Impact of Trump or Clinton win on Canada’s real estate


The world is watching, waiting…poised. Who will be the next U.S. president?

While political junkies are planning viewing parties for tonight, many analysts, economists and sector specialists are trying to predict what could happen to U.S., world and Canadian financial markets. Canada’s real estate sector is no exception.

Plunging recreational property prices 

“Historically, Americans have been the largest foreign buyer segment in the Canadian commercial and recreational market,” says Phil Soper, CEO of Royal LePage. “Americans—not the Chinese or Japanese, —make up the largest number of foreign buyers in places like Muskoka, Ont., Whistler, B.C. and in Canmore, Alta. Part of the reason is the relative affordability of our recreational properties based on the strength of the American dollar.”

But if the U.S. greenback were to dip in value—say, because of a global lack of confidence of the newly elected leader—this would certainly impact Canadian recreational real estate prices. And that impact could last years. Just look at the Nova Scotia and New Brunswick recreational market. These markets plunged as much as 60% after the 2008/2009 financial collapse, when Americans pulled out en mass. Some of these markets are still in the process or recovering, almost a decade later.

Economy could soften

What’s worse is that promises made by both candidates don’t bode well for exports—and that’s a problem.

“Neither candidate has said things that are particularly encouraging for Canadian trade,” observes Soper. “As both have taken a protectionist stance.”

In relative terms, trade is much more important to Canada than to the United States. The Americans can afford to be insular since they have 325 million people in their market to our less than 35 million. “Any protectionist stance from the U.S. would do significant damage to Canada,” says Soper. And any hit in our slow-growing economy could further prolong our climb out of the ultra-low interest rate environment. Worse, it could prompt lay-offs in certain parts of the country were exports and trade help shape the local economies. This will impact localized housing markets. Think Alberta and low oil prices, and you get the picture.

What if Clinton wins?

Still, Soper is a lot more optimistic for Canada’s economy, and the fate of our real estate market, if Hillary Clinton were to get elected. “She’s been a Secretary of State, a senator and a First Lady,” says Soper, “so she understands the importance of trade.”

While the Democrats have historically taken a more protectionist bent, Soper believes that Clinton has a more worldly view. “I’m fairly confident she’d find a way to ratify the Trans Pacific Partnership Agreement—an important trade deal for Canada.”

What if Trump wins?

If Donald Trump were to win, Soper isn’t so confident. “The Republican party has carried the banner of business-friendly for decades, but Trump has outlined a platform that most business people and leading economists say is very damaging”—both to the U.S. and to the Canadian economy.

For instance, Trump’s plan to place massive tariffs on Chinese imported goods “essentially means he’ll start a trade-war with one of America’s biggest and most important trade partners,” says Soper. This will hurt the U.S. economy and this retraction will be felt among all trade partners, including Canada.

Also, Trump’s plan to “tear up NAFTA,” could end up creating yet another trade war. Plus, Trump’s promise to deport 11 million workers—because they presumably entered the country illegally—will have a dangerous impact on America’s currently tight labour market. Unemployment in the U.S. dipped below 5% in October. “The country is entering what economists call full employment,” says Soper. “By taking that many workers out of the labour force, Trump could bring business to a grinding halt.” That won’t bode well for slow-growing economies.

Urban property prices could rise

Still, the gloomy outlook of a potential Trump presidency may have one silver lining: it could mean an influx of Americans immigrating to Canada.

We could actually see a surge in demand for Canadian homes, says Soper. “The rhetoric of social unrest that has built up over the last few years in the U.S. may have reached a point where some are so fed-up that they decide to head north.”

This would certainly bolster “Brand Canada,” says Soper. In the last 10 or 15 years, the world’s view of Canada has improved significantly. “We’ve attracted a lot of positive attention,” Soper says. “From Voguenaming Queen Street West in Toronto as the second coolest street in the world, to various happiness and liveability rankings from respected organizations, like The Economist, our nation is now considered a top place to live,” says Soper. More demand, may help support real estate prices, particularly in larger urban centres. Of course, this assumes the American dollar won’t lose value and remove the relatively high purchasing power a U.S. buyer would have in Canada.

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