| Housing
transactions a major economic engine
April 16, 2003. Resale homes have a significant impact
on the Canadian economy. That's the consensus of a recent
report released by the Canadian Real Estate Association (CREA).
Resale housing transactions in Canada generate $7.5 billion
in additional spin-off consumer spending, and help create
more than 100,000 jobs a year. The additional economic activity
after the transfer of the existing home includes renovations,
the purchase of furniture and appliances, professional fees
and moving costs. "The study shows the tremendous economic
impact of the housing industry, outside of the actual cost
of the home," said Gregory Klump, Senior Economist of
CREA. "When Canadians move, they typically buy new appliances
or furnishings, and renovate in various ways to tailor their
home to their specific requirements."
"Job
creation is also a major factor of the sale of a home. The
study shows that almost 85 percent of the jobs created annually
because of the resale housing market are a direct result of
the transaction," Klump adds.
Many
of the direct jobs created are in the finance, insurance and
real estate sectors. According to the study, most of the construction
jobs are also created directly by the home transaction because
renovation expenditures typically happen within the first
few years of purchase. Other jobs come from professional services,
which include public service employment, trade jobs and manufacturing.
Other industries that benefit from resale transactions are
transportation and storage; communications; utilities and
retail trades.
2002
was a record-setting year for Canada's resale housing market.
Canada Mortgage and Housing Corporation suggests 2003 will
be a record year for renovation spending, as many recent home
purchasers will begin renovations during the year.
Clayton
Research, who conducted the study, determined that between
January 2000 and November 2002, each housing transaction in
Canada generated an average of almost $19,800 in additional
consumer spending. A similar study prepared by the same market
research company released in 1994 determined that in the period
between 1991 and 1992, a home sale generated $16,200 in additional
consumer spending. This represents a 22% increase in economic
activity generated by each home sale in the ten years between
the two studies.
In
that same period (1992-2002) the national average house price
increased 26%. According to MLS statistics, the national average
price of a resale home in Canada in 1992 was $149,572. In
2002, the period covered by the latest Clayton Research study,
the national average price of a home was $188,138.
This
article prepared from a news release issued by the Canadian
Real Estate Association. While the information contained in
the article is believed to be accurate, it is not warranted
to be so.
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