For those of us home owners who have been watching with angst as home prices south of the border have collapsed precipitously, there is some welcome news: resale prices for Canadian homes rose to their highest average on record in May. This is in the context the fourth straight month of increases in sales activity, and improving consumer confidence.

This is particularly good news for those of us on the West Coast, where we’ve seen the greatest gain. Interestingly, these gains in the West, where there are some of the nation’s most expensive markets, are skewing the national average price. According to the Canadian Real Estate Association, the average home price has recovered 16.4 percent from the lows reached in January.

Of course, this is terrible news for first-time home buyers, especially in British Columbia where we “enjoy” the country’s most expensive residential real estate. The effect of this is partially offset by the lowest mortgage rates in decades.

This is the first year-over-year increase since May 2008.

Home sales rose 8 percent to 37,649 units in May from April, the fourth consecutive monthly increase on a seasonally adjusted basis.

As Doug Porter, deputy chief economist at BMO Capital Markets, point out: “In the short space of about 18 months, the housing market has gone full circle from a sellers’ market, to a flat-out buyers’ market, and back to a sellers’ market.”

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Thanks to Baba Brinkman, a Vancouver rap artist, for the above.

See it here:

He really gets into it around the 2-minute mark:

The Dow Industrials lost 3.8%, the S&P 500 was down 4.6%, the Nasdaq fell 4.2%, and the Russell 2000 was off by 4.3%. The weakness was deep and broad. There were just 218 advancing issues on the NYSE compared to 2,815 decliners and 2 new highs against 238 new lows. According to our friends at Lowry’s, today was another 90% down day with down volume accounting for 96% of total volume.

Within the S&P 500, all 10 sectors spent the day in negative territory and roughly 98% of all holdings closed in the red. Insurance companies, banks, tire manufacturers, and coal miners led the decline. Wal-Mart was the only Dow component to finish the day higher after reporting strong quarterly results. Gold miner Newmont Mining was another notable gainer.

As with all 90% down days, it is likely that we now face the potential for a short rally from oversold conditions. The move could be quite ferocious, similar to the one that followed the 90% down day that set the bear market low on November 20. There are two warnings flags, however, that lead me to believe the rally will be fleeting even if it is flashy: First, lower prices are still simply not encouraging buyers to get off the sidelines, as buying power continues to fall while selling pressure intensifies. Second is the extreme weakness among the financials. As represented by Financials Sector SPDR (XLF), the sector breached its January lows and is now in a freefall. Buying power in the group continues to fall away and confirms the trend. Target for the XLF is now $5.50.

A Fair Country by John Ralston Saul

Reading “A Fair Country” by John Ralston Saul.

I find the premise appealing.

Saul argues that Canada, rather than being born of the two solitudes (English & French), we are in fact a Métis nation, heavily influenced and shaped by aboriginal ideas. This can be seen in our deeply held positions on egalitarianism, a proper balance between individual and group, and strong our leaning towards negotiation over violence. Saul argues these are all aboriginal values that Canada has absorbed through the last 250 years.

As I said, I find the premise appealing, and I see within it the possibility, a way through, a resolution to the history of devastation Canada’s First Nations continue to experience. For if First Nations are recognized as among Canada’s founding peoples, I can’t help but believe there can be a brighter future for all of us.

At some level, I wonder if it’s not simply another form of cultural appropriation, that we’re trying to once again put aboriginals in a position they’re not interested in taking. But there does seem within this idea the opportunity to come together.

His comments on immigration are also quite timely, and in particular, he make a strong point that the conservatism seen within some groups of new arrivals is nothing new, and is nothing to be afraid of, that Canada has seen this throughout its history:

There are those in Canada wo are as panicked as the Europeans about the country being so open. They talk a great deal about our values – usually in a vague but urgent manner – and worry about the presence of so many immigrants from extremely conservative religious and social backgrounds. They forget that that has almost always been the case.

Did the Northern Irish arrive in Canada in the nineteethn century open-mined and ready to learn French while reaching out to Catholics? Did the attitudes toward women’s rights of many Portugues men from the Azores match those of most established Canadians? What about the attitudes of Serb and Croat immigrants to each other? What about the Finnish communists who went to cut logs in northwestern Ontario? Or the Italians from small southern villages? The whole Canadian experience of immigration has been one of experimenting with adaptations. It’s not about humiliating people by shutting them into preconceived models.

Again, there’s opportunity in these words.

Common sense on the street dictates “As goes January, so goes the year”.  If that is the case, it’s going to be tough, and possibly quite ugly for the rest of the year..

CNBC points out the 2nd-worst January was 1916, when the Dow dropped 8.6 percent.

S&P is at 825 at yesterday’s close. The inability to hold above the 850 level for even a day is very troublesome, suggesting that a visit back to November lows, or possibly worse, are certainly in the realm of possibility.