Newfoundland 2008 Budget Highlights

April 30, 2008 · Filed Under Local St. John's · Comment 

The Newfoundland and Labrador Economy Highlights

  • Economic Performance 2007
    • Real GDP increased by 7.9% driven by exports of oil and minerals and consumer and government sector spending.
    • The unemployment rate fell to 13.6%, a reduction of 1.2 percentage points and the lowest rate in 26 years.
    • Personal income growth of 4.3% and personal disposable income growth of 5%.
    • Retail sales growth of 9.5%.
    • Increased residential construction investment of 9.9% with 2,652 housing starts.
    • Net in-migration of almost 2,000 people in last half of 2007.
  • 2008 Expectations
    • Real GDP forecast to decline by 2% due to lower offshore oil production.
    • Capital investment expected to increase by 15%. Combined investment in oil and gas projects estimated to be $1 billion for 2008.
    • Housing starts stable at 2,657 for the year.
    • Employment expected to increase by 1.5%, adding another 3,300 jobs, and the unemployment rate is expected to decline to 12.4%, a further decrease of 1.2 percentage points.

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No Provincial Economy Immune from US malady

April 3, 2008 · Filed Under Market Trends and St. John's Real Estate · 1 Comment 

RBC released it’s Provincial Outlook today and is quite clear “no provincial economy immune from US malady”.

The tone for the report is caution throughout most sectors including labour, housing, exports and Canadian dollar.

Saskatchewan is expected to be the growth leader in 2008 as its economy benefits from strength in energy, mining, and agriculture. Newfoundland is expected to be the laggard as waning oil production weighs on its growth.

Housing affordability is poised to improve across the country this year on the back of falling mortgage rates and cooler house price gains. House price growth is expected to move into the single-digit range in almost every province by year-end. This contradicts Remax’s 2008 house price increase for St. John’s but is in line with CMHC’s report.

Saskatchewan will continue to benefit from last year’s in-migration surge in 2008 before housing activity simmers down in 2009. Every province except Saskatchewan is likely to see a decline in new home construction in 2008.

Saskatchewan — The new provincial growth leader
We expect Saskatchewan to be Canada’s top growth performer this year, coming in at 3.6% in 2008 and 3.2% in 2009. Saskatchewan and Manitoba have become the new ‘it’ provinces with hot housing markets, big capital spending plans and tight labour conditions. Saskatchewan now ranks number-one across all key housing indicators that we track. House prices became overvalued in a very short time and it is likely only a matter of months before a decelerating trend sets in to bring markets back closer in line with underlying fundamentals. The cool down is likely to be similar to what is currently going on in Alberta. On the business side, however, Saskatchewan has more upside potential than Alberta. Saskatchewan benefits from strong export volumes and high prices for oil, uranium, potash and grains. A surge in migration inflows confirm that these strengths are being noticed. The unemployment rate (4%) is holding at its lowest rate in 25 years and skilled labour shortages are a growing concern. Labour shortages are supporting the fastest wage growth in the country.

Newfoundland and Labrador — Waning oil production
Newfoundland topped the growth charts last year — growth is expected to have come in at about 9% — but is set to slip to last place in 2008 as oil production declines. Offshore oil production is expected to drop 15% in 2008 as all three oil producing fields face falling production volumes. Prospects for expansions at existing oilfields leave the door open for upside potential in the early part of the next decade. Potential projects include the Hebron development, the Hibernia Southern Extension and an expansion at White Rose. The province’s mining sector (mostly made up of nickel and iron ore) is offsetting some of the weakness on the oil front. Iron ore prices have soared by 66% since 2007 and are expected to keep the value of shipments at an elevated $4 billion in 2008 for a second consecutive year.

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Housing Starts Lower in February

March 10, 2008 · Filed Under Market Trends and St. John's Real Estate · Comment 

Release today from Canadian Mortgages and Housing Corporation.

Multiples Drag Total Housing Starts Lower in February

Urban housing starts were lower during the month of February, according to preliminary data released today by Canada Mortgage and Housing Corporation (CMHC). February’s total housing starts retreated 18 per cent, with 51 posted across provincial urban centres compared to 62 a year ago. All 51 starts were within the St. John’s region versus 61 last February, a decrease of 16 per cent.
However, starts of single-detached homes surged 135 per cent to 40 within St. John’s metro, while multiple starts sank 75 per cent to 11 after posting 44 in February of 2007.

“After beginning the year relatively strong, February’s decline in total urban housing starts was attributed to a lack of multiple housing construction,” said Chris Janes, Senior Market Analyst with CMHC in Newfoundland and Labrador. “Despite February’s lack of multiple housing starts, a surge in the single-detached segment is a positive signal and the expectation is that 2008 will be a solid year for residential construction activity,” added Janes. For Canada’s urban centres, total housing starts surged 42 per cent to 13,436 in February compared to February of 2007. Single-detached starts fell five per cent to 4,203, while multiple starts of 9,233 represent a lofty 84 per cent increase over last year.

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Housing market the focus of this week’s Canadian economic release

January 7, 2008 · Filed Under Market Trends · Comment 


Canada’s economic data release schedule kicks into high gear starting on Wednesday of this week with housing starts for December followed by the new house price index and building permits for November on Thursday  Forecast is that housing starts were lower in December as single-house starts likely unwound November’s 13.1% surge.

The new housing price index (NHPI) likely crept higher in November in line with an increase in the sales-to-new-listings ratio, an indicator of the supply and demand balance in the housing market. Building permits were likely down 2% in November with residential permits likely relatively flat, mirroring the behavior of housing starts, and non-residential permits likely to partially unwind October’s 19.1% surge.

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Mortgage Calculator: How Much Can You Afford?

January 3, 2008 · Filed Under Mortgages · 3 Comments 

How much of a house you can afford depends on a number of factors. The most important are your gross household income, your down payment and the mortgage interest rate. Lenders will also consider your assets and liabilities. Your own lifestyle and debt comfort zone also come into play.

This calculation is based on two simple rules that lenders use to determine how much of a mortgage you can afford. The first rule is that your monthly housing costs should not exceed 32% of your gross monthly household income. Housing costs include monthly mortgage payments, taxes and heating expenses. If applicable, this sum should also include half of monthly condominium fees.

Secondly, your entire monthly debt load s hould not be any more than 40% of your gross monthly income. This includes housing costs, and other debts such as car payments, personal loans, and credit card payments.

Feel free to use the mortgage calculator on our website for a quick calculation. For a more in depth assessment CanEquity will display an entire payment schedule for the life of a mortgage along with a summary of payments, interest, and balances within the mortgage term.

The average price in the current St. John’s Real Estate market for a single family home is about $150,000. Assuming a 5% ($7500) down payment. Interest rate of 5.79%

  • The amount you will need to mortgage is $146,418.75. This is amount has CMHC insurance fees included. The calculation is as follows: Purchase Price ($150,000) subtract Down Payment ($7,500) equals $142,500. To this amount we add a 2.75% insurance premium based on your Loan to Value (LTV) ratio of 95%. Therefore, 2.75% of $142,500 is $3,918.75 (cost of your insurance), plus $142,500 equals $146,418.75.
  • You will have 549 payments of $459.30 every 2 weeks for 21 years and 2 months, plus one final payment of $158.58 to payout a $146,418.75 loan with a rate of 5.79%.
  • Choosing biweekly accelerated payments will pay off your mortgage 46 months sooner, with a total of $23,264.48 in interest savings.
  • Mortgage balance remaining at end of term is $125,752.66.
  • By increasing your Down Payment you could lower your LTV ratio, therefore lowering your CMHC insurance premium of 2.75%.

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Urban Housing Starts Soar in November

December 10, 2007 · Filed Under Market Trends, Monthly MLS Stats and St. John's Real Estate · Comment 

Newfoundland housing starts soared in November, according to preliminary data released today by Canada Mortgage and Housing Corporation (CMHC). November’s total housing starts soared 33 per cent, with 189 posted across provincial urban centres versus 142 a year ago. Of the 189 starts, 177 occurred within the St. John’s real estate metro area compared to 121 last November, an increase of 46 per cent. To date, provincial urban housing starts total 1,631, up 18 per cent over the first eleven months of 2006. “November’s total urban housing starts mark six consecutive months of sustained growth in residential construction compared to the same period last year,” said Chris Janes,
Senior Market Analyst with CMHC in Newfoundland and Labrador. “Solid demographic and economic fundamentals paired with high consumer confidence, continued to drive the demand for newly built homes during the month,” added Janes. For Canada’s urban centres, total housing starts fell five per cent to 17,077

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