Are Foreign Buyers Purchasing All of Canada’s Real Estate?
Read the news? Great, then you’ve heard that foreign buyers (especially Chinese real estate investors) are “driving up are housing prices.” Maclean’s recently ran an article China is Buying Canada, where they cited urban planning professor Andy Yan, who conducted a “study” that found a neighborhood in Vancouver had 66% of buyers with “non-anglicized names.” If you can believe it, the article got less scientific from there. Is your bulls**t meter on high? So was ours.
That has to just be one news outlet though, right? The Globe and Mail, they’re responsible about their sources. They ran an the article Foreign Buyers Gobbling Up More of Canada’s Luxury Homes. In it they cited a brokerage questionnaire where “25% of 24%” (or 6% to us simple folk) of agents said they had foreign buyers. The part they left out was that 39% of the agents surveyed said that figure is lower than 5%.
The Truth Behind Toronto’s Real Estate Prices
The Canadian Housing and Mortgage Corporation (CHMC) finally shed some light on the situation when they published the first report on foreign ownership of condos. Despite the CBC article where Toronto’s “condo king” Brad Lamb claimed foreign ownership is at 50% in Toronto, it turns out only 3.3% of condos actually had foreign ownership.
Foreign Ownership of Toronto’s Condo Market
Brad Lamb’s Estimate
Chart Data Source: CMCH Housing Market Insight, April 2016.
Turns Out We’ve Heard This Before
We’ve been digging to find out what people were saying during Toronto’s last real estate bubble in the late 80s, and it turns out foreign buyers were doing it again. Darn, they were suppose to own the whole country by 1997, what’s going on? There was no actual evidence, just gems like this from the Toronto Star: most of the new investors are Orientals from Japan, Hong Kong and Taiwan whose pockets are bursting with money”.
…most of the new investors are Orientals from Japan, Hong Kong and Taiwan whose pockets are bursting with money.
Tony Van Alphen, CP.
Toronto Star, September 30, 1987
So What’s Happening?
While there’s no single reason, one of the biggest is likely that income hasn’t kept pace with housing in Canada – in fact, our middle class is getting paid less and less by the year when adjusted. It’s an unfortunate and uncomfortable truth most media, politicians, and experts neglect to discuss. Instead they’re opting to blame a faceless group of people – like those darn Chinese real estate investors. We’ve seen how blaming a whole race of people for the faults of the economy has never worked out before, and it really never solves anything — especially the real issue of Canadian income.
Image: Canada’s Real Estate Propaganda, by @paigering
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I can’t believe the Toronto Star would publish those comments in the 80s. Seems a little racist, even for that time.
Brad Lamb is just like any other agent, they’ll lie and say whatever so they can get a commission. The real problem is that commissions are so criminal.
Real estate rarely makes me laugh, but that chart of Brad Lamb’s estimate vs the actual number brought tears to my eyes.
I like that this article pointed out the sad state of journalism. It’s a big problem for all of us Canadians if we never receive reliable information. You can’t squeeze every last penny out of authors and expect them to turn out quality.
I remember growing up Maclean’s was actually a good new magazine. Now it’s just a printed version of an op ed, piece of garbage.
I’m constantly saying this to people and they think I’m nuts. Our generation isn’t paid enough.
We take out huge debt to get specialized training, then we’re expected to “intern” aka do free work, for two years. We’re already 6-7 years behind previous generations, THEN we have to repay our debts which puts us another two years behind.
It’s not foreign buyers, it’s banks. People earn $30k/year and live in million dollar houses. It’s ridiculous.
25% of 24% = (1/4) * 24% = 6%
Whoops! Typo’s been corrected, thanks!
Foreign ownership cannot be properly investigated because of the way canadiam corporations are used to funnel foreign currency.
Or you know, Canada has the most expensive houses because we’re tight for land and so awesome. /s
It’s true that it’s more difficult to assess foreign ownership from corporations, but non-resident corporations are still considered foreign ownership. Conversely, a lot of immigrants are being lumped into the statistics that skew it higher – when in actuality they’re domestic.
We were trying to illustrate that “foreigners are buying the land” isn’t the whole story, but it’s being told that way. If you’re from Toronto, I’m sure you’ve met more than a few people that have multiple homes here. Heck, my folks have multiple homes.
How does income not keeping pace with housing in Canada be the biggest reason why the price of real estate in Toronto (and Vancouver) is rising at unusually high rate?
If the income doesn’t rise very fast, then housing prices would not rise as fast either.
If you want to see Toronto real estate bublling, just look at Vancouver, it’s not going to be as bad, but I suspect Vancouver is so saturated that Toronto bubble will grow faster soon.