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This Week's Mortgage Market Update Contains:

• How Being Self Employed Impacts Your Mortgage Qualification
• Aging baby boomers helping change face of Canada's housing market: CMHC
• Construction spending increased 1.2 per cent in November, led by gains in housing

This Week's Quotation:

“Mach-S, the speed at which stress can't keep up, is simply forward motion. But it has to be self- propelled. Note that people in cars are still stressed.” - Jef Mallett, Frazz, 08-26-05

This Week's Highlights:

• Housing starts decline in November
• Labour market drops
• Inflation rate held at 2.9% in November

How Being Self Employed Impacts Your Mortgage Qualification

Being a self-employed individual has several advantages, the largest being the ability to write off a large portion of your income against expenses you have incurred while doing business over the year and therefore reduce the amount of income tax that you have to pay. Having the ability to save yourself thousands in taxes annually means that a lot of self-employed clients claim as many expenses as possible (some more aggressively than others) so that they are left with a very small amount of net income at the end of the year to pay tax on. Read more....

Aging baby boomers helping change face of Canada's housing market: CMHC

OTTAWA - Demographic changes from aging to immigration flows are helping shape Canada's housing market of the future, the federal housing agency suggests in its annual report. The Canadian Mortgage and Housing Corp.'s study of housing trends sees continued demand for condominium and smaller homes, institutional buildings such as old age facilities, as well as a lively market for renovators. Read more....

Construction spending increased 1.2 per cent in November, led by gains in housing

ASHINGTON - Construction spending jumped in November as builders spent more on single-family homes, apartments and remodeling projects. The Commerce Department said Tuesday that spending on construction projects rose 1.2 per cent in November, following a revised 0.2 per cent drop in October. The increase was the third in four months and the largest since a 2.2 per cent rise in August. Read more....

"THIS WEEK'S HIGHLIGHTS"

Housing starts decline in November

Canadian housing starts plunged by 13.3% in November to an annualized pace of 181,100 from 208,800 in October (initially reported as 207,600). November's decline in the pace of housing starts was due to a 23.3% drop in the urban multiples component to a pace of 95,300 from 124,300 in October (initially reported as 123,600). The pace of urban multiples has been strong so far in 2011 with the average pace of starts in the first 10 months up 18.7%, relative to the same period in 2010. Rural starts also decreased to 22,200 from 23,100. Urban singles, which tend to be more stable, saw a 3.6% increase to a pace of 63,600 (from 61,400 in October, initially reported as 60,900). Large declines in urban starts were seen in Ontario (-30.6%) and the Prairies (-13.4%), with a smaller decline in British Columbia (-3.6%). Weakness in Ontario and the Prairies was driven by declines in the urban-multiples component (down 49.4% and 23.6%, respectively). Housing starts increased in Atlantic Canada (8.3%) and Quebec (3.2%). This slower pace is more sustainable and it is expected that housing starts will increase only slightly from this point onward. The forecast assumes that housing starts will average 185,000 in 2012.

Labour market drops

Canadian employment fell in November, with 18,600 jobs cut. The November dip marked the third over the past four months after 199,000 jobs were created in the prior seven months. The labour force, which contracted by 13,800 in October, increased by 1,800 resulting in the unemployment rate rising to 7.4% from 7.3% in October. There were 43,900 service sector positions cut. Goods producers added 25,200 jobs in November with the largest increase in construction (+19,600). Manufacturing companies sliced another 7,300 from their workforce, the third consecutive month of cuts for a total of 79,200. Full-time employment rose by 34,600 following 71,700 positions cut in October. Part-time employment fell by 53,500 in November reflecting the weakness in retail/wholesale. Year-to-date, full-time employment increased by 233,000. The public sector shed 2,200 positions building on the 3,800 jobs cut in October. Private sector employment recovered 11,000 of the 32,000 jobs cut the prior month. The number of self-employed individuals fell by 27,500 in November. On a regional basis, Ontario recovered 17,000 of the 39,000 jobs lost in October. The unemployment rate eased to 7.9% from 8.1%. Most of the job losses were concentrated in Quebec (-31,000) and Saskatchewan (-4,200). Average hourly wages for permanent workers were up 2.6% in November relative to a year earlier.

Inflation rate held at 2.9% in November

In November, prices for passenger vehicles as well as maintenance and repair costs rose. These gains were supplemented by rising prices for fresh vegetables, meat and fuel oil prices resulting in the headline rate rising 0.1%. Moderating the impact of these increases were falling costs for traveler accommodation, gasoline, natural gas and electricity as well as clothing prices. Prices for motor vehicles rose again in November by 3.4%. Clothing prices, which also posted consecutive monthly increases in recent months, declined in November by 4.7%. Compared to November 2010, prices for gasoline were up 13.5%. Vehicle insurance premiums were 4.4% higher than a year earlier while the price to purchase a passenger vehicle was 1.8% higher than in November 2010. Food prices posted a 4.8% rise. Mortgage interest costs, furniture prices and natural gas prices were lower than a year earlier. On balance, the annual inflation rates, both headline and core, held at October's 2.9% and 2.1% respectively. The annual core rate held at 2.1% for the second consecutive month and is projected to move below 2% in 2012. Both the headline and core seasonally adjusted indices rose 0.1% in November, a slower pace than the 0.3% and 0.2% respective gains recorded in October.