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Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

May 5th - 2009

Canadians retrench to weather economic crisis

Concerns over the cost of living have led to a bunker mentality among Canadian consumers according to a recent Pollara Strategic Insights survey.

Concerns over the cost of living have led to a bunker mentality among Canadian consumers according to a recent Pollara Strategic Insights survey. The objective of the “Crisis Watch” tracking research was to gauge the attitudes of Canadians towards the financial and economic crisis and how those changes will affect consumer behaviour.

Pollara conducted the online survey during the first week of March this year. Approximately 2,000 people from across Canada responded and results are considered accurate to ±2.19 per cent nineteen times out of twenty.

According to the survey results, 43 per cent of Canadians believe the effects of the economic crisis will be both short term and long term, and they are acting accordingly. Only 13 per cent say the recession will not affect them, 23 per cent feel the impact will be short term, and only 12 per cent have no hope for any improvement on the horizon.

The underlying theme indicated by the results is that consumers believe there will be some recovery, but things will never be the same again. Although job security is a significant driving fear, it isn’t the main one. Overwhelmingly, cost of living is the single major concern of respondents – 47 per cent cite that as their biggest worry – far more than value of investments (33 per cent) or job security (15 per cent).

Sixty-two percent of respondents describe their circumstances as “just getting by”, with 31 per cent considering themselves ‘financially comfortable” and 78 per cent feel that the standard of living in Canada is declining. The top financial priority of Canadians, according to the survey, is to get out of debt. Credit and consumer debt are the top targets with 23 per cent reporting that they are actively paying down credit cards and 19 per cent reporting paying off other consumer debts as well. About one fifth of respondents list reducing spending as their top priority, and only seven per cent report that they will keep their spending the same in 2009.

Impact on the real estate market
Even historic low interest rates are not moving those surveyed into the housing market. When asked about the housing market, only two per cent said they are definitely planning to take advantage of low interest rates and buy a new home in 2009. A further nine per cent said they might. Survey respondents ranked the most important variables driving interest in real estate to be lower house prices, followed by lower interest rates and a stable economy.

With further price declines three per cent say they would definitely buy, eleven per cent more might. However, considerably lower real estate prices may push more Canadians back into the market – 40 per cent surveyed cite that as the first condition for jumping back in. But 24 per cent indicate a stable economy as their main pre-condition.

The good news is that most respondents don’t believe the U.S. housing crisis will be imported into Canada. Eighty-two per cent consider the Canadian housing market to be in better shape than the U.S., and 75 per cent agree that the Canadian market is not similar to that of the U.S. There is relatively little fear of a U.S. style housing crisis in Canada with only four per cent feeling strongly that it could happen here. At the same time, 57 per cent feel Canadian foreclosures will increase, yet only four per cent report they may personally face foreclosure.

As for the federal government’s stimulus package, most respondents feel that tax breaks are the only aspect of the stimulus that will affect them in the next 12 months. A third of the population could take advantage of renovation rebates, but the home buyer incentives are not likely to incense many people to become active in the real estate market. Respondents feel that federal tax cuts might have some effect on the economy over the next 12 months -- 38 per cent saying it is somewhat likely and 13 per cent very likely.

But other measures are felt to be less effective – only 22 per cent feel increased unemployment benefits will have economic benefit, and only 14 per cent feel that incentives to purchase a home will have an impact.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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