Newcomers a ‘driving force’ behind real estate investment in Ontario

A new pre-pandemic profile of Ontario residential real estate investors shows that in 2020 only a tiny number — 0.5 per cent — lived outside the province and that most investors were over 55, had an income of $110,000 or less — with an outsized portion immigrants.

The investor profile published on Tuesday is the second article this year by Statistics Canada written to address concerns about the number of investor-owned homes amid affordability challenges in places like Toronto.

StatsCan found that newcomers who arrived before 2010 made up a higher proportion of investors than their share of the population in the five provinces profiled — Ontario, British Columbia, Manitoba, New Brunswick and Nova Scotia.

Immigrants, nevertheless, had a lower average annual income. In Ontario, the average was $80,000 among immigrant investors compared to $100,000 for Canadian-born investors.

The Statistics Canada data shows how important newcomers are to driving housing investment in Ontario, said Shaun Hildebrand, president of Urbanation, which does market research on the development industry.

“The data lines up with what we see in the condo market (in) the GTA, where new immigrants are a driving force behind new condo sales and rising condo investments,” Hildebrand said.

Statistics Canada first article in February showed that about 15 per cent of all homes in Ontario were investor owned, including a wide variety of properties from single-family detached houses to mobile homes. About 42 per cent of condos were investor owned, said co-author Joanie Fontaine.

Tuesday’s release also suggests that zoning for density in urban environments encourages occupant investors. In B.C., 9.6 per cent of investment properties were occupied by the investor in secondary and laneway suites, duplexes and triplexes. In Ontario only 0.8 per cent of investment homes were owner occupied.

The report suggests that is due to higher densities in places like Vancouver and Victoria, where zoning has encouraged secondary homes for more than a decade.

Toronto has begun zoning for laneway and garden suites and secondary suites in the last couple of years. Earlier this month the city also opened single-family home neighbourhoods to multiplexes in a bid to add density to areas where facilities and services such as schools, parks and transit are already available.

Hildebrand said the Statistics Canada article shows Ontario needs a higher level of housing investment or it needs to start building a massive number of new homes.

“We’re not seeing the amount of investment in the market that perhaps we should be,” he said “and that would either come from institutional investors building for renters or individuals buying rental property.”

The relatively modest income reported by investors is likely a reflection of their age, wrote the StatsCan authors. More than half the investors were over age 65 so that could reflect retirement income levels but also the fact that investment properties are sometimes bought with a spouse or another party.

“They may have either bought the property a long time in the past, and had higher incomes at that point and now have lower incomes,” said co-author Joshua Gordon.

Statistics Canada found housing investors with two properties tended to be evenly split among women and men but the proportion of male investors jumped when the number of holdings was three or more homes.

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