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CMHC survey sheds new light on condo investors

File photo of condo construction work in downtown Toronto.

Peter Power/The Globe and Mail

The Canada Mortgage and Housing Corp. has revealed new information about condominium ownership in Vancouver and Toronto, but the data fails to answer some key questions.

While Canada's condo market has seen massive growth over the past decade, economists and analysts have criticized the lack of accompanying data to evaluate the nuances of the market.

On Friday, the crown corporation released a survey on condo ownership in Vancouver and Toronto that real estate observers had been waiting for.

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The survey, conducted in 2013, collected responses from more than 42,000 condo owners who list their primary residence as being in the greater Toronto or Vancouver areas. Of those surveyed, 82.9 per cent said their condo is their primary residence.

That means 17.1 per cent of respondents do not use their condo as a primary residence, which is one of the first data collected that hints at the number of people whose condos are primarily an investment vehicle. Within that group, 8.8 per cent rented out their condo, and 6.3 per cent had a family member living in the unit.

Bob Dugan, the chief economist of CMHC, said the survey provides valuable information but also shows there's a need for more data on the subject.

"There's certainly a data gap in the market in terms of condo investors," he said in an interview, adding that the CMHC survey is a "first step" toward collecting more comprehensive information.

But the survey didn't address one of the key questions that has loomed over the condo market for the past few year: the impact of foreign investors who see Canadian condos as a place to park capital and watch it appreciate.

"Foreign investors are very difficult to capture in a survey," Mr. Dugan said, adding that determining what constitutes a foreign investor by tracking where someone pays their taxes, for instance, can bring its own set of complications.

Benjamin Tal, an economist for CIBC World Markets Inc., said the survey was a "welcomed move" by CMHC. In addition, "There is little doubt that many observers will find the results – mainly the 17.1 per cent – much smaller than expected," he wrote in an e-mail.

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"While there is no discussion regarding foreign investors, when you combine this info with other information such as the secondary rental market survey and starts and completion survey ... observers might be surprised at the very small portion of foreign investors."

Mr. Tal estimated foreign investors probably account for less than 5 per cent, and noted the data indicates that about 2 per cent of condo owners are potential flippers.

He added that the information presented "a more reassuring picture than perceived."

Mr. Dugan said the lack of data on foreign investors has caused concern about potentially inflated supply, or that foreign capital could leave the market when yields pick up elsewhere, causing a shock to Canadian real estate.

For Mr. Dugan, the answer is obvious.

"You can't identify potential policy problems unless you have the data."

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He cited Australia as a case study. There, restrictions on foreign ownership are difficult to enforce because of difficulty in tracking the relevant data.

He added that CMHC hopes to continue looking into the issue, and welcomes other government agencies doing the same.

"We just hope the information is helpful."

With files from Tara Perkins

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