December 5, 2016 Article
2016 was an unpredictable year for the vast majority of Americans and the global citizenry at large. The US elections which saw Donald J Trump emerge victorious over Hillary Clinton was one that left many shocked.
However, the elections have come and gone, and as we await the official power change in January, it is pertinent to understand how the victory of Donald J. Trump is going to affect the Canadian real estate market.
Trumps’ election into the white house and the subsequent extension of the Republican party’s grip on all American political system will in no doubt affect the operations of the real estate market in both the United States and her neighbors; Canada. On the Canadian housing market, the following are expected to occur in the wake of Trump’s win:
SHORTAGE OF HOMES IN MAJOR CITIES: If Trump makes good his promise of deporting about 11 million workers – because of illegal entry into the US-, the next port of call for majority of the deportees would be to head north into Canada. More population for the Canada means more people looking for homes to rent or buy and could lead to a population explosion if not properly handled. Recall that the Canadian citizenship and immigration web page crashed as a result of excessive traffic as the elections results unfolded. Ever wondered why? There were more people applying than the website could carry hence the subsequent crashed.
LOWER CANADIAN LENDING RATES: A continuous increase in the US dollar could stop a planned increase in lending rates and also result in lower mortgage rates in Canada. A further weakening of the Canadian dollar and a possible threat to the US-Canada trade agreements could lead to a negative interest rate, experts have speculated.
BIGGER INVESTMENT OPPORTUNITIES: Trump also promised a 45 percent tariff on goods imported from China – if China refuses to change its “Unfair” trade practices with the US. What this means for Canada is that the bulk of Chinese investors and business owners might decide to head north into Canada if Trump makes good his promise. In the event that more Chinese companies start investing in Canada, there is all likelihood that the demand for real estate would more than double.
HIGHER COST: Economist principle states that the higher the demand, the higher the price. With an expected surge in the Canadian population, it is not far-fetched why the prices of properties in the regions such as Toronto, Brampton, Mississauga, Markham, Richmond Hill and Vaughan are projected to be on a steady climb. With the current state of the US dollar and its higher purchasing value over the Canadian dollar, experts have speculated that the cost of properties would go up as high as 20% as a result of the rush by US citizens going on a “Trump-induced” exile. With cities such as British Colombia already introducing a 15% tax on non-Canadian residents who are seeking properties in the area and Ontario following suit, it is not hard to see how Trumps presidency is already and would continue to affect the real estate market at least for a while.