A surge of temporary residents is boosting demand for homes in supply-starved market

A record-setting influx of temporary residents is putting additional strain on the Canadian housing market, just as the construction industry is pulling back on new builds.

By the end of 2022 there were roughly 1.95 million people from abroad with temporary work or study permits in the country, an increase of about 560,000 (40 per cent) over the previous year, according to recently published figures from Immigration, Refugees and Citizenship Canada.

The International Mobility Program accounted for slightly more than one million of those permits – a new high, up more than 300,000 in a year. The program covers a broad group of people, including the spouses of skilled workers and company transfers from foreign offices.

There were slightly more than 800,000 study permit holders at the end of last year, also a record high. Another 120,000 people held permits under the Temporary Foreign Worker (TFW) Program, the most since at least 2000.

“The decision to cease the operations of FairSquare was not an easy one,” Desjardins spokesperson Chantal Corbeil said in an e-mail.

“We have [made] efforts to promote FairSquare activities, but the rapid deterioration of the housing market and its business model do not allow us to continue operations,” she said.

The country’s real estate market has slowed significantly since the Bank of Canada made a series of interest-rate increases, which raised borrowing costs. The volume of home resales has plunged and January’s activity was the lowest since the Great Recession. Prices have fallen for 11 straight months and the typical home price is now 15-per-cent below peak values in February of last year.

FairSquare’s demise is reminiscent of what happened to Purplebricks and its British-based owner. Purplebricks exited Canada after it failed to gain traction with its ambitious international expansion plan. The online brokerage competes with traditional brokerages on price by offering a flat-fee as opposed to commissions typically paid to real estate agents.

Canada is winning when it comes to attracting immigrants, but failing to use its windfall.

That was the take from RBC examining the immigration boom that makes up nearly all growth. In an email to investors, they explain the immigrants are younger and better educated than Canada’s domestic workforce. However, they were more likely to be overqualified for their job, and have worse housing. If Canada doesn’t correct course, it risks exacerbating the issues it’s trying to solve.

Canada is pursuing an aggressive immigration plan, and it’s been very effective. The country averaged 7 immigrants per 1,000 people from 2010 to 2019. It tops the G7, beating the US that previously held the top spot before Canada. It’s a good thing too, because Canada is a demographic time bomb. 

Canada is hoping immigrants can resolve its upcoming demographic cliff. In 2021, immigration accounted for 90% of the country’s population growth. By 2050, Statistics Canada estimates 100% of growth will be based on immigration. If immigration fails to keep up, deaths would easily outpace births.

“Indeed, new immigrants can fill open positions, but they also increase demand for housing and consumer goods which in turn raises demand for labor,” writes Nathan Janzen, assistant chief economist at RBC, Canada’s largest bank. 

Canadian home sales declined by three per cent on a month-over-month basis to start the year to post their worst January since 2009, according to data from the Canadian Real Estate Association.

CREA’s monthly housing statistics report, released Feb. 15, found actual (not seasonally adjusted) monthly sales in January were down 37.1 per cent from the year before.

“Early 2023 feels a lot like 2019, where after a year in which it became much harder to qualify for a mortgage, everyone was wondering if the market would pick up in the spring,” Shaun Cathcart, CREA’s senior economist said in a release.

Toronto Apartment Rents Spiked 21% YoY in January

The rental exorbitance that defined 2022 showed no signs of relenting in January, according to a new national rent report.

The report — a collaboration between Rentals.ca and Urbanation, based on data from RentFaster.ca — puts the average rent for all property types in Canada at $1,996. Although that figure has dipped nominally since December, it was 9.5% above the pre-pandemic level and 10.7% over the year prior. January was the ninth-straight month in which annual rent growth exceeded 10%.

As it has in previous months, the report also highlights the mounting affordability challenges in the Greater Toronto Area (GTA). Apartment rents in Toronto were up 20.8% from the year prior, and in addition, some of the country’s priciest medium-sized markets were in the GTA, including Vaughan, Oakville, Etobicoke, Mississauga, Brampton, and Burlington.

The Greater Toronto Area will see its rental supply deficit more than double in the coming decade.

A new report from the Building Industry and Land Development Association (BILD) and Federation of Rental-housing Providers of Ontario (FRPO).

Toronto’s real estate board predicts the region’s housing market will start to rebound in the latter half of this year, with home prices and sales increasing after months of declines.

GTA- When the dam breaks: Pent-up demand for housing is growing and it could lead to a ‘bigger than ever’ crisis.

City of Calgary-