Government Should Not Tamper With Foreign Home Ownership In Canada
The Canada Mortgage and Housing Corporation (CMHC) yesterday released the results of its 2015 Survey of Foreign Ownership of Condos in Canada and the numbers were lower than previous surveys and anecdotal evidence have suggested. While this is the most comprehensive study to date, accurate numbers on foreign ownership are inherently illusive. Many foreign condo owners protect their identity through numbered companies, trusts and other vehicles to assure their privacy. Many view Canada as a safe haven to invest and protect their money, globally diversify their holdings, and keep it out of the hands of their local tax collectors. Others buy properties for children or other family members working or attending school in Canada.
The CMHC collected these data as part of their annual Condominium Apartment Vacancy Survey, which they have been conducting since 2006. They asked property management companies or condo boards–primarily through a telephone survey–for the number of condo units “owned by people who live outside of Canada the majority of the time, including Canadians.” Often times, property managers or condo boards would not know themselves the residency status of the true owners, particularly given that most of these properties are bought without mortgages provided in Canada.
I applaud CMHC for this very valuable analysis. They acknowledge the need for better data and will work with others to dig deeper. Additional study of foreign ownership of single-family homes across Canada is also warranted.
What is important is the significant rise in foreign ownership in Toronto and Vancouver. Our Winnipeg mortgage professionals have expressed doubt regarding the surge reported in Winnipeg. In the above chart, I highlighted the locations where foreign ownership is the most pronounced–Toronto Centre and Vancouver City, as expected. According to the CMHC survey, for the Toronto CMA as a whole, foreigners owned 3.3% of condos in 2015, up from 2.4% last year. In the Vancouver CMA, foreign ownership was 3.5% this year, compared to 2.2% in 2014.
Bottom Line: Foreigners are clearly impacting our housing markets, especially in our largest cities. It is hard to argue that they are the sole reason for the surge in home prices in Vancouver and Toronto or that they are blocking most Canadians from home ownership. 70% of Canadian households own their own home. This is a record high for Canada, which boasts among the highest homeownership rates in the world, well above the level in the U.S.
The government should not damper with this natural inflow of capital to Canada. Doing so could have serious unintended consequences and have little impact on providing affordable housing for needy Canadians.