Canada has seen it’s highest immigration levels ever over recent years, and the role that these numbers have factored into the supply / demand element of the housing market has been covered at great length over the last while. Despite the fact that having nearly 70% of all new immigrants to the country soon residing in the Toronto and Vancouver areas IS a problem, there’s very understandable and relatable reasons for why that’s happening.
However, the housing crisis in Canada is most certainly not exclusive to these two areas. The reality – and one that has very real trickle-down effects for real estate professionals here – is that there are fewer homes being A) built, or B) put on the market than is necessary to meet the demand for housing in Canada. Newcomers of course add to the demand in an environment where it’s nearly impossible for new building starts to catch up.
A more-demand and less-supply orientation to this means that prices for homes will be boosted. There’s no getting around that. This means fewer ‘qualified’ homebuyers being out, and especially among multi-generational Canadian families who haven’t had the luxury of living and working outside of a country that taxes its citizens so extensively. Here at Real Estate Leads, our online real estate lead generation system is an excellent way for realtors to claim a larger slice of what is currently not the biggest of pies.
But looking at the subject here more critically again, it’s interesting to take note of a recent survey that suggests one in every 5 homes purchased in Canada is bought by an individual or family that is new to the country.
What can we read into that? Let’s look at that at face-value, and we’ll then shift away to consider what relevance that has for realtors.
Unique Residential Landscape, Unique Challenges
The study from Royal LePage, one of the more well-known and long-standing real estate brokerages in Canada, started by saying that it had polled 1.500 people who had arrived in Canada at some point over the last decade. The majority of respondents (54%) related that they chose to move to Canada because they see the country as a good place to live and work. Many stated further that they chose it over the United States because they feel more welcomed as an immigrant in Canada (31%), while others said Canada offers them a safer life (26%).
That many of these new Canadians see real estate as a strong investment (86%) won’t surprise anyone. Where this becomes a bit of an issue is in the fact that many of these people who have been approved for immigration have significant investment capital for their real estate purchases due to living and working outside of Canada. They’re able to make money and keep more of it as a result of not being taxed as disproportionately as those who grew up in Canada were.
Whether that’s right or wrong, it’s an ‘it is what it is’ situation regarding these individuals having the deeper pockets needed to purchase real estate, and particularly in desirable locales in the country. It must be said though that the fact our Constitution and Charter of Rights extends freedoms to these people in the same way it does for you means that no one should question the freedom these people have to buy homes with money they’re worked hard to earn.
That really needs to be said.
The reality, however, is that – according to the survey – 75% of these new Canadians arrived with enough savings to get them into real estate. It also found that, on average, newcomers waited approx. 3 years to make their first home purchase, with many choosing to rent or live with family or friends after first coming to the country.
No matter how you slice it, this ability to arrive with sufficient savings to buy pricey real estate does put longer-standing Canadians at a disadvantage, but again that’s something that is just a reality to be dealt with. The same thing happens in America, but in the US immigrants settle and buy homes all over the place, and not just in a handful of locations like here in Canada.
Detached Homes Preferred
In spite of those numbers, the survey also states that only 32% of the newcomers surveyed became homeowners, and that’s a disparity between the 68% home ownership rate for all of Canada. Of those who did buy, roughly half of them bought a detached house. Some 18% opted for a condominium, while 15% bought a townhouse and 13% bought a semi-detached house.
With the understanding that the detached homes are obviously the most expensive – and decidedly out of reach for many Canadians – it is easy to understand why these statistics are going to be a concern for some.
As realtors, however, there is need to have bigger-picture understanding and wherewithal related to this. In addition to supporting Canada’s economic growth, newcomers to Canada are vital to the health of the national real estate market. This isn’t something to be impeded in the interest of creating a ‘level playing field’, as it is crucial that housing supply keeps pace as the economy and labour market continues to expand.
This is especially true if projections that Canadian newcomers will purchase 680,000 homes over the next five years are realized, as is predicted if current international migration levels for Canada are maintained.
The demand for affordable housing for both younger and new Canadians can only be best and most soundly met through housing policies that encourage smart and sustainable development, and ideally ones that focus on protecting and developing green spaces in our urban centres. One of the biggest problems in popular metro regions is that the municipalities have so much in the way of red-tape regarding new housing starts that developers and builders are discouraged from moving ahead.
This would be a great place to start, and if you were to ask anyone working in the real estate business this is likely what they’d mention first as well. Balancing out supply and demand – as much as that’s possible – will be beneficial for both homebuyers and sellers and the realtors who serve them. Whatever that takes likely won’t be an easy solution, but it’s one we all need to see and sooner rather than later preferably.
Our hope is that there can be a balance found, and that anyone with either personal or commercial interests in real estate can be a part of the new reality. In all likelihood, however, we’re years away from this.
Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you – and only you – for your similarly exclusive region of any city or town in Canada. Provided that you be the early bird and ‘get the worm’ here, you’ll have your area of your town reserved for you and from that point forward you’ll be the only one to receive leads for it. It’s a dynamite way to supercharge your client prospecting efforts.