The housing market seems to have cooled off (for now), and people have come to their senses about the unsustainability of the housing price increases over the past few years. The market has clearly not crashed, as some predicted and is now working on more realistic levels. And this can be a good thing for Canada’s economy.
Despite home sales slowing down by around 40%, and lower selling prices, some economists believe the economy will actually improve. The reason? More money is freed up for capital investments rather than expensive homes. Capital investments can lead to a more productive economy whereas housing doesn’t add as much to the productive capacity of the economy.
Capital investments can help businesses grow. This is critical for Canada’s economy because Canada’s population is growing as a result of Trudeau’s immigration policies. This contrasts our neighbours to the south where Trump’s newly proposed immigration policies that would limit immigration.
The immigrants are not just refugees, but also highly skilled workers and entrepreneurs who will seek financial and high tech centres around the GTA. The increased immigration to Canada will be beneficial and make the loonie more valuable.
Meanwhile, we will have to see how the foreign buyer tax will affect home purchasing. Condo sales are still surging which points to a higher demand for affordable housing. Densification, smart planning, capital investments, and strategic immigration policies will keep Canada’s economy healthy and strong.
Photo Courtesy of Tristan Schmurr