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These are stories Report on Business is following  Friday, Feb. 15, 2013.

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IMF on housing
The International Monetary Fund has added its calculations to those of others who have been measuring the over-valuation in Canada's housing market, coming to the conclusion that the level is about 10 per cent.
The question then becomes: What happens next? According to the IMF and others, possibly not much.

As The Globe and Mail's Barrie McKenna reports, the IMF warned late yesterday to expect an "adjustment" in the residential real estate market, given the Washington-based group's estimate that homes are overpriced by an average 10 per cent in Canada.

That's based on studying rental rates and household income, an analysis that's used by others, as well.

But Roberto Cardarelli, the group's mission chief for Canada, believes, as do others, that the scenario is one of a "soft landing."

The country could, he said, absorb a price drop of 10 per cent over five years providing the economy doesn't stall and the labour market continues to grow.

The real estate market has been slowing since Finance Minister Jim Flaherty moved to cool things off with his latest round of mortgage restrictions last summer.

But based on early reports from some local real estate boards, January wasn't as bad, and bolsters the soft-landing view.

As The Globe and Mail's Tara Perkins reports today, home sales in Canada inched up 1.3 per cent in January from December, though were down about 5 per cent from a year earlier. The MLS home price index was up just 3.1 per cent, marking the slowest increase since the spring of 2011.

The pause in the market isn't particularly unusual given Mr. Flaherty's rules changes, the latest in a series.

Since peaking in June, BMO Nesbitt Burns notes, the MLS home price index has declined by about 1.5 per cent. But, says BMO's Robert Kavcic, its previous, steady climb was not "without interruption," having been bumped around by previous restrictions in the morning market.

"In each case, underlying fundamentals like a falling jobless rate and low mortgage rates ultimately saved the day, and there's little to suggest that those fundamentals won't be in pace this time around, as well," the economist said.

"It also stands to reason that a one-time change to mortgage rules (lower amortization period, for example) would cause a one-time level shift in prices, after which time underlying fundamentals (income, joblessness, mortgage rates, etc.) take over in setting the path."

Mr. Kavcic has found that the average time of "adjustment" to the previous rule changes – there were three before those in the summer – was in the area of seven months. And, he pointed out, the market is now seven months on from Mr. Flaherty's latest move, though it was tougher than those of the past.

"The spring selling season will be a telling one, and with sub-3 per cent five-year fixed rates, don't be shocked if prices find a floor again."

Mohamed focus on job
Rogers Communications Inc.'s CEO mayy be on his way out, but Nadir Mohamed isn't dwelling on his legacy or allowing his unexpected decision to leave the top job overshadow one of the company's strongest quarters in its long history, The Globe and Mail's Steve Ladurantaye and Rita Trichur report.

Mr. Mohamed confirmed last night that he would step down in one year, but preferred to focus on the company's positioning when talking today to analysts and the media about a fourth quarter that saw the company post an adjusted profit of $455-million on the strength of a record number of smartphone activations.

RBC Dominion Securities analyst Drew McReynolds said in a research note Friday that Mr. Mohamed's decision is a bit of a surprise but that his departure most likely will not be disruptive to the company.

Telus sets targets
Canada's Telus Corp. is setting loftier goals for 2013.

As it announced fourth-quarter results today, Telus, one of the country's major telecommunications company, set a revenue target for the year of $11.4-billion to $11.6-billion, which would mark an increase of up to 6 per cent from last year.

Earnings per share are targeted at $3.80 to $4.20, a gain of 3 per cent to 14 per cent.

Revenue in the wireless business is forecast at $6.2-billion to $6.3-billion, an increase of up to 8 per cent, and in the wireline operation at $5.2-billion to $5.3-billion, or up to 4 per cent.

In the fourth quarter of last year, Telus reported today, profit climbed to $291-million or 89 cents a share, basic, from $237-million or 76 cents a year earlier. Revenue increased 6 per cent to $2.85-billion from $2.69-billion.

"Our strong cash flow and 2013 targeted earnings growth supports our shareholder friendly, three-year, 10-per-cent dividend growth model, which we are clearly delivering on with ongoing semi-annual dividend increases," chief executive officer Darren Entwistle said in a statement.

Factories hit in December
Canada's factories suffered a setback in December, as sales slumped 3.1 per cent, marking the biggest drop since May 2009.

The decline was the result of lower volumes, not prices, Statistics Canada said today, and was driven by losses at car assembly plants, which traditionally slow in December.

It went beyond the car plants, however, as sales also fell in the chemical and oil sectors. In fact, shipments dropped in 16 of the 21 industries measured by the statistics agency, accounting for more than 80 per cent of the over all sector.

"A 15.4-per-cent decline in the motor vehicle assembly industry was the main reason for the decline in transportation equipment sales," Statistics Canada said.

"Motor vehicle assembly plants are often shut down in December for a portion of the month. However, in December 2012, the reduction in production was greater than usually observed."

Given that, the province of Ontario, home to Canada's auto industry, took the biggest hit, with manufacturing shipments down 4.6 per cent.

Inventories across the country declined by 1 per cent, while the inventory-to-sales ratio rose to 1.34 from 1.32 in November. Unfilled orders increased 2.6 per cent.

While today's report was weak, all is not "bleak" going forward, said senior economist Krishen Rangasamy of National Bank Financial.

"In light of strong demand for autos in the U.S., we can expect a rebound in Canadian auto shipments as early as Q1," he said in a research note.

"More generally for Canada, after an awful second half of 2012, production could also get a boost in early 2013 in part due to inventory rebuilding after an apparent drag from stocks in Q4."

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