New Bank of Canada (BoC) findings reveal that investors account for 19% of home purchases dating back to 2014 – steadily outpacing other types of homebuyers during the pandemic.
The report, Housing Demand in Canada: A novel approach to classifying mortgaged homebuyers, found the share of residential investors surged in 2017, when home prices in cities like Vancouver were skyrocketing, and swelled by an even bigger pace in 2021.
This report is also among the first official policymaker-backed studies that demonstrate the significant role investors play in Canada’s housing market. Aside from anecdotes from the real estate community, previous studies on residential investors have generally shown to be much smaller.
A study from the British Columbia government in 2016 found that foreign investors accounted for about 10% of Vancouver home sales over a five-week period.
The BoC divided homebuyers into three classifications with the following percentages:
- First-time homebuyers – 50%
- Repeat homebuyers – 31%
- Investors – 19%
As home prices have outpaced increases in disposable income, first-time homebuyers have been severely impacted. The BoC report found the share of first-time homebuyers has been declining since 2015 to a new low set last year.
A key insight to emerge from the initial analysis of this data is that existing homeowners are increasingly driving home purchases. Within this group, investors have seen the largest gain in their share of home purchases during the pandemic.
The report also acknowledged that, while investors can be a significant source of instability in the market, they’re also an important factor in adding rental supply.
The BoC concluded it needs to conduct further research to examine the delicate balance between adding to rental supply while removing new builds and resale supply in a housing market that already has supply constraints.
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