Toronto and Vancouver real estate have a relatively small number of homes owned by non-residents, a.k.a. foreign buyers. Numbers from Statistics Canada show that foreign ownership of Toronto and Vancouver real estate, were well below the double digit numbers people were expecting. However, surface analysis is next to useless – and has a tendency to understates the issue. These numbers need a little unpacking to understand how distribution of these buyers plays a more significant role than most government officials are willing to admit. Today we’ll take a brief look at the disproportionate impact foreign buyers have on “affordable” housing.
Toronto Real Estate
Toronto’s foreign buyers own more affordable properties, relatively speaking of course. In Toronto CMA, the median value of a resident’s home is $590,000. The median value of a non-resident’s home in the Toronto CMA is only $513,000, more than 13% lower than a typical resident. This trend is even more pronounced in the City of Toronto.
In the city of Toronto, the gap between resident and non-resident home value is even more pronounced. Residents of Toronto have a median home value of $583,000. The median value of a non-resident home is $492,000, 15.6% lower than a typical resident. This shows that non-residents are scooping up more affordable units in Toronto.
Source: Statistics Canada.
Vancouver Real Estate
This has long been a complaint of locals in Vancouver, and the data dump from Statistics Canada confirms it. Residents in Vancouver CMA have a median home value of $820,000. Non-residents have a median home value of $751,000, 8.41% lower than a typical resident. Once again, this trend is more pronounced in the city.
The City of Vancouver has an even bigger gap between residents and non-residents. Residents have a median home value of $1,245,600. Non-residents have a median home value of $905,000, which is over 27% lower than a typical resident. Can’t spend the median value that residents are buying at? You’ll have to compete with more than half of non-residents.
Foreign Ownership Is Low… If You Don’t Understand The Issue
The media paraded a number of real estate agents that felt non-resident numbers were way too low to have a significant impact. Unfortunately, these agents fail to understand statistical distribution, and the speed at which the issue evolved. Understanding how the data came to be is very important. Ownership as a percentage of total stock seems low, but the speed at which it evolved is the real issue here.
Non-resident ownership of total stock isn’t that impressive of a number by itself. In the Toronto CMA, non-residents owned 3.3% of the total housing stock. In the City of Toronto, it rises over a point to 4.8%. In Vancouver CMA, non-residents own 4.7% of the total housing stock. In the City of Vancouver, it rises to 7.6%, a pretty big jump. While these numbers don’t seem all that big, you need to think, how quick did this market share evolve?
Residents of Toronto and Vancouver have been buying housing stock in their city for as long as the city has been around. Global reports have been showing that non-resident ownership only took off around 2015. Huge amounts of capital outflows poured out of a few countries, with a significant amount landing in global real estate markets. Canada didn’t begin tracking this until the end of 2016, but there’s hints that show this is a recent issue. For example, condo distribution in Toronto, and Vancouver show that foreign buyers were heavily concentrated in new builds.
Source: Statistics Canada.
A heavier distribution of foreign buyers into newer, and cheaper homes isn’t an issue your grandparents have to worry about — it’s an issue that younger, first-time buyers should be concerned with. Typically younger buyers get into the market in lower priced starter homes. If these lower priced properties are being purchased by foreign buyers, young Canadians are going to have to wait even longer to get into the market. We’ll be breaking down this data even further over the next few days, to give a better sense of the issue.
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