Photo: James Bombales
The rate of foreign ownership in Toronto’s condo market hasn’t dropped this year like Canada’s national housing agency suggests, one of its former senior analysts argues.
This week, Canada Mortgage and Housing Corporation (CMHC) published the results of its 2016 Condominium Apartment Survey, stating 2.3 per cent of condos in the Toronto Census Metro Area have owners whose primary residence is located outside of Canada, down from 3.3 per cent last year.
Shaun Hildebrand, senior vice president of Urbanation — and previously a senior market analyst for CMHC — says this year’s share of foreign-owned condos in Toronto “doesn’t seem unreasonable.” But he questions the drop, one he calls “alarming.”
“It would imply a loss of nearly 3,000 foreign-owned condos over the course of a year,” Hildebrand calculates. “Where could they have gone?”
Urbanation has been tracking resale condo activity in new buildings, and Hildebrand hasn’t seen turnover that would support that kind of shift. There are “very little” listings in condo projects completed in the past few years, he adds.
“Foreign owners typically purchase with the intention of holding on to their units, not for the purpose of flipping them,” Hildebrand continues. Commonly foreign buyers will use their units as rental properties, or as housing for their children attending school abroad.
Flipping just isn’t popular among non-residents buying condos in Canada’s largest city, he suggests. “It’s not something that would allow somebody to make a lot of money, really, to be honest… after paying taxes and other fees and seeing really moderate price appreciation over the past few years,” he explains.
In October, the average price of a resale GTA condo was $429,407, up 12.5 per cent from a year earlier.
“Either there was a very large number of foreign buyers that suddenly relocated to Toronto and changed their primary residence, or the data is now becoming underreported, which could be likely due to increased scrutiny by policymakers,” Hildebrand says of CMHC’s survey results.
As part of its multi-city survey, CMHC surveys property managers across the Toronto CMA, 5,905 square kilometres of land largely sharing the Greater Toronto Area’s boundaries. As foreign homebuyers continue to make headlines, Hildebrand says some may be choosing to keep their status private.
Whatever the real share of foreign-owned Toronto condos for the past two years has been, Hildebrand expects it to have risen this year over 2015 as foreign demand for units persists and more current foreign owners hold on to units.
When it comes to improving the quality of CMHC’s survey results, Hildebrand has a couple of ideas for his former employer: “Perhaps more scrutiny and better collaboration with land registry offices and property assessment organizations.”