No one is going to suggest that the Canadian Real Estate Market Goes as the markets in Vancouver and Toronto go, but there’s also no denying that the each of these locales and size and intensity of the housing markets there have some serious sway in the national picture. Foreign buyer restriction legislation introduced in both has had an effect in cooling the local market, and as such there’s been something of a downturn from coast-to-coast when evaluated as a whole.
To be sure, there are other factors contributing to a drop in home sales in Canada in certain areas, and there’s also the issue of where certain side industries related to real estate have been set up based on the understanding that the market will continue to grow, or at the very least stay consistent. The contrary of that hasn’t materialized yet, but there’s rumblings that a significant downturn could be on its way.
Here at 4GoodHosting we’re keen to offer our online lead generation system for realtors, but we’re also wise to the twists and turns of the industry and this topic is definitely one that’s worth discussing.
The prospect of a performance drop for the Canadian residential real estate market looming just beyond the horizon has been forecast for years, and it’s a development that might prompt a mass exodus among the thousands of workers that have entered the sector over the past few years and buoyed to do so by the growth they saw in it. This included everyone from agents and home stagers to construction workers and tradespeople like home inspectors.
The big picture issue is that the loss of a large number of skilled industry-related professionals might lead to even more of an industry slowdown, and – in the even bigger picture – a troublesome slowdown of a national economy that has become accustomed to leaning heavily on the housing industry.
Take a look at red-hot Toronto, for example. The number of real estate agents working in the metro region has grown to over 48,000 since 2008, representing an increase of 77% that’s compared to a 26.9% growth country-wide during the same period.
More Risk for Tertiary Interest / Employment Groups
There’s no disputing that a lot of people see real estate as their get-rich-quick scheme, but as we’ve seen across generations – when the market turns, a good majority of these agents leave the industry. Of course, there has nearly always been too many realtors in major urban centres in Canada, and some would say that this downturn might actually have something of a benefit in that it would weed out of some of those agents who got into the business for the wrong reasons.
Realtors who are reputable, well established, skilled, and financially solid will be more likely to weather the storm, but it is those tertiary sector jobs that will almost certainly take a hit and where the ‘established’ individuals won’t have the buffers they need to necessarily survive the downtimes.
Much of this will be related to the fact that home stagers, remediation pros, inspectors etc etc. are directly affected by the basic number of homes being bought and sold. They don’t have the additional interests or revenue streams that a realtor may have, and this will be particular true of service providers who aren’t well and long-term established.
Not a Cause for Immediate Concern
Most senior economists, however, seem to be of the belief that such a decline will not be an immediate threat, with the consensus being that the jobs slowdown will not occur in a single month, but over a six-month to one-year period, and the hit to consumption may take up to a couple of years to really be felt significantly.
Others still argue that the impact will be more pronounced and longer-lasting, perhaps even going so far as to cut down Canada’s annual GDP growth rate by 0.5% over the next 5 years.
One thing is almost certain – there’s going to be a “sharp” housing correction in Toronto and Vancouver, but whether or not that translates nationally remains to be seen. The results came right before recent data showing a 6.7 per cent drop in national home resales in June, the largest monthly decline since 2010 and the third consecutive month of such decreases.
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