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Canada’s stance on immigration has long since set it apart from comparable economies. Compared to the U.S., Canada welcomes three times as many immigrants on a per capita basis. That translates to approximately 340,000 immigrants per year.
Following the coronavirus outbreak, the U.S. signed an executive order suspending immigration for green card seekers, claiming that immigrants pose a risk to the recovery of the U.S.’s labor market. The logic seems somewhat flawed, however, since the economic argument to be made in favor of immigration tends to be a strong one.
Conversely, and in keeping with historical tendencies, Canada will continue to welcome a steady flow of newcomers into the country.
Though the coronavirus pandemic has stalled Canada’s economy as a whole, immigration remains a dependable fundamental of Toronto‘s economy, effectively fueling the multifamily market and making Toronto one of the best cities for investment in Ontario. Immigration drives population gains, contributes to the workforce, and ensures a healthy tension between housing supply and demand. Moreover, migration to Canada shows no signs of slowing down.
Below, we explore Canada’s immigration policy and get into some specifics about how immigration directly supports Toronto’s real estate market, particularly the multifamily segment.
Understanding Canada’s Immigration Policy
Canada has one of the highest immigration rates per capita among developed nations. This is the case for a few reasons:
• Canada has a parliamentary system of government. This means that a federal political party holding a majority has significant control over the country’s policies and can implement new immigration policies and plans as it sees fit. This is different than the system in the U.S., where power is shared by the president, congress and senate, sometimes resulting in policy gridlock.
• Immigration is a matter of shared federal-provincial jurisdiction. Under Canada’s constitution, provinces and territories are able to authorize and manage their own immigration programs. This is in contrast to the U.S., where individual states do not have the authority to implement immigration programs.
• Canada is still accepting and approving applications for permanent residency. Despite the coronavirus pandemic, the Canadian government is still holding immigration draws and inviting potential immigrants to submit applications for permanent residency. This is per the 2020-2022 Immigration Levels Plan, announced in March, which indicates that Canada will welcome more than 1 million new permanent residents over the next three years. Moreover, more lenient immigration, visa and border measures have been put in place in lieu of coronavirus-related disruptions.
Immigration supports the real estate market in the greater Toronto area (GTA), making it one of the best places for building wealth with real estate.
Immigration is a key contributor to the strength of Toronto’s real estate market. This has a lot to do with population growth. Toronto is the fastest-growing city in all of North America, with the population of the Toronto area forecasted to hit 8 million within the next 10 years. Surrounding regions have also seen steady population growth, with many people leaving the Toronto area for other parts of Ontario, such as Kitchener-Waterloo, London, the Niagara region and Hamilton. In particular, the population of Hamilton has grown by 23,763 since 2015. This reflects a steady growth rate of 3.1% over five years. Similarly, the population of St. Catharine’s, in the Niagara region, has increased by 12,396 since 2015.
As the population in the GTA and surrounding regions increases, so does the demand for suitable housing. A recent survey by Royal LePage indicates that new Canadians will drive up housing demand in the GTA, as the region continues to be one of the most desirable locations in Canada. Though increased demand means that housing prices are heating up across the board, lowered interest rates and increased flexibility on the mortgage lending front has improved accessibility to the GTA’s real estate market for first-time buyers.
The result will be a healthy tension between supply and demand within the residential real estate sector—particularly within the multifamily segment—in the coming years. According to CBRE’s Canadian Multifamily Mid-Year Update for 2019, Canada’s multifamily market is the most robust it has ever been, with record-low vacancy rates and increased rental rates recorded in the Toronto area.
As for the economic stall ensued by COVID-19, market experts cite that Canada will continue to be an attractive destination for immigrant families, due to factors such as public healthcare and the cheap dollar. According to a recent report by immigration law firm Green & Spiegel, 34,300 candidates have received invitations to apply for Express Entry to Canada so far in 2020, with over 3,900 receiving ITAs over the past weeks.
Immigration In The GTA And Surrounding Regions: By The Numbers
• Twenty-one percent of homes in Canada are purchased by immigrants. That’s about one-fifth of the housing market. Newcomers to the country spend approximately three years in Canada before buying homes, with 75% arriving to Canada with funds allocated for the purchase of a home.
• According to the same above report, it is estimated that newcomers will buy 680,000 homes in Canada over the next five years.
• The GTA is home to 45% of Ontario’s population, welcoming 77% of the province’s newcomers.
• In the last 20 years, Ontario has been home to about 52% of the international immigrants who have come to Canada.
• In a move that will support Toronto’s multifamily market, 89% of high-rise units under construction are condos.
• The homeownership rate of newcomers in the GTA is 32%.
• In 2014, the Hamilton city council voted to declare it a sanctuary city for immigrants. The city has since welcomed over 2,000 Syrian refugees.
• Niagara-on-the-Lake was ranked the second-best community for new Canadians in 2019.
• In 2018, Niagara’s average price of a home was $413,000.
As we recuperate from the coronavirus pandemic, high rates of immigration will be something of a saving grace for the real estate market on regional and national scales. For those hoping to invest in the GTA’s, Niagara’s or Hamilton’s multifamily markets, now is as good a time as any: Annual immigration numbers are forecasted to rise. Demand for housing is growing, and new supply is underway.