By The Canadian Press

OTTAWA – Canadian home prices continued to soar above year-ago levels in June, but economist believe price hikes could soon ease, spelling relief for buyers in expensive markets like Toronto and Vancouver.

The Canadian Real Estate Association said Friday the national average price for Canadian home resales was $372,700 in June, up 8.7 per cent from the same month last year, but down 0.9 per cent from May.

Realtors sold 48,487 resale homes last month, 10.8 per cent more than in June 2010, when sales began to taper off from an earlier hot streak when buyers rushed to beat interest rate hikes. Last June, the Bank of Canada raised interest rates from emergency lows for the first time since the recession.

Last month’s sales activity was also 2.6 per cent higher than in May, bucking a four-month trend of monthly declines.

“Canadian housing demand remains resilient, thanks to low interest rates, job growth, and home buyer confidence in the economy,” CREA president Gary Morse said in a statement.

June’s double-digit year-over-year sales increase was the fastest pace recorded since April 2010, said Bank of Montreal economist Robert Kavcic.

“However, the strong growth figure somewhat masks more moderate recent activity, as sales fell more than 16 per cent between April and June last year amid stricter mortgage rules, making for an easy comparison,” he wrote in a research note.

Despite the year-over-year price hikes, seasonally-adjusted prices have now dipped for three straight months, suggesting the changes to mortgage rules that limited the maximum amortization period “might be having at least a modest impact on pricing,” he said.

Some industry watchers have speculated that prices have now peaked and expect to see declines, especially when interest rates inevitably rise.

“Stricter mortgage rules and declining affordability appear to be taking at least some momentum out of prices, a trend that could continue if the Bank of Canada resumes its tightening campaign in the fall,” Kavcic said.

Sonya Gulati, an economist at TD, said June’s figures suggested a pickup in activity after a “particularly muted” over the past few months, but added that they could be a blip.

“We expect the mini reprieve to be fleeting and in turn, sales gains should be muted for the remainder of the year and into 2012,” she said.

Gulati said she expects prices to decrease by 10 per cent over the next two years, accompanied by a 15 per cent decline in sales.

“The lag between sales and prices usually comes in between two to three quarters. In turn, we anticipate prices to temper early next year,” she said.

Sales picked up in a majority of the country’s cities, with two notable exception — the pricey and once overheated markets of Vancouver, down 1.7 per cent and Toronto, 0.4 per cent lower.

In Toronto, average seasonally adjusted home prices fell 1.1 per cent, but are still up nearly 10 per cent year-over-year. The market remains one of the most competitive in Canada as demand so far this year has far outweighed the number of listings, contributing to higher prices.

In Vancouver, average prices are about 23 per cent higher than they were last year, but the average is being skewed higher by a flurry of activity at the high end of the market. Sales in expensive West Vancouver and Richmond have eased since February, which helped to reduce the impact on average prices, CREA noted.

That area has recently been a hotbed of housing activity, and high end sales helped drive June average home prices in Greater Vancouver to $630,921.

However, the national figures in June showed less of an impact from the sales of high-priced homes in Vancouver, although that city continued to skew the national results, CREA said.

About 60 per cent of local housing markets in Canada were balanced in June — meaning the number of sales and new listings were about the same. However, new listings increased just marginally, by 1.8 per cent in June from May.

Calgary, Montreal, Ottawa, Hamilton, London, Ont., and Victoria all saw gains over May.

Nevertheless, national sales activity in the second quarter (April, May and June) was down 4.5 per cent compared with the first quarter of 2011.

CREA attributed the decline from the first quarter to new mortgage rules announced in January and implemented at the end of March and an increase in mortgage rates in April and May.

CREA’s monthly report comes ahead of Tuesday’s Bank of Canada announcement on its target overnight interest rates. The central bank is widely expected to keep the key rate unchanged at 1.0 per cent, where it has been since September .

Earlier in the year, economists had expected the Bank of Canada would begin raising its short-term rate to quell inflation. However, sentiment has changed amid signs that the U.S. economic growth has been less robust than expected.

In contrast with the United States, Canada’s job growth has been stronger, its federal government is making more headway in dealing with budget deficits and its resource exports are relatively strong — putting home buyers in good shape.

“The Canadian housing sector remains on a solid footing,” said Gregory Klump, CREA’s chief economist.

“The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011.” http://ca.finance.yahoo.com/news/Home-prices-remain-sky-high-capress-1260466279.html?x=0

Residents of a downtown Edmonton condominium believe better provincial regulations could have prevented them from having to pay $2.2 million to fix problems they say were caused by the developer.

The owners of decade-old Rossdale Court condominiums have spent the last four years fixing problems with pedways, balconies and window seals which are related to water leakage.

“It is pretty disheartening,” said Lynn Yakoweshen with the Rossdale Court Condo Association.

“I bought in this building because it’s a beautiful location, it’s a wonderful neighbourhood, a great sense of community … like kind of an isolated oasis, Unfortunately if you look around it hasn’t been quite the oasis that I had hoped.”

The owners of the building’s 69 units have each spent between $28,000 to $40,000 on repairs, Yakoweshen said. The balconies needed restoration work and the building’s exterior stucco had to be completely replaced.

“All of your savings are depleted,” she said. “We’re very loathe to open emails because you wonder, ‘what now?'”

Liberal MLA Laurie Blakeman blamed the provincial government for the situation. She said building codes are insufficient and fines too low to be a deterrent. She said the current one-year warranty period doesn’t help homeowners.

“Most problems turn up at the five, six-year mark and there’s no protection for that,” she said.

The province plans to take measures which include increasing fines for building code offences but Blakeman said the province hasn’t set a timeline for when those changes will come into effect.

The Rossdale Court condo owners say they have had no luck suing the developer. Yakoweshen said the building was built under a company name that no longer exists.

“We have no legal recourse,” she said.

Blair Hallet is the developer of Rossdale Court and Glenora Gates, another condominium now under repair because of water leakage problems.

Hallet could not be reached for comment Wednesday. A staff member at Tessco, where Hallet is listed as a director, said he now lives in British Columbia. http://ca.news.yahoo.com/condo-owners-stuck-2-2m-repair-bill-004324886.html

For drama, it might seem difficult to top the past couple of weeks on Capitol Hill, but the debt ceiling debate in the United States is really only the opening act of a long-running production. The Obama administration and Congress will eventually have to agree to some watered-down measures that will enable an increase to the debt ceiling, to ensure that the country’s creditors continue to be paid on time. However, the necessary deal between the White House and House Republicans will be a political deal. It will only put off the tough economic and policy decisions to another act of this drama.

The fundamental problem facing the U.S. federal government is bringing taxes and spending into balance over the long run. Even if sustained growth is fully restored, Washington will be taking in the equivalent of 15% of gross domestic product as revenue, but spending 20% of GDP. If the budget is ever to be rebalanced, the U.S. federal government will have to tackle structural factors.

The United States is currently spending about 5% of GDP on defence and homeland security, compared with around 3% before 9/11. Social Security — long the “third rail” of U.S. politics — has a huge unfunded liability, and aging demographics will have a major impact on other social spending entitlements if unchecked. Yet, large cuts to defence and social spending are unlikely to be enough. Increases in taxes, combined with fundamental program redesign and a reduction in benefits, will eventually be required.

The medium-term fiscal plans brought forward by Republicans and by the White House currently fall well short of fiscal sustainability. The Republicans are ready to slash spending but unwilling to consider tax increases, while the Obama plan relies too much on sustained economic growth to reduce future deficits. A third option, from a President-appointed bipartisan panel, proposed a broad mix of spending cuts and revenue measures, but there has been little political takeup so far. Initially, tax hikes will affect wealthy Americans. But there is a limit to how much tax revenue can be raised by hammering rich people. At some point, tax reform will have to hit the broad swath of Americans. Some of the targets could include the elimination of popular but costly incentives such as deductibility of mortgage interest payments. Even these measures, however, will probably still fall short. Eventually, we expect the United States will have to do what Canada and other rich countries have done — implement a value-added sales tax.

Republicans, and even some Democrats, may well threaten to fight to the last breath before ever agreeing to it, but the merits of a sales tax are unmistakeable: It provides stable revenues, it affects almost all of the population, and it has the least impact on business investment. And as Canada found out in the 1990s, a value-added tax is a prolific generator of revenue, which the United States desperately needs.

The United States may already be in the midst of a “lost decade” due to the 2008 financial crisis, and the debt ceiling debate — suspenseful though it is — could be but a prelude to something much more dramatic. If international and domestic bondholders ever decide to stop buying new U.S. government bonds to fund the chronic fiscal deficits, the politicians won’t have much choice. The hard laws of economics will eventually force even the United States to face fiscal reality.

Canadians have a lot riding on the outcome of the current debate, due to our deeply integrated economies. As the U.S. goes through a difficult period fiscally and economically, Canadian businesses must re-double their efforts to adapt, innovate, diversify their sales, and internationalize their business model if they are to remain globally competitive. But Canada must also remain fiscally responsible to help offset the potential shocks ahead, so that a lost decade for the United States does not become a lost decade for Canada as well.

Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada. Kip Beckman is principal economist at the Conference Board of Canada.

Scotiabank today released the results of a recent poll looking at consumer debt levels and practices, and how Canadians are feeling about their debt. 

The study was conducted by Harris/Decima and assessed the borrowing habits of Canadians. More than half of Canadians (56%) feel their level of debt is manageable and an additional 27%. A smaller number of Canadians (17%) reported feeling overwhelmed by their debt, and many of these people carry a credit card or line of credit balance. 

“We know that a majority of Canadians are interested in having a plan that looks at their overall financial health and helps them make the most of their money,” said Mike Henry, Senior Vice President of Retail Payments, Deposits and Lending at Scotiabank. “Whether it’s renovating their home, funding a child’s education or planning for retirement, having a financial plan with a manageable borrowing strategy will help Canadians plan for and manage the role that debt plays in reaching their life and financial goals.”

Many Canadians do not currently have an outstanding balance on their credit card or on their line of credit (56% and 40% respectively). In fact, four-in-ten (41%) respondents never carry a balance on their credit card and one-third (31%) never carry a balance on their line of credit. An additional one-in-five only use their credit card or line of credit (18% and 22% respectively) in the case of an emergency. 

Click here for the Scotiabank news release.

Financial Post Staff OTTAWA — Consumer prices were up 3.7% in May from a year earlier, the biggest leap since March 2003, Statistics Canada said Wednesday.

Economists polled by Bloomberg expected 3.3% annual inflation in May.

Gasoline prices were cited for the main reason for such a high inflation rate last month.

The core inflation rate, which factors out volatile items such as energy and certain foods, was 1.8%. Economists anticipated 1.5%.

The Canadian dollar firmed to a session high of $1.0280 after the data was released.

More to come … http://business.financialpost.com/2011/06/29/canadas-inflation-jumps/

Farewell and good riddance to the first half of 2011 — six months that are ending as sour for the economy as they began.

Most analysts say economic growth will perk up in the second half of the year. The reason is that the main causes of the slowdown — high oil prices and manufacturing delays because of the disaster in Japan — have started to fade.

“Some of the headwinds that caused us to slow are turning into tail winds,” said Mark Zandi, chief economist at Moody’s Analytics.

For an economy barely inching ahead two years after the Great Recession ended, the first half of 2011 can’t end soon enough. Severe storms and rising gasoline prices held growth in January, February and March to a glacial annual rate of 1.9 per cent.

The current quarter isn’t shaping up much better. The average growth forecast of 38 top economists surveyed by The Associated Press is 2.3 per cent.

The economy has to grow 3 per cent a year just to hold the unemployment rate steady and keep up with population growth. And it has to average about 5 per cent growth for a year to lower the unemployment rate by a full percentage point. It is 9.1 per cent today.

As welcome as the stronger growth envisioned in the second half is, the improvement should be modest. For the final six months of the year, the AP economists forecast a growth rate of 3.2 per cent.

So far this year, high gas and food prices have discouraged people from spending much on other things — from furniture and appliances to dinners out and vacations. That spending fuels economic growth.

And some U.S. auto factories had to suspend or trim production after the March earthquake in Japan interrupted supplies of parts and electronics. American dealerships have had fewer cars to sell.

The latest dose of glum news: The government reported Monday that consumer spending was about the same in May as in April, the first time in a year that spending hasn’t increased from the previous month.

The report confirmed the toll that high gas prices, Japan-related disruptions and high unemployment have taken on personal spending in the second quarter.

“Here’s to a better third,” says Jennifer Lee, senior economist at BMO Capital Markets.

Relief is in sight, economists say. Oil prices have been falling since Memorial Day. The drop has lowered the price of regular unleaded gasoline by 23 cents in the past month, to a national average of $3.57 a gallon, according to AAA.

The timing of the drop in gas prices is especially fortunate because they usually rise during summer driving season, says Robert DiClemente, chief U.S. economist at Citigroup .

And the kinks in the global manufacturing chain are starting to be smoothed out as the Japanese factories that make cars and electronics resume production.

Diane Swonk, chief economist at Mesirow Financial, says auto sales should improve “quite substantially” later this year because the lost production from the earthquake is coming back faster than had been expected.

One sign of that rebound came when the Federal Reserve Bank of Chicago reported Monday that manufacturing in the Midwest rebounded in May after falling sharply in April.

And last week, the government said orders for machinery, computers, cars and other durable goods rose slightly in May after dropping in April. Economists attributed the turnaround, in part, to Japanese factories that started to rev up.

The U.S. economy is also expected to get a slight second-half boost from reconstruction in flood-ravaged sections of the South and Midwest. Construction workers will be employed rebuilding homes and businesses. People will replace destroyed cars and other possessions. Analysts predict the economic losses from the floods in the April-June quarter will be reversed in the July-September quarter.

The economists surveyed by AP predict unemployment will fall to 8.7 per cent at year’s end. It is not exactly the start of a boom: The economy is still carrying too much baggage from the financial crisis — damaged banks, depressed home prices, debt-burdened consumers — to achieve much liftoff.

Though some of the economy’s weakness in the first half is temporary, “it is hard to see much on the horizon to cheer about,” Swonk says. http://ca.finance.yahoo.com/news/Why-economists-see-modestly-capress-1496951129.html?x=0

If you use LinkedIn correctly, it can be a marketing godsend.

You can form relationships with hundreds of potential customers and solidify your brand — without spending an arm and a leg.

Do it, wrong, however, and you won’t just embarrass yourself. You might actually hurt your company’s reputation, and your own.

How to do it right?

Learn the most common mistakes small business owners make on LinkedIn — and what to do about them.

Mistake: Coming on too strong in your profile

LinkedIn is all about the subtle, soft sell. Promote your product or service too openly on your profile and you’ll be sure to turn people off.

“You don’t want to sound like you’re bragging,” says Jill Konrath, a sales expert and CEO of Sellingtobigcompanies.com

The answer:

Get your customers to write as many positive reviews of your company on your profile as possible.

If people who use your product or service comment about it, you’ll increase your credibility. Why? It shows that customers are willing to take time out of their busy days to write something nice about your company. “It carries more clout,” says Konrath.

Mistake: Promoting your product or service in a message or a group discussion

Similarly, just because you’ve connected with someone, doesn’t mean you have permission to start plugging your wares.“It feels like a violation,” says Konrath.

That’s also true for group discussions. “People will see right through you,” says Patrick O’Malley, who runs 617-PATRICK Social Media Training and Consulting in Medford, Mass.

In fact, according to O’Malley, you can be tagged for spam if you do that too often.

The answer:

Before contacting anyone, make sure you understand the number one rule of making connections on LinkedIn: keep it low-key.

In group discussions, don’t ask questions or make comments that are obvious sales pitches. Instead, establish yourself as a key expert or resource by providing thoughtful, pithy observations.

Mistake: Failing to highlight the problems you solve for customers in your profile

Too often, small business owners describe the product or service they sell in their profile, without explaining what the benefits are.

Result: you miss the chance to stand out from the crowd

The answer:

Focus on the issues and challenges your company addresses.

Examples: “We help customers struggling to increase their sales to tap new markets,” or, “We show companies how to decrease their manufacturing costs.”

“You’re talking about results, and that’s what attracts more interest,” says Konrath.

Mistake: Not taking advantage of all the capabilities available

LinkedIn provides access to a plethora of research and other features that many people aren’t aware of.

“They’re things that, quite simply, can give you a leg up on the competition,” says Konrath. “People think of it as a referral network, but there’s a lot more.”

The answer:

Find out what LinkedIn has to offer — and use it.

Example: Before every first-time meeting with a prospect. Konrath always checks the person’s LinkedIn profile to learn about the individual’s background and interests.

It’s information she uses to “create important connections right away that I couldn’t make otherwise,” she says.

Mistake: Joining too many groups

By taking part in group discussions, you can attract a lot of positive attention.

But, join too many and you’ll be spread too thin.

The answer:

Focus on two or three that are most likely to provide access to potential customers or partners.

Mistake: Inviting too many people you don’t know

Do that a lot and you can get in a heap of trouble: you’ll find yourself on a list of violators.

Then, if you want to invite somebody to join you, you’ll need to have their email address to do so, according to O’Malley.

The answer:

Just don’t do it. Make sure you know your invitees.

And be especially careful if you’re inviting a lot of people at one fell swoop. O’Malley, for example, once invited 3,000 people, only to find that several of them were individuals with the same name as contacts he knew. He’s never done that again.
Read more: http://www.businessinsider.com/6-common-linkedin-mistakes-small-businesses-make-and-what-to-do-instead-2010-4#ixzz1QQkpFLlC

Strain from a world awash in debt is increasing the risk to what is already a fragile and weak economic recovery, the Bank of Canada warns.

And Canada faces a second, more immediate challenge from temporary factors such as disruptions from the Japanese earthquake and tsunami that will limit growth to about one per cent this quarter, governor Mark Carney added Wednesday.

“This is a disruptive time, there are a major series of changes going on … so there will be some volatility,” Carney told a Senate committee after his bank released its latest biennial Financial Systems Review.

The U.S. economy — which most Canadian exporters depend on — is a shadow of itself, he said, adding that U.S. households may need a decade to get out from debt.

Meanwhile, although emerging economies are booming, Canada’s exporters, with the exception of commodities, are under-represented in that world.

And lastly, there’s the mountain of debt weighing on the balance sheets of advanced countries, from Japan to parts of Europe to the U.S., that will dampen growth for years.

The summary put into stark language the findings of the central bank’s financial systems review, released earlier in the morning, which took a more pessimistic view of the recovery.

The big problem facing the world is debt. Debt even threatens Canada’s economy, given that household indebtedness is at record levels and could grow further before tailing off.

“The key risks to the stability of the Canadian financial system remain elevated and have edged higher since December,” the bank concludes in the systems review.

For the first time, Carney revealed to a Senate committee that the current second quarter in Canada could see growth drop all the way to one per cent, from 3.9 per cent in the first three months.

Acknowledging that he had previously predicted growth of two per cent this quarter, which ends June 30, Carney told the senators: “The growth could be even lighter than that, it could be in the one per cent range.”

He added, however, that he still expects the economy to do better in the second half of this year.

The bank report and Carney’s testimony comes as Greece is again under the gun to hold off a credit default that would likely cripple some European banks and possibly touch off a new round of global financial jitters.

But the Bank of Canada says the debt woes extend further than Greece to other peripheral European nations — Spain, Portugal and Ireland — and over the longer term, to the U.S. and Japan .

Canada too faces a troubling household debt issue, the bank warns, which could be exacerbated by shocks, including an economic downturn and interest rate hikes.

In a separate report card, U.S. Federal Reserve officials also took a darker view of the situation, downgrading growth expectations both for the economy and job creation.

All these risks “are interconnected and mutually reinforcing,” the Bank of Canada said.

Carney urged Canadians to keep things in perspective, however, growth is “reclining, not declining,” and Canada still benefits from sound fundamentals.

Canada’s financial system got a “healthy” grade both in terms of the soundness of the banking system and business balance sheets, but it is vulnerable somewhat to outside forces.

Carney said Canada’s exposure to Europe’s sovereign debt is small, but not insignificant, given the interconnectiveness of the international banking system.

“The Canadian financial system is not immune to the tensions that are currently affecting European markets,” the bank’s policy council says in the report.

Finance Minister Jim Flaherty has also expressed concern about the Greek crisis, urging European policy-makers to “create a firewall that would ensure that this type of issue would not spread beyond Greece.”

Despite the weak recovery and the pain it will cause, governments have no choice but to start the process of getting their fiscal houses in order, said Carney.

He cautioned that indebted countries, even the U.S., shouldn’t assume bond markets will be always be prepared to fill their credit needs at reasonable rates. Canada learned that lesson the hard way in the 1990s, he pointed out.

“Our experience in the mid-1990s is that the bond market is there and then it’s not,” he said.

Domestically, the bank is still very worried about Canadian household debt, which is at an all-time high of 147 per cent of disposable income.

The risk, it says, is that as household finances get squeezed, Canadians will have less money to spend on consumer goods, which would slow down economic growth.

“Further moderation in the pace of debt accumulation by households is needed to contain the buildup of this vulnerability,” it says.

The bank also cites global imbalances, the two-speed recovery where advanced nations grow far slower than emerging economies, as additional risks that appear no closer to resolution.

“If the significant fragilities that still burden the financial system are not addressed in a timely manner, the progress achieved to date could be derailed,” the bank said.

TD Bank economist Diana Petramala said the report suggests the Bank of Canada is very much in worry mode, and is unlikely to raise interest rates — which could weaken the economy — until 2012.

“All of these risks (cited by the central bank) could have significant economic consequences on Canada’s economy and financial system,” if they are borne out, Petramala said.

“In addition, they are medium-term (rather than short-term) in nature, suggesting they are unlikely to disappear any time soon. Under our current forecast, we don’t anticipate Canada’s overnight rate to reach a more normal level of three per cent until 2013.”

The bank last hiked interest rates last September , lifting its policy setting to one per cent, still exceptionally low by historical standards. http://ca.finance.yahoo.com/news/Bank-Canada-Carney-warns-capress-4229338819.html?x=0

Part of taking on responsibility, is being aware of dangers and pitfalls, and developing a plan to navigate them should they appear.

And so it is with home ownership. Despite efforts to plan and account for expenses, there are many things that may cross a homeowner’s path that they may have not anticipated- job loss, changes to family situation, or increase in consumer prices. Add to that a factor that many are aware of- but may not necessarily have built in- the eventual increase in interest rates, and there is potential financial disaster awaiting those who may have jumped into the home ownership pool without enough of a buffer to keep them afloat.

Jim Flaherty’s series of mortgage and HELOC changes were intended to sort through the homeowner pool, in a way, and to cut those out who were on the fringe- and representing trouble from the outset.

However, through these changes, and with Canadian household debt increasing, the Canadian housing market has still remained buoyant- and in some areas, absolutely exploded. Housing sales themselves have decreased this year- while the average prices for home nationally continue to increase.

Jeffrey Schwartz, Executive Director, Consolidated Credit Counseling Services of Canada, Inc. told Properywire.ca, that he is  seeing the positive effects from Flaherty’s changes, and feels that there has been some material impact on the market. It’s not a case of home ownership being an exclusive club, either; more so it is about matching appropriate product with appropriate consumer responsibly.

“There were two objectives with Flaherty’s mortgage changes. They have been effective in reducing the number of people taking on more debt than they can handle. Some can make payments today, but will be stretched pretty thin if income changes or rates go up. Those that are living on the fringe continue to have trouble, and are living on a tight wire. These mortgage changes have been useful in effectively taking these people out of the mortgage market.”

“The second objective was to encourage people to pay off debt faster, so that people are not carrying debt into retirement with them. People are encouraged to retire debt, so that they increase cash flow- and put out less towards interest payments.”

“We know this is working, because home sales have slowed. This is likely reflective of stronger people entering the market.”

It is important to view home ownership as goal, not as a right, and that certain steps must be taken and displayed in order to reach that goal, and that there is a downside if due diligence is not adhered to , as  Michael Kalles, President, Harvey Kalles Real Estate Ltd., Brokerage told Propertywire.ca, “Home ownership is an excellent option for those who are able to afford it, but don’t assume that it is for everyone…For everyone who can afford it, yes home ownership makes sense.  Look at what happened in the US. People were getting mortgages when they didn’t really qualify… In that case, it was a poor investment. “

“For those that are able to afford it, home ownership offers the opportunity for people to invest in themselves, take advantage of capital gains, build equity and house their families.”

Kalles is quick to remind too, that it always comes down to assessing and delivering on the client’s best interests, even if that is not what they have indicated: “It’s not about making a quick commission; it is about the best needs of the client.”

Sometimes , even though it seems counterintuitive in a heavily competitive business reliant on winning clients over, it makes good sense to send them away: “If any client has only been approved for, say 600,000- but are absolutely insistent that they look at $800,00 properties,  than they are stretched beyond their financial comfort level. “

Schwartz suggests that solutions must be more behavioural than episodic: “People need to understand where their money is going, and look for alternatives to save money- for instance in entertainment, dining out and groceries .These are easy areas to turn a household budget into a surplus rather than a deficit each month.”

“Furthermore, people need to take that money and turn it into savings, and make that process invisible- through payroll deductions or automatic transfer of funds. Take this process out of your hands, and it will happen. If you don’t, it won’t.”

Canada’s unemployment rate fell to its lowest in more than two years as a combination of more self-employed workers and fewer job seekers in May pushed the key economic marker down to 7.4 per cent.

Statistics Canada said 22,300 new jobs were created last month, slightly above consensus estimates following April’s strong 58,000 jobs gain. The last time Canada’s unemployment rate was as low as 7.4 per cent was in January 2009, a few months after the economy had plunged into recession.

The finer details of the May report were less impressive, however.

The jobless rate dropped two-tenths of a point due as much to the fact that 27,500 fewer Canadians were actively looking for work as to the new jobs created.

While all the jobs were full time, they came in the less desirable self-employment category, which could indicate that many Canadians turned to creating their own employment because they were unable to find more traditional work.

“Small business is of vital importance to the Canadian economy, but job creation within this category in a soft spot for the economy (and) is always a knock against the quality of the headline gain,” Derek Holt, vice-president of economics for Scotiabank, said in a note to clients.

The number of employees in Canada actually dropped by 7,500 in May and the goods producing sector of the economy saw a pullback in employment, with manufacturing taking the biggest hit with 22,500 fewer jobs. The month also showed the public sector is starting to tighten, shedding 44,300 jobs as governments begin dealing with large deficits.

The markets treated the report as a status quo finding. The loonie barely budged after the data was released early Friday, although the currency swooned in later trading on dipping oil prices.

Holt noted that hours worked rose just 0.3 per cent and wages were only 2.2 per cent higher than last year, down from 2.6 per cent in March.

“After stripping out inflation, real wages are going nowhere and that remains bearish for consumer spending as households are simply unable to post income growth beyond covering higher fuel and grocery costs in a generalized commodity shock,” he said.

Still, analysts said any job gain following April’s strong advance is good news. It showed April was not a mirage.

“The details in this month’s job growth were not all rosy, but any gains at all were impressive given that they came on the heels of an outsized 58,000 prior-month tally and amidst signs that the economy is decelerating sharply in the second quarter,” said CIBC chief economist Avery Shenfeld .

Not to be overlooked, he added, is that private sector employers added workers, although a small number.

Another positive for the future, said Jimmy Jean of Desjardins Capital Markets, is that the factory sector is likely to recover once supply chain disruptions from the Japanese natural disaster are resolved.

The summer months will also benefit from an additional $10 million Ottawa is pumping into the summer jobs program to encourage student hiring. Labour Minister Diane Finley says government support will create 36,000 student jobs this summer.

Most economists had predicted a slowdown in job creation not only because they viewed April’s increase as an above-trend anomaly but also because other economic indicators pointed to slowing activity.

Meanwhile, consumer spending and housing have fallen off of late and, earlier in the week, the government reported that the important export sector shrank by 1.1 per cent in volume terms in April.

Despite the softness, Canada’s economy is doing far better than its southern neighbour, which in the same month created only 54,000 jobs, a tiny amount given the size of the U.S. labour force.

In the past year, Canada has more than recouped all the jobs lost during the 2008-2009 recession, creating 273,000 in the last 12 months alone, most full time and in the private sector. Meanwhile, the U.S. remains several million shy of its pre-crisis level and the jobless rate is above nine per cent.

In May, most of Canada’s employment gains came in the retail and wholesale trade industries, and in information, culture and recreation. There were losses in manufacturing and educational services, mostly of those in post-secondary institutions.

Regionally, the lion’s share of job creation came in Quebec, which saw its employment rise by 24,800, while Ontario saw a drop-off of 16,100. http://ca.finance.yahoo.com/news/Canada-jobless-rate-falls-capress-4119373303.html?x=0