New housing data connect immigration and property ownership

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New housing data offer a first-time view of the relationship between immigration and property ownership in cities where real estate prices have climbed highest, Vancouver and Toronto.

The data released last week show the degree of property ownership, as well as values and total family incomes, for every category of immigrant. Out of all immigrants, those who obtained citizenship through the controversial Quebec investor immigrant program have the highest assessed property values, either as a single property or multiple properties. Many have long suspected that the Quebec program has operated as a backdoor for wealthy immigrants who opt to buy properties in Vancouver and Toronto instead of remaining in Quebec, which was the intention of the program.

The Canadian Housing Statistics Program released 2020 data that show investors to the Quebec Immigrant Investor program owned, on average, a single property in Metro Vancouver valued at $1.940 million – the highest property value out of all admission categories. The average family income for that group is $70,000. By comparison, the average income for immigrants who owned a single property in Vancouver was $130,000.

The Quebec investors also had the highest average total assessed value for multiple properties in Vancouver, with an average total assessment of $4.6-million in properties. The average multiple property immigrant owner had a total assessed value of $2.7-million. The average family total income for multiple property owners for Quebec investors was $100,000, compared with the average of $190,000 for all admission categories.

The CHSP, which is part of Statistics Canada, provided the data as a valuable glimpse into the realities of Canada’s housing market. The data also included the finding that 15 per cent of individual owners (as opposed to institutional investors) own 29 per cent of all British Columbia’s housing stock.

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The intent behind the Quebec program is that investors, who must have net assets of at least $2-million, among other requirements, intend to settle in Quebec. Critics argue that, while they’re supposed to stay in Quebec, it’s impossible to stop investors from moving elsewhere. It’s a passive investment – requiring $1.2-million injection into the provincial government to be returned interest-free after five years – without having to set up an actual business. (The investment amount had been $800,000 but was increased in 2018). In return for the loan, those high-net-worth individuals are pretty much guaranteed permanent residency in Canada.

It has proven to be a hugely popular program. Immigration lawyer Colin Singer describes it in a video online as the most popular investment visa program in Canada. The program began in 1986 and had been processing 1,900 applications a year before it was put on pause. Quebec, which has its own immigration policy, won’t take new applications until April 1, 2023, pending review.

Critics say the problem with the program is that while Quebec has enjoyed the investment money, other provinces have funded health care and grappled with the flow of foreign capital into their housing markets – particularly B.C. and Ontario.

In Toronto, the Quebec investor multiple property owner had an average assessment value of $2.4-million. Average family income totalled $90,000 for that same group.

There was a parallel federal immigrant investor program, also hugely popular, that ran for 28 years, but that program was cancelled in 2014 amid concerns that investors were not paying their fair share of taxes and there was little economic benefit for Canada. However, the program’s long-term effects show up in the CHSP data as well. The average total assessment value of the federal investor immigrant who owns a single property in Vancouver is $1.580-million, with an average family income of $75,000. The average total assessment value of multiple properties held by a federal investor in Vancouver amounted to $3.8-million. That category of immigrant had an average family income of $110,000. Approximately 30,000 people purchased property in Vancouver through both investor programs, according to the data.

It is important to note that these investors are not deemed “foreign buyers,” because they are homeowners who hold citizenship, says Andy Yan, director of Simon Fraser University’s city program. The foreign buyer statistics that are routinely cited by the provincial government, for example, do not include this group.

The new data illustrate the importance of considering capital flows from foreign sources and not just the number of foreign buyers. The new temporary ban on foreign buying included in last week’s federal budget, for instance, deals only with foreign buyers, not foreign capital inflows. The ban also exempts foreign students, which has raised eyebrows. Several years ago, student homeowners made headlines for owning some of Vancouver’s most expensive properties. The most controversial example was the UBC student who bought a $31-million house. Students living in Vancouver appeared to be proxies for foreign wealth, and lenders were giving them preferential loan terms.

Dr. David Ley, University of B.C. professor emeritus, has said that all levels of government have courted foreign money for decades. In B.C. in 1988, the province began courting Asian money when the resource-based economy went into decline. He says the reach out to Asia Pacific was illustrated best by the sale of the vast Expo 86 site to a Hong Kong property development consortium in 1988.

“It was a sale that put Vancouver on the radar of property investors in Asia and established networks with the Canadian property sector. The development and real estate companies had formed an informal growth coalition with government, designed to sustain off-shore capital flows into B.C.,” Dr. Ley said in an e-mail.

“Regular trade missions by all three levels of government spread news of opportunities; the federal government alone sent five ‘Team Canada’ missions to Asia in the 1990s. The Business Immigration Program (which included investors) provided the means for both capital and capitalists to enter British Columbia.”

CIBC chief economist Benjamin Tal spoke at the Vancouver Real Estate Forum on April 12, and he said that new immigrants play a key role in the housing market.

An estimated 70 per cent of the 405,000 new immigrants who were admitted last year were already in Canada on temporary visas, which means they speak the language, probably hold jobs and are therefore already well on their way to buying property.

“It’s not just the number of immigrants, but their ability to buy a house and participate in the labour market,” Mr. Tal said.

He said the composition of the immigrants is also important, because there is a labour shortage in the construction industry and so far Canada is not attracting those workers.

“In my opinion, the No. 1 factor limiting supply of real estate now, the new housing in Canada, is labour. You cannot find it. And when you do find it, the charge is enormous. It’s crazy,” Mr. Tal said.

Mr. Yan says the system is failing new immigrants who’ve arrived to work and settle if it also allows new immigrants who are here because they are wealthy and have an appetite for real estate investment. The 110,565 immigrants who came through the federal skilled worker program and purchased a single property had one of the highest total family incomes, at $120,000, and a far lower average property value of $990,000. Although skilled workers outnumber the Quebec investors to Vancouver by a factor of 10, the latter camp has greater spending power, and the ability to drive prices upward.

He’d like to see data on exactly how many properties the wealthy investor group owns.

In this way, immigration policy and housing policy go hand in hand, he said.

“Immigrants from around the world are being sold the dream of Canada, and yet with housing unaffordability where local incomes are so decoupled from housing costs, you’re pulling out the first rungs of that dream. Canada is inviting the world to a dinner party and it turns out to be a potluck for multimillionaires.”

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