The Year of the Metal Tiger

Next up at the forecast, Angus Watt of National Bank Financial. He called 2010 the Year of the Metal Tiger because 2010 is not going to come peacefully, it's like a caged tiger that is not where it wants to be. The tiger is potentially ferocious and cruel and we should approach this year with caution. With strong references to China's astrological calendar which is symbolic as China is becoming the engine of the world economy.

He does see serious issues in the U.S. with high debt and the cost of Quantitive easing.  Definitely sees strength in the Canadian banking system calling it the "best" and "strongest" in the world. 

Some of Angus's observations for 2010:

1. You can only fight human nature for so long. In 1982 the median age was 25 (peak spending years ahead), now it is 52 (retirement focus – capital preservation).  

2. You don't ever want a crisis to go to waste; it's an opportunity to do important things that you would otherwise avoid. We've had a downturn here but we haven't really felt it. There will be changes in the banking systems around the world this year, until we know what the changes are it will be difficult for them to aggressively lend. My perspective is that government policy will distinctly affect real estate in Edmonton.  For example if the Government of Canada tells CMHC to change the minimum downpayment from 5% to 10% this will impact the number of first time buyers coming into the market.  Considering that first time buyers are the driving force behind the strength of sales that then would have a significant effect on the market.

Inflation was expected for the second half of 2009 but it didn't happen. (So maybe interest short term interest won't start to pop until late in the year or in 2011.

We have more people living in cities, than in the country as of 2009 (world's population). By 2050 70% of the world's population will be urban. When you live in the city your consumption habits change. We are guessing that his thoughts are that population growth will drive consumption growth.  Obviously employment is very important and stability in employment will only come with sustained or increased earnings.

According to Angus, by the second half of 2012 Edmonton will be rocking because of increased population and rising oil prices.  His perspective is that housing prices fell less than other places, and housing is extremely affordable  in Edmonton compared to other Canadian cities(affordability index in Edmonton is 145 vs 90 in Toronto, 58 in Vancouver, 119 in Calgary).

He Sees 7% mortgage rate creating a ceiling on housing prices in Edmonton, it only takes rates of 5% in Calgary to create this same ceiling.

We've forgotten about the "Alberta Advantage" for the last 18 months or so but it is back – our population is growing and is forecasted to grow (2.58% over 5 years) faster then the National average and well above other provinces.

43% of people buying a house in Edmonton today are renting, only 3% live with their parents. If rents continue to drop we will see less urgency from first time buyers to move from renting to buying.

We are on a sugar high right now fueled by low interest rates.  His advice is to make moves with caution

Governements need money,  so he thinks we are going to see tax and fee increases on kinds of services, fines ect.