Canada has earned itself a reputation as a hub for dirty money over the past years, and it doesn’t seem to be phased by it. Financial Transactions and Reports Analysis Center of Canada (FINTRAC) data show reports of suspicious transactions have surged higher in recent years. At the same time, the financial watchdog is conducting fewer compliance audits. The move is particularly problematic for real estate, where housing is rising at a record rate and compliance audits are 60% lower than they were last year.

Canada Has Seen Suspicious Transactions Rise 270% Since 2016

Reports of suspicious transactions have exploded over the past few years in Canada. The agency received 468,079 suspicious transaction reports in the 2020-2021 period ending March 31. It’s 21.2% higher than a year before and 271.6% higher than the 2016-2017 period. Remember, these are just suspicious transaction reports — not the total received reports. The agency receives and “stores” over 30 million transaction reports annually.

FINTRAC Audits Have Fallen Over 62%

A surge in suspicious transactions didn’t cause FINTRAC to break a sweat, apparently. The agency dropped compliance audits sharply, conducting just 151 in the 2020-21 period. This is a drop of 62.2% from the previous period. The pandemic played a role in fewer audits, but this has been a longer-term trend…read more.

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 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.