Canadian real estate is being scooped up by investors with excessively cheap credit. Ownership data for residential real estate across four regions show a significant share owned by investors in 2020. What’s most impressive is how fast this trend must have accelerated. Cities have seen up to 90% of recently completed homes go to investors, much higher than normal.
Today we’re looking at the share of housing owned by investors across Canada. When we say investors, we mean “non-owner-occupied” housing. Statistics Canada (Stat Can) defines this as a home that’s “vacant, rented out to others, or used as a secondary property.” Since we’re only looking at cities, no one’s shack in the woods is likely to be included. Only data for Ontario, British Columbia (BC), and Atlantic Canada is available.
Canadian Cities Have Seen Up To 92% Of New Supply Go To Investors
Let’s start with some general observations, shall we? About 1 in 5 (21.0%) homes in the median city across the four regions are investor-owned. When isolating new construction (built after 2016), that number rises to 1 in 3 (33.7%) bought by investors. Their ownership of new housing is overrepresented. It’s running about 60% faster than the general market share.
The share of investor-owned housing is more intense in some regions than others. For example, Bay Roberts, Newfoundland, has the highest percentage of investor-owned housing. They own 49.9% of the total stock and 92.1% of recently completed construction. For a city where unemployment is 65% above the national average, it’s not a great setup…read more.
The average rent for both one- and two-bedroom apartments in Vancouver remains the highest in Canada, according to Zumper (formerly PadMapper).
One-bedroom apartments went for $2,130 in B.C.’s largest city in January, with Toronto coming in a distant second at $1,850.
As for two-bedroom units, the average for Vancouver was $3,050, which is 27% higher than the average of $2,400 in Toronto.
Victoria was in third place for both home types, with an average rent of $1,840 for one-bedroom apartments and $2,300 for two-bedroom units.
“In the top markets, Vancouver was the only city that had one-bedrooms priced above the $2,000 threshold and Victoria’s one-bedroom rent was only $10 behind Toronto’s,” Zumper said in its report…read more.
The City of Vancouver has a backlog of 500 applications from people seeking permits to build single-family homes, duplexes and laneway houses.
The backlog comes despite a council-initiated task force created early last year to reduce the time builders have to wait to get the necessary permits to build a house.
A city staff memo circulated to council Dec. 15, 2021 pointed to an “unprecedented” increase in applications for low-density housing such as single-family homes, duplexes and laneway houses.
An accompanying chart shows applications averaged 200 in the last half of 2020, with almost all permits issued within that timeframe.
Applications then began to soar in the first quarter of 2021 and reached more than 800 in the second and third quarters of the year.
“Despite the actions that [development, buildings and licensing] staff and the task force have taken, this increase in volume has created a backlog of 500 applications,” said the memo authored by Andrea Law, the city’s general manager of the development, buildings and licensing department…read more.
Property assessments across the province continue to climb with new data revealing a nearly 22% increase since a year ago.
The vast majority of B.C.’s total real estate value of $2.44 trillion is housed in the Lower Mainland, according to information posted Tuesday to B.C. Assessment’s website.
The province’s most densely populated region accounts for $1.75 trillion of that value. More than $23.7 billion of the Lower Mainland’s updated assessments is from new construction, subdivisions and the rezoning of properties.
“The widely reported heighted demand among homebuyers during the COVID-19 pandemic is reflected in the upward movement of property values across the province including 10-30% increases throughout the Lower Mainland,” B.C. Assessment deputy assessor Bryan Murao said in a statement.
“City of Vancouver condos, however, are on the lower end of the changes, generally with single-digit increases, whereas homes in the Fraser Valley suburbs are changing higher compared to most of Metro Vancouver.”
Part of this trend could be tied to more of the labour force shifting to remote working, meaning fewer buyers are putting a premium on living closer to downtown Vancouver…read more.
Canadian real estate prices are seeing the rate of growth accelerate once again. The Canadian Real Estate Association (CREA) Home Price Index (HPI) shows prices surged in November. Even as the inventory squeeze eased a little, buyers bid up home prices at an even faster rate. Annual home price growth is at a record high, and it’s been accelerating.
Canadian Real Estate Prices Hit A Record High
The price of a typical, or benchmark, home across Canada has never been higher. The record composite price was $780,400 in November, an increase of 2.35% ($17,900) from the previous month. Annual growth hit a rate of 25.31% ($157,600) as well. Once again, this is a record for prices. A typical home across Canada jumping $17,900 in a month is hard to believe, but it happened. Again. Did we mention this is across Canada?
Canadian Home Prices Have Never Seen Faster Growth And It’s Accelerating
The prices aren’t the only record being set, but growth is also moving at the fastest rates in history. The monthly increase is the largest since April. Annual growth at 25.31% means a new record high for the CREA composite benchmark. Price growth hasn’t eased, it’s actually accelerating as moral hazard sets in.
Canada Housing Inventory Is In A Squeeze As Demand Gets A Boost From Monetary Policy
If you heard home prices are rising due to a lack of inventory, you heard correctly. Well, sort of. Seasonally adjusted existing-home sales reached 54,222 units in November. This is an increase of 0.6% from a month before. Home sales are just below the record for November, set a month before…read more.