Last week, Teranet released their quarterly Market Insight Report analyzing data on Ontario land registry. Their data revealed that multi-property owners are the largest single buyer category in Ontario real estate.
Teranet is the owner and operator of the province’s online property search and registration system. This gives them the opportunity to examine data collected on property transfers, and they employ a number of data scientists to do just that. The benefit of this approach, according to Teranet is that it does away with news constructed on “anecdotal evidence or surveys” and instead presents a “comprehensive, data-driven analysis” of the Ontario market.
The rise of the multi-property owners category has been gradual over the last five years. In 2015 the category represented less than 20% of sales in the province, sitting well below the categories of First-Time Homebuyers and ‘other’ (largely foreign investors).
The rise of the category was probably helped in part by legislation put in place to curb the growth of its competitors. One such change was the Non-Resident Speculation Tax that made it harder for foreign investors to buy in Canada. In addition to the Non-Resident Speculation Tax, pandemic restrictions significantly lowered the number of visitors and immigrants able to come to Canada, and therefore, reduced their ability to buy properties here.
Another piece of legislation beneficial to the multi-property investors was the mortgage stress test which drove many new homebuyers away from the market. These changes left the perfect opening in the market to be filled by investors.
Another consideration is that under current conditions of high prices and low interest rates, investors are in the best position to be making purchases. They have more money to spend than first-time buyers, for example, are able to access it cheaply, and have greater resources to leverage.
Other factors may have contributed to the recent growth of this category, such as the recovery from a dip in 2018- 2020 caused by rising interest rates that drove some investors away.
In Toronto itself, the change is even more dramatic. Where first-time buyers once represented 30% of all sales in Toronto 10 years ago, they are now down to a quarter of all activity. Over the same time period, multi-property owners grew from less than 20% of the market to now slightly overtaking first-time buyers to represent the largest segment of buyers in the city.
Teranet also offered an age breakdown of all buyers in each segment. Unsurprisingly, data shows millennials as the largest demographic for first-time homebuyers, representing almost 70% of sales. In the multi-property owners category, Gen X is the largest contributor, though millennials represent a not-insignificant 20%.
With major supply issues facing the real estate market, many people are finding it hard to find an affordable home, while over one million homes sit empty across Canada, partly due to multi-property owning investors. The question is, how long will it be before legislation comes after this segment of the market as well?