Arguably the most important market fundamental for real estate investors is inbound population, and for those hedging on the floodgates opening to immigrants any time soon, they might be in for a rude awakening.
In a conversation with CREW, the Real Estate Investment Network (REIN) warned that Canada is on pace to welcome roughly a quarter of its permanent residents target in 2021, and while the border is expected to open, until it actually happens, there’s no guarantee.
“In May 2021, there were 17,000 new permanent resident admissions. That is the lowest for the month, but cumulatively that puts it at 100,000 for the year. That is a long way behind the pace we need to hit,” said Patrick Francey, CEO of REIN. “We want to see an immigration number that isn’t happening yet; it’s talked about and a lofty goal by our federal government, but we’re not even close to that yet, so as investors, we have to consider the fact that borders are still not open. As much as we’re optimistic that they will, we don’t know that they will.
“When we talk about speculation, are the borders going to open? We don’t know, and I don’t think anybody really knows. We’re talking about opening up the U.S. border, but now we’re looking at our border officers going on strike, and that’s going to choke things. Then there’s a lag time with all those things that take time to reopen. If you buy a condo today thinking that by the end of the year there will be a couple of hundred thousand new immigrants in the country, it won’t even be close to that.”
Last year, the Canadian government announced an ambitious plan to settle 401,000 permanent residents in 2021, 411,000 in 2022, and 421,000 in 2023, however, an RBC report from earlier this year demonstrated that Canada was already failing its target by a wide margin.
“With few exceptions, only those who are the immediate or extended family of Canadians or permanent residents may enter the country,” said the report from Andrew Agopsowicz, senior economist at RBC. “Coupled with significant quarantine requirements, travelling to Canada may not be feasible for many potential immigrants. Furthermore, many new permanent residents will continue to be those who are already in the country, and so we should also expect even smaller population growth than these levels would normally imply.
“For example, the Canadian Experience Class applicants still face a six-month lag time even before processing starts.”
Francey also said that even if the pace picks up, it will be virtually impossible for Canada to meet its target.