting global jitters and the fear of further stock erosion.

Investors held just 50.9% of their portfolios in stocks and stock funds in May, down 9.5% from April. That’s the smallest percentage in stocks since May 2009, shortly after the market bottomed. It’s also below the historical average of 60% http://ca.finance.yahoo.com/personal-finance/article/cnnmoney/outrunning-bear-market-20100602

Carney plots cautious rate path

Jeremy Torobin Globe and Mail  

Mark Carney is taking a cautious approach to raising interest rates, weighing Canada’s powerful economic rebound against the uncertainty of an “increasingly uneven” recovery across the globe.

The Bank of Canada Governor became the first central banker in the Group of Seven to raise borrowing costs since the financial crisis and recession, increasing the benchmark overnight rate Tuesday by one-quarter of a percentage point to a still exceptionally low 0.5 per cent.

Policy makers will keep an eye on Europe’s troubles, and won’t move more aggressively than they see fit, the Bank of Canada suggested, even though the economy is rebounding rapidly and inflation will likely exceed its 2-per-cent target this year. Much like in 2008 when the U.S. financial crisis pulled Canada into recession, the country’s economic health depends in large part on policy makers in other countries successfully containing homemade problems.

“Interest rates are incredibly low, given the strength of the domestic economy, but the global story is where it’s at right now,” Eric Lascelles, chief economic strategist at TD Securities in Toronto, said in an interview. “The level of uncertainty suggests there’s not a lot of confidence in the forecasts.’’ The open-ended nature of the announcement sparked a fall in the Canadian dollar and yields on two-year government bonds as investors pulled back their bets on what they had expected might be a series of uninterrupted rate hikes going forward.