It’s election season in Canada and “economic impact” will be a top priority for most politicians. Read or hear anything about “megaprojects” – public or private – and one of the first things you’ll learn is the number of jobs and income the project is expected to generate. Economic impact is a big selling point for megaprojects but it’s also just as important for all sorts of economic activities.
Think of home purchases and sales through the MLS® System. An individual transaction might not make much of a dent on the economy of Canada but when taken together, the nearly half a million transactions each year (average of 464,363 over the 2012-2014 period) generate quite a punch.
Earlier this year, Altus Group undertook important research for The Canadian Real Estate Association tracking the many ties between resale housing transactions through the MLS® System and the broader economy.
Some $23.7 billion per year of ancillary spending was generated as a result of purchases and sales of homes through the MLS® System over the 2012-2014 period and an estimated 171,650 jobs per year were also supported by this activity.
The reason home transactions provide such a boost to the economy is the additional homebuyer spending – spending that is incremental to normal annual spending by households. Over the first three years, homebuyers spend on a wide array of goods and professional services, such as:
- bedding and towels
- lighting fixtures
- window coverings
- lawyer, bank, and appraisal fees
Buyers also spend on moving costs and pay considerable taxes to governments, including land transfer taxes in many jurisdictions.
In addition, homebuyers typically undertake home repair and renovation projects on their newly-acquired homes. Most homeowners in Canada spend something on renovation and repair every year, but recent buyers spend a lot more, up to $9,500 extra, over the first few years they own a home.
There has been a lot of talk lately about the economic slowdown in Canada, at least through the first half of 2015, related to a slowdown in the oil and gas sector. But housing resales have remained buoyant with sales in the first half of the year up about 6.5 per cent from the same period in 2014. That makes the resale housing industry, with all its spin-off economic benefits, a key driver of economic growth in this country.
So be proud to be part of such an important industry and don’t be afraid to remind your politicians just how important your “megaproject” is to the Canadian economy!