Statistics Canada has been highlighting the role of investors in the housing market. A recent study of five provinces, including BC and Ontario, found that over 25% of dwellings are owned by investors as of 2020.
The problem is that the StatsCan report is misleading. As noted by two housing researchers in BC, Jens von Bergmann and Nathan Lauster, this analysis is flawed both by how investors are defined and how the analysis is framed. Included in the definition of investor are: governments; for-profit businesses; individuals not found resident in the province; individuals owning more than one property; and individuals resident in the province owning a property with more than one residence.
While it is generally expected that a high share of condominiums are owned by investors, even that data is skewed. Driven by significantly higher property tax rates for commercial properties versus residential properties, large property management firms have converted purpose-built rentals to condos. For example, as noted by von Bergmann and Lauster, about half of the 10.1% of condominium apartments owned by investors in the city of Vancouver are purpose-built rentals legally structured as condominiums.
We see similar concerns where it is suggested that 15% of detached homes are investor owned. Looking back at the definitions, this would include vacation properties as well as properties with secondary suites.
In the most recent StatsCan report on real estate investors, the Canadian Housing Statistics Program (CHSP) highlights the percentage of non-resident investors in BC and singles out the regional municipality of Invermere: “40.9% of owners were out-of-province investors, and this rate reached 69.2% in Radium Hot Springs.” Since development in this area has been targeted for vacation properties for Albertans, it is not surprising to see that there is a higher level of out of province ownership. However, since a significant number of these developments were sold as timeshare units, this would likely skew the ownership percentage much higher.
There are similar problems when looking at within-province “investors.” Owning a vacation property as well as a primary residence makes the owner an investor according to this analysis.
The BC provincial government has recently announced that a key component of its strategy to improve housing affordability is to get more secondary suites in the province. Square One Insurance estimated that 25% of detached homes in BC and as high as 40% in Vancouver had secondary suites as of 2015.
In a 2021 study, CMHC estimated that there are 75,000 secondary suites in Ontario, and that 1 out of 6 ground-oriented homes in Toronto has a secondary suite.
Within the CHSP definitions, homeowners who have secondary suites are investors. Most homeowners who have secondary suites would not see themselves as investors – just ordinary Canadians trying to afford their home and make their mortgage payments.
Housing affordability is a key concern for Canadians. Getting the definitions and the framing of the issues is important to ensuring we get good policy outcomes.
Independent Opinion
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