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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (48710)	11/8/2012 9:20:39 AM
From: robert b furman	Read Replies (1) \| Respond to of 69835

will do. Thanks for your thoughts Bob

To: Johnny Canuck who wrote (48710)	11/8/2012 5:09:54 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 69835

Goldman labels Canadian real estate a 'high flyer' Brady Yauch, BNN.ca staff 1:10 PM, E.T. \| November 8, 2012 Real Estate Tags: Real Estate A A Share on email Follow this Canada's housing market is being called a 'high flyer' compared to other developed economies and could be in line for a pullback in prices and new housing starts, according to Goldman Sachs economists. While many developed economies have suffered from a housing boom-turned-bust, Canada and other countries such as Norway, Australia and Germany, have experienced an increase in home prices since the end of the financial crisis. Some of that increase can be attributed to stronger economic growth -- particularly in commodity-heavy economies such as Canada and Australia -- compared to their peers, but also to loose monetary policy outside of their borders, the economists say. "The stark differences in house price performance between the ‘housing highflyers’ and the ‘low-lyers’ are, to a degree, a reflection of the differentiated economic recovery across those countries," the economists say in a note to clients. "But the ‘high-flyers’ also appear to have benefited from excessively easy monetary conditions, in part, having imported monetary easing from the easy policies in the G4." Highlighting Canada's housing market, in particular, the economists warn that loose monetary policy from the G4 (U.S., euro zone, Japan and Britain) is now making its way to countries that largely avoided long-term damage from the financial crisis and could be fueling an asset bubble. "To the extent that this easing pressure is unwelcome -- particularly from the perspective of providing fuel to fresh housing bubbles -- this places policymakers in the ‘high flyers’ in a tricky dilemma," the economists say. They say raising interest rates -- which the Bank of Canada has repeatedly warned investors will likely be its next move – is a "blunt" instrument in dealing with housing bubbles and will cause "collateral damage." "Policy rates may need to be raised substantially to move the needle on mortgage rates significantly, and in the process the authorities may have to accept considerable collateral damage in other parts of the economy," they say. "Furthermore, any exchange rate appreciation that follows is likely to affect a country’s export competitiveness." New housing starts are also a concern, as the Goldman economists estimate that index for building permits in Canada is above its long-term average. "Because housing is extremely durable, housing busts tend to be more severe and more painful when there is overbuilding of homes prior to the bust -- as was the case for example in the recent housing busts in the U.S. and Spain," they say. The comments from Goldman Sachs come amid growing signs that Canada's housing market is slowing, which many economists and investors attribute to tighter mortgage regulations put in place by Ottawa over the summer. In July, Ottawa shortened the maximum mortgage amortization period to 25 years from 30 years and lowered the amount homeowners can borrow against their house to 80 percent from 85 percent, among other changes Housing starts fell more than expected in October, Canada Mortgage and Housing Corp said on Thursday. The number of new housing starts on a seasonally adjusted annualized rate fell to 204,107 units in October, compared to 223,995 starts in September. The number of new housing starts peaked in April at 251,802. Many economists warn that the slowdown in Canada's housing market will act as a drag on the overall economy. "Residential construction likely cut into Canadian real GDP growth for a second-straight quarter in Q3, and October’s result points to further weakening in Q4," says BMO economist Robert Kavcic. "With sales trends running softer and starts expected to fade further, the sector will likely remain a drag on growth through much of 2013, a stark shift from recent years."