A Federal Act, which will be initiated in January 2023, will prohibit non-citizens and non-permanent residents from purchasing residential property in Canada for two years. According to one national law firm, “The Government hopes that the Act… will help to curb the perceived rising number of vacant houses owned by foreigners and real estate inflation.” I believe that the previous quote cunningly used the word “perceived” very intentionally.
Beginning in March 2020, I got to know the four walls of my living room intimately as I – along with several other Canadians – observed the stay-at-home orders during the COVID-19 pandemic. This coincided with a time of objectively low volume in non-resident visitors entering Canada (3,887,483 in June 2019 vs. 121,524 in June 2020). Therefore, using the Government’s logic, we should have seen less vacant homes and deflation in the real estate market. However, when I look at the North Vancouver sales statistics from 2005 to 2022, we saw:
1. The highest month for sales ever with 3,788 in June 2021
- Pre-Pandemic height was 3,472 in June 2016
2. The highest month for new listings ever with 5,739 in May 2021
- Pre-Pandemic height was 4,544 in August 2019
3. The highest month for dollar volume of sales ever with $4,875,473,782 in June 2021
- Pre-pandemic height was $3,713,933,480 in July 2016
4. The highest average month for price per square foot ever was $922 in October 2022
- Pre-pandemic height was on average $766 in August 2018
5. The highest month for House Price Index ever being $1,403,592 in October 2022
- Pre-pandemic height for HPI was $1,194,858 in April 2018
We are also saw data from Stats Canada that don’t jive with this policy as it pertains to vacancy rates:
- 2001 Vacancy Rate was 7.8%
- 2006 Vacancy Rate was 8.4%
- 2011 Vacancy Rate 8.6%
- 2016 Vacancy Rate 8.7%
- 2021 Vacancy Rate 8%
Based on the real estate boom that occurred during the pandemic when immigration was relatively put on hold, I am doubtful this Act will have any real consequences. I personally see it as the government (1) trying to appease the public and (2) proving to the public foreign ownership is not the main cause for the rising prices in real estate. If you’re wondering why real estate prices continue to climb — I would offer that it’s due to a lack of supply and the fact that from a historical perspective the real estate market only moves in one direction: up.
Furthermore, what is also happening simultaneously to this Act being introduced is a necessary initiative to boost immigration to Canada to help offset the labour shortages we’re experiencing as Baby Boomers (a substantial group of the working population) enter retirement. Since those immigrating here will understandably not be affected by this new Act, a flood of new workers and future-home owners are entering the country.
In my estimation, this governmental Act will be about as effective as my strategy for removing the imaginary Monster from under my daughter’s bed. Curious about my strategy? I sing the ghost busters song and take a vacuum to floor under her crib – it’s also the most spotless area of our home.