New housing report breaks down investor demographic data

A new report by Statistics Canada reveals insights into Canada’s real estate investors.

With demographic statistics published in the report titled “Housing Statistics in Canada,” these insights paint a picture of investors throughout Ontario, British Columbia, Manitoba, Nova Scotia, and New Brunswick for the 2020 reference year, highlighting each demographics’ role in the housing market.

Here are some key takeaways.

PROVINCE INVESTOR DIFFERENCES

Statistics Canada notes that Nova Scotia, New Brunswick and British Columbia represented the highest volume of out-of-province and non-resident investors in 2020.

Nova Scotia, for instance, had 3.8 per cent of their investors deriving from outside of the province in 2020. Similarly, New Brunswick had 3.0 per cent, while British Columbia had 2.7 per cent of out-of-province investors.

Leah Zlatkin, a mortgage broker and corporate strategist with Mortgage Outlet Inc., notes that the data, emerging before recent interest rate hikes and developments in inflation, represents a very different housing market.

“A lot has changed” since 2020, she told CTVNews.ca in a phone interview on Wednesday. “I don’t know if we can really base this on the profile of existing investors.”

But Zlatkin also explained that 2020 trends reflecting out-out-province investors in the East Coast remain relevant to the current housing market.

“For many Ontario investors who want to get into the market with a second or third home in the course of the last two or three years, the East Coast has been really cheap in terms of property values,” she said. “So it’s been a really good opportunity to buy properties out there and still be renting them for the same cost as properties in the [Greater Toronto Area].”

The data revealed that, compared with other types of investors, out-of-province investors earned the highest average incomes in all five provinces assessed. In most provinces, however, investors who owned vacant land in addition to a primary residence had an average annual income that was similar to people who were not investing in real estate.

In New Brunswick, 1.6 per cent of in-province investors owned three or more properties. This was one end of the housing stock range, which saw 2.9 per cent of Ontario investors owning three or more properties in their province.

“For Nova Scotia and New Brunswick [the volume of out-of-province investors] makes a lot of sense,” Zlatkin said. “Property values in Nova Scotia are so much less. You could rent out the properties for a good amount… You could buy a rental property in Nova Scotia or New Brunswick for two, three hundred thousand dollars in the last two years. And you could rent that same property out for two thousand dollars [per month].”

In Ontario, Zlatkin explained, to buy a property that you could rent out for $2,000 you would need to pay upwards of $500,000 or $600,000. “When you look at how much is required and what kind of mortgage you’d need to qualify for, it makes a lot more sense to buy out east.”

Zlatkin also explained that managing properties when you live out of the province would be much more difficult. However, “if it’s a smaller value property, the risk is not as high.”

IMMIGRATION INVESTORS COMPARED TO CANADIAN-BORN INVESTORS

Statistics Canada also reported that established immigrants – meaning those who arrived in Canada before 2010 – were more likely to be investors than their proportion in the population. British Columbia, for instance, found immigrant investors carried an average property value totalling $2,200,000. This compares to Canadian-born real estate investors who had an average assessed value standing at $1,610,000.

Similarly, in Ontario, the average assessed value for immigrant investors was $1,290,000 and $890,000 for Canadian-born investors.

According to Statistics Canada, a major reason for these value discrepancies derived from the fact that immigrant investors were “more likely to own a primary residence in a larger census metropolitan area.” In highly populated cities, property assessment values are “generally higher compared to other parts of the provinces,” Statistics Canada explained in the report.

Zlatkin believes a major factor is the competitive process of immigration in the country, which leans towards welcoming newcomers with high education and high-paying job eligibility.

“When you look at how we allow immigration to happen in Canada, most people who are immigrating into Canada are extremely well educated,” she said. “They come in with a lot of credentials. People [who immigrated] are [often] very employable if they don’t already have employment. They may also come from situations where they were previously doing well in their home country and they may have family members who are still doing well in their home country.”

Zlatkin explained that there is a lot of asset opportunity for those with an existing income or those who have financial backing, either from an incoming job or from family.

INDIVIDUAL INCOME AVERAGES AND INVESTOR AGES

The report also found that disparity in incomes was more significant in B.C., and Ontario.

In B.C., Canadian-born investors had an average individual income of $105,000 in 2020, with immigrant investors carrying an average individual income of $80,000.

The same average income ($80,000) was traced to immigrant investors in Ontario, where as the average individual income for Canadian-born investors in the province was $100,000.

Notably, Nova Scotia and New Brunswick were the only provinces out of the five that showed immigrant investor incomes higher than the individual incomes of Canadian-born investors.

In Nova Scotia, immigrant investors earned an average annual income of $75,000, while Canadian-born investors earned $65,000. In New Brunswick, the average individual income of immigrant investors stood at $65,000 in 2020, while Canadian-born investors earned an average of $60,000.

“When you look at the average income here, most of these people wouldn’t qualify for two or three homes,” Zlatkin said, explaining key differences with the housing market of 2020.

Along with showing that residents aged 55 and older represented a “higher proportion of investors than their share of the provincial populations,” the report explained that Canadians 35 and younger averaged 5 per cent of total property investors in 2020.

Zlatkin called this “shocking.”

“I’m shocked because most people under 35 don’t have enough income to qualify for these mortgages,” she said.

Zlatkin mentioned that this could be a result of generational wealth, financial cushioning from families, and shifts in lifestyle focus for younger investors.

Zlatkin said this trend could reflect an increased demand for millennials to have better work life balance – a luxury afforded to real estate investors who rent out properties and only have to maintain them in order to incur wealth.

To rent out multiple properties you actually “could acquire quite a bit of wealth and it’s long-lasting throughout your entire lifetime,” she said.

“For a millennial who has the money or has generational wealth it makes sense that young people are incredibly incented to buy.”

 With files from CTVNews.ca’s Jesse Tahirali

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