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Immigrants in Canada Gain Wealth through Real Estate

Immigrants in Canada Gain Wealth through Real Estate
3 min. read

Photo: Hannamariah / Shutterstock

Most of the wealth held by immigrant families in Canada is in real estate, according to a newly released report by Statistics Canada.

While the data shows that immigrant families accumulated more wealth between 1999 and 2016 than in previous years, it has also revealed that their focus on real estate means they have more mortgage debt than Canadian-born homeowners do. This could put immigrant families at higher risk if there were a future debt crisis.

StatCan’s report, “The Wealth of Immigrant Families in Canada,” used data from the 1999, 2005, 2012, and 2016 Surveys of Financial Security (SFS) to look more closely at the wealth of the country’s immigrant families – an area that StatCan says has received relatively little attention in the past.

Established Immigrants Are Wealthier

Established immigrant families (major earner in the household is 45 to 64 years old and has been in Canada for at least 20 years) had an average net worth of $1.06 million in 2016, making them slightly wealthier than Canadian-born households, with an average net worth of $979,000. Note that a person’s net worth is made up of all their assets (including their house), minus debts.

Wealth growth for established immigrant households between 1999 and 2016 was 69.6%, while Canadian-born households’ wealth rose by 88.6% within the same timeframe.

While most of the wealth growth in general came from increased house prices and higher retirement pension plan (RPP) values, 69% of wealth growth for established immigrant families came from real estate in Canada. In comparison, only 39% of wealth growth for non-immigrant families came from housing.

More Mortgage Debt for Immigrant Families

Immigrant families’ focus on real estate investment results in them carrying more mortgage debt than Canadian-born homeowners do, and this could possibly put them at greater risk in the event of economic instability.

In fact, on average, immigrant families with a major earner aged 45 to 64 had a debt ratio of 217% of their household income in 2016. The debt ratio for non-immigrant families was 137% of their household earnings.

In markets like Vancouver and Toronto, immigrants make up 41% and 46% of the population, respectively, and own 37% of Vancouver’s residential real estate, and 43% of Toronto homes for sale. In Vancouver, 39% of all immigrant-owned properties are single-detached houses, while in Toronto, about half of immigrant-owned properties are detached.

Immigrant families in Vancouver possess properties that are worth $255,100 more than the ones owned by Canadian-born residents, when looking at dwellings valued at over $1.8 million. Recent immigrants (those who came to Canada between 2009 and 2016) show an even bigger difference. They hold 5% of all single-detached properties in Vancouver, with an average value of $2.3 million, which is $823,900 higher than the figure for Canadian-born owners.

This is not mirrored in Toronto where, in general, immigrant-owned homes are worth less than properties owned by Canadian-born residents. Recent immigrants stand out here as well, however, as their homes are worth slightly more.

Dealing with Increased Debt

Although they are dealing with heavier debt loads, immigrant families don’t appear to be struggling to manage these debts any more than Canadian-born residents are, according to the StatCan report:

“The study finds no evidence that immigrant families use payday loans, withdraw money from registered retirement savings plans or pay off only part of their monthly credit card balances to a greater extent than Canadian-born families of similar age do.”

While there is a potential risk that Canadian immigrant families, with their higher mortgages, could face issues in any future debt crisis, their heavy investment in real estate has allowed them to decrease the wealth gap that exists between immigrant families and Canadian-born ones.

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