Well, after years of campaigning, speculation, scandals, pointing fingers and bets, all eyes were on the presidential elections in America on November 8th. The winner has emerged, President Donald Trump is set to lead America to a better future, although we don’t have the exact details as to how it will be accomplished just yet.
I don’t think the world woke up to the news, as I am almost certain that they did not go to sleep until the results of the elections were announced. Social media flooded from intense emotions, to light hearted meme’s and predictions of the future- and some inquiries about ticket prices to Mars. One of the most popular re-shared news during this ‘historic’ moment was the fact that the Canadian Government Website had crashed, due to an overload of, what we assume were American Citizens, looking at the immigration policy and how they can relocate up North. Some intense feelings about Trump has shed light on Canada, where it is assumed that the only reason there may be yellow snow up there, is because maple syrup pours down from the skies.
Ok, let’s get into the details as to what this really means for the Real Estate Market in both Canada and the United States. What we know so far, is that the Canadian website did crash, and we also saw a huge surge overnight on job sites, looking for job opportunities within Canada.
Will Americans actually move to Canada?
David Cohen, an immigration lawyer at Canada Visa, confirmed that inquiries were at least 6 times higher than the average, however, this is not the first time to see such inquiries after a presidential election. Though interest was still higher during the 2016 elections, there was also a similar spike in searches and inquiries when George W. Bush was elected as President. Cohen does mention that this is typically an impulse search- Real Estate Agents, don’t get too worked up just yet. From start to finish, the process to migrate to Canada takes about a year, and for those who back out, usually do so three months into the process. He urges Americans to “test out the waters” work and apply for a work permit, which takes a few days to process. The average number of application from U.S. to Canada over the past 5 years has been roughly 6,000 applications, with 2011 being the highest so far, with 8,9500, according to USA TODAY.
Now, let’s dissect what the experts are saying will happen within the U.S. Real Estate Market and the Canadian Real Estate market. Let’s start with the United States.
How Does President Trump Affect The U.S. Real Estate Market
President Trump is not the first president to be elected with a rich background and interest in Real Estate. Two former presidents, who were also real estate dealmakers, included Thomas Jefferson and George Washington, both of whom “loved their property holdings and made sure the U.S. Constitution protected them” according to Brad Inman. Trump, however, has not been too vocal about his plans for the real estate market throughout this campaign. His plans, however, will affect the economy, which will then affect the real estate market. America, and the world, is going through the same emotions as was felt with the morning after Brexit, which ironically, also involved Donald Trump speaking in Scotland about the policy. There’s so much uncertainty, people are still trying to wrap their minds around the news, and are receiving so many opinions from around the world, they don’t know which direction to turn their heads. So first thing’s first, let the dust settle a bit before taking on any concrete news about real estate. This is especially truly if your clients are asking you what is going to happen to the price of their home, and the real estate market, now that Trump is president.
According to Ralph McLaughlin, chief economist with Trulia.com, those who are in blue states may be less confident about the market, while homebuyers in red states, will feel a surge of confidence. The mixtures of feelings will shorten the confidence for investments, but may only be temporary. Trump also has aggressive plans for rebuilding parts of the country, ranging from roads, to building inner communities, which may have an impact on home building. The key, however, are the conditions of increasing minimum wage and job opportunities in order to fully recover, and strengthen, the housing market. In addition, Trump’s plan of getting rid of Obamacare, will mean less operating costs for small businesses, which also includes brokerages as well. Trump has also noted that the building regulation is one the most over regulated industries, stating that “Twenty-five percent of costs to build a house are regulations. I think we should get that down to 2 percent.” If he succeeds in lowering this, then consumers will be able to benefit from more affordable housing. Immigration can also be a touchy subject for some. Trump’s plan to deport almost 11 million illegal immigrants can have an affect on operations. “By taking that many workers out of the labour force, Trump could bring businesses to a grinding halt.” Quite simply, it’s a plan that most business people and many leading economists say is very damaging both to the U.S. and to the Canadian economy, says Phil Soper, CEO of Royal LePage.
Mortgage rates also took a dip post election results, but have slowly climbed back up by the morning. “Mortgage rates are falling because investors are seeing safe yields in U.S. mortgage backed securities, reflecting their confidence in the relative safety of the U.S. housing market,” wrote Trulia chief economist Ralph McLaughlin. The Trump campaign did also mention they had intentions of lower premiums for FHS, making it easier to borrow money, however, this is no definite plan set in place.
The strength of the U.S. dollar has a lot of debate going on amongst experts. If the U.S. dollar does weaken, then there is more foreign investment opportunities within the U.S., bringing some balance. One of the most interesting contributions Trump brings to the real estate market, is his affect on the luxury real estate market in the long term, as he could improve trade with Britons, while aligning with foreign investors, according to mansionglobal.com.
Peter Wetherell, chief executive of Wetherell and a leading London real estate broker, insists that Trump’s win “will bring a property industry leader into the White House for the first time in American history. Without a doubt a Trump presidency will be pro-property and pro-real estate.” He also proclaims that the luxury market will greatly benefit both internationally and across the U.S.
So, in conclusion, once Trump finalizes, or puts his plan into action, we will then be able to have a firmer grip as to where the real estate market is headed. Right now, there’s more questions, than confidence, however the dust will settle. Your real estate clients will not all be fleeing to the North, after all, winter is coming, and there isn’t a secret wall being built along the Canadian/U.S. border, despite what you hear on social media. Keeping yourself updated on the latest news, and even foreign relationships, will be key the next time a client asks, ‘What will happen to the real estate market.’
Oh, Canada, we did not forget about you and how you’re affected by the recent elections.
Keep in mind that the U.S. dollar has had a 30% more buying power than the Canadian dollar. Interest in buying in Canada assumes that the buying power will remain the same. The focus on those who do relocate are mainly on larger urban centres, and mainly in Ontario. Vancouver may not see such an influx of relocators, due to the higher Foreign Buyer’s tax that was passed this past August. Vacation properties in Canada have also been popular among Americans, as the number one foreign investors they are in Canada. A decreased currency could mean less investment in vacation properties. Furthermore, Trump’s announcement about changing the NAFTA agreement could have heavy implications on an already slow Canadian economy. This agreement will affect Canada more than the U.S. economy, which could create lowered businesses and more layoffs.
A lot of the uncertainty is due to a lack of a clear action plan presented by the Trump party, and leaves room for a lot of speculations. New foreign relationships could also play an interesting part for the future of the U.S. economy, and therefore, the real estate market. Once the ‘shock’ of the elections wares off, like always, we will have to keep ourselves well educated and up to date. One thing is absolutely certain, if there is anything situations like Brexit and the elections have taught us, is that in times of uncertainty, everyone looks to experts for advice. As real estate agents, you must do your part to become an expert within your community, and that includes investing in yourself through education, learning what to say to clients, being well aware of local, national and international issues and how it will affect your client. You can offer more value during uncertain times, than ever before.