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Will Canada's Real Estate Market Get Trumped?

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CANADA TRUMP
Jonathan Ernst / Reuters
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What Trump's Presidency Means for Canada & Our Real Estate Market

I think I speak for (almost) all Canadians when I say that Donald Trump's win came as a wee surprise. Now that the shock has worn off, just weeks before he takes office, Canadians everywhere are asking what this means for us. While the rumour mill churns, I'm left wondering what Trump's presidency means for Canada and our real estate market. Will Vancouver too, get trumped?

The Trump effect on big banks

As news of Trump's win echoed around the globe, the world's financial markets felt the rumble. An article in Forbes reported that Goldman Sachs' stock ballooned by 30 per cent.

In case your memory is short, Sachs was one of biggest players in the 2008 U.S. housing market meltdown that plunged the world economy into the dark ages. And it gets better. Sachs' COO Gary Cohn will be the director of the White House National Economic Council in the Trump Administration as announced earlier in December. "With Cohn advising President Trump, Goldman Sachs will have one of its own advocating on economic policy," Forbes stated.

This move is relevant to Canada and our housing market insofar as the strength of the U.S. dollar affects us in myriad ways. If the American economy continues to react positively, a stronger U.S. dollar could send even more buyers north of the border.

vancouver home for sale
Realtors' signs are hung outside a newly sold property in a Vancouver neighbourhood where houses regularly sell for C$3-C$4 million Sept. 9, 2014. (Photo: REUTERS/Julie Gordon )

Trumped-up currency

Since Trump's win, the U.S. dollar hit an 11-month peak. A report from Fortune held that according to economists, this is likely due to the possibility of "faster inflation and wider budget deficits, if president-elect Donald Trump should go on a U.S. spending spree..." In contrast to the buoyed U.S. buck, Mexico's peso took a beating like an emptied-out piñata. In Canada, our aptly named Loonie has been left trembling as Canada holds its breath to see if Trump's stance on free trade holds. If so, the Loonie could plunge even further below its counterpart.

Pedal to the metal on Canadian mining

In contrast to the Canadian dollar, the mining sector saw shares of many companies rise in response to the former reality TV star's promise of major infrastructure spending. As a result, the price of copper alone rose around 30 per cent. Relied upon heavily in infrastructure, the metal is used for electric cables that power cars, telecommunications, and manufacturing.

Location, location, location

MoneySense reported recently that Trump's win could have a positive outcome for home sellers in Canada. One possibility is that an increase in demand could come from those who decide to pack up and head north. This demand could buffer current housing prices, particularly if the U.S. dollar holds its current strength. But MoneySense also remarked that the GVA's new Foreign Buyer tax would likely negate any American interest.

One thing is for sure: no one knows what to expect.

Trumproll, please...

The sentiment that Vancouver real estate will not see much effect as a result of Trump's win was echoed in a piece published by the Toronto Star. In a statement from Canadian Real Estate Association chief economist Gregory Klump, "It's too early to know what it means for Canadian housing markets. Nobody knows what it means for the Canadian economy writ large, let alone housing markets across the country."

It could however, make Canada look "more attractive" to American buyers looking for investment property. Canada's welcoming, tolerant stance in the face of Trump's increasingly secular sentiments could provide a breath of fresh air for our American neighbours. Personally, I have seen an increase in inquiries from American residents looking at purchasing either a second home or an investment property in B.C. With a strong U.S. dollar, even the 15 per cent non-resident tax is not proving to be much of a concern for our friends south of the border.

As the dust settles after the American presidential election, one thing is for sure: no one knows what to expect. With Trump's blatant disregard for honouring his promises, the implication of his presidency on Canada is impossible to assess.

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