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December 03, 2024INVESTORS AMONG RESIDENTIAL REAL ESTATE BUYERS, 2018-2020 Today Statistics Canada has released their most recent report on the role of real estate investors in the Nova Scotia, New Brunswick and British Columbia property markets. This analysis covers the period of 2018-2020, and provides insight into the role of investors prior to the COVID-19 pandemic and in the first year of the pandemic. This report will serve as a baseline for analysis of the pandemic and post-pandemic years. For the purposes of this study, an investor is defined as the owner of at least one residential property that is not used as a primary residence, excluding Canadian non-profit organizations. Investors are further separated into four categories: business, non-resident, out-of-province and in-province investor buyers.
Among the three provinces studied over the three year period beginning in 2018, Nova Scotia had the highest rate of investor buyers in all three years. In each year of the study Nova Scotia had the highest proportion of business, out-of-province, and non-resident investor buyers, while British Columbia had the highest proportion of in-province buyers of the three provinces examined.
Taking 2019 as a representative year, at the CMA level the highest rate of investor buyers was found in Kelowna and Vancouver, followed by Victoria. Halifax had the fourth-highest level of investor buyers, with the highest level of business investor ownership of the CMA's examined in this study.
Investor buyers were more common in the condominium apartment market than in fully- or semi-detached homes. In 2019, 33.4% of British Columbia condo buyers were investors, versus 18.9% of house buyers. A similar pattern was evident in Nova Scotia, where 33.7% of condo buyers were investors vs 24.7% for houses. New Brunswick was the exception to this trend, of the three provinces examined, with 14.5% of condos and 16.2% of houses bought by investors.
In the two Atlantic provinces examined, the median price paid by investors for homes was lower than that paid by non-investors. In 2019 in Halifax the median price of an investor-bought house was 73.1% of the median price paid by a non-investor. The reverse was true in British Columbia, where investor-bought homes tended to be more expensive. In Vancouver, the median price paid by non-resident investor buyers was 19.5% higher than that paid by non-investors, while in-province investors paid an average of 8.8% more than non-investors. Despite the differing price trends between investors and non-investors, investors were not found to be paying more or less than non-investors relative to the home's assessed value, implying that investors were not paying a premium, or receiving a discount, relative to non-investors in the three provinces examined over 2018-2020.
Most individual(non-business) investor buyers owned fewer than three properties. In 2019, these buyers represented 64.4% of investor buyers in Nova Scotia.
The study notes that larger-scale investor buying was more common in rural areas in each province examined. In Nova Scotia in 2019, 11.8% of buyers in rural areas were individual investors owning three or more properties, compared to 5.0% in Halifax. A similar trend was shown in New Brunswick, where 8.5% of rural buyers were larger-scale investors, compared to 4.2% in Saint John and 4.1% in Moncton. This trend was less pronounced in British Columbia, with 7.6% of rural buyers being larger-scale investors, compared to 6.7% in Vancouver and 5.9% in Victoria.
Immigrants are overrepresented among in-province investor buyers relative to their share of the population. In Vancouver, for example, 67.0% of resident investors were immigrants, compared to 41.8% of the population. In Halifax 21.4% of resident investors were immigrants, versus 11.2% of the broader population. Immigrant investors were also found to invest at lower incomes than their Canadian-born counterparts, with immigrant buyers in Vancouver having a median income of $60,000 vs Canadian-born investors who had median annual earnings of $90,000. Across the other CMA's examined in this report Canadian-born investors had between 20-50% higher incomes than immigrant investors. Investor buyers also tended to be older, with investors having a higher median age than non-investors in all three provinces examined. Among investors, out-of-province investors were older than in-province investors.
The rates of investor buyer home ownership was also significantly higher in tourist regions. Nearly 7 in 10 buyers in Whistler, British Columbia were investor buyers compared to the provincial average of 25% in 2019. In Inverness, Nova Scotia, the rate or investor buyers was 51.7% compared to the provincial average of 28.7%.
Source: Statistics Canada: Investors among residential real estate buyers: An analysis of Nova Scotia, New Brunswick and British Columbia