Message from the CEO

Reasons for optimism abound

Those of you who have heard me speak on the long-term future for our profession, and my perspective on where we’re headed as a country, know that I am an optimist on both counts. Both Canada and Royal LePage have enjoyed a remarkable run this past decade, with growth that consistently outpaced other countries, other industries and other companies. My rosy prognosis for our future is based upon fundamentals already in place. And the belief that leadership in our country will continue to do the right thing – more or less.

Understanding Canada’s place in the world is helpful in determining the future of our country’s real estate market, so let me start with a bird’s eye view of Canada. Yes, we rocked the planet as host of the Olympics, but I’m referring to what gives strength to our economy. Canada’s somewhat stormy but high profile hosting of the G8 and G20 summits highlighted our position as a global economic powerhouse.

In the next few paragraphs, I’ll provide my perspective on Canada’s political and financial soundness and our competitive strengths and weaknesses, relative to other nations. This is not a complicated macroeconomic perspective, but one which I believe can be boiled down to what real estate professionals do each day. And by extension, I hope that it will assist you in articulating to your clients why there is almost never a bad time to invest in real property in our country.

Inventory

A flourishing real estate industry is dependent on a few fundamentals: the total number of homes available for sale must increase over time, the number of buyers must grow, and the income of those buying houses must appreciate. Luckily, we are in an industry where the total inventory of products for sale is always increasing. A property, once built, is permanently added

to inventory. Even in bad years, we build many houses. Canada finished 2009 with our home builders on track to add more than 100,750 houses to our inventory of ‘future product’ in 2010.

Population growth

Of course builders only build if there’s someone to sell to. Population growth is a category that Canada excels in, relative to much of the developed world. While Canadians are not reproducing enough to grow our population, we are producing more future homebuyers than many other countries. The real success story rests in our ability to attract immigrants from around the world. Each year, a quarter of a million new people arrive on our shores from every corner of the planet. The ‘brand’ that is Canada is in high demand among those world citizens who have the means to relocate their families. Think of ‘Canada’ as the nation-equivalent of Royal LePage. We are able to recruit the best and the brightest!

Employment and opportunity

As gorgeous as our beaches and mountain vistas may be, the world’s migrants aren’t buying a ticket to Halifax, Montreal or Calgary for the great weather. They head our way because this is a safe, healthy, tolerant place ideal to raise a family. We have wonderful programs and institutions dedicated to educating our children and healing our sick. And we have jobs. Good jobs.

How are we able to do this? As we march through this high level view of Canada’s competitive strengths, it all comes back to where the work is.

Big smile: one, two, three.

The world is a competitive place. Capital and jobs flow to the countries that make the most sense economically. In Canada, we start with a natural resource advantage that is truly unparalleled. We have immense energy assets; fresh water; timber; vital and precious minerals. The long list of natural resources that Canada possesses is truly a treasure trove of riches.

Since the industrial revolution, nations have pursued job creation through industry – the manufacturing of raw material into finished goods. However, less than 11% of Canadians now work in the manufacturing sector.

Knowledge-based jobs

So where are the jobs? In real estate, of course! And in other professional sales occupations. In financial services. In medical services. Information technology. The law, accountancy, travel and tourism. We have become a nation of skilled ‘knowledge workers.’

Canada’s economic future is what I call ‘the big smile.’ Imagine a graph, where the higher up you go, the more competitive the country is in a given category. On the left is the measure of wealth in natural resources. Canada scores very high marks. In the middle is manufacturing, where we score low in terms of global competitiveness. Increasingly, so does the United States and most countries in Europe. Finally on the right of the graph we have competitiveness in the services economy. Canada, with its highly educated, skilled workforce, scores high marks again.

As I said at the outset, this is a simple view of economic place in the world. It doesn’t look at our productivity relative to other developed nations, for example. It is an area where for too long Canadian business has relied on a weak currency to help sell goods and services abroad. Perhaps a topic for a future essay! The point is, reading the economic tea leaves tells a happy story. The coming decade should be one of increasing prosperity for Canadians – and Canadian REALTORS®!

Phil Soper is the President and Chief Executive of Royal LePage Real Estate Services and can be reached at president@royallepage.ca.