Canada’s housing boom is rippling through to related sectors, from renovations to gardening.
As The Globe and Mail’s Tamsin McMahon reports, the latest statistics show home sales climbing in May to their highest in about five years, and average resale prices rising by more than 8 per cent over the course of a year.
New home construction is also on the rise, with housing starts climbing last month to an annual pace of almost 202,000 units.
Along with all of this come the related dollars for furniture, appliances, landscaping and renovations.
“Even retail sales are showing an outperformance in housing-related items, with sales of furtniture, electronics/appliances and building/gardening materials rising at a faster clip than all other categories, the first such increase since 2010,” Emanuella Enenajor, North America economist at Bank of America Merrill Lynch, said in a recent report on Canada’s housing market.
There’s more, Bank of Nova Scotia economist Adrienne Warren noted in a report this week.
Spending on renovations climbed by almost 5 per cent, when adjusted for inflation, through the first quarter of 2015, Ms. Warren said, adding she expects home builders to hold construction at about the current level over the near term.
And that’s good news for a troubled economy.
“Canada’s housing sector continues to show considerable resilience, providing an important pillar of support for the economy at a time when the much-anticipated rotation from household demand to export- and investment-led growth has been slow to materialize,” Ms. Warren said.
“Residential investment - transfer costs, new construction and renovations - was the strongest component of GDP growth in the first quarter of the year, rising an annualized 4 per cent,” she added.
“The sector looks likely to add solidly to growth again in the current quarter.”
A scene I'd love to see
"Wouldn't crowdfunding be an easier way to buy Colt out of bankruptcy protection?"
Where things stand
So where exactly do things stand this morning in the Greece crisis?
Prime Minister Alexis Tsipras said today his government wants a “viable deal” with its creditors, but those lenders don’t appear to be budging.
And according to Mr. Tsipras, the problem lies with haggling between the International Monetary Fund and other European creditors, rather than with differences between the lenders and Athens.
“The big contradiction is the IMF’s presence, which wants measures and a restructuring, the others want measures but no restructuring,” he reportedly told the chief of another political party.
“They want an a-la-carte IMF.”
The jitters continue to filter through financial markets as observers wonder what comes next, which they see as anything from capital controls to a default to a so-called Grexit, the term given to a potential Greek exit from the euro zone.
“It is almost impossible to go through a day without talking about Greece, and once again it is at the forefront of European traders’ minds,” said market analyst Alastair McCaig of IG in London.
“The noises now coming out of Germany are inferring that capital controls could be the next course of action should some compromise not materialize before the weekend,” he added.
“With the viability of the euro zone as an entity under such scrutiny, equity markets have buckled under the pressure and momentarily ignored the benefits of the ongoing QE being pumped into the region,” Mr. McCaig said, referring to the European Central Bank’s asset-buying stimulus program known as quantitative easing.
Quote of the week (so far)
“The fact that neither side could agree whether the talks last 30 or 45 minutes gives an indication of the huge divide.”
Michael Hewson, CMC Markets, on collapse of Greek negotiations
Fitbit boosts terms
Fitbit Inc. is going the extra mile in its planned initial public offering.
In new documents filed with U.S. regulators, Fitbit said it’s raising both the number of shares and the price of that stock.
The price range has been boosted to between $17 (U.S.) and $19, from $14 to $16.
Tale of two cities
If you want to know just how “smoking hot” Vancouver’s housing market is, take a look at some research from BMO Nesbitt Burns.
Prices in for a single-family home in Greater Vancouver topped $1.1-million in May, up by what BMO senior economist Sal Guatieri calls a “sizzling” year-over-year increase of 14.2 per cent.
Prices have now doubled in the last 10 years, Mr. Guatieri said in a research note titled “How smoking hot is Vancouver’s housing market?”
“For a suitable comparison you need to look at another very attractive, land-constrained city, San Francisco, where the median price of a similar property doubled from 2000 to 2006 and nearly again from 2009 to the present (with a nasty 45-per-cent correction in between,” he said.
“A home there will also set you back more than $1-million (U.S.).”
Along with Toronto, Vancouver is oft cited as a frothy market.
Phrase of the day
Stalking horse bid
The initial bid submitted in a takeover auction, setting a floor price for the assets. Gun maker Colt chose such a bidder as it filed for Chapter 11 protection. Isn’t there something about shooting horses, don’t they?