Market Update – The news is full of mixed messages about what is happening locally and around the world.  One day the news is good and the next it’s bad.  Economists can’t agree on what has happened in the past, let alone what is going to happen in the future.  (Let’s face it, if they could accurately predict the future, they wouldn’t be writing economic forecasts).  The media happily regurgitate all the stuff they hear from the economists and quite likely don’t get it right a good part of the time.

Unfortunately, bad news seems to sell better than good news so we seem to get a larger proportion of the bad.  The problem with continual bad news is it causes consumer confidence to falter.  Think about it.  If the media prints a prediction that house prices are going to drop by 10% next year, consumers will delay buying homes, waiting for those lower prices.  If enough consumers wait to buy, that lower price forecast will almost certainly come true.

People sell their homes because they want a new home, because they want to move to a bigger or smaller home, because they need to move for their jobs, or even because they’ve lost their jobs.  People buy homes forthe same reasons.

Those who buy and sell trying to predict the highs and lows in the market are almost certain to miss their timing.  Those who wait to sell until the price of their home goes up will pay more for the house they buy.  Those who wait to buy their first home until prices go down, may miss the low in the market because no one knows when we’ve hit low until prices start to go up, and then they may pay a higher interest rate which is exactly the same as a higher price.

The moral of the story?  Your home is the place where you live and raise your family.  Real estate values have always kept pace with inflation.  Your home is a great forced savings plan.  You can build equity while you provide a roof over your head.  Make your housing decisions based on your family’s needs, not on some vague prediction for the future.

The compelling arguments for buying a home today:

Ample supply – we have more homes on the market than at any time in history.  A great opportunity to find just the right home for your family.

Low prices – a large supply of homes relative to lower demand has caused very attractive pricing relative to previous years.

Low interest rates – interest rates are at historical lows.  Because most home purchases are mortgaged, low interest rates are the equivalent of a large price discount.  A difference of two or three percent in the mortgage rate means thousands in savings over the most interest rate sensitive first five years of ownership.

If you are going to sell and then buy again, current price levels are irrelevant, but low interest rates can still be a huge advantage.

Natural gas risks worthwhile: Shell CEO – Canada is home to many promising natural gas reserves trapped underground – September 13, 2010, Canadian Press

The promising natural-gas industry carries environmental risks as companies work harder than ever to unlock it, a top international oil executive conceded Monday at the World Energy Congress in Montreal.

Royal Dutch Shell CEO Peter Voser told delegates at the conference that the world is on the cusp of a natural gas supply boom.

He said recent events – like the Gulf of Mexico oil spill – are a reminder that sometimes things can go wrong.  “I realize that there’s some public concern that fracturing could affect fresh water layers in the ground,” Voser said in his keynote speech at the conference.

“We take that concern seriously … Whether we like it or not, producing energy and delivering it to billions of customers around the world comes with certain risks.  “Rather than closing our eyes to that reality, we must confront risks and manage them as effectively as we can.”

However, Voser strongly defended the potential of natural gas as a clean and abundant energy source that will help countries reduce their overall greenhouse gas emissions. He even called on governments Monday to loosen regulations, and allow natural-gas extraction to reach its full potential.

The head of Europe’s largest oil company says the fuel will play a bigger role in the global energy mix in the coming decades.

He predicts the world’s annual natural gas demand will increase by 25 per cent by 2020 – and almost 50 per cent by 2030 – as emerging countries like China continue to grow.

“A key question is whether the world’s appetite for natural gas will keep pace with supplies,” Voser said.

Tapping into deep gas reservoirs is easier than ever with the help of new technology — and Canada is home to many promising reserves trapped underground.

Shell owns extraction rights in British Columbia, where the corporation is already producing enough gas to power more than 400,000 homes. Voser used Shell’s operations in B.C. to illustrate Canada’s potential in shale and tight gas, both of which must be extracted from rock deposits.

Housing market not in free fall, report argues – Financial Post – Sept. 8, 2010

OTTAWA — Canada’s cooling housing market continues to put the brakes to residential building plans in Canada, although the slowing trend in no way signals a U.S.-style housing free fall, the Conference Board said Wednesday.

The Ottawa-based think-tank weighed in on the housing-bubble debate on Wednesday, after Statistics Canada released data showing the value of building permits for residential construction fell for the fourth straight month in July.

The 2.4% decline, to a monthly rate of $3.5-billion, follows similar data showing housing starts and resale activity in Canada declining for months now, along with reports arguing that Canada’s housing market is a bubble waiting to burst.

Not so, the Conference Board of Canada argued in a report Wednesday.  “The housing market has lost its lustre. No doubt about it,” said Mario Lefebvre, the centre’s director for municipal studies.

“However, this will not lead to a free fall for Canada’s housing market. This country will not experience home-price declines to the tune of what we have witnessed in the United States over the past few years.”

Signs of a slowdown were unmistakable in Statistics Canada’s report. It showed weakness in residential permits was much more broadly based than in the nonresidential sector, with declines registered in six of 10 provinces, said Scotia Capital economist Derek Holt.

Yet, he added, the report “is directionally in line with expectations for softer housing markets,” and that the number of residential permits “nonetheless remains 31% higher than a year ago.”

Mr. Lefebvre conceded in his report that the next few months will be weak, thanks to a slowing economy, the arrival of the harmonized sales tax in Ontario and B.C., declining consumer confidence, European debt worries and a jobless recovery in the U.S.

At the same time, home prices now average more than $300,000 in Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal — far above the $150,000 to $200,000 historical average — according to a recent report from the Centre for Policy Alternatives which said those markets have all the hallmarks of an “accident waiting to happen.”

But Mr. Lefebvre argued the country will only see a pause in home-price growth, with some possible small declines in a few markets.

Mr. Levebrve said prices have held up despite declining resales because those sales “are coming off incredibly high levels in most markets — levels that were simply not sustainable.”

The board said it does expect housing starts to decline. But like the resale market, this will mark a return to more normal levels rather than a collapse in the market, which, in the case of the U.S., was the result of laws that allow mortgage deductibility for tax purposes and the “ring-fencing” of mortgage debt, which prevents lenders from pursuing other assets of a mortgage holder, the board said.

Oilpatch hiring again – By Harley Richards – Red Deer Advocate – Published: August 27, 2010 6:43 AM

A year ago, the prospects were pretty bleak for oilpatch workers with a resume in their hand.  No more.   Drilling and service companies are beating the bushes for skilled and even unskilled people as their industry recovers from the economic downturn.   Bonnie Snair, human resources manager at Red Deer’s High Arctic Energy Services, said her company has hired 74 workers over the past two and a half months.  “I anticipate that we’ll be hiring another 50 before the end of the year,” she said.  One of the most popular places for oilpatch companies to seek staff has been the newspaper classifieds. And after a period of absence, corporate logos have returned to that section of the Advocate, said Richard Smalley, the newspaper’s retail advertising manager.

“You’ve just got to open up a paper and you’ll see all the oil and gas ads that are running in there.”   Year-over-year, said Smalley, the Advocate’s classified display linage — which consist primarily of employment ads, particularly for the oilpatch — is up 43 per cent.  “That’s a huge jump.”  Charles Strachey, a regional communications manager with Alberta Employment and Immigration, has also observed an increase in job postings at his department’s Labour Market Information Centre in Red Deer.   “There’s been a significant jump in the number of oilfield jobs,” he said, adding that construction has also seen renewed hiring.

“Basically, there was almost zero jobs for the oilpatch on the job board last summer.”  As might be expected, this increase in the male-dominated sectors has impacted the ratio of job-seekers visiting the local Labour Market Information Centre.   Six months ago, 75 to 80 per cent were men, said Strachey; now the male-female split is about 50-50.  He added that his department is also now getting more requests for the specialized training typically required for oilpatch jobs.

Shane Goacher, operations manager with Bravo Oilfield Safety Services Inc. (B.O.S.S.), said the Grande Prairie-based company’s ads have generated quantity but not quality.  “A lot of people are available but nobody has the experience.”   When the oil and gas sector plummeted, he said, many skilled workers disappeared.  “Some of them ended up going to school, some of them ended up getting (other) jobs.”

Nancy Malone, economic analysis manager with the Canadian Association of Oilwell Drilling Contractors, said senior staff on drilling rigs tend to ride out the slow periods.  “They understand the industry, they understand the ups and downs and they work appropriately.”

Roger Soucy, president of the Petroleum Services Association of Canada, said the labour crunch is likely hitting some companies harder than others. Those active in horizontal drilling and multi-stage fracturing — increasingly popular methods for pursuing oil and gas — are probably busier than other firms.

He and Malone agreed that the situation is not as dire as it was during the boom period several years ago. But if rig activity is high this winter, manpower could become a concern.  “We lost so many people who generally don’t come back to the industry once they’ve left it,” said Soucy.

The companies vying for people are already turning to new strategies.  High Arctic has been promoting a snubbing boot camp to entice prospective employees to give the industry a try. Snair said it’s helped her company hire many of its new people.  B.O.S.S. offers employees a travel voucher that they can use for a vacation after working for a period of time. Goacher said such enticements have become commonplace in the industry.

Both businesses are tapping into new search methods — High Arctic has turned to Facebook and B.O.S.S. to Kijiji — in their efforts to connect with young prospects.  “I think people just have to get really creative and step out of the box,” said Snair.