Conservative pledge to collect data on foreign homebuyers gets mixed reception

The Conservatives' pledgeto spend $500,000 oncollecting "comprehensive data on foreign buyer activity in Canada's housing market"has been met with a mixed reaction among Realtors, many of whom acknowledge the need for more data but areskeptical that such information will do anythingto solve the problem of affordability in overheated real estate markets such as Vancouver and Toronto.

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"There are real concerns that foreign, non-resident real estate speculation is the reason some Canadian families find house prices beyond their budgets,"Conservative Leader Stephen Harper said atan election campaignstop in Vancouveron Wednesday.

"If such foreign, non-resident buyers are artificially driving up the cost of real estate, and Canadian families are shut out of the market, that is a matter we can and should do something about."

Whether the concerns Harper referred to are justified has been hard to assess, because information aboutresidency and citizenship statusis not collected in any systematic wayby the agenciesthat track the housing market.Canada has few restrictions on foreign ownership of real estate, and such information doesn't have to bereported in most real estate transactions.

It was only in October 2014 that the Canadian Mortgage and Housing Corporation publishedits first, limitedlook at foreign investment, saying it recognized that "there is demand to fill information gaps."It found the proportion ofcondominium units owned by people who permanently reside outside Canadawas highest in downtown Montreal and Nun's Island (6.9 per cent); Vancouver's BurrardPeninsula (5.8 per cent); and Toronto Centre (4.3 per cent) butwas only 2.4 per cent in the country overall.

Buyer datanot collected

Pierre Leduc of the Canadian Real EstateAssociation saidthere'ssimply not enough data on home buyersperiod.

"It's not just foreign ownership," he said. "One of the questionsIget a lotis, 'What'sthe percentageof homesin Canada that are sold to first-timehome buyers?'Wedon't know.We don't have any dataon buyers in general, so we can't even categorize.We canjust tell you: so many houses were sold, so many houses were bought."

Many in the industry saymore datawould be a good thingif only to put to rest the largely anecdotal notion thatCanada'srealestate is beinggobbled up by property-hungry foreign speculators.

"[Foreign ownership is]not such a big deal as peoplethinkit is, but there does need to be some data, so we're not just going by, 'My friend says that everyhouseon his street was bought by someone fromChina,'" said Damian Stathonikos of the B.C. Real Estate Association.

Stathonikos saidcollecting the data won't be a problem and cansimply beincorporated into the propertyregistration or taxation process (as it used to be in B.C.).The bigger challenge will be figuring out who collects it andhow toanalyzeand use it.

"What do you want to collect? Is it where theperson resides? Becauseyou maybe a Canadiancitizenbut reside in Qatar because you're thereon an oil contract, but you'repurchasing investment property. Doesthat count as foreign investment?"hesaid. "Oryou may be a foreign national, but you residein Canada."

Impact mostlyat thehigh end

The B.C. Real Estate Associationrecently tried to quantify the extent offoreign ownership in Vancouver byreviewing 2011 census data and pastsurveys done by the Vancouver Real Estate Board, CMHC and the consulting firmUrban Futures.

Itconcluded that in Metro Vancouver, "foreign ownership of housing is considerably less than fiveper cent of the housing stock and not more than fiveper cent of sales activity."

DamianStathonikos,B.C. Real Estate Association

It also found thattheproportion ofdwellingssitting empty or occupiedfor only part of theyear by non-residents was not significantlydifferent from in other large urban centres.

"None of thedata pointsshow that foreign investment is sufficient enough to impact a market that's as large and diverse as Metro Vancouver, except for maybe a small segment of high-end luxury homes," saidStathonikos.

Another recentstudy of 1,500 transactionsbyVancouver's Macdonald Realtyfound that "only a tiny portion of the [Vancouver] market is offshore, non-resident, foreign investment."

It found that buyers with mainland Chinese surnamesaccounted for70 per cent of theproperties Macdonald Realtysold for more than $3 million in 2014, 21 per cent of those between $1 million and $3 million and11 per cent of those that sold for less than$1 million. Thesebuyers have "a negligible impact on the overall marketbut a strong impact on the luxury market," the analysis found.

DanScarrow, whoheads the agency's Shanghai office, stressed the studylooked atethnicity, not residency or citizenship.

"The vast majority of buyers of Chinese ethnicity in Canada are, in fact, Canadian citizens," he said in anemailto CBC News.

Many factors driving up prices

Vancouver real estate lawyer RichardBell saidsuch data backs up his experience with foreign buyers, who, he says, fall into two categories.

"Oneis that they're buyingthe $3-million-plus homes, whichis a very small part of the market,and twothey'rebuying condos as investmentsandthey'rerentingthemout, whichincreases the rental stock,"said Bell, a managing partner at Bell Alliance.

In his speech Wednesday,Harper referred toestimatesthat"as many as 15 per cent of the condos in Vancouversitempty" "No dreamsarelivingthere," he said, vowing to "take action to ensure any foreign, non-resident investmentsupports the availability andaffordabilityof homes for Canadians."

TheSaudi prince buying a $19 million penthousethat's going tosit empty. What issitting empty... is the highend.Richard Bell, Vancouver real estate lawyer

The estimates he cited arefrom a 2013analysisby BTAworksbased on 2011 census dataand apply only to the downtown core. For Metro Vancouver, the numbers are closer to six per cent,according to that study, and five per cent, according to the B.C. Real Estate Association.The idea thatlargeswaths of Vancouver aresittingempty,robbing Canadianfamiliesof the dream of homeownership,is largely a myth, Bell said.

"The Saudi prince buying a $19 million penthouse that's going tosit empty," he said. "What issitting empty, Ibelieve, is the highend,where people are saying, 'Vancouveris a beautiful city. Wewant to go there for one monthout of the year.'

"It's sort of like Canadiansbuying in Palm Springs or Florida."

Foreignownershipaffects prices at the topof the market and trickles down to the averagehomebuyeronly in thesensethat"people that usedto buy at the topend of the market are nowhavingtomove intothemid-range, so everyone is pushed down a little bit," he said.

"Thebabyboomerswho aredownsizing are ableto pay morethanthe people that are moving up."

He saidthe anxiety over foreignownership has less to do with xenophobia thanskyrocketinghouse prices, which are affected by a lot more than a buyer's citizenship.

"The baby boomers' kids are now starting to buy properties generational wealth transfer is taking place; low interest rates; urbanization young kids don't want to live in small towns anymore. So, the discussion that would be really interesting is to try and look at all the factors in play," Bell said.