There are plenty of reasons to want to move to Canada (if you can ignore this actual image from an ice-covered neighborhood in Ontario from last week). Nice people. Universal health care. Nature. Drake. Poutine. The … Commonwealth? (Are we still into the whole monarchy thing?)
Anyway ... Starting now, foreigners hoping to relocate to the Great White North and buy a cute little property in Medicine Hat (or one of the other delightfully named communes up there) may be in for disappointment.
Here's the deal: A new law essentially bans foreign buyers from acquiring residential properties as investments for the next two years, my colleague Chris Isidore writes.
The issue, which won't be unfamiliar to Americans, is the skyrocketing price of homes since the start of the pandemic — driven in part by people looking for an investment at a time when inventory was historically tight and buyers were flush with cash.
"The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors," Prime Minister Justin Trudeau's party declared in a campaign message. "This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors."
But critics are, well, critical.
For starters, the law is coming into effect just as the heat is coming off home prices. Much like in the US and elsewhere, the Canadian central bank's efforts to tame inflation are cooling demand for housing, which helps bring prices down.
Average home prices in Canada peaked above US$585,000 ($800,000 Canadian) in February, and have fallen steadily since then, dropping about 13% from that peak, according to the Canadian Real Estate Association.
It remains unclear what the impact of the law will be on the Canadian housing market, which is among the least affordable in the world. (According to a Statista analysis of housing affordability by country, Canada ranks 5th — less affordable than US, UK and New Zealand markets.)
Also on critics' minds:
The real estate group has also argued that the legislation undermines Canada's reputation as a multicultural nation that welcomes foreigners and that the potential benefits of the ban are "likely to be modest." (The law does have some exceptions for immigrants and permanent residents who aren't citizens, but, sure, the optics aren't great there.)
Some worry about retaliation by the United States and Mexico. Like, if we the people of the Southern Kingdoms can't buy our summer homes up in White Walker Territory, then maybe we'll strike back by forcing Canadian pensioners to spend their winters in a sauna in Moose Jaw instead of playing golf near their condo in Phoenix.
After all, Canadians are the largest foreign purchasers of American properties, and we've got an inventory shortage, too. (Fun fact: More than half of all Canadian acquisitions of US properties are in Florida and Arizona.)
To be sure, there's zero indication yet that we're gonna kick the Canadian buyers out. (They're just too nice!)
Bottom line: This could turn out to be an economist's morality tale about the perils of politicians meddling in free markets. Or, if I were a betting woman, I'd say this was a mostly political play to make the government look like they're helping without really, like, doing much. One professor in Toronto told Canada's CBC that there's "patchy data" at best when it comes to tracking foreign homeownership in the country, but it's "actually pretty small when it comes to foreign buyers." (Easy target + minimal real impact = political win-win.)
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