Investor Influence in Canadian Housing Market Surges to 30% in 2023

Investors are increasingly shaping Canada’s housing market, with their influence growing steadily, according to recent data from the Bank of Canada. 

In the first quarter of this year, investors were responsible for 30% of residential real estate purchases, up from 28% in the same period last year and 22% in 2020. The central bank defines investors as those who take out mortgages to acquire property while maintaining a mortgage on another home.

Meanwhile, the percentage of first-time homebuyers has decreased from 48% in early 2020 to 43% in the first quarter of 2023, while repeat buyers dropped from 30% to 27.5% over the same period. This shift underscores the changing dynamics in the Canadian housing market.

The Bank of Canada’s data highlights the significant impact investors have on housing trends, with their presence potentially amplifying house price cycles. During housing booms, increased investor demand can drive up prices further, while during stable or declining market conditions, fewer investors can contribute to decreased demand and lower prices.

Read: Yet Another Fire Claims More Under-Construction Homes in GTA

The COVID-19 pandemic, coupled with a low-interest-rate environment and aggressive marketing promoting real estate investing, has encouraged Canadians to invest in multiple properties. However, the federal government has focused its housing policies on foreign buyers, with a ban on purchases until the end of 2024, without addressing domestic investors.

The central bank’s data also underscores two key vulnerabilities in the Canadian economy: high household indebtedness and soaring house prices. While mortgage delinquencies remain steady at 0.12%, there has been a slight increase in highly indebted borrowers with mortgages 4.5 times greater than their annual income. 

Read: As the Cost of Living Continues to Rise, Household Debt Jumps to $2.34 Trillion in Canada

Additionally, 29% of new mortgage borrowers spend more than 25% of their gross income on mortgage payments, indicating vulnerability to rising interest rates or income loss.

Despite these concerns, there are signs of improvement in some areas. The share of homeowners making down payments of less than 20% has decreased from 18% in 2020 to 12% in the second quarter of 2023. Home flipping has also seen an increase over the past two years, but it still accounted for less than 3% of transactions in the first quarter, suggesting overall market stability.


Information for this story was found via the Globe and Mail, Toronto Star, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Silver’s Finally Breaking the System | Keith Neumeyer – First Majestic

The Best News for Gold Was the Drop! – Peter Grandich

McEwen Copper: The Los Azules Feasibility Study

Recommended

Steadright To Conduct Multi-Phased Exploration At Historic Goundafa Polymetallic Mine

Goliath Resources Drills 10.72 g/t Gold Over 7.83 Metres At Surebet

Related News

Canada Addresses Real Estate Crisis By… Banning Foreign Ownership?

The Canada Mortgage and Housing Corporation has issued regulations regarding the restriction on foreign homebuyers...

Thursday, December 22, 2022, 10:31:07 AM

Unprecedented Population Surge Casts More Problems For Canada, Including Housing

In the face of an unprecedented surge in population growth, Canada is grappling with a...

Monday, December 25, 2023, 09:47:00 AM

Rising Renewals Could Trigger Wave of Home Listings in 2025

A new report from the Canada Mortgage and Housing Corporation warns that over a million...

Saturday, November 9, 2024, 07:44:00 AM

Is Immigration To Blame For Canada’s Housing Crisis?

Canada’s population has reached a significant milestone, hitting 40 million on Friday, with immigration accounting...

Monday, June 19, 2023, 03:04:00 PM

Office Vacancy Rates in Canada Reach 30-Year High

According to a groundbreaking report by renowned commercial real estate firm CBRE, Canada is experiencing...

Wednesday, July 5, 2023, 11:19:00 AM