Mythbusters: Foreign Investor Edition
Last week I was invited to participate in a Condo Investor Round table discussion held by CMHC. CMHC brought in about a dozen condo industry insiders and some Realtors like myself who sell downtown pre-construction condos to ask us what we thought about the market and where we see things going. Most of what was discussed was nothing new. The usual arguments for and against a market correction were brought up and the consensus continues to be that there is no consensus.
One highlight I thought of the conversation was that the topic of foreign investment in the Toronto condo market came up. There seems to be a general sentimentÂ amongÂ the ‘bears’ of the real estate world (those who have been calling for a condo market crash since…forever) that foreign investment in new condos is at an all time high and that this is a warning sign we are due for a crash. There were even some in the room at this event, people who are working on the inside of the condo industry who believed that foreign investors were buying upto 90% of some new projects that have launched in the past year! I though this was a crazy number as my own estimates put it at about 15% of the market.
One broker of record for a large, mostly-Chinese brokerage said that they calculated the number of foreign investors they deal with at only 2% of all their buyers. Others in the room confirmed that number to be valid. There is simply no evidence (that I have heard) that foreign investors are a driving force in the condo market in Toronto. Â They are present, yes, but they are very small.
I think the take away to remember is this:Â Just because you are not born in Canada does not mean you are a ‘foreign investor’. Yes, it’s true that many new projects are being bought predominantly by people of Chinese and Indian decent, but they are not foreign! These buyers are almost all Canadian residents, if not Canadian citizens. If you have a Canadian SIN# and you have a Canadian driver’s license, you are are not a foreign investor. For more on this subject of who exactly is buying all these new condos, check out my previous blog.
The belief that condo buildings are being bought up by huge amounts of foreigners is a complete myth.
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