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OTTAWA — "I'm moving to Canada," is a common refrain, often heard whenever Americans find themselves frustrated with U.S. politics.
As of Jan. 1, Canada is enacting a two-year ban on the purchase of residential property by most non-residents.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act was quietly introduced last spring after Prime Minister Justin Trudeau's Liberal Party of Canada blamed Canada's housing crisis on outside investors, the Times reported.
"The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors. This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices," the party's platform states. "Homes are for people, not investors."
The move was in response to widespread political sentiment in Canada, but it "sounded absurd," said Jacky Chan, the Vancouver-based founder and CEO of BakerWest Real Estate, which markets luxury high-rise condominiums nationwide, the Times reported.
"As multicultural as Vancouver and Canada are, there is a sentiment around, 'Yeah, Asians, foreigners, immigrants are coming here, buying up real estate, eating supply and driving up prices,'" Chan told the Times, which reported he was born in Hong Kong and has lived in Vancouver for 29 years. "Most foreigners buying real estate are not speculators. They're immigrants buying homes to live in."
The U.S. housing affordability crisis pales in comparison to Canada's, with the average home in Canada costing nearly $650,000 in U.S. dollars, which is nearly nine times the household income, according to a May report by HousingWire.
However, by mid-2022, Canadian home prices had begun to dip. Still, the ban was quietly signed into law, going largely undetected by even many real estate professionals, according to the Times.
The two-year ban on home purchases by non-Canadians also comes when regional Canadian governments are already making moves to tackle the country's high home prices.
The provincial government in Ontario raised the real estate speculation tax for foreign buyers from 20% to 25%, the Times reported. British Columbia enacted a 20% take on international homebuyers.
Those measures seem to be working, the Times reported, noting foreign investment in real estate fell from 9% of residential sales in June 2016 to about 1% in June 2022, according to data from the British Columbia Ministry of Finance.
"No developer in his right mind was even targeting them," Chan said, according to the Times. "Why would a ban make sense?"
The law has prompted accusations of xenophobia, all while immigration numbers hit record highs in Canada, the Times reported. Census data released this fall showed immigrants now make up 23% of the Canadian population, with a vast majority coming from India and China.
Non-Canadians "got a lot of blame for the housing crisis, and it was a big issue politically," Brendon Ogmundson, chief economist of the British Columbia Real Estate Association, told the Times. "But the pandemic shut off nearly the entire segment of foreign buyers, and prices still hit an all-time high. That's evidence that foreign buyers are not significant drivers of the market, and this ban will not affect anything."
Canadian officials declined the Times' request to answer questions for the story.
Earlier this month, the Canadian government issued a set of regulations, including exemptions and enforcement of the ban. They noted the ban applies only in "census metropolitan areas" and "census agglomerations," or cities that meet certain population criteria, and not to vacation homes in "recreational areas." The ban also has exemptions for buyers with Canadian spouses or partners, refugees and foreigners buying multifamily dwellings with more than three units.