I was in the process of posting about the Liberal budget stance yesterday when the phones and email took over and I found myself in the field until after dinner time last night, as did many others.  This is good news for our clients, and for the Victoria real estate market. 

I continue to hear similar stories from many of our colleagues and we are seeing several of our colleagues being in the field as well.  Somehow I managed to leave my computer without saving my work yesterday — I’m convinced that I saved a draft, but sometimes these things will just happen, so I’ll try again!

President Obama to visit Ottawa

The White House has announced that the 44th U.S. President will make his first official foreign visit to Ottawa on February 19th.

There has been word that Hillary Clinton will join Mr. Obama.  Having the Secretary of State along would appear to indicate that the U.S. considers this meeting more that just a pomp and ceremony visit and that they are eager to “get to work” at turning our economies around.  There are also rumours that the President will meet with Liberal Leader Michael Ignatieff and Governor General Michaëlle Jean at Rideau Hall.

The economy will top the agenda, but the President and Prime Minister will also discuss, amongst other things, Afghanistan, natural resources and trade.  Regardless of the topics covered, we are happy that it appears the President will arrive in Ottawa to find our heads of state acting more like adults than the junior high school spectacle that we saw during the coalition days back in November that ultimately led to the suspension of Parliament.

Playing nicely

While we would hope that sane people will always prevail in Ottawa, and not just during Presidential visits, we will take what we can get.  What we are seeing from both the Tories and the Liberals in the last week is encouraging.  The Liberals rubber stamped the Tory budget with the condition that the Conservatives report implementation and costs throughout the next year, to which the Harper government replied “we are happy to do that”.

While there is likely to be minor amounts of jawing back and forth between the Liberals and the Conservatives, we see a minority government with accountability as a very good thing for Canada, regardless of who is on the Government side of the floor in Parliament.

That said, the NDP and Bloc Quebecois were quick to shoot down the budget, asking the Liberals to do the same.  By accepting the Tory budget, the Liberals put a non-confidence vote to rest for the time being.  We also see this as very positive for the country and the economy, including the real estate market.  At this point, partisan considerations need to take a huge step back so the people in Ottawa can put the country first, plus, we would hate to imagine President Obama’s first official foreign visit to be to a coalition government with no clear leadership or mandate.  We need stability in these uncertain times; the Government and opposition appear to be ready to work together to move forward!

And the budget?

Highlights of the budget can be found here.  In the big picture, the Harper budget outlines deficit spending, via increased spending and decreased taxes, to stimulate the economy.  Tax payers and politicians alike have viewed “deficit” as a very dirty word over the past 13 years, yet at this juncture most people tend to see it as a necessary evil to get past the sudden downturn in the economy.  While the arguments will continue back and forth about the merits and pitfalls of deficit spending to stimulate the economy, what many people often lose sight of is that markets of all kinds, economies, any flow of capital, have historically always been subject to cycling between positive and negative growth.  As much as it would be nice to have the security of knowing that markets and economies will always be increasing, it simply has never happened.  We need address the global issues and for the time being, both tax payers and politicians appear willing to accept deficit spending as a large part of the solution, at least in the short term.

As it is currently outlined the budget will pump $40 billion into the economy in the next 2 years, and will see deficit spending until 2013, at which point the debt will be estimated to be approximately $660 billion.

The budget and real estate

The real estate industry will see quite a boost from the 2009 budget:

- More mortgage buybacks, in addition to what has already been announced and implemented, up to $50 billion.  This is one of many measures aimed at keeping the credit markets moving and ensuring that consumers and businesses alike have access to the credit they need for day to day business operations.

- A $750 tax credit for first-time home buyers to cover the costs of buying a home, such a land transfer taxes (also known as the Property Transfer Tax, PTT, in real estate transactions in British Columbia), legal fees and other closing costs.

- First-time home buyers will now be able to take up to $25,000 out of their RRSPs to use as down payments towards a home, tax and interest free.  This is an increase of $5,000 over the previous limit.

- A tax credit of 15% (to a maximum of $1,350) on home renovation expenses started prior to February 1, 2010.

- New measures to make sure that Canadian consumers are not charged more for mortgage insurance than the “actual cost” of obtaining said insurance.

Thanks for reading, please contact us if we can help you with any of your Victoria real estate needs.

Regards, Sean Farrell

The Federal Conservatives unveiled their 2009 budget today, promising to pump $40 billion into the Canadian economy with new spending and tax cuts over the next 2 years.  We are still returning phone calls and emails to clients here at the office today, so we have yet to have a chance to ponder the bulk of the news from Ottawa today.  The Liberal Party is also doing just that, pondering the budget with a “level head”, despite calls from the NDP and Bloc Quebecois for the Liberals to vote against the budget, effectively calling yet another non confidence vote.

Rather than act impulsively, the Liberals have been diplomatic in saying the Harper Government has delivered a budget that has both positive and negative features, while adding that the Liberal caucus will discuss the budget and “sleep on it” before announcing their verdict tomorrow.

We will see the official reaction very soon, however, it’s a relief to see Michael Ignatieff and the Liberal Party take a higher road approach the budget, or at the very least try to appear professional in their approach to the Conservative budget.  Many people have compared the antics of all of our elected officials last fall to those of children playing in a sandbox, which culminated in a suspension of Parliament.

This approach lends some optimism that cooler heads will prevail in Ottawa, something that should happen at all times, not just difficult economic times, we hope this continues, regardless if we do find ourselves changing things on Parliament Hill in the very near future or not.

More optimistic news

An article in today’s Times Colonist echoed what we observed in my previous post, that activity has been picking up in the Victoria Real Estate Market in 2009, while consumer sentiment, while still low, increased in January.

Both Reuters and The Globe and Mail reported today that Mark Carney, Governor of the Bank of Canada (BoC), has been saying that the BoC expects Canada to emerge from the current recession soon, and in a better position than any of its peers, while adding that there is little threat of deflation facing Canada later in the year.

Thanks for reading, please contact us if we can help you with any of your real estate needs in Victoria!

Sean Farrell