Rates of foreign ownership a bit higher in downtown areas, but still in single digits

Pete Evans – CBC News

Canada’s national housing agency poured cold water on the notion that foreign money is driving up Canada’s condo market, arguing in a paper Tuesday that foreigners own no more than 2.4% of all the rental condos in Canada.

Comment: Of just the rental condos? What about non-rented condos?

As part of its mandate to monitor Canada’s housing market, the Canada Mortgage and Housing Corporation publishes a report twice a year looking at details of local rental markets across the country. The report is tabulated in April and October every year, and for the first time the October report published Tuesday looked at how many foreigners are buying what are known as “purpose-built rental housing units” — which essentially means a residential property designed to earn investment income from being rented out.

The answer? Not many.

Based on extensive interviews and site visits with owners, managers, or building superintendents of about 20,000 buildings with at least three or more units across the country, here’s the CMHC’s estimate of many foreigners own condo units in Canada’s 11 biggest census metropolitan areas:

* Victoria: 1.1%
* Vancouver: 2.3%
* Calgary: 0.2%
* Edmonton: 0.1%
* Saskatoon: 0.3%
* Regina: 0.1%
* Winnipeg: 0.1%
* Toronto: 2.4%
* Ottawa: 0.7%
* Montreal: 1.5%
* Quebec City: 0.6%

Comment: Sorry, but those numbers seem low to me. And why not just check with the new condo builders, they must have ID for all purchasers. They would have ID, addresses, contact information, etc. It would be easy enough to talk to the builders about all the info they actually have.

The report should surprise anyone who believes the many local narratives that foreigners are the driving force pushing condo prices much higher than their fundamentals would otherwise indicate.

Comment: While I don’t believe the numbers are as high as some people say (50-90% is insane), I do think that the investment segment is more likely in the 20-25% range. Total new condo purchases? Less than that, somewhere in the 10-20% range. Overall condo ownership, of ALL condos in Toronto? Probably in the same 10-20% range. I bet Vancouver is a bit higher, maybe 5-10% more. I think the other cities would be way low, they are probably accurate.

The CMHC does concede that foreign condo ownership is higher in downtown cores. The rate for the Montreal area as a whole may be 1.5%, but it jumps to 6.9% on Nun’s Island, CMHC says.

Similarly, in downtown Toronto the rate is 4.3%, compared with 2.4% for the census metropolitan area as a whole. And Vancouver’s Burrard Peninsula has a foreign investor ownership rate of 5.8%, compared with 2.3% for the area as a whole.

Comment: In that case, for downtown only, I would add 10% to all my figures. And subtract up to 10% as we get away from the core, depending on the area. Markham, for instance, probably has an abnormally high foreign ownership percentage.

Rents getting pricier

The report contains some other details on the health of Canada’s rental market, beyond the influence of foreign money

“Between October 2013 and October 2014,” the CMHC says, “in the largest centres the number of purpose-built rental units rose by 2.7% or 42,711 units.”

“This increase in supply outpaced the approximate 39,900 increase in units occupied. Accordingly, the national vacancy rate rose” to 2.8%, the housing agency says.

Comment: That is such a useless measure. Taking rental vacancy from Vancouver, Regina, Toronto, Montreal and Moncton and trying to combine them? Means nothing.

But there was wide variance in the numbers from city to city. Vacancy rates for condominium apartments ranged from a high of 3.4% in Montreal to a low of 0.7% in Vancouver.

Rents also ticked higher, on average. Across the country, the average rental rate for a two-bedroom apartment increased 2.5%. That’s higher than the 2.4% inflation rate seen in the same period for the economy as a whole.

Across the country, the average rent was $941 per month. “Average monthly rents for two-bedroom apartments in new and existing structures were highest in Calgary ($1,322), Vancouver ($1,311) and Toronto ($1,251),” the CMHC says. “Rents were the lowest in Trois Rivières ($568), Saguenay ($595) and Sherbrooke ($604).”

Comment: Same here, average rent prices are meaningless across such a huge country. House prices vary from $600k averages in Vancouver to $200k averages in Moncton. Same with rent, from $1,322 to $568 – how can you lump those together when they are 4,440km and 233% apart?

Condo rental rates are, in general, a little higher, because condos tend to have modern amenities. Rental prices for two-bedroom condominium apartments were highest in Toronto ($1,818) and lowest in Quebec ($1,070).

The gap between rents in apartment buildings versus comparable condominium units was highest in Toronto, at $567, and Montreal, at $405 a month.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
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