Spinoffs from house sales boom
FIONA ANDERSON
Sun
As the sales of existing homes continue to shoot up, so do the spinoff effects to the other parts of the economy as each sale generates, on average, almost $25,000 in additional spending, a report prepared for the Canadian Real Estate Association said.
In British Columbia, that number is even higher — $27,873. And when the resale market is as hot as it is in B.C. that translates into a sizzling retail industry.
Mark Startup, president and CEO of Retail B.C., said retailers have been feeling the effects of the fast-paced resale market for at least two or three years.
“Furniture and appliance and consumer electronics and household-oriented retailers — increased activity in the home resale and home building markets have led in many months to double-digit sales increases in many of those categories,” Startup said.
Between 2002 and 2004, the period reviewed in the report, the resale housing industry in Canada generated 120,000 jobs, one-third of them in the finance, insurance and real estate sector. The sales also fueled ancillary spending, including the purchase of furniture and appliances, moving costs, renovations, services and taxes, an average of $10.8 billion annually.
In B.C., house resales generated an additional $2.5 million per year and created 18,050 direct and 9,670 indirect jobs.
Between 2000 to 2002 each resale in Canada fueled an average of $19,760 in consumer spending and in 1991 to 1992, $16,200 was generated per sale.
“The study shows the tremendous economic impact of the housing industry outside of the actual cost of the home,” CREA chief economist Gregory Klump said in a news release. “When Canadians move, they typically buy new appliances or furnishings, and renovate in various ways to tailor their home to their specific requirements.”
Klump said that the study, originally carried out for the 1991 to 1992 period then repeated a decade later, will now be completed every second year to show the effect resales have on the economy.
There is a widespread perception that new home construction has such a great economic impact, Klump said. Yet there are three times as many existing home sales as there are new homes constructed.