Why foreigners can’t buy Canadian homes

Canada, in an effort to curb the housing shortage, is banning foreign investors from buying for two years.

Canada has officially banned most foreigners from buying a home, and it all has to do with Canada’s wildly unaffordable housing market.

Why foreigners can’t buy Canadian homes

Housing prices were up 48% in 2022 compared to 2013, and now average ~$568k — over 11x the median household income after taxes, per the BBC.

The ban, aimed to prevent investors from snapping up properties and driving up prices, prohibits non-citizens and non-permanent residents from buying residential properties for two years. Violators face a $7.4k fine.

Exceptions include international students, refugees, and people buying vacation properties outside of urban areas.

Will that work?

Well, New Zealand enacted a similar ban in 2018, but inflation has led to a continued rise in prices.

In Canada, detractors argue that foreigners account for less than 5% of buyers, and the real issue is supply.

Parliament member Jenny Kwan told The New York Times that the government should target real estate investment trusts and for-profit real estate companies. And it has a bit, via anti-home-flipping and vacancy taxes.

Meanwhile, in the US…

… the fight rages against short-term rentals.

  • NYC’s new law, which requires hosts to prove they live at the property, could wipe ~25% of local Airbnb listings.
  • Philly hosts must now obtain a “limited lodging operator license,” which ensures units are up to code, and a hotel license if they don’t live on-site.

FWIW, research suggests short-term rentals do drive up housing costs, and experts have suggested these very methods as a possible solution, per MarketWatch.

For more: An interesting article about “supply skepticism,” the belief that we actually don’t need to build more homes.

New call-to-action

Related Articles

Get the 5-minute news brief keeping 2.5M+ innovators in the loop. Always free. 100% fresh. No bullsh*t.