Dollar within striking distance of modern-day high

TORONTO (Reuters) – The Canadian dollar looks set to extend a rally that’s taken it to 3-1/2 year highs against the U.S. dollar this week, as more hawkish Bank of Canada comments lifted the currency and global investors pushed into the safety of Canadian assets.

Given the central bank’s clear signal it would likely resume interest rate hikes later this year, analysts said the currency might even revisit its modern-day high. It reached C$0.9059 to the U.S. dollar, or US$1.1039, in November 2007, according to Thomson Reuters dealing data.

“Yes, Canada could hit post-Civil War highs once again,” said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.

“(Hitting the high) would not be altogether unwarranted if Canada begins raising interest rates again. It’s certainly not in our forecasts, but it’s a nontrivial possibility of hitting C$0.90 within the next 12 months.”

Based on available data, the Canadian dollar was at an all-time high of C$0.36 to the U.S. dollar, or $2.78 in 1864.

A survey on Wednesday of Canadian primary dealers found most expect a rate hike in September or October, perhaps as much as a year before the U.S. Federal Reserve starts raising interest rates.

“Against a background of firm commodity prices and continued global diversification flows to the relatively safe harbor of Canadian bonds, we look for the loonie to stay close to around US$1.05 even by the early part of 2012, before Fed rate hikes start to kick in,” said Douglas Porter, deputy chief economist at BMO Capital Markets in a note.


The currency began rallying on Tuesday after the Bank of Canada signaled it was closer to resuming rate hikes. Governor Mark Carney indicated that the central bank’s focus was on inflation and not the Canadian dollar, despite concerns that a strong dollar could hurt the economy.

But other G10 currencies are still outperforming the Canadian dollar, with part of its strength coming from U.S. dollar weakness, and general strength from the bloc of Australian, New Zealand and Canadian dollars.

A release of draft conclusions from a euro zone meeting on Thursday to tackle contagion from Greece’s debt woes helped push the Canadian dollar to a 3-1/2 year high of C$0.9425 to the U.S. dollar, or $1.0610, its highest since November 2007.

“That was viewed very constructively by the market and lifted the euro up. It also helped bolster risk appetite, which undermined the U.S. dollar,” said Woolfolk.

Canada, with its relatively robust economy, stable debt market and internationally recognized sound banks, has become particularly appealing to investors as the U.S. and European debt crises send investors elsewhere.

“As uncertainty in Europe continues to rise and problems in the U.S. remain at the forefront, there is likely increased appetite to diversify holdings away from both USD and EUR based assets,” Scotia Capital chief currency strategist Camilla Sutton said in a research note.

“Small open economies, with strong sovereign positions and flexible FX regimes, like CAD, are in demand. We expect this is a long-term trend…that will help support CAD into year-end.”


Currency analysts polled by Reuters said this month they expected global risks to drag the Canadian dollar down against a stronger U.S. dollar, with parity a possibility within the next 12 months.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said a stronger Canadian dollar will hurt non-commodity aspects of the economy, such as manufacturing.

“The Bank of Canada will get more concerned about … the higher currency and may dampen expectations of a rate hike,” Chandler said.

“The exports are heavily weighted toward commodities, but part of the country doesn’t produce commodities, they’re consumers of commodities. They get hurt, so it leads to this bifurcation of the economy, which makes it all the more difficult to conduct monetary policy and has political ramifications.”

Woolfolk disagreed.

“We think conditions warrant higher interest rates in Canada, but (the central bank) is likely holding back because of the obvious positive it would have for the currency,” he said.

Bank of Canada hints that rate hikes are coming sooner rather than later

OTTAWA – The Bank of Canada signaled Tuesday that it will look for an opportunity to raise interest rates sooner rather than later to keep inflation in check as the Canadian economy continues to grow.

The central bank kept its overnight rate target at one per cent but noted that the U.S. economy has grown at a slower pace than expected and Europe faces a growing credit crisis — both potential drags on the domestic economy.

Despite those threats, the bank said it believes Canada’s economy remains on track to grow this year, which observers said likely means a rate hike as early as October .

CIBC World Markets chief economist Avery Shenfeld said the bank’s decision to drop the word “eventually” in reference to the timing of its next rate hike suggests it will move before the end of the year.

“The underlying message is that rate hikes will be coming sooner than eventually,” Shenfeld said.

“The surprise is really for those who thought that the Bank of Canada would be waiting until 2012 to begin hiking rates, because I think here the message is directed at those dovish observers and indicating that we will probably be moving sooner than that.”

The suggestion that rates in Canada will rise in the near term helped push the loonie up 0.87 of a cent to 105.16 cents U.S.

Canadian economic growth slowed in the second quarter, but the central bank said it expects to see an acceleration in the second half of the year.

Overall, the Bank of Canada expects the economy will expand by 2.8 per cent in 2011, compared with its call in April for 2.9 per cent growth. The outlook for 2012 and 2013 was unchanged at 2.6 per cent and 2.1 per cent respectively.

Shenfeld said the central bank will likely wait to see if its economic outlook is on track before moving to raise rates.

“The key is the Bank of Canada has to see evidence that its projection for a re-accelleration in economic growth is actually taking place,” said Shenfeld, who currently expects the central bank to hold rates in September and move in October.

BMO Capital Markets senior economist Michael Gregory said the case of a rate hike was building, noting that household spending in Canada remains solid.

“We are sticking to our call for October and December rate hikes this year,” Gregory wrote in a note to clients.

However TD Bank economist Sonya Gulati said she continued to expect the Bank of Canada to keep rates on hold until its first meeting in 2012.

“We think that they are going to time it more to when the (U.S.) Fed is going to start to increase it, which we think is going to be March of next year,” she said.

“In previous communications, the governor has indicated that the rate spreads between the two countries is something he’s keeping a close eye on and that there has to be a working gap between the two for the countries to go forward, given how high the Canadian dollar is.”

Gulati said TD expects the Bank of Canada will increase its overnight rate target in one-quarter percentage point intervals starting in January to two per cent before pausing to assess the situation and then increasing the key rate again to three per cent by the end of 2012.

A full update on the central bank’s outlook for the economy and inflation is expected when the Bank of Canada publishes its monetary policy report on Wednesday.

The central bank said in its statement Tuesday that the U.S. economy continues to be restrained by the consolidation of household balance sheets and slow growth in employment while fiscal austerity measures in Europe also restrain growth.

“Widespread concerns over sovereign debt have increased risk aversion and volatility in financial markets,” the central bank said in its statement.

The central bank also said its outlook assumes that European authorities will be able to contain the sovereign debt crisis, “although there are clear risks around this outcome.”

However as Europe and the United States continue to put up warning signs, the Canadian economy has appeared to be on track with three consecutive months of job growth and signs of inflation.

Statistics Canada said Tuesday that its composite leading index rose 0.2 per cent in June compared with a 0.8 per cent gain made in May.

The agency said a downturn in the auto sector due to disruptions following the earthquake and tsunami in Japan temporarily slowed assembly work in Canada, while the housing index increased 0.3 per cent as home starts in June hit a high for the year to date.

The Bank of Canada’s latest business outlook survey last week found corporate Canada in a generally upbeat mood and looking to hire with 57 per cent of the firms surveyed expected to hire new workers over the next year compared with just four per cent of firms that expected to have fewer employees over the next 12 months.

Statistics Canada also reported a net gain of 28,000 jobs for June, a stark contrast to a disappointing report of only 18,000 jobs added in the United States.

The bank’s overnight target rate affects the prime lending rate at Canada’s big banks and in turn the rates for variable rate mortgages and lines of credit.

The Bank of Canada’s next scheduled rate announcement is set for Sept. 7.

The Canadian Press–bank-of-canada-hints-that-rate-hikes-are-coming-sooner-rather-than-later

Why Canadian mortgage rates are on a roller coaster

Tom Fennell Yahoo Finance  If there’s one question being kicked around the barbecue more than any other this summer, it’s probably this: should I lock in my variable rate mortgage?

But with interest rates bouncing around, to the point where they make a mortgage-rate chart look more like the diagram of a rollercoaster, homeowners can be forgiven if they are hesitant.

After all, every time mortgage rates rise, they seem to come back down again. Recently, Royal Bank tried to raise mortgage rates, increasing the cost of its five-year fixed mortgage by 0.15 per cent, only to quietly lower them a few weeks later.

What gives?

On the variable side, rates have been stable, holding at 2.1 per cent for so long it seems like the new normal. They are priced based on the Bank of Canada rate. And with the U.S. economy slowing (Alberta created more jobs than the U.S. did in the last quarter), it’s little wonder that Bank of Canada governor Mark Carney decided not to raise interest rates this week – and it’s doubtful he will anytime soon.

While the variable rate has held steady for months, fixed-rate mortgages are far more difficult to predict. Fixed mortgages are primarily priced off of the five-year bond, and as a result are subject to volatility in the bond market, which is being whipsawed by the European sovereign debt crisis.

As more European countries edge toward default, interest rates have risen on their bonds, in some cases to more than 10 per cent. Many investors, however, fearing widespread defaults, have fled to the safe haven of the U.S. bond market. In the process, that has kept U.S. rates in the 2.3 per cent range, and helped keep mortgages rates low in this country, with a five-year fixed term mortgage going as low as 3.29 per cent.

But these bedrock-low rates could rise quickly if the U.S. does not solve its own debt crisis. President Obama has asked Congress to lift the country’s debt ceiling — the amount the country can borrow to meet its obligations. The Republican-controlled House of Representatives is refusing to grant the increase until Obama makes deep cuts to government expenditures.

They have until Aug. 2 to solve the impasse and if nothing is done, the U.S. will default on the latest round of payments it has to make on its debts. Bond rating agencies have already said they will downgrade U.S. bonds if a default occurs. If that happens, it will drive up interest rates in the U.S. and push rates up on Canadian mortgages in the process.

“If Europe gets into trouble and the U.S. gets into trouble, money will be looking elsewhere,” says Kelvin Mangaroo, founder and president of “Interest rates have been bouncing around and we might continue to see that until the U.S. credit situation gets sorted out.”

Could the uncertainty in Europe actually drive interest rates lower in Canada?

If Obama and Congressional Republicans come to an agreement, there could be a sudden flight to quality as investors buy U.S. bonds. That could drive down interest rates on the U.S. five-year bond, and reduce rates on Canadian fixed mortgages.

“There is always the possibility that they could drop a bit still,” said Mangaroo. “They’ve been lower before, so there is no reason that they can’t go back.”

With so much volatility in the market, should you lock in your mortgage? It’s hard to say, but studies have concluded you are better off holding a variable mortgage. Then again, those studies also include periods of extremely high interest rates, but with rates now at historic lows they would only go marginally lower.

In fact, you can purchase a 10-year mortgage for just 4.84 per cent and a 25-year at 8.35 per cent. In effect, you could lock your mortgage costs in at today’s historic lows and that would pay dividends long after the crisis in Europe and the U.S. has passed and rates are rising again.

Whether to lock in or not is the most common question Mangaroo gets at About one-third of Canadian mortgages are variable, but Mangaroo says, “It all comes down to risk profile. And interest rates will be going up, so if you’re uncomfortable with that, you should look at a fixed five-year term which is at 3.5 per cent.”

But one thing is certain. If you hold a variable mortgage, you can breathe a little easier knowing Carney won’t be raising rates anytime soon. Ian Lee, director of the MBA Program at Carleton University, says this is because of the ongoing failure by the European leadership to address, let alone resolve, the growing Eurozone debt crisis and the ongoing inability of the U.S. political leadership to seriously address their annual $1.5 trillion deficit and $14 trillion debt.

“This clearly suggests,” says Lee, “that Governor Carney will think many times before raising interest rates now or in the fall.”

Condo owners stuck with $2.2M repair bill

Residents of a downtown Edmonton condominium believe better provincial regulations could have prevented them from having to pay $2.2 million to fix problems they say were caused by the developer.

The owners of decade-old Rossdale Court condominiums have spent the last four years fixing problems with pedways, balconies and window seals which are related to water leakage.

“It is pretty disheartening,” said Lynn Yakoweshen with the Rossdale Court Condo Association.

“I bought in this building because it’s a beautiful location, it’s a wonderful neighbourhood, a great sense of community … like kind of an isolated oasis, Unfortunately if you look around it hasn’t been quite the oasis that I had hoped.”

The owners of the building’s 69 units have each spent between $28,000 to $40,000 on repairs, Yakoweshen said. The balconies needed restoration work and the building’s exterior stucco had to be completely replaced.

“All of your savings are depleted,” she said. “We’re very loathe to open emails because you wonder, ‘what now?'”

Liberal MLA Laurie Blakeman blamed the provincial government for the situation. She said building codes are insufficient and fines too low to be a deterrent. She said the current one-year warranty period doesn’t help homeowners.

“Most problems turn up at the five, six-year mark and there’s no protection for that,” she said.

The province plans to take measures which include increasing fines for building code offences but Blakeman said the province hasn’t set a timeline for when those changes will come into effect.

The Rossdale Court condo owners say they have had no luck suing the developer. Yakoweshen said the building was built under a company name that no longer exists.

“We have no legal recourse,” she said.

Blair Hallet is the developer of Rossdale Court and Glenora Gates, another condominium now under repair because of water leakage problems.

Hallet could not be reached for comment Wednesday. A staff member at Tessco, where Hallet is listed as a director, said he now lives in British Columbia.

Home prices remain sky high in June, but poised for a drop, economists say

By The Canadian Press

OTTAWA – Canadian home prices continued to soar above year-ago levels in June, but economist believe price hikes could soon ease, spelling relief for buyers in expensive markets like Toronto and Vancouver.

The Canadian Real Estate Association said Friday the national average price for Canadian home resales was $372,700 in June, up 8.7 per cent from the same month last year, but down 0.9 per cent from May.

Realtors sold 48,487 resale homes last month, 10.8 per cent more than in June 2010, when sales began to taper off from an earlier hot streak when buyers rushed to beat interest rate hikes. Last June, the Bank of Canada raised interest rates from emergency lows for the first time since the recession.

Last month’s sales activity was also 2.6 per cent higher than in May, bucking a four-month trend of monthly declines.

“Canadian housing demand remains resilient, thanks to low interest rates, job growth, and home buyer confidence in the economy,” CREA president Gary Morse said in a statement.

June’s double-digit year-over-year sales increase was the fastest pace recorded since April 2010, said Bank of Montreal economist Robert Kavcic.

“However, the strong growth figure somewhat masks more moderate recent activity, as sales fell more than 16 per cent between April and June last year amid stricter mortgage rules, making for an easy comparison,” he wrote in a research note.

Despite the year-over-year price hikes, seasonally-adjusted prices have now dipped for three straight months, suggesting the changes to mortgage rules that limited the maximum amortization period “might be having at least a modest impact on pricing,” he said.

Some industry watchers have speculated that prices have now peaked and expect to see declines, especially when interest rates inevitably rise.

“Stricter mortgage rules and declining affordability appear to be taking at least some momentum out of prices, a trend that could continue if the Bank of Canada resumes its tightening campaign in the fall,” Kavcic said.

Sonya Gulati, an economist at TD, said June’s figures suggested a pickup in activity after a “particularly muted” over the past few months, but added that they could be a blip.

“We expect the mini reprieve to be fleeting and in turn, sales gains should be muted for the remainder of the year and into 2012,” she said.

Gulati said she expects prices to decrease by 10 per cent over the next two years, accompanied by a 15 per cent decline in sales.

“The lag between sales and prices usually comes in between two to three quarters. In turn, we anticipate prices to temper early next year,” she said.

Sales picked up in a majority of the country’s cities, with two notable exception — the pricey and once overheated markets of Vancouver, down 1.7 per cent and Toronto, 0.4 per cent lower.

In Toronto, average seasonally adjusted home prices fell 1.1 per cent, but are still up nearly 10 per cent year-over-year. The market remains one of the most competitive in Canada as demand so far this year has far outweighed the number of listings, contributing to higher prices.

In Vancouver, average prices are about 23 per cent higher than they were last year, but the average is being skewed higher by a flurry of activity at the high end of the market. Sales in expensive West Vancouver and Richmond have eased since February, which helped to reduce the impact on average prices, CREA noted.

That area has recently been a hotbed of housing activity, and high end sales helped drive June average home prices in Greater Vancouver to $630,921.

However, the national figures in June showed less of an impact from the sales of high-priced homes in Vancouver, although that city continued to skew the national results, CREA said.

About 60 per cent of local housing markets in Canada were balanced in June — meaning the number of sales and new listings were about the same. However, new listings increased just marginally, by 1.8 per cent in June from May.

Calgary, Montreal, Ottawa, Hamilton, London, Ont., and Victoria all saw gains over May.

Nevertheless, national sales activity in the second quarter (April, May and June) was down 4.5 per cent compared with the first quarter of 2011.

CREA attributed the decline from the first quarter to new mortgage rules announced in January and implemented at the end of March and an increase in mortgage rates in April and May.

CREA’s monthly report comes ahead of Tuesday’s Bank of Canada announcement on its target overnight interest rates. The central bank is widely expected to keep the key rate unchanged at 1.0 per cent, where it has been since September .

Earlier in the year, economists had expected the Bank of Canada would begin raising its short-term rate to quell inflation. However, sentiment has changed amid signs that the U.S. economic growth has been less robust than expected.

In contrast with the United States, Canada’s job growth has been stronger, its federal government is making more headway in dealing with budget deficits and its resource exports are relatively strong — putting home buyers in good shape.

“The Canadian housing sector remains on a solid footing,” said Gregory Klump, CREA’s chief economist.

“The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011.”

Home Prices to Fall?

Home prices to fall, TD warns The economists report says the average price of a resale home in Canada will fall by more than 10 per cent over the next couple of years, as well as predicting sales will decline by more than 15 per cent over the same period. While this sounds ominous, last week economists inaccurately predicted new US job numbers to come in at 200,000 whereas reality produced only 18,000.


Moral — With Flaherty cutting back refinancing to 85% in recent months and the high potential of values/prices dropping in the next year or two, now is the time to refinance and pull out equity.

Five costly reno mistakes to avoid

Shelley White Globe and Mail Update

I recently wrote about my kitchen renovation for Home Cents, detailing how I managed to keep my budget under $25,000 while still ending up with a functional and beautiful room.

There were a lot of comments (thanks for those, by the way) – some people thought I’d paid too much, some thought I’d paid too little. But there did seem to be a consensus that the post demanded some photographic evidence. So, due to popular demand, here are the before and after photos of my kitchen renovation. And please note: I took them myself, so excuse my not-quite-awesome camera skills.

Although I’m enormously pleased with how the renovation turned out, I certainly wouldn’t say the project was free of mistakes. In fact, there are some small things I might do differently if I had to do it all again (you may spot a couple of those in the photos, in fact).

So how can you avoid renovation missteps before they happen? HGTV has put together a useful collection of the 25 Biggest Renovating Mistakes. It’s quite a comprehensive list, but here’s a sampling of some of the factors I could relate to:

Gutting Everything
It can be tempting to want to just tear everything out – including the walls – and start from scratch. But that is where the additional costs can come creeping in. My contractor wisely elected to take a look inside the wall we were going to take down before totally ripping it out. Once we found out that tearing the wall would add challenges and money to the job, we changed the plan and kept the wall.

“I see this time and time again where people just start, and they think they’re going to pull a piece of wallpaper off, and by the time the process is over, they’ve completely gotten themselves into a deep, dark hole that’s very difficult to get out of,” says Mr. Eric Stromer, host of home reno show Over Your Head.

Inaccurate Measurements
I measured once, twice, three times and then again before ordering cabinets. My contractor was also meticulous with his measurements, but I could see how things could go quickly off the rails is someone was sloppy or rushed.

When dealing with countertops, always choose a company that will come and do the measuring for you, preferably using a cardboard template. That way, the onus is on them to ensure it fits correctly. That also allows you can take a look at the template and make sure you’re getting the shape you want. When you’re talking about a slab of stone worth thousands of dollars, you don’t want to take any chances.

Going Too Trendy
“People often make the mistake of wanting to be too hip and trendy in their new home by picking the latest, hottest, coolest things,” says Ms. Carmen De La Paz of HGTV show Hammer Heads. “What they don’t take into consideration is that trendy means that it’s short term.”

Five years ago I had my heart set on aqua-coloured glass tile for my kitchen backsplash. Sure, it would have looked good for a couple of years, but take it from someone who really loved her royal blue and bright yellow kitchen when she painted it 11 years ago – your taste will change. Unless you’ve got the extra cash to redo your kitchen, the best thing to do is keep it classic and simple. I think our choices will stand the test of time, but you can be the judge of that.

Ignoring Lighting
Hammer Heads carpenter Ms. De La Paz put it this way: “Another mistake that homeowners will often make is not taking into consideration the lighting in their home. The lighting in your home can completely change the colors, the feeling, the ambiance.”

In other words, ignore lighting at your peril. When I first planned our new kitchen, I completely forgot about lighting. Our old kitchen had one overhead lamp that cast a lot of shadows. Thanks to our contractor’s suggestions, we’ve got a number of pot lights on a dimmer plus under-cabinet lighting, and the difference is vast.

Failure to Anticipate Chaos

Now that it’s over, I can look back on our renovation experience and think, “It was a piece of cake.” But around week three, our kitchen was an utter mess. For readers that wondered why my family and I spent $2,200 to rent a condo instead of sticking it out at home – that place was a dust pit. Moving out was essential for our sanity and our health – drywall dust is not good for anyone.

Your reno might go smooth as molasses, but just in case, it’s a good idea to assume it will be dustier, messier and more annoyingly inconvenient than you ever could have imagined. Finance&utm_content=2093436

Boomers not delivering on their New Year’s savings resolutions

Despite making retirement savings a priority to start the year, almost one-third of boomers see themselves missing their savings goals in 2011

TORONTO, July 12, 2011 /CNW/ – Boomers started 2011 with good intentions to put more away for retirement. However as the warm weather signals the mid-point of the year, many don’t feel they are delivering on their 2011 goals when it comes to building their savings.

In a recent CIBC poll conducted by Harris-Decima, almost one-third (30 per cent) of respondents aged 45-64 felt they were doing a poor job of building their savings so far in 2011, including 17 per cent who rate their progress as “very poor”. Overall, less than half of boomers surveyed (42 per cent) believe they are making good progress in building their savings so far in 2011.

These results suggest boomers are not placing enough emphasis on an area they cited as their primary focus at the start of the year. In a survey of Canadians’ top financial priorities for 2011 released by CIBC in January, boomers were the most likely to say that planning for their retirement was their top financial priority. Yet, the most recent CIBC/Harris Decima poll shows that just over half of boomers are proactive when it comes to building their savings:

  • Only 53 per cent have a regular savings plan in place where they automatically put money away each month
  • 58 per cent have a budget in place for themselves that they track each month
  • 61 per cent have met with an advisor in the last 12 months

“While boomers have taken the important first step of identifying retirement as their top financial priority, some don’t feel confident about the progress they have made when it comes to building their savings so far in 2011,” commented Christina Kramer, Executive Vice-President, Retail Distribution and Channel Strategy, CIBC.  “Savings is clearly a priority for Canadians who are approaching retirement, and seeing only half of Canada’s largest demographic with a regular savings plan in place suggests a significant opportunity for more boomers to start saving on a regular basis.”

The good news is there is still time to get back on track before the end of the year.  Survey results indicated that simple steps can lead to feeling better about your progress in building your savings:

  • Putting money away as part of a regular savings plan makes a significant difference in building savings over the long term. Among boomers who feel they have made good progress in building their savings so far in 2011, 70 per cent have a regular savings plan in place.  Among those who feel they have done a poor job of building their savings in 2011, only 32 per cent have a regular savings plan.
  • Meeting with an advisor who can guide your savings efforts and help you structure your finances was also identified as important in the survey. Boomers who were positive about their savings progress were likely to have met with an advisor, with 72 per cent saying they had met with an advisor in the last 12 months.  Among those who feel they have done a poor job of building their savings in 2011, only 48 per cent had met with an advisor.

“There’s a clear link between feeling positive about your savings progress so far this year and certain key activities like having a regular savings plan in place, or meeting with an advisor to discuss your overall financial picture,” added Ms. Kramer. “Meeting with an advisor can help to ensure your savings are on track to meet your income targets in retirement.”

Ms. Kramer also believes there is an opportunity for those already saving regularly to ensure they review their plans on an ongoing basis.

“Even among boomers who have a regular savings plan in place, the financial strategy they created a number of years ago may need to be updated, including the amount they are putting away each month as they near retirement,” she says.

Ms. Kramer adds that once boomers have established a regular savings plan with their advisor, they can begin to look at the broader investment options that may be right for them to optimize retirement income, such as deciding how to utilize TFSAs versus RRSPs and other options.

Data Highlights:

Boomers’ evaluation of their progress towards their savings goals thus far in 2011:

Very Good – 14%
Good – 28%
Fair – 26%
Poor – 13%
Very Poor – 17%

Percentage of boomers who have consulted with a Financial Advisor in the last 12 months, regionally:

Atl. – 53%
Que. – 59%
Ont. – 63%
Man./Sask.- 69%
Alb. – 64%
B.C. – 59%

Percentage of boomers who have a regular savings plan in place where they automatically put money away each month, regionally:

Atl. – 49%
Que. – 51%
Ont. – 57%
Man./Sask.- 56%
Alb. – 51%
B.C. – 52%

Regional perspective of boomers who have a monthly budget in place that they track each month:

Atl. – 72%
Que. – 60%
Ont. – 62%
Man./Sask.- 63%
Alb. – 46%
B.C. – 45%

Renovation Spending

Renovation Spending

According to CMHC’s recent Renovation and Home Purchase survey:

  • 1.9 million households (42% of homeowner households), surveyed in 10 major centres, indicated they completed renovations last year  This is a slight decrease from the 2.1 million households that completed a renovation in 2009.  The average cost of renovations was $12,972.
  • Almost $23 billion was spent on renovations in 2010 across the 10 major surveyed centres.  The majority of homeowner households renovated to update/add value or prepare to sell.
  • 39% of homeowners  indicated that they intend to spend $1,000 or more by the end of 2011.

Weak U.S. June jobs report ‘shocker’

On Friday July 8, 2011

The U.S. added 18,000 jobs in June, far fewer than the 120,000 that many economists had been hoping for, the U.S. Bureau of Labour Statistics reported Friday.

“The June jobs report was a shocker,” said Nigel Gault, chief U.S. economist for IHS Global Insight. “It was far worse than expected, and weak on all key dimensions — job creation, unemployment, the length of the work week, and hourly earnings.”

The unemployment rate edged up by one-tenth of a percentage point from May, to 9.2 per cent. The rate is up by 0.4 of a percentage point since March.

Employment in the private sector rose by 57,000, the weakest month since May 2010, while government employment fell 39,000.

Economists had initially been expecting to see 90,000 jobs added in June, according to a survey by FactSet. But after the release of strong economic data earlier this week, many economists raised their estimates to 120,000 jobs, and some jumped to 200,000.

The June numbers are especially disappointing because a big jump would have suggested the 54,000 jobs added in May was a temporary setback.

But with the June increase so low, the economic recovery is still moving very slowly. The revision of the increase in May job numbers, cut by more than half to 25,000 from 54,000, was another discouraging sign.

“The recent pattern of jobs suggests that the economy hit a brick wall in May,” Gault said.

Stock markets dropped with the report, indicating the concern with the progress of the recovery.

There are now 14.6 million people officially unemployed in the U.S, and since March, the number has risen by 545,000, the department said.

There were another 8.6 million people working part time because their hours had been cut back or because they were unable to find a full-time job.

And 2.7 million people were not in the labour force, but wanted employment, were available for work, and had looked for a job in the prior year. But they were not counted as unemployed because they had not searched for work in the four weeks before the survey.

Despite Jobs Disappointment, Buffett Still Doesn’t Expect Double-Dip

Warren Buffett acknowledges that this morning’s June jobs report is disappointing, but he’s sticking with the economic optimism we heard in yesterday’s CNBC live interview.

While some are saying the economy may be heading back to a recession,Buffett tells Bloomberg

this morning, “I would bet very heavily against that. How fast the recovery will come, I don’t know. I see nothing that indicates any kind of a double dip.”

Even so, he says President Obama can’t be happy with this morning’s report from the Labor Department that payrolls increased by just 18,000 in June as the unemployment rate increased to 9.2 percent.

“It means that we’re still a ways off from getting to where we should be. We’re seeing growth around the world, but it’s not mushrooming.”

Buffett repeated his belief that once the residential construction rebounds, “We will come back big time on employment.”

He’s predicting a decline to an unemployment rate of 6 percent “within a few years.” 

Rent to Own

The benefits to the buyer of renting to own

The benefits of home ownership are many including tax deductions, security, etc. If you don’t have the means to put a down payment on a home right now, but you want your rent payment to actually go toward an investment, renting to own is an excellent option. One of the biggest benefits is the rate at which you accumulate equity. And you could get more home than you may qualify for at this time.

  • Equity growth: The buyer’s rent payments will actually go toward an investment — toward equity in a home. Every month a portion of your rent payment is credited towards your down payment or off of the sales price.
  • Option deposit is credited to the price of the home: The buyer/renter pays the seller an option deposit like we mentioned above. This money is vested interest in the home and will be fully credited when you buy the home.
  • Minimum expenditures out of pocket: When you buy a home, you need a down payment that is at least 5% of the purchase price of the home as well as closing costs. Here, you’ll only pay a normal rental security deposit typically plus the option deposit.  To gte 5% down, you also need to have very good credit.  With Rent to Own, you need a minimum of 2% down.
  • Flexibility in requirements: Restrictions are up to the seller which means there could be more flexibility with credit, etc. You prove your ability to purchase the home by making rent payments every month.
  • Control of the Home: The buyer has full control of the home while paying rent. You’ll get to learn the ins and outs of the home, what should be changed and home improvements, etc. before actually owning it.
  • No Taxes, Less Liability: Since the buyer does not yet own the home, they do not have to pay property taxes up front, etc. So the buyer has time to prepare for the cost of the home and learn about the total cost of the home while there before they have to take on full responsibility.
  • Minimal Maintenance: Typically large maintenance problems or any maintenance problems that exceed a certain amount of money are delegated to the seller.