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Rates staying low into next year
Julie Fortier, Financial Post

OTTAWA - With the Canadian economy doing surprisingly well over the past six months, many see higher interest rates from the Bank of Canada in the not so distant future, but according to a report released Thursday from CIBC's chief economist Avery Shenfeld, rates are likely to remain at a very low 2.5% through to 2011.
In CIBC World Markets' latest Global Positioning Strategy report, Mr. Shenfeld lists several reasons for Bank of Canada Governor Mark Carney to keep interest rates subdued after July. He points out that the U.S. will probably have a more gradual approach to raising rates and if Canada gets too far ahead, that could send the Canadian dollar soaring.
"While factories are recovering in Canada alongside a global industrial revival, output remains nearly 20% below the pre-recession peak, and wages are now substantially above those stateside without the productivity gains to match. There's only so much of a competitive challenge that non-resource exporters can take in short order," Mr. Shenfeld said.
He also pointed out that inflation is not expected to rise much further and stimulus spending is expected to be reigned in by governments - including Canada's - which will slow growth.
"If the U.S., the U.K., and Japan all move from huge stimulus to even modest restraint, Canada will feel it in our export prospects come 2011," Mr. Shenfeld pointed out.
Mr. Carney has promised to keep interest rates where they are at 0.25% until the end of June. However, the latest reading of Canada's economic growth showed the core inflation rate at 2.1% in February, far above the Bank of Canada's forecast of 1.6% for the first quarter of the year. Many analysts believe the Bank of Canada will not wait until mid-2010 to raise rates.
Read more: http://www.financialpost.com/news-sectors/economy/story.html?id=2777584#ixzz0kYfL1zaB

Calgary MLS sales plunged in May

CALGARY - Calgary MLS sales in May plunged compared with a year ago, according to data released today by the Calgary Real Estate Board.

The board said single-family home and condo sales were down just over 20 per cent from the level registered in May 2009.

At the same time new listings for the month rose by nearly 33 per cent in the single-family home market and by just over 22 per cent in the condo market.

Average prices, however, rose by nearly 11 per cent for both single-family homes and condos.

“We believe there are a number of factors contributing to this marked slowdown including a declining number of first-time homebuyers in the market, a rise in monthly carrying costs as mortgage rates rise and to some extent market jitters in the wake of Greece’s financial crisis,” said Diane Scott, CREB president.

In May, there were 1,262 single-family MLS sales for an average price of $483,240 and a median price of $420,000. A year ago, the single-family market had 1,584 sales for an average of $436,427 and a median of $390,000. In April of this year, there were 1,352 sales for an average price of $460,378 and a median price of $417,000.

The condominium market showed a similar story in May with 518 sales for an average of $304,662 and a median of $279,900. In May 2009, there were 653 condos sales with an average price of $275,212 and a median price of $255,000. In April of this year, sales in the condo market were 639 with the average price at $289,588 and the median price at $267,500.

In the towns outside of Calgary market, there were 338 MLS sales in May for an average price of $363,231 and a median price of $354,000. Last year there were 374 MLS sales for an average price of $353,384 and a median price of $336,000.

In the country residential market, which includes acreages, there were 74 transactions with an average price of $864,084 and a median price of $820,000. Last year, the average price was $823,631 and the median price was $750,000 on 71 transactions.

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