Canada needs to boost home building by 50 per cent to keep up with immigration, report says

2023/02/15 Leave a comment

Yet another study highlighting some of the implications and impacts of Canada’s high level of immigration:

Canada needs to ramp up home building by 50 per cent just to keep pace with immigration, according to a new report.

The country is on track to break ground on about 210,000 housing units this year, according to Desjardins Securities. But the Desjardins report says about 100,000 additional housing starts are needed this year and next, as Canada gets ready to admit a record number of immigrants.

Many economists and real estate industry experts believe there is a severe shortage of housing in the country – and it will only get worse. Canada has increased immigration levels to make up for the shortfall during the first year of the pandemic and to help fill jobs in construction, health care and other areas.

With the federal government planning to admit 1.45 million new permanent residents over the next three years, the report says, housing starts must become a priority, in part because of the time it takes to complete a housing unit.

“We have to dig out of a hole and move higher ultimately,” said Randall Bartlett, Desjardins’ senior director of Canadian economics.

A large share of new immigrants end up in Ontario and B.C., two provinces where home prices have historically risen faster than in the rest of the country.

Although the typical home price across Canada dropped 13 per cent from the peak last February by December, the average price in the most popular destinations – Toronto and Vancouver – still tops $1-million.

“If these newcomers to Canada continue the recent trend of moving to Ontario and British Columbia, affordability there and nationally will erode further,” says the report, authored by Mr. Bartlett and Marc Desormeaux, the bank’s principal economist.

At the same time, rental rates have been quickly increasing as many would-be homebuyers have had to continue renting owing to higher mortgage rates.

Desjardins’s call for more home construction echoes statements from the national housing agency, Canada Mortgage and Housing Corp., which has repeatedly said the country needs to increase its supply of homes.

Source: Canada needs to boost home building by 50 per cent to keep up with immigration, report says

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Canada wants to welcome 500,000 more immigrants in 2025. Can our country keep up?

2022/11/28 Leave a comment

The Globe’s Matt Lundy is doing some of the best reporting and analysis of immigration these days, with this article raising one of the elephants in the room, housing availability and affordabilty, healthcare, infrastructure:

Every year, Canada adds a big city – in a sense. The mass of individuals are spread around, mostly to urban centres, but increasingly to suburbs and far-flung communities. They are here to work, to study, to build a better life.

The expansion is historic. From July to September, Canada’s population grew by around 285,000, a 0.7-per-cent gain that was the largest since Newfoundland joined Confederation in 1949. More than 700,000 people have been added over the past year, roughly the same as the population of Mississauga, the seventh-largest municipality in the country.

The trend picked up when the federal Liberal Party came to power. Since 2016, the country has grown at nearly double the rate of its Group of Seven peers. For the most part, that growth is driven by immigration.

The push is deliberate. Policy makers say higher immigration is necessary to fuel Canada’s economic growth, and in particular, to ease labour shortages that have frustrated the corporate sector.

It is, however, a population boom with its share of growing pains

Consider that over the past year, fewer than 200,000 housing units were completed. There were 3.6 new residents for every home added, the highest ratio since at least 1991. Affordability is deteriorating in most places. There is a fundamental mismatch between home supply and demand – and the population boom is contributing to the divide.

At the same time, Canadian governments are struggling to deliver basic services. Surgeries are getting cancelled in crammed hospitals. Canadians can’t find family doctors, let alone newcomers trying to navigate an ailing health care system. Cash-strapped cities can’t refurbish their infrastructure as fast as it’s falling into disrepair.

To cope with the affordability crisis, a growing number of people are fleeing our cities. They include teachers, nurses and construction workers – the very people who keep those cities running.

In this fraught environment, Ottawa has its foot on the accelerator. After admitting about 405,000 permanent residents last year, the federal government is aiming for 500,000 in 2025. And that’s just a portion of the migration wave: At last count, there were 1.4 million residents with temporary work or study permits.

Canada is facing a complicated adjustment. Notably, developers are scrapping or delaying housing projects, owing to rising interest rates and waning profitability. Just when more homes are needed, fewer are being built.

Several economists question why the federal government would create more demand for services, when so many pillars of social infrastructure are in distress. They wonder if Ottawa is singularly focused on hitting its immigration targets, with insufficient planning for how to successfully absorb those newcomers.

For its part, the federal government says the solution to so many of these problems is simple: more immigration. They’re planning to bring in more doctors and nurses from abroad, along with people to build homes.

Many recent immigrants have waited years for admission. Now they’re arriving at a time of decades-high inflation and slowing economic growth. Highly-skilled newcomers will likely manage the transition just fine. But others are discovering the Canadian dream is a pricey proposition – and perhaps not what they bargained for.

Ash Gopalani knew Toronto would be expensive. Just not this expensive.

He and his wife, Sneha, arrived in September, after a stressful three-year process to get their permanent resident cards. Finding an apartment was the next hurdle. Too often, the listings were in cramped basements, with little natural light, or far removed from the city’s core or public transit.

Mr. Gopalani eventually signed a lease for a one-bedroom unit in the city’s west end for $1,800 a month, the top end of his expected range. What he didn’t anticipate was paying six months of rent – $10,800 – up front, because the couple from Mumbai has no credit history here. Now, they have less of a financial buffer as they search for jobs.

Mr. Gopalani was hoping to follow a familiar playbook for newcomers. Establish a career. Save up money. Then buy a house – preferably big enough that their family from India could stay a while.

But the experience of moving here has been a reality check.

“We don’t know if we can afford building a life in Canada,” he said.

The rental market is ground zero for where immigrants get a taste of the cost-of-living crisis, in which fierce competition and bidding wars for relatively few units have led to jacked-up prices.

For Alexiane Sauvaire, it was a rude awakening. She thought finding an apartment in Toronto would be easier than in her native Paris. After eight frustrating days of looking, following her arrival, she moved to Montreal.

“Maybe for rich people, it’s easy. But when you’re not rich, it’s impossible to live right now in Toronto,” she said.

Increasingly, recent immigrants are bypassing the largest metro areas – Toronto, Vancouver and Montreal – to settle elsewhere, although a slim majority still favour those regions, according to the latest census results. However, costs are rising quickly in other cities, too, as they experience fervent demand from migrating people.

Over the past year, the average rent in Calgary has jumped 18 per cent to around $1,720 a month, according to data for new listings on Rentals.ca. London, Ont., is up 26 per cent. Halifax: 21 per cent.

From a labour standpoint, the affordability crisis is making it difficult to recruit – and retain – important workers.

“There are very significant economic risks to large cities if they do not get housing costs under control,” Aled ab Iorwerth, deputy chief economist at the Canada Mortgage and Housing Corp., said on a conference call this summer. “It’s getting increasingly difficult to attract skilled workers and even highly-skilled workers to these cities because they’re just becoming simply unaffordable.”

The task ahead is nothing short of gargantuan. CMHC says that, in order to restore affordability back to levels in 2003 and 2004, Canada would need to build 3.5 million morehomes than projected by 2030.

Earlier this year, the federal government unveiled billions in new spending for housing, with a goal of doubling construction over the next decade. That plan looks dead on arrival amid higher borrowing rates.

There is, of course, another problem: labour. In a recent report, CMHC said there were not enough skilled workers to build the homes so desperately needed.

“Even under more ideal conditions, I don’t think we have the capacity to build at a pace that matches the demand through population growth that we’re seeing,” said Shaun Hildebrand, president at real estate firm Urbanation.

Immigration lawyers have a blunt message: The application system is a mess.

And it’s a mess that was largely created in Ottawa.

Immigration, Refugees and Citizenship Canada (the federal immigration department) had around 2.2 million applications in its inventories as of Oct. 31. About 1.2 million of them were in backlog, meaning they’ve been in the system for longer than service standards for processing. That’s far higher than before the COVID-19 pandemic.

“The system is falling apart. I’ve never seen it like this, in the 20 years that I’ve been practising,” said Kerry Molitor, an immigration consultant in Toronto.

After failing to hit immigration targets in 2020, owing to pandemic challenges, the federal government wanted a rebound. Through various decisions, it invited thousands of people already in Canada to apply for permanent residency. The surge in applications overwhelmed a civil service that struggled to process files efficiently amid office closings and the shift to remote work.

In some cases, applicants are waiting years for a decision. Mr. Gopalani and his wife applied for permanent residency in the fall of 2019. They expected an approval within months, a typical outcome in their stream of immigration. They weren’t approved until July, 2022.

“The immigration system could have been more sensitive, empathetic, towards the kind of transition that people go through, which didn’t happen,” he said.

Because of the backlog, applicants such as Mr. Gopalani have put their lives on hold for years. Others are working in Canada, but their permits are nearing expiry, putting their future plans in doubt. These are individuals who, in Canada’s points-based system for economic immigrants, would often be shoo-ins for approval, but now are caught up in a bureaucratic nightmare.

There are “really good, quality people in the pool, and they’re not getting invitations,” said Mikal Skuterud, an economics professor at the University of Waterloo. “What happens now when these folks leave? They say, ‘The hell with this, I’m going back to my country or the U.S. or wherever.’ Now you’re losing all that talent. That’s completely not what this process is supposed to be.”

Despite the administrative headaches, Canada is on pace to welcome 431,000 permanent residents this year, right on target. The trouble is that talented people are slipping through the cracks – and the immigration system is taking a beating in public opinion.

“There’s this massive psychological toll that the backlogs, the delays and the lack of transparency have on people,” said Lev Abramovich, an immigration lawyer in Toronto. “I don’t think IRCC bureaucrats and politicians understand how much suffering this has caused.”

For all of Ottawa’s talk of targeting the best and brightest, the federal government is also allowing more cheap foreign labour into the country. Earlier this year, it overhauled the Temporary Foreign Worker (TFW) program, largely so employers could access more low-wage labour.

Colleges and universities, meanwhile, are ramping up their intake of foreign students, who mostly don’t need work permits. Increasingly, those students are taking jobs to rack up points for their permanent residency applications.

Around 1.4 million people had temporary work or study permits at the end of 2021, an increase of 85 per cent since 2015. That’s 640,000 people – about equal to the city of Vancouver – who have been added in just six years. Their ranks are set to accelerate this year, after policy changes.

While Ottawa has targets for admissions of permanent residents, there are no such guidelines for other migrants. With students, the federal government has essentially ceded that responsibility to postsecondary institutions, which are inclined to boost their revenues through higher intake of foreign students, who pay lofty tuition fees.

“The number of foreign nationals who receive study permits in any given year is based on demand, not predetermined targets,” Rémi Larivière, a spokesperson for IRCC, said in a statement.

An extreme example: Cape Breton University. Nearly 4,000 of its full-time students this fall had study visas, up a whopping 68 per cent from last year, according to preliminary survey data from the Association of Atlantic Universities. About three-quarters of CBU’s full-time students are from abroad. That’s injecting a surge of new demand for services in sleepy Sydney, N.S. (population: 31,000).

Gurmeet Singh, a second-year student, is trying to help people with their transition. He’s part of a volunteer group that verifies rental listings for incoming students. On average, the group gets three requests daily to check out potential residences. Mr. Singh visits those listings to see if they’re suitable for living – and if they exist.

Fraudulent listings are fairly common, Mr. Singh said; the group finds a scam every couple of days. “We felt it was our moral duty to help our fellow international students,” he said.

That’s not the only source of frustration. In local media this week, CBU students complained that a majority of classes in the two-year postbaccalaureate business program – a popular choice among foreign students – were being held in an unexpected venue: a Cineplex Inc. movie theatre off campus

Higher immigration is a guiding principle for this iteration of the federal Liberal Party.

Time and again, the party frames immigration as the antidote to an aging population, helping to grow the pool of labour market participants – and thus, too, the economy.

“Immigration is not just good for our economy, it’s essential. We can’t get by without it,” Immigration Minister Sean Fraser told reporters at a recent news conference.

The truth is more complicated. A vast body of economic literature shows that immigration has little effect on gross domestic product per capita, a popular measure of living standards. Furthermore, while new immigrants are younger than existing residents, the intake is too meagre to offset a demographic wave of aging citizens.

This doesn’t mean immigration is bad for the economy. But it’s not an accelerant, either.

“Often, the argument is made as if it’s obvious that immigration generates economic growth,” said David Green, an economics professor at the University of British Columbia. “Not if you look at the numbers.”

Of late, Ottawa has said various policy changes – including the expansion of the TFW program and allowing foreign postsecondary students to work longer hours – are aimed at easing labour shortages. This has led several economists to accuse the federal government of kowtowing to corporate pressure, flooding the job market with low-wage foreign labour, rather than forcing companies to hike wages or make investments.

“There’s lots of evidence that holding employers’ feet to the fire in times of tight labour markets is the best way to spur innovation, automation and productivity. Those are the things you want in an economy,” said Jim Stanford, director of the Centre for Future Work, a think tank.

“And if you say to employers, ‘Don’t worry, we’ll let you bring in some low-priced temporary migrants to solve your problem,’ you’re just dissipating the pressure that’s required to achieve a more productive economy.”

Prof. Green questioned the need to admit half a million permanent residents in 2025, given the fragile state of Canada’s social infrastructure and the questionable economic rationale for that target.

“I don’t see the planning here,” he said. “Do you really want to ramp up to 500,000 a year, at a time when we seem to be heading into recession and our housing markets and our health care system are straining at the seams? That’s a discussion that should be had.”

By and large, surveys suggest Canadians welcome immigrants. A recent poll, conducted by the Environics Institute for Survey Research, found nearly seven in 10 respondents support current levels of immigration, about double the share in late 1970s. The vast majority of respondents – 85 per cent – agreed that immigration is positive for the economy, a view that has held strong for decades.

But Prof. Green suggests we shouldn’t take that for granted. If the country struggles to integrate newcomers, then perhaps Canadians will start to eye them suspiciously. “It’s politically dangerous, to my mind,” he said.

For now, that’s a worry. But it’s not the experience of Tanushree Holker and Nishant Kalia, who moved to Toronto from New Delhi in the summer of 2019. Their expectation of Canada as a welcoming country has checked out.

“That perception about Canada being a country which accepts immigrants with open arms, it is true when you come here,” Ms. Holker said.

The couple has shared their journey in Canada on YouTube; their channel, In The North, has nearly 100,000 subscribers, to whom they dispense their acquired wisdom on everything from buying a car to navigating a complex immigration system. Mr. Kalia started the channel after getting laid off early in the pandemic. He’s since built a career in human resources, while his wife works for a Big Six bank.

In recent videos, they’ve documented a major life change: They moved to Calgary. By doing so, they’re saving $350 a month on a similar-sized rental unit, and they expect to buy a home within six to nine months. Despite any number of financial complications, their version of the Canadian dream is going to plan.

“After we made our trip to Alberta, we realized that there is actually a life in Canada beyond Toronto and Vancouver,” Mr. Kalia said in a video. “To our surprise, [Calgary] was much better than we expected.”

Source: Canada wants to welcome 500,000 more immigrants in 2025. Can our country keep up?

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How one federal agency broke free of outdated IT infrastructure

2021/04/30 Leave a comment

While written a bit too much as a puff piece, an interesting and relevant example of modernization (some of these remind me of my time in the early days of Service Canada and IT infrastructure renewal, where of course the issues were on a much larger scale and higher risk for CPP and EI):

The COVID-19 pandemic has laid bare the need for modern, agile IT systems as both the public and private sectors grapple with a suddenly remote workforce. Cloud platforms are the backbone of modern IT infrastructure, providing scalability, speed, and remote access, and are secure without the expense of physical infrastructure. Yet less than 10 per cent of federal departments have transferred some of their operations to a cloud platform. Part of this is because the pandemic diverted focus, but it is also due to fear of the unknown and uncertainty over security benefits and procurement rules.

Had the pandemic struck five years earlier, Canada Mortgage and Housing Corporation (CMHC) would have been crippled by its lagging IT infrastructure. Instead, CMHC’s operations continued without missing a step – even supporting the government’s pandemic response by rolling out critical economic support with record speed, such as the Canada Emergency Commercial Rent Assistance for small businesses and the Insured Mortgage Purchase Program to support the financial system.

CMHC’s partnership approach to transforming its IT infrastructure can serve as a model for other federal departments. CMHC and Accenture, a global professional services company, came together five years ago to move CMHC’s outdated and siloed systems to a robust digital service platform.

Back in 2016, CMHC relied on close to 1,000 separate software applications, many of which were customized and hard to maintain. From operations and insurance underwriting to applications for program funding and accounting, every structure had its own siloed system.

Technology was a source of frustration. Twenty-three per cent of CMHC employees rated it their number one barrier, and one in six employees spent their time trying to find data.

Today, those systems have been replaced with enterprise platforms that have automated manual tasks, sped up processing times and offer real-time data to support better decision-making. This endeavour was no small feat. Finding the right partner and doing a thorough analysis of the scope of the challenge took over a year.

Together as CMHC’s deputy chief information officer and Accenture’s federal government practice lead, we helped execute a project that took place over several years and involved hundreds of employees from both organizations. Ultimately, we found that how we implemented the technology was just as important as the technologies we invested in. Sometimes it was even more important.

Here are five key lessons learned that we believe can help other departments successfully approach digital innovation:

1. Leadership buy-in is crucial

The journey for the project – called CMHC in Motion – began under CMHC’s president and leadership team with the goal of becoming a more agile, focused and efficient company with a culture of accountability.

CMHC modernized its organizational structure and focused on communication and training to manage risk, change and execution and to encourage innovation. Fixing technology was the next step.

The leadership team ensured the building blocks were in place for technology and business transformation. Program funding and resources were made available to drive this three-year transformation and its evolution for years to come.

The CIO role was elevated. Now the CIO sits on CMHC’s executive committee and is positioned to influence decisions that affect all parts of the company. Digital and technological thinking need to be able to influence business strategy rather than being made to fit into strategy that is already set. The two need to evolve hand-in-hand.

2. Innovative solutions require innovative approaches

It was clear from the start that the traditional procurement route of a complicated and time-consuming request-for-proposal process would be an obstacle for the project. Inviting potential partners to analyze the scale of the problem was critical to finding not only the right partner but also the right solutions. For three months, two potential partners were given access to CMHC’s infrastructure and systems to fully assess the scale of the situation they would face. More importantly, it allowed CMHC to leverage the experience of external experts in defining the solution. Incorporating this into the proposal process allowed for a broader, more robust and feasible path forward.

When CMHC and Accenture came together there was already an understanding of the challenges and potential solutions, and the project team was able to move straight to planning implementation.

3. A true partnership and governance structure is vital

From day one, CMHC wanted a partner. The vision was an arrangement where both parties shared in the benefits and risks and would collaborate on challenges. Given the complexity and timelines of the project, it was impossible to predict where the work would lead, what outcomes and technologies would be needed or even be available. A risk-sharing fund positioned both parties to carefully consider potential project variances and cost overruns, and both parties came together to solve emerging needs and to consider any potential changes to the scope of work.

Agreeing up front to share in the financial risk is not the norm for public sector transformation projects, but it eliminated years of delay as we avoided time-consuming project scoping, trying to describe the perfect solution. It meant that CMHC was not dictating a solution, but rather defining the problem and getting fresh outside perspectives on how to address it through a cohesive joint team.

Managing outsourcing relationships isn’t easy, so CMHC created a partner relationship management team. Three levels of governance are used at CMHC. It starts at the highest level, with the executive team, then flows to the management and operational governance structures. On a bi-weekly basis CMHC and Accenture Canada’s CEOs met to discuss program performance, relationship status and planning. Five years after the contract was signed, these meetings still take place.

4. Commit to an uncharted path

A multi-year transformation will not follow a straight path. Innovative, agile organizations need to be open to imperfection and experimentation. Innovation requires an acceptance that not all ideas work, and that getting out of planning mode and into testing mode happens so we can learn, adapt and move forward. Progress over perfection and timeliness was important, and we made risk-based decisions to move quickly.

For CMHC, technology was also used to help drive a change in culture around risk-taking, speed and being ok with failure. For CMHC and Accenture, there was an understanding that immediate answers would not always be available, especially with rapid advances in technology. This enabled the delivery team to take risks and push forward at a quicker pace, knowing that it was ok to fail fast to avoid the lengthy detours of searching for the “perfect” solution.

Along the journey, unforeseen events – like the introduction of the National Housing Strategy in 2017 and the COVID-19 pandemic – required significant changes to plans and priorities. CMHC was able to adapt, demonstrating that with the right culture and committed senior leadership, organizations can become resilient and better equipped to respond to unexpected changes in their business environment.

5. Create a feedback loop to guide the pace of change

Engaged and enabled employees can make or break transformative IT projects. Change management is often the first thing to cut when an organization is trying to save its resources, yet it is one of the areas we found to be critical. Continuous dialogue and check-ins through surveys and consultations ensured employees believed in the transformation and had the skills and confidence to adopt transformed business approaches. It is essential to communicate early and often to employees in a transparent and simple way.

To get early buy-in from employees and to show our commitment to making this transformation work, the first project we tackled was the one with the biggest positive impact for our employees – moving off Lotus Notes email to Outlook and Skype. The success of this implementation was instrumental in gaining buy-in from employees and made the transformation real for them.

We were cognizant of the massive cultural shift we were asking employees to make. Their entire technological world was being altered, from a new email platform and filing systems, to a client relationship management system, invoicing and how they manage client requests. We developed a “heat map” to identify which areas of CMHC were undergoing the most change. With the map and employee feedback, we were able to adjust our approach and ease up where the pace of change was too intense. We worked alongside senior management and human resources to continuously evaluate progress and identify areas that needed more training or support.

Moving forward

We find ourselves at an exciting time, where rapid innovation in technology has the potential to drastically change the way we develop and deliver public programs and policy. Over the past few years, technology companies have improved the ease of use, security, scale and interoperability of their offerings. The flexibility and cost-effectiveness of cloud services are undeniable.

The pandemic has highlighted the need for agility in our IT infrastructure. As Canadians look to all levels of government to lead them through these unprecedented times, they have seen the tangible results of government in action to keep them safe, provide them with financial support and navigate the road to economic recovery. Now is the time to build a better, more resilient IT environment for our public sector, one that will allow us to weather storms and continue to provide Canadians with world-class government services.

Source: How one federal agency broke free of outdated IT infrastructure

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Previous housing data understated number of non-resident buyers in Vancouver and Toronto

2019/03/26 Leave a comment

The importance of good data and how it could have made a difference in public discussion and debate (not that the real estate industry is likely to change its position given its business interests). Particularly worrisome that a government agency, CMHC, got it so wrong in 2015 with a flawed methodology:

Not so long ago, real estate industry and government officials were doing their best to shut down concerns that skyrocketing housing prices in Vancouver and Toronto were related to non-resident buying.

As it turns out, they were very wrong.

“Basically, if we put every residential property unit that was built in the city of Vancouver from 2006 to 2017 into a single building, every tenth unit [and a bit more] would have been owned by somebody who doesn’t live in the country,” says Andy Yan, urban planner and director of Simon Fraser University’s City Program.

The CMHC condo survey of 2015, a busy year for the real estate market, maintained that foreign ownership of condos was low in metro Vancouver and metro Toronto, at 3.5 and 3.3 per cent respectively.

In 2016, Canada Housing and Mortgage Corporation chief executive Evan Siddall told the Vancouver Board of Trade that blaming foreign buying was creating an “unhealthy tension” between “existing residents and newer arrivals.” Instead, he pointed to local investors, population growth and lack of supply as the big factors in Vancouver’s affordability crisis.

But the CMHC’s latest Housing Market Insight report, released last week, shows the previously released data were off by as much as two to three times the actual rate of non-resident participation in home ownership. Based upon the new study, the numbers are actually 11.2 for metro Vancouver and 7.6 for metro Toronto.

The CMHC’s new Housing Market Insight report, in partnership with Statistics Canada, now reveals the extent of non-resident buying in Vancouver. The CMHC had begun releasing its Condominium Apartment Survey in 2014, after collecting information on non-resident ownership, in response to the affordability crisis. But the CMHC only had access to condo data and its methodology was limited. It partnered with Statistics Canada to form the Canadian Housing Statistics Program (CHSP), to address the major gaps in data on housing. In 2017, as part of the federal budget, StatsCan got extra funding to delve deeper into offshore buying, which is when the data got more interesting – and far more accurate. It meant that instead of interviewing building managers about the number of foreign owners in the buildings – an obviously problematic method – the CMHC had data from Canada Revenue Agency and the provincial land titles office to verify tax residency.

Perhaps the most surprising revelation is the rate of non-resident participation in the buying of newly built condos across the region.

“Of the housing units owned by non-residents, 55 per cent are condos,” says Jordan Nanowski, senior CMHC analyst and co-author of the report.

Where non-resident ownership is concerned, metro Vancouver overshadowed Toronto by a wide margin. And new builds were a particular draw. Non-resident owners played a part in 19.2 per cent of Vancouver condos built between 2016 and 2017. In other words, almost 20 per cent of condos built that year had at least one non-resident on title. In Toronto, meanwhile, the number falls to a mere 9 per cent.

Mr. Yan dug deeper into the CHSP data, and came up with more numbers. Non-residents have participated in the ownership of a shocking 14 per cent of all housing types built in the city of Vancouver in the past decade (as in, at least one person who owns the property is a non-resident). For metro Vancouver, that rate is 11.2 per cent. For the city of Toronto, the rate is 8 per cent; metro Toronto is 5.2 per cent.

In Coquitlam, B.C., 20.8 per cent of new condos had at least one non-resident on title. In Surrey, B.C., the figure is 20.5 per cent of condos in that time period. Burnaby, B.C., is at 25.1 per cent. Richmond, B.C., has the highest percentage of all, at a whopping 25.8 per cent, he says.

“In Richmond, condos built between 2016 to 2017, we’re talking about 26 per cent have non-resident participation. That’s one in four.”

The numbers are big in the broader housing market picture as well, with 7.8 per cent of all single detached houses built in metro Vancouver from 2006 to 2017 owned by at least one non-resident purchaser. For condos, the numbers jumps to 18 per cent of all condos built in that time period.

“This is something that people have denied for so long,” Mr. Yan says. “It measures a form of foreign ownership that many have denied was happening, and in proportions that few could imagined.”

Mr. Nanowski says that non-resident participation tended to increase when density increased and prices increased. Across all age groups, non-residents tended to own more expensive homes. But a number that stood out for him was the higher prices of detached homes owned by non-residents in the city of Vancouver. Detached homes in the city owned by non-residents were, on average, assessed at $1.1-million more than those owned by residents. In Toronto, the difference of a detached house owned by resident and non-resident was only $89,000.

“Big difference,” Mr. Nanowski said. “Yes, non-resident premiums are largest in Vancouver and the prevalences are largest in Vancouver as well.”

Using new methodology, the crown corporation has revealed that many properties have a mix of resident and non-resident ownership. They analyzed this mix in the category of “non-resident participation,” meaning at least one owner on title was a non-resident. Put another way, at least one person on title is a non-tax resident, which means they do not have a principal tax residence in Canada. They earn their income and pay their income taxes elsewhere. This is a key difference from the CMHC’s previous methodology, which was to define “non-resident” ownership as a property that was owned entirely by non-residents, or majority-owned by non-residents.

The definition of a “non-resident” is someone whose principal residence is outside of Canada, irrespective of their nationality.

Also, these rates do not include pre-sale purchases, or what units were not owner-occupied and held as investments. The study authors did not provide data on the source countries of origin for non-resident owners.

“The summary of all this is the globalization of Canadian residential real estate,” Mr. Yan said, “and what are you going to do or not do about it, on a federal, provincial and local policy basis? This is about transparency, taxation and fairness, and how we build housing and for who, in our communities.”

Mr. Nanowski says the previous data they used weren’t flawed, but useful for following trends. The new data is much more comprehensive, he says.

“When we look at this data, we want to compare it to itself only, as a kind of cross section and not compare it to previous data. Because there is a change in methodology,” he says.

Josh Gordon, assistant professor at the School of Public Policy at Simon Fraser University, says that the delay of such important data has likely been a setback. He points out that industry voices used the previously limited CMHC data to bolster their arguments that foreign buying was exaggerated. Prof. Gordon had questioned the CMHC’s reports at the time, and received some flak for it.

“Imagine in 2015 if we had a sense that non-resident buyers were buying 15 per cent or so of new condos. How would that have changed the nature of the debate? Would that not have indicated that there was an issue that needed addressing?,” Prof. Gordon asks.

“Those who wanted to push back against possible restrictions were able to use the ‘authority’ of the CMHC in the debate to good effect, and this delayed possible policy action. More accurate data would have helped build the case for policy restrictions, and that might have mitigated the sharp escalation of prices.”

Mr. Yan found it ironic that the report was released the same week as the City of Vancouver announced its annual homeless count was underway.

“Perversely, this week saw the release of measures on two drastically different ends of Vancouver’s housing situation. With the CMHC release, we see the numbers of homeowners who don’t live in the country, juxtaposed with Vancouver doing its homeless count of those who actually live here, but don’t have the benefit of a home.”

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CMHC head says foreign buyers a ‘scapegoat’ for high Vancouver prices

2016/12/02 Leave a comment

Although he is right to point out that other factors are involved, I am not completely convinced by the data he uses to downplay the role of foreign investors,  compared to the data used by others such as David Ley (see The Asian force behind Vancouver’s housing boom, Blame politicians for Metro Vancouver’s housing price crisis):

High housing prices in the Vancouver region stem from a variety of factors, with foreign buyers shouldering a disproportionate amount of blame, says the president of Canada Mortgage and Housing Corp.

Evan Siddall said he is concerned about “unhealthy tensions” pitting existing residents against recent arrivals, and also older homeowners against younger families priced out of the market.

“Who is to blame for Vancouver’s affordability problems? To some, the scapegoat is obvious – blame foreigners,” Mr. Siddall said Wednesday in prepared remarks to the Greater Vancouver Board of Trade.

“While it would be convenient to hang all of the blame for high prices on others – offshore buyers – it’s just not that simple. Sure, it makes for a tempting narrative. Them, not us. And while foreign investment clearly is a factor, it is not the only one.”

Mr. Siddall listed a wide range of factors that he sees as contributors to Vancouver’s expensive real estate: domestic residential investing, population and economic growth, low interest rates and housing supply constraints.

Some industry observers argue that buyers from China are the primary drivers behind Vancouver’s housing boom that spilled into the suburbs.

Mr. Siddall said evidence points to housing investor activity in Canada originating from predominantly domestic sources, yet foreign investment is often seen as the culprit in Vancouver. Going off script, he added: “When a white person buys a house, we don’t notice. If somebody of a different colour does, we do. And that’s not good economics.”

During a news conference after his speech, Mr. Siddall said the debate over housing affordability is contentious. “This contrast between us and them is a factor. We notice things that are different better than we notice things that are similar,” he said.

The CMHC president added that the federal government has policy tools, with the Minister of Finance knowing not to use economic stimulus to unduly influence the real estate market.

“Our analysis confirms that the most important factors accounting for house price increases over the long term are economic,” Mr. Siddall said in his prepared speech. “We believe two income-related factors are at play: An increase in high-paying jobs and a tendency of these jobs to concentrate in cities. This is an important and statistically robust factor in Toronto, less so in Vancouver. The impact in Vancouver may differ because wealth, rather than income, could play a much more pronounced part here.”

The B.C. government implemented a 15-per-cent tax on foreign buyers in Metro Vancouver in August. On Tuesday, the province said purchasers who are not Canadian citizens or permanent residents accounted for 7.1 per cent of the total deals in Metro Vancouver closed between June 10 and Oct. 31.

British Columbia, which began collecting data on June 10 on foreign purchasers, noted that in the seven weeks leading up to the tax’s implementation on Aug. 2, foreign purchasers accounted for 13.2 per cent of the region’s total. The regional statistics, including transactions that involve buyers from China, are based on closed deals registered with the province’s land title office.

The price for detached houses sold in October within the City of Vancouver averaged more than $2.6-million, or double the average price for detached properties in the City of Toronto. The market in and around Vancouver remains the most expensive in Canada, despite prices dropping recently for detached houses, condos and townhomes.

“Our attachment to low-density single-family housing in many neighbourhoods represents regressive urban planning and makes the problem worse. This is basic economics. The more we hold back supply, the faster prices will rise in response to increased demand. And Vancouver’s supply response is among the weakest in Canada,” Mr. Siddall said in his speech.

In a new survey released on Wednesday, CMHC said the share of foreign buyers in Canada’s major markets is still low. The federal housing agency said foreign condo ownership in the metropolitan area of Vancouver has declined to 2.2 per cent in its latest survey of property managers and condo boards, compared with 3.5 per cent in the fall of 2015. In the Toronto region, the proportion of condos owned by people whose primary residence is outside of the country decreased to 2.3 per cent from 3.3 per cent, while dropping to 1.1 per cent from 1.3 per cent in the Montreal area.

Beyond the three largest markets, CMHC found that the share of international condo buyers has remained small in places such as Saskatoon, Regina, Edmonton, Calgary and Halifax.

Source: CMHC head says foreign buyers a ‘scapegoat’ for high Vancouver prices – The Globe and Mail

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CMHC hits roadblocks in review of foreign owners

2016/03/16 Leave a comment

Suggests legislation might be needed given resistance of the realtors (too good a business line for them to be forthcoming on a voluntary basis?):

Canada’s national housing agency is focusing efforts to collect data on foreign real estate investors by studying temporary residents, including international students studying in Canada, as well as Canadian citizens who live abroad. But it has run into resistance in its attempt to ask real estate agents, developers and lawyers to voluntarily provide information on international clients.

Canada Mortgage and Housing Corp.’s struggle to collect reliable data about foreign real estate investors is detailed in hundreds of pages of documents originally released to Bloomberg under Access to Information and subsequently provided to The Globe and Mail.

The agency’s first challenge was to settle on a definition of foreign investor. Its “final definition,” according to minutes of a January meeting, includes Canadian citizens whose permanent residence is in another country, along with what it calls “non-permanent residents.” They include temporary foreign workers, visitors to Canada and those with no legal ties to the country. They also include the more than 200,000 international students who are in Canada on study visas.

The inclusion of students as foreign investors was controversial even within the federal agency, with minutes of the meeting noting that “there was no unanimous agreement on whether foreign student buyers should be counted as foreign buyers or not.” CMHC is proposing to flag international students separately from other non-permanent residents.

The number of international students in Canada increased 36 per cent between 2010 and 2014, to nearly 212,000, according to Citizenship and Immigration data included in the CMHC documents. While the number who eventually apply for postgraduate work permits has risen from 10.9 per cent in 2010 to 17.6 per cent in 2014, “the large majority of students actually do not become permanent residents,” CMHC wrote. “This would justify classifying ‘student buyers’ as foreign buyers.”

There is no hard data on how many international students buy housing while studying in Canada, but real estate agents in Vancouver and Toronto often point to the fact that many foreign buyers, particularly those from China, buy housing here so that their children can go to school. “We feel some people, like students, are buying properties instead of renting with money mainly coming from outside Canada,” a CMHC analyst wrote in an internal exchange from early December.

The federal housing agency also drafted a proposal for a separate research project that would measure “the effects of non-permanent residents on housing demand.” It held discussions with HSBC Bank late last year about ways to collect data that would “allow identification of foreign mortgage applications,” along with Canada Revenue Agency, which requires non-resident homeowners to pay withholding taxes on rent and real estate sales.

One of the ways CMHC is proposing to collect data on foreign investors is a pilot project to survey real estate agents and developers about clients who might be considered foreign buyers, starting with Vancouver. The federal agency is also looking to include questions about the residency status of buyers and owners to its survey on condo owners and housing starts and hopes to work with provincial land registries to add data about foreign owners, starting in Ontario.

But it has run up against resistance from the real estate industry, with internal documents laying out that meetings with developers to discuss adding foreign residency questions to CMHC regular surveys of condo sales yielded “mixed results.”

“Some [condo] developers are willing to provide the information while others are not willing to provide it,” the agency wrote.

One real estate industry organization in B.C., the name of which was redacted in the CMHC documents, told the housing agency that it didn’t think its “members would be forthcoming with the information requested, despite knowing the background of their buyers.”

Source: CMHC hits roadblocks in review of foreign owners – The Globe and Mail

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