The foreign buyer drama over Toronto real estate continues. Statistics Canada (StatsCan) finalized their numbers for their non-resident ownership in Toronto CMA. The agency concluded only a small number of Toronto homes are owned by non-residents. However, isolating their numbers to new construction, we see an interesting concentration. Non-resident ownership of new construction is almost triple that of total homes.
Non-Residents Own 2.63% of Greater Toronto Real Estate
Non-resident homeowners represented a small ratio of total homeowners according to StatsCan. Non-residents own 45,277 homes, just 2.63% of Greater Toronto’s housing stock. The majority were in the City of Toronto, where 29,091 (3.86%) homes were owned by non-residents. The concentration was highest in the City, with that number falling the further out you go.
Non-resident ownership in the suburbs is highest in Richmond Hill, Markham, and Oakville. Richmond Hill’s 1,768 homes owned by non-resident represented 2.87% of homes in the city. Markham follows up with 2,746 homes owned by non-residents, about 2.71% of all homes in the region. Oakville came in third with 1,378 non-resident homes, just over 2.19% of homes in the region. It’s adorbs that StatsCan’s leading with those numbers, but that’s not what people want to know. People want to know how much of the new housing stock is going to non-resident owners.
Greater Toronto Non-Resident Real Estate Ownership
The ratio of homes in Greater Toronto owned by non-residents, by construction period.
Source: Statistics Canada, Better Dwelling.
Non-Residents Own 5.17% of New Construction Built In Greater Toronto
Non-resident ownership wasn’t a huge trend until the Great Recession. Isolating new construction between 2016 to 2017 gives us a different picture. Non-residents across Toronto CMA own 674 units built between 2016 and 2017, representing 5.17% of units completed during that period. The City of Toronto saw 508 of those units, representing a massive 9.17% of homes built during that period. Yes, the ratio almost triples when you isolate ownership to new housing stock.
This trend also extends to the suburbs, most notably in Pickering, Markham, and Richmond Hill. Pickering only had 5 homes go to non-residents, but it represented 6.25% of new homes built. Markham saw 633 homes built from 2016 – 2017 go to non-residents, 5.59% of the total. Richmond Hill saw 17 homes go to non-residents, 4.67% of homes built during the period.
Greater Toronto Non-Resident Real Estate Ownership Built In 2016-2017
The number of homes in Greater Toronto owned by non-residents built in 2016 to 2017.
Source: Statistics Canada, Better Dwelling.
Now we have a slightly better read on the impact on foreign investment on housing stock. The total level of non-resident ownership is interesting in Toronto, but not that important of a stat. Most people are trying to understand why there’s big smoking holes in the ground on every block – yet the increase in supply doesn’t seem to impact prices. An army of non-resident owners that bought in the late 1980s wouldn’t have any impact on that. However, non-resident sales for the purposes of massification would.
Data Gaps Still Make The Information Not All That Useful
Two factors make this data not all that useful for getting a read on the current market – timing and assignments. The data only looks at ownership up to 2017 Q2, so the impact of China’s new capital controls is minimal. The ratio is likely to drop as it becomes harder to export capital from Mainland China.
More important, there’s no information on pre-sale assignments, which were heavily sold overseas. Since an assignment isn’t a home until the building completes, it doesn’t count as non-resident ownership… yet. Pre-construction is sometimes used as a derivatives market, used to secure asset prices with little cash upfront. These assignments are often sold before they register, skipping any level of “ownership.” Buyers have to still see significant upside, which is hard to do after a 30% increase in prices. The point is, these ownership numbers greatly underestimated the impact of foreign money.
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Good point that just because non-resident owners register, doesn’t mean they aren’t hogging all of the assignments, and flipping back to market.
I mean that the ones that register are few, in contrast to the number of assignment buyers.
Damnit, these comments need an edit button.
How does StatsCan really know if owners are non-resident or not? Are they linking to CRA or Immigration, or just taking the word of the Census respondent? Is there any will to get a better sense of how much foreign money has made it into the market? Are developers required to divulge money sources and investors of pre-sales?
Property transfer and corporation data. These numbers are more reliable for Ontario than BC, since they have a ton of beneficial ownership issues we don’t in Ontario.
Great, now we know. Now why did the other 90% of people think it was there last chance to buy, and they extended their credit to the point where the government had to crack down on dodgy loans? Hm…
It’s easy to blame people that can’t blame. It’s not so hard when you buy an asset at an inflated value, then find out there’s no liquidity at the price you paid for your bitcoin, I mean condos.
Reading up more and more about the money laundering schemes that have been identified in BC so far. Casino one is massive but there is also the private lender scam. Lend a rich Chinese person CAD cash here against a property, they repay the loan in China as it is hard to get their money over here, lender than has legit funds in china that it can use to buy more fentanyl , which it can then ship back to Canada. If borrow defaults in China, lender claims property in Canada, sells it, then has clean Canadian cash.
Anyway, I’m wondering the degree to which this is happening in Ontario as well. Lets not forget that a 35% down payment would also qualify you for a loan with CIBC and other banks as a foreigner. BD covered this, believe it was a no questions asked mortgage (provided you had 35%)
G&M did a multi-page write-up about cleaning money through RE; exactly what you note above with diagrams to boot! Canada has a big financial transparency problem which is slowly, slowly being fixed but not by us, by other governments! Liberals are hypocrites and liars. PCs can’t be trusted not to just blow our money on jets and tax breaks. NDP are a basket case and would bankrupt Canada. I guess I’m off to Singapore! BD4L.
Hey Blue,
I worked as a lawyer in Singapore, and I can tell you that it has been Asia’s laundromat since we were all in diapers. Only difference is that now the rest of the world’s oligarchs – some my erstwhile clients- have discovered the benefits of stashing money there. But yeah, I’ve seen this all before. Casinos where the average check is around 8 million dollars? Yup. People buying 6-7 units in a condo in cash in one day? Yup. Nothing new under the sun, as they say …
That’s very interesting.
Any idea if the recent crackdown helped? They basically forced Singapore banks to not open accounts for non-residents, unless they have significant money that warrants stricter compliance checks is my understanding.
The information Canadians receive will become clearer and clearer as the crash escalates. How it always works. The sins are hidden by govt while the scam is profitable, but once all the money has been extracted from the market, suddenly politicians come out of the woodwork hollaring about “No transparency” and “Unethical standards” etc, etc.
You know the jig’s up when govt rolls out new legislation and reporting standards designed to “inform Canadians.”
This article and the linked one on massification just made my head explode. BD, when can you guys get some podcasts going? I love how you are connecting the dots.
Yup, when I read it in December I threw my companion hamster across the room; thank god he was in his sweater. Oh the webs we weave. Live in the light. BD4L.
I second a podcast request. I’ve had the pleasure of seeing Dan and Stephen speak separately, and both are excellent at taking data points, and turning them into competing stories. Would love to hear Katy and Joey do the same.
Stephen is pretty active on Twitter. Joey is also another good account to follow, he contributes here sometimes.
3:02PM EST, do you know where LL is? Thought the chap may stick around for more than a week. As Jay-z would say “On to the next one”. BD4L.
“The last of the market bulls”
Did he get a life, did the money laundering report shut him up, or did he get banned for racism? Inquiring minds need to know!
margin call
He had a bankruptcy hearing today.
Maybe we should take it a bit easier on the bulls? They do help drive traffic to BD
Saying this because LL doesn’t post one day? LOL. Your bitterness for rising house prices is obvious. Not everyone has the time to post every single day through out the entire day. Your pathetic attempt to drive prices lower via this site is a joke. Listen, you’re not going to stop demand/upward prices. Just keep renting fool.
LL posted full time for two weeks. Thousands and thousands of words. He was obsessed. His sudden absence is notable for that reason.
And you’re right of course. None of the bears here are going to halt the demand for houses. That can only be done when the same fools who leveraged themselves on the way up start capitulating. People like LL Fool J and yourself. It’s already happening. The bear market started April 2017. Enjoy.
For those who care about rate decisions chances of BoC hike in July jumped back to 70% now.
https://business.financialpost.com/news/economy/odds-of-bank-of-canada-rate-hike-climb-after-polozs-remarks
@LL http://www.merixfinancial.com/programs/interest-only-flex.pdf
Interest Only Loan is available in case you want to increase your property/rental portfolio
Hey! The average household size was 2.7 in 2016, a minor downward revision from 2.8 at Census 2011.
http://www.aljurfvillas.com/