Near- and medium-term confidence improves from December lows
Near- and medium-term confidence improves from December lows
Monday, February 23, 2009
Investors Group Inc. and Harris/Decima’s overall index of consumer confidence in the economy rose to 67.0, the highest the index has been since August 2008, in the period from December to February. In the U.S., the index did not see the same bounce as in Canada, inching only slightly upward to 61.2.
The most significant jump in optimism was on the question of how Canadians felt they’d be doing financially a year from now. Twice as many people feel they’ll be better off than worse off (27% to 13%). This is an improvement from December results when 20% felt they’d be better off, while 18% felt they’d be worse off.
Canadians are also more amenable to making a major purchase. In December, 35% thought it was a good time to make a major purchase, while 50% thought it was a bad time. Today, opinion is virtually even, with 41% feeling now is a good time to make a major purchase and 43% feeling it is a bad time to do so.
Pessimism about the economic outlook for the coming year decreased slightly. While a majority, 59%, still foresee bad times for the economy in the coming year, this was down from the 64% who answered in-kind in the December survey. Ten per cent see good times ahead for the economy in the next 12 months.
The number of Canadians who say they are worse off today than they were last year remained relatively steady at 27%, down a point from the December survey. Once again, most people, 57%, are far more likely to say they are doing about the same financially as they were last year. Thirteen per cent feel they are better off financially compared with a year ago, which is relatively unchanged since December.
“Some Canadians appear to be seeing light at the end of the economic tunnel, as both the one-year and five-year outlook results have improved this quarter,” says Harris/Decima senior vice president Jeff Walker. “The roller-coaster ride may not be over yet, but the data suggests many feel that we have hit bottom, and will gradually move upward from here”.
“Restored consumer confidence is an important factor in any potential economic recovery,” adds Debbie Ammeter, vice president of advanced financial planning at Investors Group. “It is interesting to note that Canadians seem to recognize that things could be difficult for most of this year, but yet, there appears to be more who believe that they will be better off a year from now.”
Each week, Harris/Decima interviews just more than 1,000 Canadians. These results were gathered from Feb. 5 through Feb. 15 for a sample of just more than 2,000 respondents. The poll’s margin of error is 2.2%, 19 times out of 20.
5 C's of Borrowing
5 C's of Borrowing
By Bob Quinlan
Saturday, February 21, 2009 04:00 AM
by Bob Quinlan
A big part of the impending “doom and gloom” of the feared collapse of our economy has come from the lending policies, the performance of borrowers and the adjustments being made to lending policies of today and the future. When you are looking to borrow you need to consider that the economic climate will dictate how a lender will look at a deal. How the lender will come to the decision to approve a deal was a lot different in 2007 as to what it is in 2009. I would like to offer you who are reading this the basics of lending/borrowing along with some personal comments that help you decide: if you are going to apply for credit and what you should consider.
Firstly, lenders are in business to make (not lose) money. Consequently when a bank lends money it wants to ensure that it will get paid back. (the same as a borrower expects to come out of the end of a transaction with more than they went in with). To maximize the possibility of being paid back, the bank wants to make sure that there is sufficient assurance that a person can and will pay back a loan. The lender must consider the 5 "C's" of Credit each time it makes a loan.
CharacterIs the general impression you make on the potential lender. The lender will form a subjective opinion as to whether or not you are sufficiently trustworthy to repay the loan. Your educational background and experience in your field of work will be included. The length of time at your current employment and your current residence will be considered. The longer you have been at both, the higher you will score on the character scale. In 2007 there was little concern that your future might be in jeopardy. In 2009 every source of income is scrutinized as whether it is feasible that it will continue.
CollateralIs the extra security the lender has to cover the loan. In real estate transactions this generally means the property. If for some reason, you cannot repay the mortgage, the bank wants to know that the real estate the mortgage was taken out for is good and marketable real estate. A current real estate appraisal will determine the value for the property in today's market. Some lenders will limit themselves to the type of property they are going to accept. Rural properties have less interested buyers than urban properties. In the case of a foreclosure the lender doesn’t get the property. They have to apply to the courts to have them placed back on the market for resale to repay the loan. This takes time and money. Lenders will charge for the risk accordingly.
CapitalIs the money you personally have invested in the purchase, otherwise known as your down payment. The more of your own money you invest as a down payment, the more likely that you will do all you can to maintain your payment obligations. This fact was evident during the recession of the 90s where a large number of the power of sale properties, were at one time, purchased with small down payments. Capital is also reflected by your ability and willingness to save money and accumulate assets. The higher your net worth, the more you have as a cushion for repayment in the event you run into a financial set-back. Saved or earned capital is more highly regarded than “gifted”.
CreditIs the evaluation of your habits in performing credit obligations. The information about your credit history is stored at the "credit bureau" and indicates how well you paid your bills over the last 6 years. All major credit cards, auto loans, leases etc. are reported to the credit bureau. A lender will evaluate your ability to maintain your obligations and try and determine how well you live within your means. Some individuals make the mistake of not paying the minimum monthly obligations on loans and credit cards with the expectation of making a larger payment the following month. These missed payments appear on their credit report branding them as chronic "late-payers" for the next 6 years.
CapacityTo repay the loan is probably the most critical of the five factors. The lender will want to know exactly how you intend to repay the loan. The lender will consider your income as it relates to the loan that you are applying for. Does the monthly carrying costs of the loan represent less than or equal to 32% of your total monthly income? If it is, the probability of you successfully repaying the loan is fairly high. When you include your personal debts, loans, cards, etc., a lender will likely not approve your total debt load of higher than 40% of your total monthly income. Prospective lenders will also want to know about any other sources of income you may have to repay the loan, if your steady income stream is interrupted. What savings can you fall back on? What property do you have that you could sell to cover payments?
The biggest factor that people are having the most difficult time with today is: These principles above change complete depending on what the future economy is predicted to do. For the past six years we have had a rising economy. Increasing property values. Little fear of people losing their jobs. Even if they do, the value of their property has risen so they can sell and get out of trouble. Now we are in the midst of a declining economy. It is expected that in the near future many jobs will be eliminated. House sales will fall along with the value of homes. Anyone who has a home that they purchased recently and lost a job had better have 10 – 20% equity or they won’t be able to sell. Without extra funds to pay the mortgage, foreclosure is probable.
Banks get their money from interest earned on repaid loans. They lose on foreclosures. The income they earn is used to pay investors who deposit their savings in the bank. They can only do that if they earn a profit. Do you having any savings in the bank? Would you keep it there if you thought your bank was losing money?
Bob Quinlan is a Mortgage Broker with Mortgage Alliance Prince George, you can reach him by email :bob@pgmortgages.ca or by calling the office at 250-564-9161
CMHC Predicts Slowdown in P.G. Housing Market
By 250 News
Friday, February 20, 2009 03:52 AM
Prince George, B.C.- Canada Mortgage and Housing has released its forecast for housing in B.C. and the forecast is for reduced housing starts, lower prices and a higher vacancy rate for rentals.
For Prince George, the report predicts there will be a 25% drop in new construction starts this year, however, that will decrease to a 12% decline in 2010.
For re-sales, the forecast for Prince George shows a decline of 16.5% in sales this year, and a further 7.7% drop in 2010. Prince George is the only B.C. city surveyed that is expected to see a decline in sales in 2010. Kamloops, Nanaimo, Abbotsford, Kelowna, Vancouver and Victoria are all predicted as seeing increased sales next year, with Kelowna at the top of the chart with a 16% hike.
As for price, the average price of a re-sale in Prince George is predicted to slip to $227,000 this year (down 5.5%), and to dip another 2.2% in 2010 to $222,000 in 2010.
As for vacancy rates, CMHC predicts the vacancy rate in Prince George will grow from the 2008 rate of 3.9% to 4.9% and the average rent for a one bedroom unit will increase to $625 from the current $598.
Major Drop in 2009 Assessment Appeals
By 250 News
Friday, February 20, 2009 04:10 AM
Prince George, B.C. - BC Assessment has recorded significant decreases in both public inquiries and property appeal statistics in response to the 2009 assessment roll.
At the Prince George office, there have been just over 1,600 inquiries, that's a 38 % drop over last year. The number of letters of appeal so far is 505, down 53% from 2008, and the number of property appeals filed is down 45% at 560.
Only the office in Surry/White Rock saw an increase in the number of review files with 1,670, an increase of 39.5%
Province wide, the taxable value of the 2009 assessment roll is $953 billion, an increase of $13 billion or 1.41 per cent over the 2008 assessment roll.
30,613 public inquiries were received province wide at 18 BC Assessment area offices, a reduction of 37 per cent over last year's total of 48,373. The majority of customer inquiries are received by phone (24,851) followed by email, in-person, fax and regular mail.
7,764 letters requesting assessment reviews by the Property Assessment Review Panel were received. This is a reduction of 57 per cent over last year's total of 18,241 letters requesting reviews.
These requests contained a total of 18,978 individual property appeals, a reduction of 35 per cent over last year's total of 28,966 individual property appeals. The number of individual appeals is much higher than the number of letters requesting reviews because many letters ask for a review of the assessments of several properties.
Last fall, the B.C. government passed the Economic Incentive and Stabilization Statutes Amendment Act in order to provide stability for property owners concerned about property values during an economic downturn.
This legislation required 2009 assessments to reflect the value of a property as of either July 1, 2007 or July 1, 2008, whichever date provided a lower value.
Housing Starts Down In January
Housing Starts Down In January
By 250 News
Monday, February 09, 2009 09:45 AM
Prince George, B.C.- Housing starts in Prince George area were down 76% in January over the same month a year ago.
In Prince George there had been 17 single family home starts in January last year, compared to just 4 last month.
Canada Mortgage and Housing Corporation says the National seasonally adjusted annual rate of housing starts declined to 153,500 units in January from 172,200 units in December of 2008.
“To a certain extent, the decline in housing starts coincides with recent developments in the existing home market. Reduced sales and increased listings in the existing home market have led to reduced spillover demand in the new home market,” said Bob Dugan, Chief Economist.
Across the country, the seasonally adjusted annual rate of urban starts decreased 15.6 per cent to 126,700 units in January. Urban multiple starts decreased 12.2 per cent to 76,700 units, while urban single starts fell 20.2 per cent to 50,000 units in January.
January’s seasonally adjusted annual rate of urban starts moderated in all of Canada’s five regions. Urban starts declined 29.1 per cent in British Columbia, 8.6 per cent in Atlantic Canada, 1.4 per cent in Quebec, 14.6 per cent in Ontario and 30.3 per cent in the Prairies.
year. Actual starts in urban areas have decreased by an estimated 40.4 per cent compared to the same month in 2008. Actual urban single starts for 2009 are 44.2 per cent lower than they were a year earlier while urban multiple starts are down 38.1 per cent.
