How many homes in Vancouver and Toronto would you say are owned by those living outside of Canada?
That’s one of the questions the recent Canada Mortgage and Housing Corporation (CMHC) Housing Market Insight report sought to answer. The report showed that non-resident participation in homeownership is 11.2% in Metro Vancouver and 7.6% in the GTA.
These numbers differ from previous data reported by the CMHC in 2015, which was 3.5% for Vancouver and 3.3% for Toronto. So, why such an increase and what does it mean?
Improved Methodology for Data Collection
In response to housing affordability concerns in Canada’s major cities, back in 2014, the CMHC began releasing previous reports on non-resident homeownership, based on data collected through its Condominium Apartment Survey.
To get a fuller picture in more recent years, the CMHC partnered with Statistics Canada to create the Canadian Housing Statistics Program (CHSP). Statistics Canada received extra funding in the 2017 federal budget to look more closely at offshore buying, which helped collect even more data.
With this funding, the CMHC was able to access stats from the Canada Revenue Agency, as well as provincial land titles offices, to check tax residency information. Before gaining access to this info, the CMHC used to rely on data it gathered about foreign ownership directly from building managers.
For its stats collection, the CMHC defines a ‘non-resident’ as someone who lives primarily outside of Canada. Non-resident ownership describes a situation in which at least one owner on a property’s title is a non-resident, meaning they work and pay taxes somewhere other than Canada.
Previously, the CMHC’s methodology stated that a property had non-resident ownership if it was owned completely by non-residents or was majority-owned by non-residents.
CMHC’s new methodology has shed some additional light on the non-resident purchasing impact in the Vancouver and Toronto real estate markets. When speaking to The Globe and Mail, Jordan Nanowski, senior CMHC analyst and co-author of the recent report, noted that while the previous data looked at different aspects of non-resident activity in the Canadian housing market, it is still is very useful for following trends.
“When we look at this (new) data, we want to compare it to itself only, as a kind of cross-section and not compare it to previous data. Because there is a change in methodology.”
New Condo Builds Draw Non-Resident Buyers
The most recent CMHC report based on the new methodology reveals that many properties in the Vancouver and Toronto real estate markets have a mix of owners that are residents and those who are not. The numbers show that non-resident ownership is more prevalent in the Vancouver real estate market than it is in Toronto, regardless of property type.
New condo builds are particularly attractive to non-resident buyers, according to the report. For new condos built in Vancouver in 2016 and 2017, 19.2% had at least one non-resident on the title. In Toronto, non-resident ownership represents 9% of new condo purchases.
The share of non-resident ownership for new condos is often higher in other areas of Metro Vancouver. Around 20.8% of new condos in Coquitlam have at least one non-resident on the title, while for Surrey condos the share is 20.5%.
The share of non-resident new condo ownership in Burnaby is even higher, at 25.1%, and Richmond condos top the list with 25.8% of new builds having at least one non-resident on the title.
Non-Resident Purchasing in Overall Housing Market
When it comes to the overall housing market in Vancouver, non-residents own 14% of all housing types that have been built in the city over the past ten years. For single detached homes, 7.8% have at least one non-resident on the title, while condo ownership among non-residents is at 18%.
Non-resident buyers often own homes that are more expensive, regardless of the buyer’s age. Vancouver detached homes owned by non-residents on average had an assessed value of $1.1 million more than detached homes owned by residents. The assessment value difference of Toronto detached homes owned by residents and non-residents was $89,000.
In general, non-resident purchasing seems to grow when density and prices increase in each city.
With the improved methodology in place, CMHC hopes to continue tracking non-resident purchasing activity in the Canadian housing market and its effects on the markets in major cities across the country.