Reality check—foreign buyers aren’t buying up B.C.’s housing stock
Statistics Canada recently released data on ownership of residential properties in Nova Scotia, New Brunswick, Ontario, Manitoba and British Columbia in 2020. Some of the numbers made headlines. For instance, investor ownership of residential properties ranged from 20.2 per cent in Ontario to 31.5 per cent in Nova Scotia. Moreover, 41.9 per cent of condominium units in Ontario were used as investments that year.
Those numbers might at first appear to vindicate concerns that “speculators” and foreign investors are buying up Canada’s housing stock, pushing out Canadians looking for a place to live. Not so fast. The details tell a more complicated story.
Let’s take B.C. as an example, where there’s long been concern about foreign buyers particularly in the Lower Mainland. In 2020, non-occupant investors owned 23.3 per cent of units in the province. That seems to align with the foreign buyer story.
But when we drill down into the data, the story changes. Non-resident investors owned only 2.5 per cent of all houses while businesses owned another 2.5 per cent. The numbers are higher for condominium units, with 7.0 per cent owned by non-resident investors and 8.6 per cent owned by businesses. In other words, if a condo building has 100 units, we should expect foreign investors or businesses to own roughly 16 of them. That’s a far cry from claims that foreign investors and companies are buying up entire condo towers.
In reality, most investors who own housing units in B.C. are Canadian individuals rather than companies or foreign buyers. Of the 16.5 per cent of houses owned by non-occupant investors in the province, 9.8 per cent (much more than half) were owned by British Columbians and 1.7 per cent by other Canadians. Of the 36.2 per cent of condos owned by non-occupant investors, 18.1 per cent were owned by British Columbians and 2.6 per cent by other Canadians. In other words, Canadians own the majority of investment properties in B.C.
Statistics aside, it’s not entirely clear why we should care who owns individual units. One might argue that home ownership is inherently good. But there are good reasons why some people might choose not to own their home—for instance, young people saving for deposits to purchase a home in the future. Or professionals or students living temporarily in a city. Having condo units available to rent is a benefit for people who can’t or don’t want to buy.
Of course, if investor-owned units were sitting empty, critics might have a point. But that does not appear to be the case. According to past Canada Mortgage and Housing Corporation research, which surveyed investors who owned a primary residence and at least one other condo in 2015, 48.4 per cent of these investors had tenants while 42 per cent said they or a family member were using the unit. The vacancy rate for those units was 4.1 per cent compared to a national rental vacancy rate of 3.3 per cent in October 2015.
This also undermines the narrative that building more condos won’t boost the housing stock because speculators aren’t renting them out. It’s an odd narrative reliant on the idea that investors are both greedy but also uninterested in collecting rent. In reality, investors want tenants. So units bought by investors—domestic or otherwise—usually end up on the rental market. Even if, say, 80 out of 100 units in a new condo building become occupied, it would be absurd to claim that doesn’t boost the rental stock. Eighty new occupied homes is the relevant number, not the 20 that might or might not be occupied—especially when Canada desperately needs more housing units.
While some of the investor ownership numbers in Canada might seem dramatic, the reality is more complicated. Foreign buyers and businesses own a small percentage of units, heavily concentrated in condominiums. We shouldn’t let this narrative distract from the fact that Canada needs more housing units, and that means more building.