The real estate industry stands out as one of the few industrial sectors that rely heavily on numerous other industries and the performance of the national economy for sustainability. This reliance explains why real estate in Canada and USA often lead the tumble whenever other sectors like the finance and stock markets shake. A case in point the 2007/8 housing bubble. There is, therefore, a need to understand how different economic trends impact the industry.
1. Inflation and interest rates
The rise of inflation in the country forces the government to increase the interest rates. As these two go up, they drag the construction costs and mortgage rates along. Such raises result in a shakedown of the markets and firms like housing agents as most people avoid property purchases and investments.
2. Foreign investments
Real estate in Canada and the USA property markets are considered some of the most stable industries and, therefore, a principal investment option by foreigners. In this case, a well performing global economy often results in an influx of foreign investments in the two northern American property markets and vice versa.
3. Government subsidies
In most cases, government subsidies get into the real estate Canada and USA in the form of favorable tax policies like reduced taxation on property sales or raw materials purchases. Subsidies in other sectors of the economy that relate directly to the property markets like reduced income tax or even subsidized healthcare also translate to more increased investments in the industry.
4. Performance of leading economy sectors
The performance of several leading sectors of the economy also has a significant effect in the real estate markets and, in effect, the sustainability of housing agency profession. For instance, the current wave of increased fuel production and subsequent low cost of energy and gas has lowered construction costs and prompted more action within the industry in Canada and the USA as citizens channel the savings on gas to property investments.
5. City growth momentum
The economic performance of leading capital cities in the USA and Canada also play a significant in shaping the real estate. For instance, the current millennial involvement in low-cost property purchases in the boroughs surrounding major cities like New York and Ontario has caused a shift in how real estate agents view the market.
Real estate in Canada and USA is highly dependent on both the national economy and performance of other economic sectors as well as global economic trends. The property markets in these countries can thus be said to the replicate the performance of the rest of the economy.