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Many still seen priced out of Vancouver home market despite cooling

These are stories Report on Business is following Monday, Sept. 17, 2012.

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Home sales slip
Vancouver's housing market is cooling rapidly, but many prospective home buyers may still not be able to buy in.

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Over all, The Globe and Mail's Tara Perkins reports today, home sales in Canada fell 5.8 per cent in August from July, marking the steepest drop since mid-June 2010. That follows new mortgage rules brought in by the Canadian government in July.

Average prices are now just 0.3 per cent above where they sat a year ago, but appear headed for decline.

"Price weakness has not been as persistent as sales weakness so far in 2012," said senior economist Sonya Gulati of Toronto-Dominion Bank.

"This is because there is usually a two- to three-quarter lag between the time sales declines set in and when the ripple effects are noted in the price series."

Canada's two hottest cities, Vancouver and Toronto, saw sales declines of 9.3 per cent and 7.8 per cent, respectively, from July to August.

Ms. Gulati said Vancouver appears headed to an overall down year, but that still might not help some looking to buy.

"In spite of the marked contractions seen, the average existing home price remains about seven to eight times larger than the average household income," she said.

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"This suggests that many local Vancouver residents are still being priced out of the market."

Lowe's drops Rona bid
Lowe's Cos. Inc. is pulling out of a controversial contest for control of Canada's Rona Inc.

The U.S. retailer says it still wants the Canadian chain, but has been spurned by its board over the $1.8-billion (U.S.) bid, The Globe and Mail's Bertrand Marotte reports.

"Lowe's continues to believe that a combination of Lowe's and Rona makes business sense and would create significant value for all stakeholders," Lowe's said in a statement as it pulled its $14.50-a-share (Canadian) offer.

"It is unfortunate that the Rona board of directors did not recognize the important economic and commercial benefits of this proposal for its stakeholders and for Canada. Lowe's remains committed to the Canadian market and will continue delivering outstanding home improvement products and services to its Canadian customers."

That doesn't mean the game is necessarily over.

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"Our view remains that Lowe's wants to conclude a transaction with Rona before Rona closes, or shrinks in size, 23 big-box stores located outside Quebec," said Desjardins analyst Keith Howlett.

"Lowe's would, in our view, like to convert many of these locations (as well as the other Rona big-box stores outside Quebec) to Lowe's."

Ford strikes deal with CAW
The Canadian Auto Workers union today reached a deal with Ford Motor Co. that will create about 600 jobs at a plant in Oakville, Ont., and cuts hourly labour costs for newly hired employees, The Globe and Mail's Greg Keenan reports.

The four-year agreement includes bonuses of $2,000 for cost-of-living adjustments, and a $3,000 signing bonus but no increases on base wages.

The deal averts a strike at Ford's Canadian operations that was scheduled to begin at 11:59 p.m. ET today. The union was in negotiations with Chrysler Group LLC and General Motors Co. about whether they would accept the agreement and head off a strike scheduled to shut their operations in several Ontario cities.

Apple cites record
The iPhone 5 is off to a record start, raising questions about how Apple Inc. will meet demand for the new smartphone.

Pre-orders hit two million in 24 hours, Apple Inc. said today, more than double what had been the record of one million set by the its predecessor, the iPhone 4S.

"Demand for iPhone 5 exceeds the initial supply and while the majority of pre-orders will be delivered to customers on Sept. 21, many are scheduled to be delivered in October," it added.

AT&T Inc. said today it, too, set a sales record for the new iPhone over the weekend.

Customers ordered more iPhones from AT&T than any previous model both on its first day of preorders and over the weekend.

Tensions rise
Trade tensions between Washington and Beijing are escalating, as the United States takes fresh action against China at the World Trade Organization.

The White House is is lodging complaints related to subsidies and duties on autos and auto parts.

The U.S. alleges Beijing is subsidizing exports of both cars and parts.

Shell delays plan
Royal Dutch Shell PLC is delaying its Arctic drilling plans because of damage to safety equipment known as a containment dome on its Arctic Challenger barge.

The dome was damaged in a final test, the company said today, and it will take some time to fix it and assess whether its worthy.

"The time required to repair the dome, along with steps we have taken to protect local whaling operations and to ensure the safety of operations from ice floe movement, have led us to revise our plans for the 2012-2013 exploration program," Shell said.

"In order to lay a strong foundation for operations in 2013, we will forgo drilling into hydrocarbon zones this year. Instead, we will begin as many wells, known as 'top holes,' as time remaining in this season allows."

Toronto the good
I question the wisdom of Toronto Mayor Rob Ford leading a trade mission to Chicago.

The executives on board - they include Barclays Canada chief Michael Wilson and TMX Inc. CEO Thomas Kloet - aren't the issue. They're high profile, well known and respected Canadian business leaders.

It's Mr. Ford I don't want representing me on the mission tomorrow and Wednesday.

The mayor is being dogged by troubling conflict of interest allegations over his youth football efforts. But more importantly, as all Torontonians know, his comments can be embarrassing, and not at all representative of a city that is the financial heart of Canada.

Just yesterday, on a radio show that comes just a little too close to Wayne's World for my liking, Mr. Ford and his city councillor brother, Doug, raged against those on the mayor's case over the alleged used of city resources for his pet project of youth football, which he denies.

To their mind, as The Globe and Mail's James Bradshaw reports, the folks who are complaining are "lefties" and "elitists" and "cocktail socialists."

"We're just warming up," Doug Ford said on the radio show. "The fireworks are going to start on a bunch of these left-wing, elitist socialists."

Of course, the mayor has already said he skipped orientation and didn't read the guide on how to avoid conflicts of interest.

I hope he didn't skip the orientation session on the city of Chicago. For Torontonians, he's the conflict of interest.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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