Foreign Ownership Equates to 7.6% in the City of Vancouver. Is this Accurate?
Statistics Canada Released their first ever foreign ownership data. You can find the full report here. To no surprise, a flurry of angry tweets filled the Twitter sphere. A polarizing political debate erupted, prompting me to reach for the block button several times.
First off it’s critical to understand who is considered a “foreign buyer”
“A foreign buyer is defined as a non-resident homeowner (often expressed as a “foreign homeowner”) as an individual whose principal residence is outside of Canada. “Foreign ownership,” in this case, technically refers to the non-Canadian residency of the legal owner of the property, irrespective of the owner’s citizenship. It should be noted that this definition would classify Canadian citizens whose primary residence is outside of Canada as a “non-resident.”
How was the Data collected?
“Land titles, property assessment data, census of population, tax and Business Register data. Statistics Canada includes individuals and corporations in its estimate of non-resident owners. Statistics Canada covers apartment-condominiums and various other housing types, including non-apartment condominiums, single-detached homes, semi-detached homes, row houses and vacant land.”
So this doesn’t cover foreign buyers who might be using blind trusts. For the record blind trusts are not as big as the media wants you to believe. Blind trusts are reserved for the ultra wealthy, including our own finance minister Bill Morneau. The typical foreign buyer is not setting up a blind trust to launder billions of dollars (although it has happened). Largely these kinds of stories give locals an excuse to leverage themselves to the tits.
Crucially important is this data does not include citizens who are earning an income outside of Canada. This is the most popular method of “foreign buying”. Although it’s not technically foreign buying because the owners have Canadian citizenships. Whether or not they’re paying their “fair share” of taxes is an entirely different story.
Lastly, this data does not include pre sale condos. Note that Stats Canada uses land registry data. Pre sale condos which are bought (mostly in Hong Kong sales centres) and then flipped prior to completion and would not register in land registry. So this is likely a significant number excluded from the data.
Now that we’ve got that covered let’s take a look at the numbers.
Here’s the foreign ownership rate by each area across Greater Vancouver.
Foreign Ownership By Area
Foreign Ownership By Type
The largest share of non-resident ownership was for condo apartments, at 7.9% in the Vancouver CMA. Oddly, this data suggests foreign owners are under 4% of the detached market. This feels questionably low, and perhaps under reported due to blind trusts or again suggesting many are already Canadian citizens.
All of this data for Vancouver is as of June, 2017. We’ve only now begun tracking this data so there’s no way to know if this number has been growing in recent years (I’m sure it has). Regardless, the numbers suggest egregious house prices may be more local than we want to believe. After all, Canadians are the most indebted of any advanced economy and 40% of all home loans are now blended with a Home Equity Line of Credit.
That being said, as many pundits have suggested, and as I have witnessed on the ground many “foreign buyers” are not actually foreign, they own Canadian passports.
This is why the debate has begun to focus on where are they earning their income and are they paying their fair share. And what will be considered “fair share”. This is a political hot potato that involves potential changes to immigration policies and tax laws.
Lastly, of the official 7.6% of foreign ownership in Vancouver how many are productively renting them out vs. how many are simply using Vancouver real estate as a hedge against inflation and a preservation of wealth. Leaving homes empty creates zero benefit to the local economy. This is data Stats Canada should begin tracking.