Canadian real estate investors may be a bigger problem than even the most aggressive assumptions. New data from Statistics Canada’s (StatCan) Canadian Housing Statistics Program (CHSP) shows investors captured a greater share of the total housing stock in most provinces in 2023. That isn’t surprising, but the math for that to work out is: Investors had to account for 3 in 4 new owners—driven by Ontario, where investors represented 84% of net growth.
How Marginal Buyers Impact Real Estate Prices
Before we get to the data, a quick detour to ensure we all understand marginal influence. A marginal buyer is the person or firm willing to pay whatever it takes to beat the market. They aren’t just outbidding everyone—they set the pace of the game through comps. These buyers are a small share of the market, but they have a disproportionately large influence.
This problem is amplified by irrational exuberance. Investors aren’t buying a home to live in; they’re buying a return, with the expectation that any price paid can be recouped by tenants. That hasn’t worked out in Toronto, creating a systemic risk that hopefully the whole country never realizes.
Marginal influence is also the reason that money laundering has such a disproportionately large impact on real estate, especially in BC and Ontario.
Canadian Real Estate Investors Cornered The Market: Capturing Over 4 in 5 New Owners In Ontario
Canadian Investor Share of Net Growth In Ownership, 2023.
Source: StatCan CHS; Better Dwelling.
We’re often told investors own a modest 20-25% of housing stock, but this dismisses the marginal impact. If we look at the change in ownership between 2022 and 2023 (a.k.a. the marginal demand), we see a very different picture. Across the five reported provinces (ON, BC, NS, NB, and PE), there was a net increase of 70,020 owners. Investors accounted for 50,750 of those units—about 72.5% of net growth. That means for every 10 net owners added, more than 7 were investors.
The total is heavily skewed by Ontario, where investors represented 84.4% of the net growth in ownership in 2023. It’s a big shift for the province—just over 1 in 5 (21.7%) of properties are owned by investors, but the net change in ownership shows they represented over 4 in 5 owners in 2023. As it’s the biggest province, it skews the national picture, making serious problems in other provinces look tiny despite being critically elevated.
“The total is heavily skewed by Ontario, where investors represented 84.4% of the net growth in ownership in 2023.”
BC is a good example. Investors represented nearly 2 in 3 (63.6%) of the change in net ownership, which seems small in contrast and less than the national average in this context. However, that’s still more than half, and nearly double the rate of investor ownership (33.1%) in all properties. It’s a problematic share that only seems minor in the context of a comparison to Ontario.
Canadian Real Estate Investors’ Share of Total Housing Stock
Canadian Housing Stock: Share Owned By Investors, 2023. CAN Denotes The Aggregate of The Five Available Provinces
Source: StatCan; Better Dwelling.
The marginal influence was higher in Ontario, but that’s primarily because smaller markets are saturated. In general, investors represented 25.5% of the 7.19 million records. However, Ontario is the only province to come in under that average. The rest of the provinces with available data were between 31.4%-34.3% investor-owned. Despite these provinces being more affordable, the share of end-users that own their home is traditionally smaller—a common observation in less diversified economies.
Policymakers like to frame investor ownership in absolute terms: the total they own is 20-25%, implying 75% of the market is owned by end-users, and everything is fine. But this framing ignores who sets the prices at the margin and shapes the market—and who’s locked out of it. This is part of the reason that bubbles can’t be stopped, but end up popping: if 75% of people benefit from this arrangement, then the 25% on the other side are screwed. It’s hard to appreciate that the benefits are short-lived since that 25% is concentrated in younger households. Neglecting the foundation of a structure may leave one with more money today, but the failure tends to be more catastrophic than the short-term benefits.
The problem may seem abstract, but the impact most definitely is not. Canada’s disproportionate focus on housing as an investment is a primary drag on productivity, which is effectively a drag on quality of life and competition. It also presents significant concerns for taxpayers, as investors are acutely concentrated amongst recent buyers exposed to the correction. That makes them the primary recipient of any demand support—often taxpayer-funded schemes designed to transfer investor risk to younger end-users, who can ride out the losses over their life instead of defaulting.
Been thinking about this a lot because how old are first time buyers? 41-45 now? How do they climb the property ladder? They’re already too old for most mortgage risk models since they would have to delay retirement to continue making payments.
Climbing the property ladder? Its worse—follow the line of thinking.
Once there’s no reasonable belief in prosperity, you have a motivation problem like in Japan. Kids stop having children and the economy needs to be financialized to the point the central bank is the owner of a big chunk of the economy.
Those without motivation collapse. Those with motivation have no reason to stay. we’re rushing towards a bigger problem than we realize. This is multi-generational.
Won’t the smarter kids just move to a new country? (i.e. emigration data is bumping).
Canadians tend to forget why we have so many people from France, Italy, and Greece from the 70-80s wave. Those places went from the center of Europe to demographic collapse at the speed of light. Now those left fall into 3 categories: those from wealthy families doing fine, those who struggle, and those who leave.
Not a problem since the real estate wealth will be transferred from parents to their kids. Biggest wealth transfer in history incoming for kids.
Stability at 60 means those young adults won’t be contributing to the economy in the same way. They won’t have kids and the demographic collapse continues. Then what?
All of the kids we imported to fill the demographic are supposed to inherit what? Their family’s farm in Africa or India?
They aren’t trying to facilitate success. They’re trying to generate labor with lower standards and higher compliance due to fear.
Yeah all those kids can’t wait to inherit HELOCs
I appreciate this post and it took me awhile to realize what “net” ownership change means.
anyone who needs help, hopefully this can clarify:
– investor replaces investor- no change.
– owner-occupier replaces owner occupier – no change
If the net balance rises by 100:
– investors are 75 of the net growth – 75%
– owner-occupier 25 of new growth – 25%
In this case we are adding 4 investors for every 1 family. Correct?
If this is the case that is crazy. Didn’t we move to Canada so a king didn’t own everything?
You got it my man. I almost feel bad for the day you learn what Partners Limited is.
Man how will all of the racists blame immigrants now?
Real estate is still 50 per cent overpriced Wages have been stagnant for decades.
143 Million USA Homes 17 000 Cities
Canadians are the dumbest investors EVER
Dumb can be fixed with education ,unlike our American neighbors who are just plain Stupid and Stupid can.t be fixed.
The reason we may not know the names of the investors is that it’s called money laundering. Financial Institutions, Realtors, Lawyers, Notaries Public, Immigration offices and REITs are all involved in concealing real identities. Where is the RCMP or CSIS (Canadian Security Intelligence Service)?
Most of these comments are quite perceptive!
Have you ever noticed that maybe in your statistics, most of the time, AB and SK?
I hope it is not intentional and done to skew the graphs so that they do not support your message?