Donald Trump as President - What does this mean?
Wednesday Nov 09th, 2016
So this morning we woke up to the news that Donald Trump has been elected president of the United States. So what does this mean to us in Canada and real estate prices?
Well today it means Bailey's in my hot chocolate is acceptable at breakfast, but long term I think its simply too early to tell. What is not too early is that regardless of who the US chooses to lead them our real estate market is different from theirs.
First and foremost, it is important that people don't panic. Reacting too quickly will trigger a self fulfilling prophecy that doom is near. Everyone needs to take a deep breath, realize that similar to Canada one man in isolation, despite what he may think, can't change the world. Nearly everything he proposes still has to be approved by congress and the senate and right now, despite the Republicans retaining power, they aren't exactly best buds. There are a lot of bridges to repair before anything can realistically happen and that all takes time.
But it is important to remember that despite being our closest neighbours there are some key differences between Canada and the US as it relates to our economies and real estate.
Banks and credit unions are much more regulated in Canada. There are very strict lending guidelines and as you are probably aware, the CMHC just imposed even tougher guidelines for high ratio mortgages (mortgages where folks are putting less than 20% down). This means the government in Canada has extra measures in place to help ensure that folks who are in their homes can afford to stay there despite fluctuations in the market.
The Canadian economy is more diversified than it was during the last Republican president. We are less reliant on the automotive industry and large scale manufacturing which means we have a lot more "buffer room" than before. Make no mistake - Canada's economy is closely tied to the US; however, we can withstand some greater changes than previously. Canada also has great relations with our other allies. This means that we can continue to negotiate and trade with other nations making us even less reliant on the US.
Canada will be that much more appealing to those wanting to move to another country. This has been the punch line for a number of jokes during this election but its true. Whether US citizens are going to try to cross the border or people from other nations are deciding where to move to, Canada will continue to be a top choice. This means that demand will remain high.
So what does this mean to you?
Over the next weeks the markets will jump around but they will inevitably find their footing and things will calm down a little. Major businesses on both sides of the border will be drafting plans to ensure they are successful given some new realities. This will potentially offset any changes to the marketplace, even for the short term.
So if you had plans to move or sell, I would continue to follow through with those plans. Don't wait to "see" what the market will do based exclusively on the US election. It will be months before Donald Trump is actually in power and months after that before "things get done". You could be settled in to your home before he has a chance to change Mount Rushmore.