Real Estate Chronicle: The Economic Impact of Home Sales: a Canadian Study.

Wednesday, October 19, 2005

The Economic Impact of Home Sales: a Canadian Study.

It is an undisputed fact that MLS resale housing transactions generate significant economic activity. This certainly should not come as a surprise, considering that MLS residential transactions throughout Canada account for 95 percent of all residential transactions. The question is: how much of an economic activity is generated?

A new study by Clayton Research Associates finds that the purchase and sale of homes through the MLS system generates an average of CAD $19,800 per transaction in additional consumer spending. Clayton Research is a firm of urban and real estate economists providing strategic information, analysis and advice to private and public sector clients across Canada. The firm specializes in real estate market analysis, land use planning issues, consumer spending and borrowing research, and building products demand. The study, which was commissioned by the Canadian Real Estate Association (CREA) found that the $19,800 increase generated by each single real estate deal includes:

fees paid to professionals such as realtors, lawyers, appraisers and surveyors;
taxes and fees, including registration fees, paid to governments;
purchase of new appliances, furnishings as well as renovations.

During the span of time scrutinized by Clayton, which ran through the period between January, 2000 through November, 2002 an average of 381,800 homes changed hands annually.

The study found that when Canadians move, they typically purchase new appliances or furnishings as well as renovate. As a result, resale housing transactions generate CAD $7.5 billion per year in additional consumer spending and help create more than 101,600 jobs attributable to moving. This is, unquestionably, a significant contribution to the Canadian economy. More specifically, consumers spend their money as follows (all figures are in CAD):