It appears the Canadian real estate market has taken off again and shows no signs of slowing down. 2009 finished strong with high demand and price increases....and that's carried over into 2010. Canada was not as severely affected by the credit crunch due to its ultra strong banking system.
"Canada's real estate market enters 2010 with considerable momentum from an unusually strong finish to the previous year" according to Royal LePage executive Phil Soper. Canadian buyewrs appear to be reacting to low borrowing costs, a high degree of optimism in the Canadian economy and pent up demand.
However, there are rumblings that Canadian interest rates could be on the rise later this year to cool off any bubble effect of rapidly rising house prices.
Jobs seem to be slowly returning in many sectors, including automotive industries....but Canada is not out of the economic woods by a long shot......even though 54% surveyed expresssed optimism about 2010. Economists predict a long slow ride to recovery.
In November the Canadian unemployment rate stood at 8.5%, which is much lower than that in the US but still worrysome.
The consensus of 22 economists surveyed forecast that about 20,000 new jobs were added in December. That would make it the second consecutive month of gains, after November's 79,000 jobs increase. Economists say 2010 will be mostly positive. Scotiabank's Derek Holt believes 2010 will likely see the creation of more than 300,000 net new jobs, reversing the previous year's losses. Canada's population is a little more than a tenth of the US.
The Great White North is expected to weather the recession better than most, mainly due to it's strong banking system.
A major cloud for exporters is the rising value of the Canadian dollar. This has heightened competativeness and led to lower corporate profits. Only 3 - 4 cents separate the value of the Canadian and US dollars.
Economist Avery Shonfeld says, "The strong dollar is taking the bloom off the Canadian economy. But more than that it's changing the composition of the growth, property prices are stronger while manufacturing is weaker."
On the positive side, the strong dollar is having a beneficial impact in helping to control the price of imports and allowing the Bank of Canada to keep interest rates low.
If there's one thing we've learned through this recession it's the experts have been proven wrong time and again. How 2010 turns out will be pretty much a coin toss. I'm betting on heads to be a winner.
Thanks. Sincerely, David
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