This evening I was at a presentation in Edmonton by Patricia Croft, who is the Chief Economist for
RBC (Royal Bank of Canada) Global Asset Management.
She had a quite positive outlook and she was quite upbeat, but she did sound several notes of caution. She questions whether the recovery is completely sustainable and it might not stand up to all the negative factors.
She did say “Canada is in one of the best positions of all the developed nations”. The stimulus money was needed but the road back is going to be a bit of a rough one.
She noted oil and copper prices are up, plus interest rates are not likely to increase much until 2011, and then it will be to fight inflation and/or support the Canadian Dollar if it goes too high.
Globally, which country is in the most dire straits? Japan. They are in a difficult situation and will be for a while to come.
The economy to watch? China. They are looking to be the up and coming powerhouse.
What about real estate? Well, in the US housing prices dropped about 30% and are recovering slowly. The US Government will probably keep their incentives for 1st time buyers and expand it to some home-owners.
Canada has done surprisingly well but the prediction is for only a 1 to 3 % increase in prices for the next year.
What are some of the Risks to the recovery from the Recession?
a) governments might make policy mistakes
b) another credit crisis (so save some money and Buy Canadian when you can)
c) Chinese economy may stumble
d) Inflation and taxes
e) Protectionism
f) Geopolitics
g) weak US Dollar
So, there are many factors that will affect the recovery, but Canada is the envy of many different countries. If you are looking to purchase a 2nd home in the US, you probably need not rush. They will be slow to recover.
Ben Officer, CD
RE/MAX Real Estate
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