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Persistent gaps in available homeownership data are giving policy makers a fragmented picture of immigrants who buy expensive homes.DARRYL DYCK/The Canadian Press

It’s time to determine whether systemic discrimination against immigrants in the labour market is creating latent housing market risks.

There are worries that Canada’s rising immigration levels will intensify competition for homes and fuel further increases in real estate prices over the coming years. Those concerns stem from a lack of affordable housing in major job centres such as Vancouver and Toronto, but also in smaller cities that have experienced steep home-price increases during the COVID-19 pandemic.

But there also seems to be another risk brewing in the housing market. Persistent gaps in available homeownership data are giving policy makers a fragmented picture of immigrants who buy expensive homes. Many of these buyers are believed to be using pre-existing wealth to purchase residential real estate because they have such low incomes in Canada.

Canada’s next wave of immigration set to add more fuel to overheated housing market

It’s long been assumed that many of those newcomers are independently wealthy and don’t need to work. But some do need employment, and they often encounter difficulties finding a suitable job in their chosen professions because they lack Canadian experience or their foreign credentials aren’t recognized by employers.

Canada attracts foreigners on the promise of a better life. But if immigrants lose their homes and can’t find work, it makes it difficult for them to succeed in Canada. This, in turn, would aggravate the affordable-housing crisis. This country’s housing sector is already volatile enough without more individuals getting in over their heads with mortgages they can’t reasonably afford.

“If you are an economic immigrant and you don’t have other opportunities, real estate becomes one of the fastest wealth generators,” Andy Yan, director of the city program at B.C.’s Simon Fraser University, told my colleague Rachelle Younglai. “They are wealthy. But when they try finding a job, it goes south.”

While immigrants have long complained about this disconnect – that their qualifications are good enough get them into the country but inexplicably fail to secure them appropriate employment and remuneration after landing here – they now face a new problem: Rising inflation is driving up the cost of living and putting more strain on household budgets across the country.

No one really knows whether this ascending wave of home buyers has the financial wherewithal to cope. That’s because we have only limited data about immigrant homeowners, their sources of wealth and the wage gaps they face in Canada.

It’s not known how many immigrants are buying their homes outright versus financing them. Among those who have mortgages, it’s unclear how many are using alternative lenders that typically charge higher interest rates than chartered banks. Other key metrics, such as the typical loan-to-income ratio and loan-to-value ratio of their home loans, likewise remain a mystery.

Since the ranks of immigrant home buyers are expected to swell over the coming years, it’s imperative that policy makers have a reliable way to predict how many of these purchasers risk finding themselves financially stretched.

Determining the scope and the severity of this potential problem, however, requires a measure of lateral thinking. Rising living expenses and the spectre of higher interest rates are just two variables to consider.

The federal government also needs complete information about immigrant wealth and incomes, including a thorough understanding of why some newcomers have trouble integrating into the labour market and continue to face wage gaps long after they move here.

Economic immigrants, of course, are selected because they are ideally suited to contribute to the Canadian economy given their education, job skills and accumulated wealth. Even so, they encounter wage disparities that vary in severity depending on their country of birth, according to a recent study published by Statistics Canada.

Specifically, the federal statistical agency found that economic immigrants born in the United States and the United Kingdom had the highest median wages when they first arrived in Canada and a full decade after admission.

“Among the principal source countries of economic immigrants admitted to Canada in 2008, the median entry wage ranged from $15,300 among those born in Algeria to $86,200 among those born in the United States,” the study states.

“In 2018, 10 years after admission, the median entry wage ranged from $38,800 among those born in South Korea to $100,700 among those born in the United States.”

Those born in the United Kingdom, meanwhile, earned $70,900 in their first year and $91,000 after a decade in Canada.

These wage disparities should concern housing policy makers, especially since there is often a big gap between immigrant incomes and purchase prices of their homes.

As Ms. Younglai reported in Thursday’s Report on Business, in Richmond, B.C., a typical immigrant buyer in the lowest wage quintile, with median annual income of just $11,100, spent a median of $763,000 on a home in 2018, according to data from Statscan’s Canadian Housing Statistics Program. But a typical Canadian-born buyer in British Columbia in the lowest income quintile, with a much higher median annual income of $32,300, spent a median of $396,000 on a home that same year, according to CHSP.

Although it is assumed that immigrant buyers are paying for their homes with previously accumulated savings, rather than Canadian income, there is no information about their funding sources. Do these buyers have sufficient wealth socked away to absorb higher living costs for an indefinite period of time, or are they at risk of draining their savings?

It’s urgent the federal government fill in these data gaps and take a holistic view of housing-market risks. That includes determining why some immigrant home buyers have such relatively low incomes.

Let’s hope the vast majority of them are rolling in it and aren’t being forced to scratch out a living.

But if systemic discrimination in the labour market is proving to be an unseen risk for the housing market, then Ottawa and the provinces, which are responsible for labour laws, have an obligation stamp it out – for all our sakes.

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