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These are stories Report on Business is following Thursday, Jan. 8, 2015.

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One of these things is not like the others …
Bank of Montreal's chief economist looks at the Vancouver, Calgary and Toronto housing markets and finds that "one of those three things no longer belongs."

He's talking about Calgary, the heart of Canada's oil industry.

As the latest home sales numbers pour in, Calgary is showing a distinct change after having been the hottest housing market in the country.

Sales fell 7.5 per cent in December from a year earlier, while new listings surged by 42 per cent, which Douglas Porter believes signals "downside pressure" on prices going forward.

"On the flip side, Toronto's piping hot market is still piping," the BMO economist said.

According to the Toronto Real Estate Board, sales in December rose by almost 10 per cent from a year earlier, and average prices 7 per cent.

Vancouver, the other hot city, is also still hot. As The Globe and Mail's Brent Jang reports, the benchmark price there, rather than the average, rose by more than 8 per cent.

"With long-term rates skidding lower in recent weeks and the [Bank of Canada] waiting at least until late this year (and quite possibly until 2016) before hiking rates, borrowing costs look to remain the housing market's friend for some time yet," said Mr. Porter.

"Outside of the oil-producing regions, the drop in crude and bond yields looks to prolong this surprising strength in housing."

Bank of America Merrill Lynch is also concerned about Alberta's housing market, though sees no trouble elsewhere.

"We don't expect weaker energy prices to trigger a meltdown in Canadian housing," its economists said in their BofA Merrill Lynch Global Research report.

"If we drill down into the regional trends in house prices, we see little evidence that energy is driving house price dynamics in any significant way."

Not so fast, Alberta.

In Canada's energy-dominant province, there are "clear risks" to the housing market.

"If WTI remains at $50 a barrel in 2015, the year-over-year plunge in energy prices would nearly match the 40-per-cent drop seen in the 2009 recession," they said, referring to West Texas Intermediate, the U.S. oil benchmark.

"During that episode, annual average house prices in Alberta fell by about 8 per cent," they said.

"Although the painful 2009 recession is not directly comparable to today's episode of falling energy prices, it provides some sense of an 'upper limit' to the magnitude of the risk to Alberta's housing market in the coming year."

Homebuilding could also shift as Canadians from other provinces no longer flock to what has been the country's job capital.

"On net, that demographic shift could reduce homebuilding activity in Alberta, but boost demand in regions like Ontario and Quebec, causing a re-allocation in provincial shares of homebuilding activity," said the report.

But across Canada, there's no evidence that energy has played a role in the country's housing boom.

"Unlike Alberta, Ontario's economy produces virtually no energy and yet we have seen the most remarkable house price gains in that province's most populous city: Toronto," the economists said.

"Indeed, some of the strongest increases in house prices have occurred outside of Canada's energy hub. That challenges the notion that elevated energy prices have contributed significantly to Canada's housing boom."

Oil steadies
Analysts are trying to determine whether oil prices have found their bottom or if two days of relative stability is simply a "dead cat bounce."

Some, however, still expect crude to sink as low as $40 (U.S.) a barrel amid a supply glut and a price war sparked by Saudi Arabia.

The collapse in oil prices, meanwhile, has claimed its first big victim, a Texas-based drilling company.

"Oil prices yet again have dominated the overall market direction over the last 24 hours as a slight rebound in major prices has seen equity markets recover losses incurred earlier in the week," said chief market analyst James Hughes of Alpari in London.

"However, we are going to need to see much more of a recovery if prices are going to continue to recover as yesterday only saw a brief respite and  a potential dead cat bounce on both WTI and Brent crude oil," he added, referring to West Texas Intermediate, the U.S. benchmark and its overseas counterpart, which sells for more.

"However there has been talk over the last 24 hours that $40 could be the absolute price floor for oil as all oil producers continue to lose money even with the price above $50 a barrel. However those eyeing a price floor at $40 are also concerned that any recovery from this level may not happen until the second half of the year."

And, as Adrian Miller, the director of fixed income strategy at GMP Securities in New York, pointed out, "as we have seen repeatedly oil sentiment can swing on a dime."

His comments came as prices held relatively steady.

"One data point doesn't make for a trend but the drop in U.S. oil inventories gives some temporary respite at the psychologically-significant $50 per barrel," said analyst Jasper Lawler of CMC Markets.

Stock markets also rallied, buoyed by central banks, including the Federal Reserve, which is signalling it's still in no rush to hike rates, and the European Central Bank, which is expected soon to launch an all-out stimulus program known as quantitative easing.

The Bank of England today also held firm.

The Canadian dollar, largely tied to oil prices, touched a low of 84.47 cents U.S., and a high of 84.77 cents. It was at about 84.5 cents by late afternoon.

The collapse in oil prices since last summer has, of course, rippled through markets and the oil patch, forcing major companies to cut their spending and analysts to revise their forecasts for economic growth.

Governments, too, like that of Alberta, have gone back to the drawing board, grappling with the fallout from lower royalty and tax revenues.

In Texas, a private driller, WBH Energy LP, reportedly filed for bankruptcy protection when one of its lenders drew the line.

"The U.S. oil industry has had its first prominent bankruptcy since OPEC decided not to cut oil production and prices crumpled to $50 per barrel," said analyst Jasper Lawler of CMC Markets.

"Like in any boom, the scramble for easy profits leads to excessive risk-taking normally in the form of too much debt, and the shale boom in the U.S. is proving no different," he added.

"The WBH bankruptcy will likely be the first of many if oil prices stay around current levels."

Lower loonie won't affect GM decisions
The drop in the value of the Canadian dollar against its U.S. counterpart won't be the saving grace for the manufacturing operations of General Motors of Canada Ltd., The Globe and Mail's Greg Keenan writes.

"We don't make major footprint decisions based on those types of [currency] fluctuations," Mary Barra, chief executive officer of General Motors Co., said on a conference call today.

Important GM vehicles are made in Canada, Ms. Barra said, but she said she had no new product allocation decisions to announce and would not commit the company to continue building vehicles in Canada after 2017.

"I see an opportunity to continue to build," she said.

Ford hikes dividend
Ford Motor Co. is hiking its first-quarter dividend by 20 per cent to 15 cents a share.

"This increase is consistent with the company's capital strategy of financing its plan, further strengthening its balance sheets and providing attractive returns to shareholders," the auto maker said today.

Air travel up
Oil's plunge should mean a boost to economic activity and passenger demand this year but softening business confidence is putting a damper on international air travel, says the trade group for the world's airlines.

Growth in global air travel volumes rose 6 per cent in November compared with the year-earlier period, up from 5.7 per cent in the previous month and ahead of its 10-year average growth rate of 5.6 per cent, according to the International Air Transport Association, The Globe and Mail's Bertrand Marotte reports.

The more robust economies – notably that of the U.S. – are expected to benefit the most from the fall in oil prices, IATA said today.

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