I don't have a source on me but I've read plenty about wealthy people in other countries buying large amounts of Canadian real estate as a store of value, even if it sits vacant. Mostly people in countries where there aren't so many great places to invest. But I don't know off hand if that's just a drop in the bucket compared to other things or what.
There likely was a great deal of this at some point before 2015, but in 2015 BC finally started tracking who was buying homes and brought in a foreign buyer tax and since there there's been only ever more scrutiny on foreign buying, and from everything I've read foreign buying has fallen off a cliff.
Because there was no data tracked before 2015, whether or not there was indeed a significant amount of foreign buying remains speculation and theory but there are some signs that support the notion that it was important.
For example major luxury condo builder Westbank has significantly reduced their operations in Vancouver, pivoting away from super luxury homes explicitly marketed as pied-a-terres and in the pages of Monocle magazine and are now building increasingly in the USA and even Japan. Some of their projects in Vancouver changed from being condos to rental. That this all happened post foreign buyer tax suggests that foreign buyers were a critical part of their business plan and they needed to remarkably change it after foreign buyers went away.
Data that tracks foreign buyers and owners in Canada are scarce and patchy. The Canadian Housing Statistics Program shows that non-residents only own about two to six per cent of Canadian residential properties in 2020.
Edit: Those numbers are in line with the US. Why is the US real estate market not that crazy then?
Real estate is, at worst, used for sanction evasion and money laundering, and at best, as a loophole for citizens of restrictive countries to extract more of their money from those countries.
All of these create an incentive to overbid on real estate.
Where I live, this is a known issue. In fact, the top real estate companies specifically try to attract foreign investors, and have stated so publicly.
Look at the chart in the article. Home prices plummeted in 2022, when the Canadian government enacted a 1% Underused Housing Tax (UHT) on Canadian residential property that is considered vacant or underused.
Because it's smaller and more concentrated. With fewer cities containing a larger portion of Canada's population, the demand is focused more intensely.
Does the demand side of the equation just not matter to you? It’s not “blaming foreigners”, it’s blaming politicians who come up with the policies that affect both the demand and supply side of the equation.
Hmmm...2 to 6 percent of a market can be more than enough to make a difference, even a sizeable one, if there is already a shortage. Now, there is still the question of why there is a shortage, but 2 to 6 percent in an already tight market is more than enough to spike the prices.
Of course, China shows that you don't need outsider investing to create a ridiculous property affordability situation.
