14. April 2009 by Kari Calder.

March saw Canada lose 61300 jobs which means jobs are disappearing at rates not seen since the early 1980’s. For the first time in 7 years the unemployment rate is 8%. Since October’s peak we have seen employment fall each month for a total of 357000 jobs lost, which is 2.1% of the work force. During the 1991 recession the contraction was not as strong but it equals that of the 1982 slump, but it was the level that was expected in the budget and programs and money has been allocated to help deal with this problem (this refers to the budget’s $40 billion over 2 years stimulus plan)

The good news? March’s losses weren’t as bad as January and February when 129000 and 83000 jobs were lost respectively and March’s losses were what one would expect in the middle of a recession.

One of the problems though is that a lot of Canadians are falling through the cracks as EI mandates that 700 hours of accumulated work is needed to qualify for benefits, but under the current circumstances some are asking that that be cut in half says Erin Weir of the United Steelworkers. He also says that his previous experience with recessions that unemployment rates will continue to be up even after the Canadian economy starts to bounce back as employers hold off on hiring until the recovery is for real.

Last month BC lost 22600 and Alberta lost 14900 workers, whereas Ontario only lost 11000 (but they still lead the country in jobs lost with 171000 over 5 months)

One of the hardest hitting sectors is Canadian manufacturing with auto and forestry leading the way as they have let go 6.8% of their workforce. Construction has been hit with 99000 jobs lost since October and we see evidence of this in the Saskatoon new housing market as our new housing starts have declined drastically.

Canada’s unemployed number is now 1,456,600 with 16,838,100 still working. Youths 15-24 are at 14.8% unemployed, 7.5% of men 25+ are unemployed, in the same group women are at 5.7%.

Saskatchewan and Newfoundland were the only 2 provinces to stay the same from February to March at 4.7% and 7.4% respectively. Saskatchewan and Manitoba have the lowest unemployment rates with 4.7 and 5.1 respectively.

Out of the major cities the unemployment rate in Regina is the lowest at 3.9%, a close second goes to Quebec City and Saskatoon’s unemployment rate, #3, is also low at 4.8% with Winnipeg, Edmonton and Ottawa in 4th with 4.9%.

Windsor, Ontario has the highest unemployment rate at 13.7% followed by Kitchener, Ontario at 9.6% and Saguenay, Quebec at 9.3%.

Kari Calder
Saskatoon Real Estate Agent
Century 21 Conexus Realty Ltd.

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14. April 2009 by Kari Calder.

Some of Canada’s oldest and largest companies appear to be in big financial trouble. One of the ways that is used to see if a company is likely to fall into bankruptcy is the “Z” score which weighs 5 ratios-equity to debt, return on total assets and sales, working capital and retained earnings to total assets, any score below 1.8 is not good news for employees, investors and other stake holders.

There are 5 that have been analyzed that fit that bill but, where there are losers there are inevitably winners and there are seven that came out on top.

The top 7 are:

Goldcorp (Mining)
Gold topped $1000US in February. Even though it didn’t remain there long it shows that, even during a global economic slowdown, gold’s role as a safe haven is still intact and Canada is home to some of the world’s largest gold companies such as Barrick and Kinross. All of these are expected to do well in 2009.

SNC-Lavalin (Infrastructure)
Canada’s largest and highest profile engineering and design firm is in a good spot with governments around the world pumping money into infrastructure to help boost economies. This company has been around for 100 years so it has lots of experience, as well as money, to take on projects all over the world.

EnCana (Oil and Gas)
Although energy prices may be dropping there is still a lot of growth potential in this sector. This company is a leader in the natural gas field in terms of technology, operational effectiveness and strategy and has almost $400 Million in cash and a lower debt to capital ratio than other senior energy and petroleum producers in Canada.

Royal Bank of Canada (financial services)
When looking for a Saskatoon mortgage broker I have a great guy at Royal Bank in Saskatoon and I am pleased to see RBC on the top 7 list of companies poised to do well. Canada was the envy to US banks by avoiding the same pitfalls and mistakes and risks the US banks made. RBC is poised to gain market share while some of their competitors struggle. They are also in a position to build global capital market franchise with the failure of many global competitors such as CitiGroup, Lehman Bros, Merrill Lynch, etc.

Agrium (Agriculture)
Even when there is a recession people still need to eat so the fertilizer company is virtually recession proof. This is good news for Alberta but also Saskatchewan’s Potash Corp. The edge goes to Alberta’s Agrium because of its acquisition strategy and they are currently in the process of a hostile takeover of CF Industries which would increase its market position in nitrogen to #2 (currently it is #3) and in phosphate to #3 (currently #5)

Canadian National Railway (Transportation)
CN is one of the most efficient railway companies in North America as its operating costs as a percentage of revenue are the lowest among its peers. CN is not immune to the slowing economy but they are in a better position then their competitors once business does recover. CN also has an edge due to the ability to soon bypass Chicago which was a huge bottleneck for transport during a quick economy, they acquired tracks just outside of Chicago in January.

Onex (Private Equity)
Onex specializes in acquisitions that require less than $1 Billion in debt financing and has more than $500 million in cash and no debt and $3.6 Million US to spend in its private equity fund. With a few more smart purchases, such as the purchase of Cineplex from Chapter 11 earlier this decade, Onex could come up big as the economy recovers.

Canadian Real Estate Investment Trust (Real Estate)
Despite the whole scare of plummeting real estate prices this sector has differentiated itself by boasting the most conservative accounting policies and lowest payout ratios in the industry. CREIT has high quality assets, diverse income stream, solid distribution and  a conservative payout history.

Research in Motion (Technology)
The Crackberry is on of Waterloo’s best/worst kept secrets and has about 21 million subscribers which is tiny compared to the 4.7 billion mobile devices that will be in use this year.

Shoppers Drug Mart (Retail)
Besides just needing meds, Shoppers Drug Mart has a growing cosmetics business that helps customers beautify without breaking the bank. Shoppers had a 3.6% increase in the 4th quarter which included one of the worst month-to-month Canadian retail sales declines in 15 years.

Now Time for the Bad

Air Canada (Air line)
Eroding market, rocky relationships with employees, up to their windows in debt, and perilously close to violating debt covenants and not enough cash…this could spell disaster. But, if they had a dime everytime someone complained about their services they would be rolling in it!

This company isn’t expected to run away and die as the government will likely bail them out, even after they didn’t get smart after the first time this happened.

Can West Global Communications (International media company)
They bit off more than they could chew with acquiring the National Post but neglecting to pay off the debt and instead went on an international expansion tour. Although they gained some valuable assets they didn’t manage their debt very well and, as I read my online paper, I can understand how the National Post barely turns a profit which doesn’t help the debt issue.

Nortel Networks (Telecommunications equipment manufacturer)
Overspending on bad acquisition, seismic accounting scandals, overpaid CEO’s ($20M US for the current one!) and poor and outdated technologies all contributed to this one being in the ‘bad’ category.

General Motors (Automobile Manufacturer)
Subsidiary of America’s largest auto manufacturer. Enough said. In December it already secured $3 billion in bailout loans from the federal and Ontario governments, funds it later declined to draw on, to now negotiate a larger sum. Lenders are not giving out car loans to anyone with a pulse now after the economic melt down so this translates to less new cars needed which left all manufacturers scrambling to cut production.

Kari Calder
Saskatoon Real Estate Agent
Century 21 Conexus Realty Ltd.

Posted in Saskatchewan News, Saskatoon News, Saskatoon | 1 Comment »

14. April 2009 by Kari Calder.

Saskatoon real estate should tighten up again with the dramatic housing start decrease in 2009. Regina real estate will also see the same thing as they also had a huge drop in housing starts. Not only are Saskatoon realtors trying to juggle the overabundance of listings, Saskatoon home builders are also dealing with their high inventory. The decreases were fully expected announces Paul Caton, CMHC market analyst in Saskatchewan, but they do expect an increase in 2010. What is happening in the current Saskatoon real estate market is there are a lot of resale houses for sale in Saskatoon. This means less work for the home buyer and often times less money for an ‘almost new’ house for sale in Saskatoon. Saskatoon builders have only started 77 single-detached houses this year which is down from 284 new home starts in Saskatoon just last year…down 73%. In March these starts fell 75% to 32 units down from 128 new housing starts in Saskatoon in March of 2008, but keep in mind that March 2008 was one of the strongest months on record for new housing in Saskatoon to be started.

As for multi-family dwellings in Saskatoon only 12 have been started this year, down 96% from 2008 and the lowest number since 1991. Last year 306 multi-family units were started in the first quarter.

Regina is much the same with Regina builders only breaking ground on 42 new houses in Regina in March, down 40% from last March. There are only 117 new houses in Regina that have been started in the first quarter and multiple units were down 90%.

Saskatchewan in general is down 73% with 257 units from 948 units last year for the first quarter.

What does this mean? House prices should remain stable and strong and we should only see a modest decrease this year and potentially some increases in house prices in the next year in some Saskatchewan real estate markets.

For more information on the Saskatoon real estate market be sure to contact me!

Kari Calder
Saskatoon Real Estate Agent
Century 21 Conexus Realty Ltd.

Posted in Saskatchewan Real Estate, Canda Real Estate News, Listings, Current Market, News, Saskatoon Real Estate | 1 Comment »

14. April 2009 by Kari Calder.

January saw US house prices rise by 1.7% compared with December, 2008. Over the past year US house prices have been down 6.3% and down 9.6% from the peak in April 2006 and in December the year-over-year decline was 8.8%.

There have been some stronger sales in some markets in the beginning of this year which is contributing to the increase.

Of course a turnaround in the US house price cannot yet be determined as there must be several consecutive months of increase to call it a turnaround.

Led by the pacific side of the US with a 21.1% decrease house prices were down in all 9 regions of the country last year. The smallest decline was the 0.4% drop in the West South Central (Texas, Oklahoma, Arkansas and Louisiana)

I can’t help but wonder if some of this increase has to do with Saskatchewan real estate savvy buyers who have been buying properties in the US. Many Canadians have been going to the US in the past year to purchase real estate with the equity they have gained in their Saskatoon houses.

The pacific states still registered a decline while the other 8/9 regions showed either a constant or an increase in prices with a rise of 3.9% in the East North Central Region (Great Lakes region) and 3.6% in the South Atlantic region (Delaware to Florida).

Kari Calder
Saskatoon Real Estate Agent
Century 21 Conexus Realty Ltd.

Posted in Canda Real Estate News, News, International Real Estate | No Comments »