Finally, we get our first comprehensive look at foreign ownership of Toronto real estate. Statistics Canada (StatsCan), Canada’s national statistics agency, crunched the registry data to determine non-resident ownership. This is the first set of non-resident data from the organization, so we still don’t know how this trend is evolving. However, it does show that non-resident ownership is definitely alive and well across Toronto. Let’s take a look at some of these mind boggling numbers, and what they could mean.
Non-Residents, and About The Data
Let’s start with the definition of a non-resident, so we’re all on the same page. A non-resident owner is someone who has a primary residence in another country. This could be a foreign buyer that’s never set foot in Canada, using the property strictly as an investment. It also includes Canadians that still own, but picked up and moved elsewhere. Ruthless speculator buying homes to hold and keep empty for appreciation? Non-resident owner. Canadian that keeps their home while they work in the US for a few years? Also non-resident.
Unfortunately this is the first set of data, so we don’t have a time series to compare. What we can do however, is isolate these numbers to see how newer built units are being absorbed by non-residents. This isn’t a perfect method to determine growth, but it’s the best we have since we waited so long to collect this kind of information. We’re definitely looking forward to the next set of numbers, but in the meantime – here’s what we’re seeing.
Non-Resident Owned Homeownership May Be Accelerating
Non-resident ownership is much higher in newer built units, in both Toronto CMA and the City of Toronto. StatsCan data shows 57,946 homes were owned by non-residents in Toronto CMA. This represents 3.4% of the 1,720,585 homes in the registry data looked at. Isolating homes built after 2016, we see this trend is much stronger in newer builds. Toronto CMA saw 758 of the 11,739 homes built after 2016 go to non-resident owners. That means 6.45% of homes built after 2016 in Toronto CMA went to non-residents. The rate of non-resident ownership is almost doubled in newer builds.
Source: Statistics Canada.
Isolating the City of Toronto, this trend is even stronger. Currently 36,623 homes are owned by non-residents, out of the 753,750 homes StatsCan looked at. Non-residents own 4.8% of the total homes in the City of Toronto. Isolating units built after 2016, 552 of the 5,245 units analyzed were owned by non-residents. This represents a non-resident ownership rate of 10.52% for homes built after 2016. Once again, the rate doubles in newer built units.
Source: Statistics Canada.
Non-Residents Own $37.37 Billion of Toronto Real Estate
The value of these homes owned by non-residents is mind boggling. The Toronto Census Metropolitan Area (CMA) had $37.37 billion worth of property held by non-resident owners. That’s 3% of the $1.2 trillion of land registry used for the numbers. Remember, that’s not 3% of properties bought this year. That’s 3% of
residential value, owned by non-residents.
Source: Statistics Canada.
Isolating just the City of Toronto, the numbers are still huge. Non residents owned $23.23 billion of Toronto’s residential real estate. That represents 4.07% of the $570 billion of homes analyzed by StatsCan. The rate is higher in the City, but not a massive jump.
We don’t have a lot to compare, but it does appear that the trend of non-resident ownership may be getting stronger over the past few years. This does lend a little more credibility that an increasing amount of Toronto’s supply is viewed as an investment or novelty for wealthy foreigners. Not supply for locals that actually live here. Are they using them as occasional homes or holding them as an investment to flip later? Does it matter? Leave your thoughts in the comments.
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Much better way to look at the data. Most outlets are saying “foreign ownership is less than 5%,” which underplays the issue for younger people looking for housing. Many Boomers and Gen Xers have lived in their homes for years, they’re not chasing relatively new builds.
If non-residents are buying more than 1 in 10 homes in Toronto built last year, that effectively makes 10% of that supply non-contributing to the local economy. This becomes a bigger issue when you take into consideration domestic buyers that are buying and holding properties empty, essentially doing the same thing. Old people already have homes, this isn’t a crisis for them. This is a crisis for us young people, that have to compete with pressure created from overseas speculators.
Exactly. There’s enough building, it’s just not going to people that want to live here. Foreign buyers often get first dibs on pre-construction. We need to make it mandatory to hold a home for 5 years after buying, like they do in China.
Just like China and other countries we also need to make home ownership tied to citizenship. The racist card? Non-sense – if you do not live here and contribute then you do not deserve to own … period…
I say tax them at 15% a year with a vocation/resort property tax; they need to contribute to our economy and not parked money from somewhere or somebody else in which every country!! Let them pay for the subsidized housing demands and infrastructure instead for the city/feds to go after already over-taxed middle class. Cos otherwise, middle class will stop spending and we will have nothing but the walls!!
Ugh…. why don’t we build a wall while we’re at it and ask the foreigners to pay for it too?
You’re comment is so stupid it’s astounding
For those of you that keep saying “tax the foreigners or ban foreign ownership”, we may as well become a communist and protectionist country.
Do you know the difference between Communism and Capitalism?
Communism and capitalism take opposite approaches to private property. For capitalists, private property is both the motivator and the reward for economic progress. Capitalists believe that one of government’s main functions is to protect the property rights of individuals – and, by extension, the rights of owners of businesses. The main goal and tenet of communism is the elimination of private property in favor of communal ownership of all resources and means of production.
Tell that to the millions of minorities that this negatively impacts. Its the Chinese and Indian rich foreign investors taking advantage of the Canadian housing market, inflating prices so high, lower income families (who are often Canadian minorities) are almost always the most negatively affected. Canadians are of all races, this isn’t a race thing; this is taking care of Canadians first because our housing market is currently in crisis because of these foreign buyers.
check out http://www.condoguru.ca/toronto for toronto preconstruction condos deals.
Non-residents need a higher rate of taxes, period. There’s homes in my neighborhood that haven’t been occupied in years.
Who cares? The problem is that we’re restricting building. If they could build as much supply as needed, we could absorb both investors and locals. Instead we have building restrictions, that incentivize keeping homes empty. The government is creating a supply shortage, investors are just taking advantage of it.
nonsense…. Those with more money will buy more and in areas that are conducive to people who actually need to live and work there.
“Those with more money” now means those with enough money to compete with foreign buyers who have more money than most local buyers. It’s all good news until you’re the one forced to live in East Gwillimbury and commute an hour each way in your car.
It is tricky as the investors might dump the properties when they find another “parking lot” , like a bitcoin 😉
Why don’t we rip down all the forests and contaminate all the green space to build houses that will suit the foreigners and needs of the general populace.
The problem is not ONLY foreigners and LOCAL speculators… it’s several contributing factors and the BIGGEST issue is the widening wealth gap. I don’t understand why nobody ever points this out?
The top 20% of Canadians own about 67% of the wealth and the bottom
20% own none AND as per Statistics Canada ‘the average net worth of the top 20 per cent of families sorted by income group rose by an average of 80 per cent between 1999 and 2012, compared with a gain of 38 per cent among families in the bottom fifth of society.’
You don’t even have to look far, just look at your own workplace… the average North American CEO makes roughly 360 times that of their average employee…
This is no surprise. There are not enough buyers for over-inflated mini condos that are being constructed, so they are being bought up by foreign investors.
if they ever SAW the closet they were buying, I am sure they would think twice.
The pictures look beautiful. All modern. And I suppose, compared to a unit in Hong Kong or Singapore, they are of average size. But really? Maybe they intend on puting them on AirBNB and rent them out like hotel room suites. They are about the same size.
But as someone else pointed out… Foreign investors (and local I am sure) are given preferential treatment prior to releasing anything to the general public. This is not a fair system.
Your breakdown of data into new build vs old is interesting. This seems to fit right in with your earlier article on how new builds are being marketed in bulk to foreign investors.
Thanks for the reminder…my spidey senses were tingling but I couldn’t place why. Are developers dumping in advance of a major slowdown? Why discount if demand is actually high? Are they pitching to foreigners to buy volume because ‘you can easily sell them to the stupid locals’?
Or is Toronto morphing into a true global city and attracting more and more foreign money? Not like NY or London but CHI or Boston?
That’s a lot of expensive homes coming on the market if the value of housing drops.
I would like the stats of where these foreign owners are actually from, and when they started buying up homes. I bet 2015 is when a huge portion started to buy/speculate/tax evade…
I can just see China’s version of W5 investigating all of their wealthy residents hiding money in Canada’s real estate.
Who needs the Panama Papers when we’ve got the Canada Conundrum. Tax the rich foreign speculators, and tank Canadian property values, or ignore it all and let the whole thing implode on its own. What’s a Canadian government to do????
I imagine these wealthy foreigners have forgotten all about their Canadian properties, just like those pesky villas in france!!
Unaffordable housing is one reason young people are desperately taking huge risk “investing” in cryptocurrencies to try and generate enough money for a downpayment, mortgage payments, even rent.
Do these numbers include large scale investor properties? ie: when a foreign buyer buys a multi-family or office building in its entirety, is that included in these numbers? Because if it is, that could seriously skew the data upwards. A landlord is a landlord is a landlord, and where the landlord lives shouldn’t really impact affordability. What about REITs that are not based in Canada?
Also, I think it’s worth pointing out that even though non-resident buyers may own single units / single family homes, they may be putting them into the rental pool – something that is not accounted for in this data.
There are 2 more factors that should be discussed in relation to these foreign buyer percentages. And these 2 have tremendous impact.
1. If statscan officially shows that foreign ownership in Toronto is say 5%, then you can be damn sure that the real number is a hell of a lot higher than that. Remember, these are official numbers. That means foreigners buying Real Estate in Canada through a local intermediary is NOT tracked and therefore considered local buyer. Therefore not part of these numbers. For instance, foreign buyers buying through friends, or siblings, or business partners. I would say that over 50% of the clients that we come across have bought homes in Toronto because “someone” overseas sent them money. The Real Estate agents that we interact with laugh at these numbers, stating that most of their buyers are actually foreign, meaning their money is simply funneled through local intermediaries. We have personal knowledge of a foreign buyer buying 12 homes at a time in one neighborhood for the specific purpose of holding inventory and then speculating the price up over time. Prices in that specific neighborhood went up over 100% in a matter of 12-18 months. Once comparables kick in, then all prices increase, which leads me to point number 2.
2. More importantly, everyone knows that it does not many how many buyers are foreign, it just takes one buyer that buys a house on the street and overpays and BOOM, the comparables now change for the entire street and neighborhood. Whether the number is 5% tracked or more like 20% untracked, it does not matter, it really only take one or two houses sold in a neighborhood to start moving the price frenzy upwards..
An interesting point to debate is whether Canada move towards what New Zealand and Australia is doing and ban foreign ownership. If you want to own Real Estate in this wonderful country call Canada, if you want to benefit from the economy, from other financial rewards, from the freedom, the security from the democratic process, from the legal system then you must live here. Otherwise, the population of Canada is just too small and the impact is just to great to essentially have Canadian citizens not afford to live in their own country where they pay taxes and contribute to society. The crazy prices in Vancouver and Toronto are not the fault of foreigners. They are simply taking advantage of a financial vehicle and maximizing returns. Nothing wrong with that. the responsibility lies in the Canadian Federal and Provincial government. Their job is to protect its citizens, to ensure a way of life that we pay into every year through taxes. They need to ensure that we, as Canadian citizens, can continue to afford a lifestyle not dictated by foreign speculators or by countries where their wealthy population dwarfs that of Canadians. Why should Canadians be held financial captive based on what foreign buyers want to do with our Real Estate. Foreign buyers can be allowed to invest in other areas of the country, such as REITs, ETFs, Commercial property to some extent. But private Real Estate should belong to Canadian citizens and their descendants, not to foreign investors that have no intention on benefiting Canada.
These are all good points to debate. Unfortunately the government at all levels makes too much money on Real Estate transactions for the status quo to change too much unless there is more pressure shown by Canadian Tax payers.
Absolutely brilliant post.
Unfortunately we live in a fast changing world, where new and unforeseen threats emerge and propagate at the speed or viruses.
Amongst our government’s main duties is to protect citizens from
everything from lethal drug running to unfair trade practices, as well as new and multivarious manifestations of electronic hacking and ransomware, which are increasingly infecting not just our computers, but banking and financial systems, and now it would appear even extending into brick and mortar real estate markets.
Unfortunately, as you say, all levels of government, have abandoned it’s citizens to the wolves, side from paltry initiatives in Vancouver and Toronto, aspirin instead of penicillin, amidst Trump-administration-like claims from numerous vested interest quarters of “there’s no interference … no collusion”.
Which is patently absurd.
Another absurdity is the delusional railing against potential government regulation of the feeding frenzy, characterizing it as free market “interference”, when government interference opened the door to the calamity in the first place, however unintended and deemed necessary, by lowering interest rates to near zero levels.
Add a 4% annual property surtax on all property held by non-tax residents. If you don’t file and pay tax here, your property will contribute 4% towards infrastructure. On the thousands of Vancouver’s $4,000,000 empty dwellings, that would be a nice $160,000/year each into the local economy.
The message should be loud and clear: We don’t want speculators profiting off the backs of the people who created our desirable society, without making a meaningful contribution themselves..
Riddle me this: Isn’t the issue not the % of the housing they own but their impact and potential manipulation of the market?
Take a 3 party scenario. 2 parties know each other and wants to manipulate the market, A + B. 1 party does not,C. A + B are wealthy or have a pool of other peoples money and understand the prime land banking, ‘drive up the price’ climate (BD has broken it down before). Similar to previous markets, like south florida, they go in with sacks of cash. Buying and selling to each other, driving up the price. (On a side: I observed a family in brampton sell a house back and forth between 4 families before going back to the original). Now, price is only one factor; mortgage fraud is the other. A + B are going back and forth; getting over inflated mortgages, extracting some cashflow until the picking is right and they off load to a local or any other sucker (other foreigner who wants to replicate the success). At the end of the cycle they’ve extracted hundreds of thousands of cash through fraud, inflated the housing market and still sold out and made money off of the asset (remember they started the increase and know when it will end).
Maybe not, what do I know.
I think they need to go much further, when you are laundering or hiding money, it’s like pawning
stolen goods, any return is better than nothing.
And like any form of smuggling, if caught in the act, the property should be confiscated, sold, and the money turned over to civic initiatives.
You continually read comments like people should move elsewhere if they can’t afford it, owning a house is not a right, et al.
What absolutely isn’t a right is the government protecting corrupt and immoral business practices, tax loopholes, and economic trade barriers that benefit foreign nationals over domestic residents.
In other words foreign buyers have been a minor part of Toronto real estate for many decades. This is a non-issue. Thanks for sharing the data for clarity.
“In other words foreign buyers have been a minor part of Toronto real estate for many decades. This is a non-issue. ”
Say there are 100,000 cars driving along the 401, and a few crashes during Monday rush hour, that just results in a few temporary blip in the traffic system. But what about if there were 5,000 crashes. It would be a catastrophic mess.
Chimps and humans are 98.4 percent the same genetically.
5% off on the price of a pair of socks is generally a non-issue. This is a whole different kettle of fish.
Its good news that you are living in cities that so many people from across the globe want to invest in. Once they buy a house they are most likely to continue investing more money in Canadian economy.
I wish one day I have enough money to buy a house of my own. But this does not mean that I expect the government to make it easier for me by restricting the market. If someone is buying two three or four properties with legally earned income even that generates more economic activity. A vacancy tax sounds like a fair solution.
On the brighter side, no one is going to live forever. If you have money buy, rent otherwise and be happy.
[…] phase, at the same time. Investor demand is leaving vacant homes around the world, and cities like Toronto, Vancouver, and London can no longer sell to locals at these levels at the volumes needed. We’ve […]
Other countries heavily tax nonresident properties, Canada ought to as well. Make the taxes so heavy they must sell. This would free up much needed housing and fund cities. But will our gutless “leaders do this”,? Don’t hold your breath.