Investors are becoming increasingly involved in Canada’s housing market, making up 30% of all residential real estate purchases in the early part of this year. The COVID-19 pandemic has fueled investor buying as rising home prices have generated interest in residential properties as an asset class. The Bank of Canada’s data reveals that the percentage of first-time homebuyers has decreased, while repeat buyers have also fallen. The increasing presence of investors in the housing market can amplify house price cycles, adding to bidding pressures and intensifying price increases during housing booms. The federal government has targeted foreign real estate buyers with a ban on purchases, but has not yet addressed individual domestic investors. The Bank of Canada’s data also highlights vulnerabilities in the Canadian economy, including high household indebtedness and high house prices. Some vulnerabilities are increasing, such as delinquencies for car and installment loans, while others are easing, like the share of homeowners putting down less than 20% of a property’s purchase price. Home flipping is on the rise, but still accounts for less than 3% of transactions. The central bank intends to provide regular updates on these indicators.
https://www.theglobeandmail.com/business/article-investors-account-for-30-per-cent-of-home-buying-in-canada-data-show/