Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

These are stories Report on Business is following Monday, Dec. 15, 2014.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Market easing
Canada's housing market is showing signs of cooling down from a frothy pace.

Story continues below advertisement

Nonetheless, the country's real estate group updated its forecast to call for stronger sales this year and next. Both sales and price growth, however, are forecast to slow markedly.

According to the Canadian Real Estate Association today, home sales across the country were flat in November compared to October.

Given September's dip and October's slight rebound, it all points to "deceleration," said senior economist Benjamin Reitzes of BMO Nesbitt Burns.

To be clear, that's not to suggest a meltdown may be on the horizon, only that the housing market is showing signs of easing off after a fantastic run.

While sales were flat from October, November's levels were up 2.7 per cent from a year earlier, according to CREA.

Average prices rose 5.7 per cent from November, 2013, while the MLS home prices index, which is deemed a better measure, gained 5.2 per cent.

New listings dipped 0.4 per cent from October.

Story continues below advertisement

Sales were up in half of all of Canada's markets on a monthly basis.

"The Canadian housing market remains a story about how sales and prices are still running strong in some areas while others are seeing subdued levels of activity with slower price gains or modest price declines," said Beth Crosbie, the group's president.

Oil prices, added its chief economist Gregory Klump, are a "wild card," though economists expected to see slower growth in Alberta.

"It's not clear how far oil prices may drop or for how long they'll stay down," said Mr. Klump.

"How that plays out may affect the outlook for interest rates, job growth, consumer confidence, and sentiment about making major purchases."

As it reported its monthly statistics, CREA also boosted its projects for home sales, although, again, that's regional in nature.

Story continues below advertisement

When the year ends in a couple of weeks, CREA now expects sales will be up by 5.1 per cent to 481,300 units, the best showing since a record 2007.

Next year, however, will show slower growth, up 0.8 per cent, to 485,200.

"Almost all of the upward revision to national activity in both years steams from the current strength and momentum of sales across most of British Columbia and much of Ontario, particularly in the Greater Golden Horseshoe region," CREA said.

And here's what you really care about:

National average prices are forecast to end the year 6-per-cent higher, at $405,500, with similar jumps in B.C., Alberta and Ontario.

Next year will see a lesser gain of 0.9 per cent to $409,300, with Alberta and Manitoba posting average increases of almost 2 per cent, and Ontario of 1.3 per cent.

Story continues below advertisement

Other provinces, CREA said, will be stable.

The Bank of Canada said just last week that it believes Canadian prices are inflated by between 10 per cent and 30 per cent, with overvaluation of at least 10 per cent since 2007.

The Bank of Canada still expects a soft landing in the housing market, as do other observers.

Mr. Reitzes, for example, said a combination of low mortgage rates, low supply in some cities and "still-favourable demographics" will bolster both sales and prices.

And Mark Hopkins, a senior economist at Moody's Analytics, says that while housing risks are "significant," price inflation varies across the country, this round of overvaluation is different from those of the past.

"Price growth since 2000 looks less like a speculative bubble and more like a reflection of structural changes affecting traditional valuation metrics," Mr. Hopkins said.

Story continues below advertisement

"One possibility is that two decades of lower and more stable mortgage rates, together with regulatory safeguards, have raised the risk-adjusted return on housing investments."

Moody's Analysts believes the national housing market is overvalued by "a little less" than 15 per cent, with, of course, those regional variations.

Wealth, debt up
We're a very rich nation, though one burdened by debt.

As my colleague Mr. Parkinson reports, net worth among Canadian households rose 1.3 per cent in the third quarter of the year as real estate values climbed.

Household net worth now stands at $232,200 on a per-capita basis, according to Statistics Canada.

Contrast that, though, to added debt of $27.4-billion, largely in mortgages.

Story continues below advertisement

Mortgage debt rose in the quarter to almost $1.2-trillion, and other consumer credit to $515-billion.

All of which brought the ratio of debt to disposable income to a record 162.6 per cent, or about $1.63 of debt to every dollar of disposable income, as the rate of the former outpaced that of the latter.

The household debt service ratio, on the other hand, dipped to a record low of 6.8 per cent.

Talisman surges
Shares of Talisman Energy Inc. are surging today as Spanish suitor Repsol SA meets to discuss a takeover of the Canadian energy company.

As The Globe and Mail's Jeff Jones reports, Repsol said today its board would meet, after several days of talks, to discuss the possible acquisition of Talisman.

"The company reports that, at the ordinary meeting of its board of directors to be held today, it will submit for consideration, among other matters, the analysis of a possible transaction consisting in the acquisition of the total share capital of the Canadian company Talisman Energy Inc.," it said.

Talisman, in turn, confirmed it is in talks with Repsol, though again also cited other interested parties.

One of those, said Bloomberg News, is the Canada Pension Plan Investment Board.

Loonie slides
The Canadian dollar slumped below the 86-cent mark today as oil prices slipped again.

And don't expect it to get much better, though there may be some higher points along the way.

The loonie, as Canada's dollar coin is known, touched a low point of 85.79 cents U.S. today, and a high of 86.59 cents. It stood at 85.85 cents by late afternoon.

This came as oil prices, which had stabilized, tumbled yet again, continuing the weeks of turmoil.

While the Federal Reserve's decision this week could surprise markets, and lead to a dip in the U.S. currency and thus a bounce in the loonie, that would likely be short-lived if it happened, said senior currency strategist Greg Moore of RBC Dominion Securities.

The longer-term trend is still lower, Mr. Moore said.

Senior currency strategist Camilla Sutton of Bank of Nova Scotia agreed the Canadian dollar will probably sink again this week, reaching multi-year lows.

This trend is "too strong to fight," said Ms. Sutton, whose bank believes the loonie will end the year at about 85.5 cents.

The loonie isn't alone amid the oil bust.

Russia's ruble has been crushed, for example, and Norway's krone has come under the same pressure as the loonie.

A big week
As Samuel L. Jackson's character in Jurassic Park was so fond of saying, hold onto your butts.

It's a big week for financial markets after last week's renewed rout in the oil market and volatility in stocks and currencies.

Notably, as The Globe and Mail's Brian Milner reports, there's Wednesday's decision from the Federal Reserve amid speculation that the U.S. central bank may well change its language.

Investors will be watching closely to see whether the Fed changes its signal to hold rates at an emergency low for "a considerable time" after winding down its asset-buying stimulus program known as quantitative easing.

There will also be readings on manufacturing around the world, an election in Greece, readings on Canadian and U.S. inflation, and a Bank of Japan decision.

This week also brings the latest inflation reading from the troubled euro zone, which is skating dangerously close to deflation.

We'll also get quarterly results from a few companies this week, including Oracle, FedEx, Nike, Winnebago and BlackBerry.

Before BlackBerry's results on Friday, however, The Globe and Mail's Sean Silcoff reports, comes the unveiling of the company's "Classic" smartphone.

Streetwise (for subscribers)

ROB Insight (for subscribers)

Business ticker

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies