There is always a lot of ongoing talk about foreign investment and non-Canadian money that comes into the real estate market. I’m not one to say that I don’t have clients who are not Canadian, but I was always skeptical of how much “foreign money” actually comes into the real estate market. Back in 2017, I would say that there was definitely a good “sizable” amount of foreign money at play, but post-April 2017’s foreign buyer tax policy implementation, that “sizable” amount has definitely dwindled.
It’s All in the Name – I was always skeptical of “foreign money” because being an immigrant myself and knowing how the home ownership system works, I would argue that when I purchase properties, I look like a “foreign investor” despite being fully Canadian. I can’t speak on behalf of other cultures, but in the Chinese culture, our immigrant parents tended to give us a legal English name that was based on the pronunciation of our Chinese name. So when properties are purchased, the legal name tends to look “foreign” despite the common practice of also having an Anglo-Saxon English name. Whether these names are Canadian or not, these are what appear on results of title searches.
The reason why I’m giving you this background information is to anecdotally explain that there is no way to predict what is considered to be a foreign investment. I tend to believe that there are actually more local buyers, such as immigrants, and these local buyers with seemingly “foreign names” make up a large portion of the home buyers in Toronto.
The Study- A recent Royal LePage study surveyed approximately 1,500 of people who arrived in Canada in the last 10 years, and it showed some very interesting statistics. I’m going to list them out for you and then give you a breakdown of what it all means.
- 21 % of all home buyers are immigrants, having immigrated less than 10 years ago;
- 31% of the above are families;
- 25% are students;
- 20% are independent;
- 86% of the immigrants see real estate as a good investment;
- 32% of immigrants in Canada own homes;
- 68% of all Canadians are homeowners.
The following is an immigrant home ownership breakdown by product type:
- 51% detached house
- 18% condo
- 15% townhome
- 13% semi-detached
If you parse through the stats, those are some pretty shocking numbers. This means that about 20% of our market is driven by immigrants who view real estate as a good investment despite accounting for only a small fraction of the population in Canada.
Approximately two-thirds of the Canadian population own homes (68%) and only about a third of the immigrant population own homes (32%) but the latter group has a huge desire to own homes (86%). You know what that means… DEMAND!
The New Wave Profile – If the number of immigrants expected in 2019 alone (almost 350,000) and 86% of them want to be homeowners in Canada, the demand for housing will continue to be strong. One of the key factors that everyone seems to forget about is the fact that the immigration process in Canada is no longer a lottery system but rather it is a selection based on capital and skill for the economy and workforce.
Given that Canada is one of the most highly sought-after places in the world to live and Toronto being at the heart of it, our immigration system allows us to pick and choose the best of the best to let into our country. This means that our new crop of immigrants are those with money and the skills to make more money in the workforce. So despite the rising cost of real estate, the idea and ability to own a home for these people don’t seem to be far-fetched given their profiles.
The Wrap – With so many wealthy and skilled immigrants coming into Canada, it is very easy to anticipate that demand will continue on its upward trend and accordingly, the prices will continue to rise as well. So ultimately, that’s why I keep urging you to continue investing in real estate and to be one of the beneficiaries of this fundamental change to our country. Do not miss out. If you’re looking profit from this movement, make sure you contact me at Zhen@PrimePropertiesTO.com
Until Next Time, Happy Real Estate-ing,