Globe and Mail Update Published on Wednesday, Jul. 28, 2010 4:44PM EDT Last updated on Wednesday, Jul. 28, 2010 4:51PM

House prices still strong
Canadian house prices rose 1.3 per cent in May from a month earlier, and now stand 4.2 per cent above their pre-recession peak, according to a Teranet-National Bank composite house price index. It marked the 13th straight month of increases and the second that prices rose in each of the six regions it covers. National Bank economist Marc Pinsonneault contrasted that to the real estate market in the United States, where prices are down almost 30 per cent from their peak. In Canada, year over year, the index is up 13.6 per cent. The index differs from the measure used by the Canadian Real Estate Association.

“But we do not believe that acceleration in the Teranet-National Bank index will be sustained,” he said in a research note. “… The number of existing homes sold has declined in each of the three months ending last June, and it did so to a much larger extent than the number of new listings. This heralds a deceleration in home price inflation, especially since a harmonized sales tax (HST) was introduced on July 1 in Ontario and B.C.”

Among the gains:

• Ottawa, 2.3 per cent month over month, 11.4 per cent year over year
• Montreal, 1.8 per cent and 8.5 per cent
• Vancouver, 1.2 per cent and 17.1 per cent
• Calgary, 1.2 per cent and 7.8 per cent
• Toronto, 1.1 per cent and 16 per cent
• Halifax, 0.7 per cent and 5.6 per cen

METRO VANCOUVER – After decades of debate, Surrey has decided to permit homeowners to have one secondary suite in all single-family homes in the city, following an Ipsos Reid telephone poll in which 63 per cent of those surveyed supported the idea.

The move, which received unanimous approval at city council Monday night, brings Surrey’s secondary suite policy into line with that of most municipalities in Metro Vancouver. Delta is expected to go ahead with a similar policy.

Up until now, Surrey has allowed secondary suites only in predetermined zones in the city, mostly in Newton. Yet the city has its share of illegal suites, which are estimated to number as high as 19,000.

Surrey Coun. Judy Villeneuve, who chairs the city’s social planning committee, said the illegal suites have provided affordable housing in the city, as well as mortgage help for new homeowners.

Legalizing the suites, she said, will allow homeowners to offer accommodation to extended families or renters, while ensuring they provide parking spaces and pay their fair share for utilities and taxes.

Homes with secondary suites result in added costs to the city’s water, sewer, and garbage services.

“Hardly any rental housing has been built in Surrey in the past 15 years,” Villeneuve said. “Our goal is to is to provide lots of [different] housing so everyone can live … and have a roof over their heads.”

According to the Ipsos Reid poll, 63 per cent of 1,200 people polled in a random telephone survey said they would support the move, mainly because it would provide more rental housing, make home ownership more affordable and increase density in neighbourhoods without changing the area’s character.

But support varied according to location, with 65 per cent in favour in the Newton/Fleetwood area compared with just 57 per cent in south Surrey.

The main reasons for opposing the move are related to parking issues, general congestion/crowding, traffic congestion and concerns about equitable payment of property taxes and utility charges.

City staff recommended that council endorse the policy subject to conditions, which included prohibiting multiple suites in a house, requiring the registered owner of a home with a secondary suite to live on the premises and requiring homes to provide parking and pay appropriate utility fees to offset the added costs of city services.

The random telephone survey, conducted between June 28 and July 6, has a margin of error of 2.8 percentage points. A web-based survey, which polled more than 1,500 people on the city’s website from June 28 to July 1, found levels of support were lower, with 55 per cent in favour.

ksinoski@vancouversun.com

Read more: http://www.vancouversun.com/Surrey+votes+allow+secondary+suites+city+wide/3325280/story.html#ixzz0ut38F3da

The Bank of Canada as suspected has raised its overnight rate by 25 basis points to .75 and the banks will most likley follow by raising prime to 2.75%

This means if you have a 400,000.00 mortgage your payment will increase by as much $60/monthly

With every 25 basis point increase you can expect $12-$15 dollars per 100,000.00 in mortgage amount. The press release from this mornings announcement is below.

I will be discussing the Mortgage Market today on The Bill Good Show on CKNW AM980 live in studio at 10am-10:30am, we welcome you to join us by tuning in.

Questions on your mortgage? Call 604-802-3983 or introduce us over an email at acalla@dominionlending.ca to someone that you truly care about to see how we can help you today!

Bank of Canada increases overnight rate target to 3/4 per cent

OTTAWA – The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent.

The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank’s outlook in its April Monetary Policy Report (MPR). While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon. In the United States, private demand is picking up but remains uneven.

Economic activity in Canada is unfolding largely as expected, led by government and consumer spending. Housing activity is declining markedly from high levels, consistent with the Bank’s view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010. While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession.

The Bank expects the economic recovery in Canada to be more gradual than it had projected in its April MPR, with growth of 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.

Inflation in Canada has been broadly in line with the Bank’s April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period. The Bank will look through the transitory effects on inflation of changes to provincial indirect taxes.

Reflecting all of these factors, the Bank has decided to raise the target for the overnight rate to 3/4 per cent. This decision leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending, and the uneven global recovery.

Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.

Information note:
A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 22 July 2010. The next scheduled date for announcing the overnight rate target is 8 September 2010.

 Enjoy your week

Kim Covert, Financial Post · Friday, Jul. 16, 2010

Read more: http://www.financialpost.com/news/Week+Ahead+Rate+hike+cards/3288001/story.html#ixzz0u7teJzQu

OTTAWA — Two major announcements bookending the coming week’s economic news will provide a clearer snapshot of the state of the Canadian recovery.

The Bank of Canada will be first up when it makes its monthly interest rate announcement on Tuesday. But that will come before Friday’s critical report from Statistics Canada on the country’s consumer price index for June.

The central bank raised its benchmark index rate in June by 25 basis points, and at the time expectations were that the rate would increase steadily. But in the weeks since that announcement concerns about a double-dip recession have been growing, increasing speculation that the bank would hold the course. Consensus expectation is for a 25 basis-point increase on Tuesday, bringing the rate to 0.75%, though analysts disagree on what will happen as the year unfolds.

“While both domestic and global conditions have deteriorated modestly since June, the underlying momentum in the Canadian economy warrants the continued normalization of policy in the near term,” wrote strategist David Tulk of TD Securities in a note to investors. “When we look further into the future, the impact of financial market turmoil and decelerating economic growth is more difficult to quantify. In recognition of this uncertainty, we have scaled back our forecast for rate increases, and now look for a year-end overnight rate of 1.25% and a rate of 2.50% by the end of 2011.”

Economist Michael Gregory of BMO Economics, who also calls for a another 25 basis point increase, said he expects the bank to make one more increase of that size in September then hold the line for the remainder of the year. CIBC is calling for the rate to reach 1.25% in October, followed by a pause lasting at least two quarters.

The Bank of Canada’s rate announcement will come ahead of the key June inflation report on Friday. The consensus expectation is for 0.1% month-over-month drop in the consumer price index on lower gasoline prices, while the core year-over-year inflation rate will be unchanged at 1.8%, below the Bank of Canada’s target of two%.

CIBC economist Krishen Rangasamy said that while the rate announcement will precede the CPI, he doesn’t expect the “milder” June prices will have any effect on the rate. He said July’s prices should get a bounce from the harmonized sales tax introduced on July 1 in Ontario in British Columbia.

The bank will also release its Monetary Policy Report on Thursday. Mr. Rangasamy doesn’t expect the bank to make material changes to its April forecast of 3.5% growth for the second half.

“The only thing will be perhaps in the tone of the report. We think that they might adopt a more cautious tone on the external environment, particularly what’s happening in Europe and elsewhere, with slower Chinese growth, so they might adopt a little bit more cautious tone as opposed to their upbeat tone in April.”

Statistics Canada reports in the coming week include securities transactions on Monday, travel data on Tuesday, wholesale trade on Wednesday, as well as employment insurance and retail trade data on Thursday.

On the corporate front, some major Canadian companies will be reporting earnings on Thursday, including Canadian National Railway, Shoppers Drug Mart and Loblaw Cos.

Read more: http://www.financialpost.com/news/Week+Ahead+Rate+hike+cards/3288001/story.html#ixzz0u7tLcQoZ

By Julian Beltrame

OTTAWA — Canadian firms are giving the recovery a vote of confidence in a key quarterly survey, paving the way for the Bank of Canada’s expected interest rate hike next week.

The central bank’s quarterly survey, released Monday, showed firms were concerned about the fallout from the European sovereign debt mess, but still generally upbeat about the coming year.

“Overall, (business executives) are positive about the outlook for business activity over the next 12 months,” the bank wrote.

“For the first time in two years, firms, on balance, reported an improvement in their past sales activity.”

The bank’s governing council next interest rate announcement is next Tuesday.

Following a strong jobs report last week, the survey likely represents the last piece of evidence governor Mark Carney was looking for to confirm a predisposition to continue raising rates.

“I’d say there’s a 75 or 80 per cent probability they will hike next week by 25 basis points,” said Derek Holt, vice-president of economics with Scotia Capital.

“I think they’d want to avoid the perception that they just came out with a whole new round of bullish forecasts and then got wobbly knees after just one quarter-point hike (in June).”

What could stay Carney’s hand, economists say is the unknown factor of what will happen to the global economy as governments move from spending to restraint later this year and next.

Canada’s domestic economy appears well grounded. Statistics Canada reported on Friday that an additional 93,000 jobs were added in June, bringing total re-hiring since the recession’s end to over 400,000.

And the business outlook survey showed that 50 per cent of firms surveyed said they planned to add workers over the next 12 months, as opposed to only 10 per cent that planned to cut their workforce.

TD Bank economist Diana Petramala viewed that finding as the strongest in the report, although she said it might indicate some hiring that’s already taken place.

While an increase in the bank’s policy rate to 0.75 per cent will raise short-term interest rates for consumers, most economists say it is unlikely to have much of an impact on longer-term, fixed mortgage rates. Many see a hike at this time as not applying the brakes to growth, since the rate would remain near the historic low, but as a judgment by the bank that the recovery is taking hold.

Not all agree, however. A bearish minority argue that Canada still faces considerable headwinds from the European situation and ongoing U.S. weakness, and that Carney should refrain from adding a further impediment to growth.

But failing a climb down from its forecast of 3.7 per cent growth this year, and 3.1 per cent next year, the bank appears on track to take interest rates a little higher next week, analysts say.

“With price pressures expected to rise in the production line, excess economic slack continuing to melt away, and credit and lending conditions continuing to ease, the survey results weigh on the tightening side,” noted economist Michael Gregory of BMO Capital Markets.

The summer poll, and a separate survey of loan officers also released Monday, found sentiments positive, if not deliriously so, across a range of topics.

The bank said credit conditions appear to be easing, especially for larger corporations, a critical prerequisite for expansion.

The balance of opinion was also positive on questions of sales volume prospects for the coming year, and future investment intentions.

Not all doubts have vanished, however.

Business executives expressed concerns about “recent global economic and financial uncertainties and possible spillover effects in Canada.”

And although on the plus side of the ledger, expectations on future sales and investment intentions were softer than three months ago. That’s partly because of the way the Bank of Canada couches its questions, contrasting expectations to what they were in the earlier survey.

The bank noted the responses suggest that firms that have already experienced strong sales growth from recession lows now believe that the growth rate will slow to more sustainable levels, but remain positive.

And many firms that do not expect to increase spending on new machinery have already made those investments, particularly firms in the services sector.

On other elements of business activity, executives said they expect the cost of their inputs to increase at a greater rate during the next 12 months, and plan to pass on these cost increases to their customers.

But the inflationary expectations over the next two years were modest, within the central bank’s one-to-three per cent range.

The Canadian Press http://news.therecord.com/Business/article/744317   

Canadian economy adds 93,200 jobs in June; loonie jumps after employment report

By Julian Beltrame, The Canadian Press

OTTAWA – Canada enjoyed another big month for employment in June, churning out a whopping 93,200 new jobs — almost all in Ontario and Quebec and all in the services sector.

The strong performance brings the jobless rate to 7.9 per cent, the first time it has been under eight per cent since the depths of the recession in January 2009.

The Canadian dollar rose sharply after the Statistics Canada report. A few minutes before the release, the loonie was trading overseas just below 96 cents US and jumped more than half a cent after the jobs report came out.

Canada’s dollar was at 96.71 cents US shortly before the official open of trading Friday, up about a cent from the previous close of 95.79 cents

With the employment gains in June, the Canadian economy has recouped almost all the jobs that were lost during the economic contraction that began in the fall of 2008.

But Statistics Canada noted that the unemployment rate remains well elevated above the 6.2 per cent that existed in October 2008 because many more Canadians have since joined the labour force.

Still, the quickly improving labour market likely gives the Bank of Canada all the evidence it needs to raise its key interest rates by another quarter-point to 0.75 per cent on July 20 in order to keep inflation in line.

There were a number of surprises in the Statistics Canada report.

Economists had expected a modest pick-up in the range of 15,000 new jobs because several economic indicators, including retail sales, exports and building permits, have been weak since March.

Also, the 109,000 additional jobs created in April suggested a pay-back was in order.

The other surprise was that the jobs were all concentrated in Ontario and Quebec, despite the fact that manufacturing actually shed workers during the month.

Ontario gained 60,300 workers, slicing the province’s unemployment rate 0.6 points to 8.3 per cent.

Meanwhile, Quebec gained 30,400 new jobs, bringing its unemployment rate to 7.8 per cent.

This was accomplished without any help from the manufacturing sector, a mainstay in both provinces, as factories actually shed 14,300 jobs overall in June.

All of the new jobs were in the services, including retail and wholesale trade, business building and other support services, health care, social assistance and other services, such as auto repair and personal care.

The agency said the new jobs were split between full-time and part-time, with more than half private sector.

There was also a big increase in student employment — 63,000 more last month than was the case in June last year.

However, there were setbacks. There were 10,200 fewer working in the goods producing industries last month, with losses in the factories sector leading the way.

Regionally, other provinces didn’t fare a well as Canada’s two most populous, with most recording slight gains and Newfoundland and New Brunswick outright job losses.

Rental suite can help you pay off that mortgage but ‘it could be a nightmare’

Malcolm Morrison, The Canadian Press

TORONTO – Buying a house with a rental suite can be just the ticket to help you pay off your mortgage years earlier than it might have otherwise been possible.

But landlord beware: there are potential problems connected with getting financing, getting rid of tenants you really shouldn’t have let in in the first place and zoning issues.

The idea of having someone pay several hundreds dollars a month towards your mortgage might also entice you into buying a house you really can’t afford, and you could find yourself dangerously dependent on that rent money — experts will tell you this is a bad idea.

“I think leveraging yourself to a point where you are totally dependent on a tenancy and if you lose it, it could be extremely harsh on you,” said David Scarr of Royal LePage Westside in Vancouver.

Scarr said he is seeing the rental suite option become more popular, as house prices have surged in the last couple of years while mortgage rates resided at historic lows. At the same time, there has been a ready supply of tenants looking to find something decent below $1,000 a month.

“There’s always been an extreme shortage of good available (rental) stock, especially when you get students going to university, want to be close to a bus line or young people starting out in the workforce,” he said.

“They can’t pay the standard — right now in downtown you’re looking at a one-bedroom apartment probably for $1,400 a month for about 550 square feet.”

When you start number crunching to see if this makes financial sense, be aware that Canadian banks have toughened their standards for financing houses with a rental suite.

“Banks used to do a rent reduction, so that if you qualified to carry $1800 a month, and the tenant was carrying $500 and it was a legal unit, then they would take that amount off that you had qualified,” explained Diane Speer, of ReMax in Toronto.

“Or they would take some of the income and then discount, like if you’re getting $13,000 a year from a unit, they might add that into your income or take a percentage thereof. That’s constantly changing, too, the way they’re looking at it.”

“If it’s an illegal suite, you won’t get any break from the bank.”

And that brings up the issue of zoning: many rental suits in homes can be illegal, meaning the municipality hasn’t zoned a particular area for rental housing.

“There’s always the issue of whether it’s legal or not legal. Most of them are not legal,” said Speer,

“But most neighbours will turn a blind eye because it’s been a way of living for so long a while and affordable housing is available in the neighbourhood. The only time I’ve really seen issues with them is somebody moved in who has three cars or somebody moved in who is an issue.”

Scarr agreed, adding that in Vancouver the blind eye is also turned very often since “the city is aware that they do not provide affordable housing stock so it’s something that the city does not act upon unless the space is horrible.”

“Generally speaking, we’ve turned a blind eye to unauthorized suites now for the last 15, 20 years,” he said.

Having decided that you really don’t mind sharing your house with a complete stranger, you will want to take extra care when holding auditions for your apartment and adopt more than a passing familiarity with provincial landlord-tenant legislation.

“A lot of people are so excited to get a tenant and get someone to pay that they’re not doing a credit check or not making sure on the application that the apartment is being rented to one person and not a family of six,” said Speer.

Speer observed that some of her clients will get in touch with the student housing office at local community colleges.

She has also done the landlord routine and said you just have to be smart about it.

“We were just always really cognizant of keeping the rent at an amount where we would get lots of applicants so that we could choose someone who we thought would be good, one person, a professional maybe who travelled, who wasn’t around,” said Speer,

“I think that if you don’t have standards there or do any kind of qualification or screening, it could be a nightmare and I’ve seen a lot of people go through it.”

Eric Lam, Financial Post · Friday, Jul. 2, 2010

With Canada’s economy stumbling in April, adding fuel to speculation the country’s roaring recovery that began in September 2009 was coming to an abrupt end, economists warned Canada’s central bank will have to tread carefully on its plan to raise interest rates for the rest of the year.

Derek Holt and Gorica Djeric, economists with Scotia Capital, said the Bank of Canada “was not likely to be swayed” by Wednesday’s economic data. The pair maintain a forecasted 1.25% benchmark rate by the end of the year.

“There should be enough strength in the underlying economic momentum to dismiss the drag on GDP in April as something that does not portend the start of a new trend,” the pair say in a note.

In April, Canada’s gross domestic product neither expanded nor contracted, compared with 0.6% growth in March. Economists surveyed by Bloomberg had been forecasting 0.2% growth in GDP for April.

This is the first time in eight months Canada’s economy did not expand.

In its report, Statistics Canada blames the stagnant April on a “large decline” in retail trade of 1.7%, after a 1.9% gain in March. Declines in manufacturing and utilities also contributed to the underperformance while advances in mining, wholesale trade, the public sector and construction helped to offset the decreases.

Krishen Rangasamy, economist with CIBC World Markets, said it was too soon to jump to conclusions.

“It’s too early to conclude from this GDP report that the recovery is already waning,” he said in a note on Wednesday. “The excellent handoff from March means that we’re starting the second quarter from a higher base, which sets Canada up for a decent quarter despite a slow start.”

Michael Gregory, senior economist with BMO Capital Markets, said that while the 3% growth now expected is respectable, it is a bit of a letdown compared with the 5% to 6% growth figures seen earlier.

“It’s kind of like driving on the highway at 100 kilometres an hour, then getting off and going 50,” he said in an interview. “But 3% growth is still all right and where we see it for this year.”

The second half of the year will likely move quite sluggishly, however, as a lot of spending in housing, renovation and other big-ticket items was “pulled forward” due to the HST, introduced in July in Ontario and British Columbia. Mr. Gregory expects growth of about 2% on average in the fall and winter months.

Canada’s economy also faces headwinds from the sovereign debt crisis in Europe, an even worse slowdown in the United States, and possible fallout in China, he warned.

Warren Jestin, chief economist with Scotia Economics, said in a note on Wednesday that Canada’s position as a resource leader should help keep it afloat in the face of other developed countries, although “this won’t be a hard race to win.”

The situation in Europe is troubling for Mr. Gregory, but he suspects the combination of weakening housing, high unemployment and zero credit growth will hurt the United States.

“That buzz you hear about a possible double-dip recession is legitimate and will remain a worry for markets the rest of the summer and into the fall,” he said. “It’s why we think the Bank of Canada will be on hold for a while after July.”

Mr. Gregory figures the central bank will raise rates 25 basis points at its next meeting in July, then go on hold to see how things play out in Canada the rest of the year. It is likely the BoC will push rates to 1% by the end of 2010 and add another 1 percentage point to 1.5 percentage points in 2011.

“An environment of 3% growth is still something that requires higher interest rates,” he said. “Rapid buildup in household debt is a long-term risk.”

Helen Morris, National Post · Saturday, Jun. 26, 2010

When it comes to the HST and real estate, consumer uncertainty reigns supreme.

But the much-despised tax will likely not impact the real estate market much, despite the widely held perception on the part of consumers that the HST is pure evil.

During a market analysis session at the Kamloops head offices of the Bank of Montreal Tuesday, BMO economist Michael Gregory said the HST, set to come into effect July 1 in both B.C. and Ontario, has already had some impact on real estate markets.

In both provinces, the looming implementation of the combined provincial and federal sales taxes has pushed buyers into the market earlier than they might otherwise have jumped in.

As a result, the spring selling season has ranged from warmer than usual in Kamloops to downright overheated in major markets such as Toronto and Vancouver.

But Gregory said the beat-the-HST rushes will soon end and a lull will follow. That downturn will continue through the rest of the year, he added.

That doesn’t mean the HST is an overall drag on real estate, he said. The tax has simply shifted buyers to the early part of the year. Once the numbers are crunched at year’s end, the impact will flatten out.

The HST will be felt most on new homes, which will be subject to the full HST, and existing homes above $525,000. Pre-existing homes below that level will not be subject to the tax.

Perceptions of the HST aside, the fact is Canada’s economic foundation is strong, said Gregory. The economy and job creation are on the rise in all parts of Canada.

Those factors ultimately have more impact on housing sales than the HST will ever have. If the financial fundamentals stay strong, so will markets.

It may take six months for people who have shied away from buying now because of the HST to get back into the market, but they will return, Gregory predicted.

“It’s only a matter of time,” he said. “It could be enough to postpone their desire until they have a little extra savings.”

Dick Pemberton, president of the Kamloops and District Real Estate Association, agrees. He said the Kamloops market is strong, despite the potential for a short-term HST lull, and he does not expect the HST will matter much in the end.

There are other more pressing factors that will affect the market before the HST, he said, including the potential for increased mortgage rates in the coming months.

Higher borrowing costs affect affordability, he noted.

The HST will see consumers charged more for all the professional services around the house-sale process — everything from legal fees to realtor commissions.

Will the HST force people to pay more for those services? Not necessarily, Pemberton said. He expects it’s likely consumers will be able to negotiate new deals with the professionals they deal with to compensate, at least in part, for the added cost of the tax on services.

Pemberton said of all the taxes the real estate market contends with, the HST means nothing compared to the impact of B.C.’s property transfer tax, which has been in place since 1988, when it was introduced by Socred Premier Bill Vander Zalm.

The transfer tax thresholds remain at the same levels they were in 1988, Pemberton said. Then, it was seen as a luxury tax. Today, due to the rise in property values, the tax affects more than 88 per cent of home sales in B.C.

The tax badly needs an overhaul, Pemberton said. Raising the threshold levels from the current $200,000 ceiling to $525,000 would immediately benefit consumers and make housing more affordable.

“Any tax that erodes affordability is a concern,” Pemberton said.

Darryl Caunt, president of the Kamloops chapter of the Canadian Home Builders Association, said many builders are not yet certain how the HST will impact them.

“We are still seeking some clarity,” he said. “The HST — it’s a risk. The HST will affect us, because it (affects) the affordability of the product. It’s a cost to the consumer.”

Of more concern than the HST is the level of inventory in Kamloops, he said. Typically the Kamloops market has shown it can absorb no more than about 120 new homes a year.

The city has already seen that many housing starts this year, raising the spectre of a competitive new home market as the year winds down.