Real eState

Ottawa offers details on new federal ban on foreigners buying homes in Canada

Published

2 years ago

December 24, 2022

The rules include a narrow set of exemptions for foreigners to buy residential real estate such as recreational properties and housing with a minimum of four units.ERIC BARADAT/AFP/Getty Images

Ottawa has unveiled details on how the two-year ban on foreigners buying homes in Canada will work. But real estate experts do not expect the new law to help Canadians access more housing.

The rules were unveiled with less than two weeks before the ban is set to go into effect Jan. 1. They include a narrow set of exemptions for foreigners to buy residential real estate such as recreational properties and housing with a minimum of four units.

The law takes effect after this year’s jump in borrowing costs slowed resale activity and triggered the sharpest drop in home prices since the global financial crisis.

Many Canadians were already priced out of the market when home values shot up during the pandemic’s real estate boom. Today, many do not qualify for a mortgage given the going five-year interest rate of above 5 per cent.

The Prohibition on the Purchase of Residential Property by Non-Canadians Act was unveiled in the federal budget in April when home prices were cresting near their peak and buyers were still able to qualify for a large mortgage. The federal Liberal government has said the ban would help stabilize housing and help ensure Canadians had more access to purchasing homes.

However, it is unclear that foreign buyers are still a major source of demand in the market. According to the B.C. government, the number of foreign purchases in the province dropped to 1.1 per cent of all residential sales in 2021 from 3 per cent in 2017. The Ontario government also cited a downward trend but said there is “no evidence available that foreign buyers are no longer actively impacting affordability” in the province’s housing market.

After the real estate boom in Vancouver and Toronto in 2016 and 2017, the provincial governments responded by imposing a tax on foreign real estate buyers. The B.C. tax came into effect in 2016 and Ontario’s non-resident sales tax was effective in 2017.

Meanwhile, data from the Bank of Canada show that domestic investors – who face no government restrictions – have become an increasing force in the market, accounting for one-fifth of home purchases by mid-2021.

The ban will have “a minimal impact on the ground, especially when much bigger factors like interest rates and market psychology are dictating real estate activity and prices right now,” said Robert Kavcic, senior economist with Bank of Montreal. “Foreign buying was a bigger issue back in 2016, 2017. But this latest run in real estate was fuelled by domestic buyers,” he said.

Vicky Huang, who runs a real estate brokerage that caters to domestic and foreign Chinese buyers, said foreign buyers have been on the decline since Ontario implemented its tax. Ms. Huang said a small group of buyers would temporarily be prohibited from buying. But she said they represented less than 10 per cent of her clients at her Bay Street Group brokerage. She said the ban would serve more as a psychological barrier for her clients.

The newly released regulations provide numerous carveouts for foreign buyers, such as allowing purchases of residential real estate outside of a census metropolitan area, or outside of a city with a population of at least 100,000, of which 50,000 or more live in the core.

Other carveouts include international students who are on their path to permanent residency and foreigners who are working in Canada with a work permit. Both groups must prove they have been living in Canada for a certain number of years, and they are not allowed to buy property if they already own Canadian housing.

International students must prove they are enrolled in an approved postsecondary school and are not allowed to buy real estate that is worth more than $500,000. In Toronto and Vancouver, the typical home price tops $1-million.

“The government has put forward reasonable exceptions to the prohibition which will enable temporary residents and other individuals building a life in Canada to pursue home ownership in their communities,” said Brittany-Anne Hendrych, a spokesperson for the Ministry of Housing, Diversity and Inclusion.

Cailey Heaps, a Toronto-based realtor who works with foreign and domestic clients, agreed on the ban’s lack of influence and said the main hurdles for her clients are the high mortgage rates, lack of inventory and concern that they are buying at the wrong time.

Up until Wednesday, the real estate industry was unclear how the new law would be implemented.

“They’re planning to drop that on us literally last minute,” said Jonathan Hacohen, partner with Kormans LLP law firm, which specializes in real estate transactions. “It’s supposed to go into effect Jan. 1 and they haven’t given us all the answers on it, which I think is preposterous,” he said.

Data on non-resident owners show that in 2020 they owned 2.2 per cent of residential property in Ontario and 3.1 per cent in B.C., according to the Canadian Housing Statistics Program. In Nova Scotia, the share was 3.6 per cent and in New Brunswick, it was 2.9 per cent.

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Real eState

Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

3 days ago

November 6, 2024

Anne Joseph

TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Homelessness: Tiny home village to open next week in Halifax suburb

Published

2 weeks ago

October 24, 2024

Anne Joseph

HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

Published

3 weeks ago

October 17, 2024

Anne Joseph

Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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