Skip to main content

New construction permits down 11.2%: Is this important?

November saw an 11.2% contraction in building permits, the second monthly decline in a row.  BC and Ontario with the source of the contraction, but the news while less dire elsewhere was still negative in every province and segments (institutional, commercial, multi unit and single unit homes).  Not entirely surprising following 2009/10 Canadian construction boom, eventually supply had to slack to match demand, which in both (a coincidence, maybe not) British Columbia and Ontario has fallen off due to rather excessive growth in prices over the past two years.

Construction which was a net contributor in both 2009 and 2010 will probably not provide any “growth” to the GDP; however, it is important to note that construction (all types) account for less than 5% of Canada’s GDP, so any contraction will have only a very limited impact on the overall GDP growth for 2011.

The question remains what is driving the Canadian real estate market?  Every night Canadians are exposed to the disaster that is the U.S. real estate market, the recent push in the value of all real estate in Canada (up 14% since the low of 2007 and up 6% year to date) make many Canadians wonder what is pushing Canadian housing prices.  First and foremost is personal income (Note that Canadians are not in cumbered by health care insurance premiums as their southern neighbors) which has been rising ahead of inflation (although below the increase in house prices).  Moreover, the Canadian government has directed Canada’s banks to remove the ability of Canadians to borrow for periods in excess of 25 years, and Canadian home buyers must past revenue test which assume much higher interest rates before they can borrow.

These tests were enacted in October 2010 – coincidence I think not!  Overall, the data is not important since construction is such a small percentage of the overall economy.  It is reassuring to see the market responding to changes in market rules (mortgage duration and interest rate tests).



Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu