What Trump Means for Canadian Real Estate Market

What Trump Means for Canadian Real Estate Market

There have been a lot of articles and interviews in the media about how President-elect Trump’s ascendance November 8th, 2016 may affect the real estate market in Canada.

Much will be born out with time and research but in most regards it is much too early to tell, even if the Government of Canada’s Immigration website crashed the morning after the U.S. Elections.

Here are some thoughts and questions to be discussed:

  • Would the U.S. Citizens want to immigrate to Canada when this may be a four-year bubble? Remember that George W. Bush did not win the popular vote and the sun rose the next morning...
  • Would the United States lose its status as "the home of the free and the land of the brave" in terms of immigration? Would Canada then become a stronger option? Note that the Government of Canada has committed to an increase in immigration to 300,000 new Canadians in 2017 and there is no restriction at all on non-Canadians buying property in Canada, only higher taxation in the Vancouver market.
  • Would Trump’s America encourage Canadian ex-pats, living in the U.S., to move back to Canada... Especially if they were part of a cross border family?
  • Would the opening of NAFTA and other trade agreements make it harder for Canadians to hold jobs in the United States?
  • Foreign students in Canada are automatically granted work permits for three years after graduation whereas Canadians studying in the States are forced to return after graduation. Will it be even more difficult for those Canadian graduates to find work in the U.S.?
  • Will poorer Americans losing Obamacare be more interested in moving to their nearest neighbour that has Universal Health Care?
  • Will the race issues that were exposed during the Election in the United States make a good part of the population feel they are excluded from the Trump society? Here we must assume that Canada does not head towards the nativist swing that is sweeping the world...
  • Will the second largest group of foreign buyers in the United States look to better value in other countries for their winter homes, or will they choose to stay in Canada? Until the devaluation of the Canadian dollar, Canadians were the number one foreign buyer in the Unites States, now it is China.
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It is important to stay positive. In the wake of the post-election sentiment, a lot of negative projections were mentioned, but it's not all lost. RBC Dominion Securities came out with a report that maps Trump's policies and their impact on our market.

Donald Trump's victory means united government. The GOP controlling the White House, the House of Representatives, and the Senate means "about 1,000 basis point better on average for Canadians stocks than has divided government". It is based on monitoring the past  seven decades of the US government.

Stock market may plummet in the near time whereas gold can profit, as the RBC expects "fear trade" to take hold.

Another policy that may negatively affect Canada is interference with NAFTA. The president-elect called it "renegotiation of NAFTA" and it was a part of his remarks on trade policy, which included China as well.

While in the case of NAFTA Canada can suffer both directly and indirectly, it is possible China will look for more investments in Canada rather than jump through hoops in the U.S..

One of the most controversial parts of Donald Trump's campaign was his immigration policy. The RBC reports that "roughly 20 per cent of Canada's population is foreign-born, which is about twice that of the U.S.". Now, there is no doubt about that Canada's immigration policy is much more welcoming and with the turn of the table in the U.S. we are looking at better access to both highly-educated immigrants (50 per cent of all workers that enter the country each year considered highly educated, according to the OECD) and lower cost unskilled workers.

How will all of these changes move the real estate market in Canada? Will Canada looking more attractive for its liberal and caring lifestyle be a good or a bad thing for Canada’s real estate market? I think it will be a good thing. 

The Canadian Real Estate Market will become even busier. I look for prices to increase for purchasing or renting, and more demand to be felt in Vancouver and Toronto for existing product and new building.

What do you think?

Title photo by Matt Johnson

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