Average home sale yields $32,200 in additional consumer spending.

OTTAWA – June 12, 2007

The resale housing industry in Canada generated more than 158,000 jobs and an average of $15.3 billion annually in the period from 2004 and 2006, according to a study prepared for The Canadian Real Estate Association by Altus Clayton.

The report says each residential MLS® transaction generated an average of $32,200 in additional consumer spending in the period from 2004 to 2006. This included the purchase of furniture and appliances, moving costs, renovations, services, and taxes. From 2002 to 2004, the average transaction yielded $24,697 in additional consumer spending. In the period from 2000 to2002, it was $19,760.

The new study says the economic impact of each MLS® sale varies by province or region, from a high of $40,450 in British Columbia to $20,325 in Atlantic Canada. The report notes the spending relates to the cost of moving from one home to another and for renovations after moving in – it does not include any renovation expenditures by sellers to prepare properties for sale.

“Real estate continues to be one of the major engines driving Canada’s economy,” said CREA President Ann Bosley. “This study shows the tremendous contributions Canada’s resale housing industry makes to the economy above and beyond the actual cost of the home. When Canadians move, they typically buy new appliances or furnishings, and renovate in various ways to tailor their home to their specific requirements.”

“Purchases and sales of homes trigger additional expenditures that have broad economic impacts,” said CREA Chief Economist Gregory Klump. “Job creation is also a major factor of the sale of a home. The study shows that more than 94,000 jobs are created in Canada each year as a direct result of resale housing transactions.”

The economic impact of the market for existing homes is also reflected in the sales processed by MLS® systems in Canada in 2006. The 2006 national MLS® report from The Canadian Real Estate Association says there were 483,917 residential properties sold through the Multiple Listing Service® last year.

The complete updated Altus Clayton report here.

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Dramatic run-up in the dollar means business can now look for bargains Mark Zilbert, a former Montrealer who now runs a real estate agency selling million-dollar condos in Miami Beach, is quite content that the U.S. dollar is tanking against the loonie.

He says the amount of business he’s doing with Canadian clients is up about 20 per cent over the past six months.

“There’s always a number of factors that influence the spurts in business that we see – interest rates, property taxes. Currency has definitely had a substantial impact on Miami real estate,” said Mr. Zilbert, the 43-year-old president of Zilbert Realty Group.

“When the dollar was doing very poorly, we saw our Canadian business just drop off. Everybody wanted to wait and see what happened,” he said. “Clearly, a lot of Canadian buyers are taking advantage right now, and are starting to look around and shop.”

They’re even willing to book trips during the month of July to go condo shopping in Miami, something that Mr. Zilbert says he has rarely seen.

It’s one example of how Canadian consumers and companies are digging into their pocket books to see whether they can take advantage of the high loonie.

“With the Canadian dollar as strong as it is, it’s a bit like a gigantic sale sign going up,” said Simon Nyilassy, the chief executive officer of Calloway Real Estate Investment Trust, which is in talks two retail centres in Oregon. “It will definitely encourage us to look at more,” he said.

The favourable exchange rate isn’t the largest factor that Calloway would consider as it weighs U.S. acquisitions, but it certainly helps, Mr. Nyilassy suggested.

Stephen Suske, the co-CEO of Chartwell Seniors Housing Real Estate Investment Trust, said the REIT is still digesting a recent acquisition. But, once that’s done, it is very interested in expanding its U.S. platform and “the rise in the Canadian dollar, that is good for acquisitions.”

Colin Walker, managing director at investment bank Crosbie & Co., suggested he doesn’t expect Canadian firms to go on a full-blown shopping spree for major U.S. companies as a result of the higher loonie.

Most large acquisitions are made for strategic reasons, he said. “The truth is, I don’t think people make acquisitions due to currency.” Even if they did, there’s an offsetting factor at the moment, Mr. Walker said. The government’s decision to change the rules governing how companies can deduct interest on borrowings for foreign investments is causing Canadian companies to hold off on acquisitions, and that’s outweighing the impact of the loonie, he said.

Read the complete Globe and Mail article