Investors make up nearly 20% of all home purchases in Canada: report

Fabrizio Rafael

Investors account for nearly 20% of all home purchases made in Canada over the past seven years, according to a new report from the Bank of Canada.

The report looked at mortgages given out in Canada since 2014 and found that investors accounted for 19% of mortgaged home purchases. But as the report points out, this is largely domestic buyers and would only include foreign buyers if they obtained a mortgage in Canada, which means the percentage could be even larger.

Bank of Canada

The investors fell into one of two categories: those purchasing an investment property while maintaining their primary residence or those purchasing a new residence to live in, while converting their existing residence into an investment property.

The remainder of home purchases were split between first-time homebuyers, who accounted for 50% and repeat homebuyers, who accounted for 31%.

Although all three groups of buyers bought more homes during the COVID-19 pandemic, this growth was most prominent with investors. According to the report, growth in the investor category has not outpaced first-time or repeat homebuyers since 2017.

Bank of Canada

As to be expected, investor activity varies across Canada’s major cities. In Winnipeg, for example, investors account for just 14% of all home purchases. Meanwhile, in Toronto, 21% of home purchases are made by investors.

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Upon first glance, it may seem like Canada’s first-time homebuyers have the highest loan-to-income ratio when they obtain a mortgage, but as the report points out, investors overall have a much largest debt load and “could face difficulty servicing their debt following a loss of income (either employment or rental) or an increase in interest rates.”

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