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NEW HOUSING PRICE INDEX...
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( m+ e0 X4 N5 G# f P' U% jThe New Housing Price Index, has just been released and it provides some very
; g, k V& \$ \- J/ Sinteresting insights, not only into where the market has moved, but where it; F! }1 s0 i3 C3 l0 m
will be going.
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It proved, once again, the value of looking at fundamentals behind a market.
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; z8 ` ]; B4 R! V. {" G; m oThe New Housing Price Index is compiled by Statistics Canada and is used by2 ^& @3 S/ b& k$ R, i
sophisticated investors to see how much the market has moved, as well as an9 F% a/ P! i/ ^; F5 j
indicator of where re-sale home prices will be moving in the coming six months.
2 O) M5 a" Q8 u3 q! CWe look at the ripple effect that new housing prices have on re-sale property
% f0 p6 K! Y' x: k/ fvalues and can extrapolate what direction re-sale prices will be moving and by
7 ^" @0 d) @) `9 lhow much.
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For instance, for the last three years, we have told investors to avoid Windsor,
' ?$ R. X+ u7 J8 T, jOntario as an investment area because the underlying fundamentals are not very
. J- z G5 @9 g* k: istrong. This has been proven once again with the release of the latest7 A0 C. S# d: P
findings. New Housing Prices have actually decreased by .5% during June 2005 -' {6 M3 D/ l; l! ~+ C0 |# }6 i6 z( d
June 2006 proving that fundamental investing works in helping you pick the best9 _0 s* E" q/ c5 i
markets and avoid the flat ones. This .5% decrease should have little impact
! z$ d$ z2 P& d8 u' A% R* Bon average re-sale values in the Windsor region.
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To contrast this, the fundamentals we discuss are so strong in Calgary that the% M! d4 z; T* x& m) d8 G) M
market continues to be super heated. With close to 3,000 net new people into6 |- y# E* }! V# X& R% F) O
the city every month, the property market just can't keep up. That is why we6 C. g0 b; J, {5 f1 q/ \
saw the New Housing Price Index increase by 49.2% (June 2005 to June 2006). ; L3 ~) w; Z% A# z' G4 V4 N/ `
This is great news for the future of re-sale values in the city as these& f, d1 t3 b( n( z6 B) W2 p
increases will continue to ripple out into the market for at least the next six( ^: M, Q4 U4 R1 G* |
months. + K# d, Y4 C `4 g9 F
8 L- j3 i, i6 D4 o& D' I$ ?' bComparing these two regions is a great illustration of the value of not getting5 ]5 x( ~+ ]6 V! [, l
caught in the 'emotional guessing game' by just focusing on the underlying2 x) y4 g3 V8 Q( h
fundamentals. It is sad to see those people who said in the last 2 years that" E0 f; V" h9 K1 I `0 s0 ]# }0 j; j) g9 ~
the Alberta real estate market was over and they were going to sit back and wait- X5 W" m6 M1 s; \
until it drops. Quite obviously, they have missed out on AMAZING gains, all
- j/ h3 I( w$ B1 tbecause they didn't follow fundamentals, they just led with their emotions.' \ D+ h w$ i. f9 k5 ]" p' u- f
5 A' W3 U9 ~" p/ V- K! D! q% E) JBy the way, Edmonton's New Housing Price Index is up an amazing 28% so far (June: g! Y0 z* n! @( p3 }
2005 to June 2006), also great news.7 H1 A4 n5 f4 }0 O3 e6 ?6 w
) |" \( F# Q5 B/ h7 wBy comparison across the country, these are the numbers for June 2005 - June6 e9 s1 ?7 z/ }: a8 Y# N- f
2006 New Housing Price Index for:" T* Y0 N3 N; X$ E
2 p% c: K. w s$ M/ p; LVancouver . . . . . . . . +5.2%! a5 y( i0 P; a H8 R F" j
Saskatoon . . . . . . . . +8.5%
/ O- j9 z" p1 u# x8 U# O9 CLondon . . . . . . . . . . . +3.0%
; d2 V+ |9 E# kHamilton . . . . . . . . . . +4.9%
' P8 V4 Z4 R2 g& k" H" qSt. Catharines - Niagara . . . . +4.9%
. i8 F( }( c# @Toronto and Oshawa . . . . . . . +3.2* {* J* e4 f) ]* k0 L! Z4 B" }
Ottawa - Gatineau . . . . . . . . . +3.1% R# R: |) \* o
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Fundamental investing ALWAYS makes you look like a genius - emotional investing
( [% F! L% m) N$ G$ s5 m4 O8 xgives you quick highs, but also quick lows. Well done on your focus!
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As the fundamentals have been showing all along, the Alberta market continues to0 ^% T, H* f0 `$ U2 @( @" u
be strong, as in-migration and job creation continues to attract people from not4 G3 t$ \9 s, J; c I3 M" O
only across Canada, but from around the world. Our average wages are
1 o2 ^! e( p. @; cincreasing, our population is increasing, our unemployment rate continues to" I: a* ?# p6 u. Z/ V! t+ `2 M
drop and our GDP growth is slated to once again lead the country.4 t9 Z9 Z6 f# R6 m; K' { G( y: h
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Here are some very interesting facts that are helping to support the strong
5 V4 M1 n1 U) `: v, efundamentals:
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1. The Conference Board of Canada is forecasting strong economic growth in5 h' i7 [1 E0 E t( P. N& P" Q
Canada, with Alberta once again leading the way. In fact, the projected growth
( H$ Q; v6 E' e, P6 A' w+ g! k8 yfor Alberta's economy is a staggering 6.6%. (BC + 3.6%, Ontario + 2.5%), and
$ N W2 G$ y: R/ M. ethis is slated to occur even with the labour shortages we are witnessing.
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, D# y, t! @9 ]4 r2. People are discovering Canada as an investment center from all over the
/ [+ @1 z9 N% b: j' nworld. Recently, there have been investors coming here from Asia, Australia,
( x% N9 I& j; t4 p; ithe US, UK and Europe. In fact, if you review the world's press you will see
/ e D; K0 K2 r. j; rthat Canada (with a focus on Alberta) is being discussed more frequently. " q/ {) ]. q0 `2 M% j) x+ W% e' n! n
# n5 |& p, J9 `: y' ]' u3. Don Campbell has just returned from presenting our Canadian investment& k$ D* @8 z8 V% m# M
atmosphere (including Why Alberta - Why Now") to a group of major investors in' d8 D2 m! {& y; Q v
Dublin, Ireland, and the response was overwhelmingly positive. In fact, after
; v0 y4 J$ M# g) pDon presented the economic facts, many of these investors (who could invest
- s) K0 K7 h" c9 m( vanywhere in the world) have already booked their flights to here. Once again
2 Q: J& H y. {" z H8 R9 R. Bproving that when the true numbers of our economy are presented (along with the
# r% G0 r0 w P4 x4 l X5 epolitical stability of our country), there is no place in the world that can
+ X* w1 ^8 [' J3 l/ z8 x" _beat it for long term investment.
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4. Job creation continues to be strong (with a small lull in June); definitely: ^: k. s1 S8 ^* `( F$ M1 k
a sign of strong long-term fundamentals. RBC has also been following the job
9 {; O, q- s/ ?3 [8 Fcreation situation and here is what they are saying: (www.rbc.com/economics)
, f! k+ [: ?7 S1 ?+ ?( Q$ _"After generating a substantial 96,700 jobs in May, the largest such gain since
8 P% k! [2 p* `4 H# OJanuary 2002, the economy lost a modest 4,600 jobs in June...
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Strength in the Canadian economy contributed to a gain of 215,600 jobs in the
' p ^4 d4 v [# F! O. F' Sfirst half of 2006, a feat not matched since the second half of 2002. With the
& A2 \: d5 Q, Z$ m% deconomy widely expected to grow at a more moderate pace in the second half of
# ?. N1 C2 \8 U. Qthe year on the back of slowing trade activity, this impressive showing may not, v: J6 Q: w! S7 o' L
repeat itself. We expect that employment grew in July at a pace consistent with
- d9 y; k- v5 U d& h- c; Yits recent trend of 24,000 jobs a month. Assuming that the labour force grew at
# ~& x* |6 c# w& p7 R, c' X" ~$ oits trend rate, a gain of 24,000 jobs will lead to a national unemployment rate
2 F2 a( [* q. `- b' Oof 6.1%." Overall very good news. Now the key is to ensure that the region in2 a% ?. m. m$ O9 q! {5 \9 x
which you are investing is continuing to generate jobs and increasing incomes.2 G5 w1 G4 Q2 W% k0 y' ]* [( L
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6 Y9 `2 ]" I1 I" _% nIn other words, it is a great time to be taking advantage of this strong9 {1 W, r9 m2 u; z+ K3 r; Q" C; C
economy, avoiding 'excuses' and to especially not listen to the uninformed
# x1 b1 d; F' \' L: |0 _5 \'dream stealers.' As long as you stick with your game plan, you continue to do7 T7 G% e8 Z+ j) W/ {
your due diligence, and you remove emotions from the equation, you will see the' N R7 l6 |( l4 B6 ^" C
opportunities that are right in front of you, right here in Alberta. Let the
* ?! e3 X7 V. L- E- x'dream stealers' call you 'lucky' 5 years from now as your net worth has soared
& b* @5 n: Y! b) fand your financial freedom has surpassed even your wildest expectations.
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! n: C2 T. ^1 f: OCapital Gains Comparison.9 d0 V5 i7 \! z, J- I3 f" z. Y
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KPMG has recently released a comparison of the true Top Federal and Provincial2 [. v0 l8 }' Y8 R" U# o
Marginal Capital Gains Tax Rates per province. It is very interesting to see! L+ f( g) _: Z3 c9 i
how these will affect your exit strategy. Here are the numbers:
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BC . . . . . . . . 21.9%- ]7 q. t( u" X q* l3 y {
AB . . . . . . . . 19.5%
4 i( E2 d1 ^' g8 hSK . . . . . . . . 22.0%9 N7 ]" g6 B Z7 N% n% L
MB . . . . . . . . 23.2%
; D; y4 y0 O% r, ?; m3 [ON . . . . . . . . 23.2%, ]" F$ p$ e' J& b+ }4 O( i! l& p
QC . . . . . . . . 24.1%5 n/ r9 V, I0 ?
NB . . . . . . . . 23.4%0 f% j# O ]8 C
NS . . . . . . . . 24.1%5 }& w8 k* L; A( N8 F* L+ l
PE . . . . . . . . 23.7%
! d/ E9 i* ^. v8 l" c6 K P6 YNF . . . . . . . . 24.3%
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4 I3 w- J$ K6 s1 j( V C/ C sLower capital gains tax increases investment and stimulates the long term, V, K/ n6 I! l
economy of the province. It also allows real estate investors to keep more of& Q3 X9 R8 `1 [# x
their profits at exit time. Always a good number to pay attention to.1 n4 G, k- H# w, B/ c' ?
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Overall, by staying focused for the next short period of time, you have the
% a/ s5 V; d9 `- R0 G3 m. s4 V7 gopportunity to create financial freedom of which others can only dream. Of
! ]0 x0 K& T$ ~5 I9 e- pcourse, the key word is focus. And with an August line-up of 'Members Only'! S% j* f( ^2 z# P4 d5 k% [5 j
events like this, you can't help to become a real estate investment champion: w& r% ]4 t9 C9 Q) t
when you take action as a full REIN Member.# k( n' p: |2 G6 M. Z9 e0 A
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Focus on the fundamentals, keep emotions out of your decisions, and enjoy the
3 @) _8 W5 e i8 e: N5 Q; oresults in just a few short years. |
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