April 20, 2017
Over Half of Canadians Support a Foreign Buyer Tax: Zoocasa Housing Trends Report
Zoocasa.com releases inaugural 2017 Housing Trends Report
Comprehensive data may still be lacking on whether foreign investment is impacting the Canadian housing market – but local owners and buyers feel strongly that it is, according to Zoocasa’s inaugural Housing Sentiments and Trends Report.
According to the data, 61% of Canadians feel foreign buyers are driving up home prices in their city, and an additional 69% support a foreign buyer tax. Unsurprisingly, this is most acute in the nation’s hottest markets: a full 74% of British Columbia respondents feel it’s a factor and 75% support a tax, which was implemented in Metro Vancouver last August. In Ontario – home to a city that has experienced 33% year over year price gains – 66% feel foreign buyers are an issue and a whopping 70% support a tax.
What’s curious, though, is such a tax also draws high support in relatively unaffected markets: Albertans, prairie residents, and east coasters reported support for a tax at 63%, 55%, and 56%, respectively.
About Zoocasa’s Housing Trends Report
Zoocasa’s Housing Sentiments and Trends Report, which surveyed over 1,000 respondents from every province, reveals Canadian perceptions on housing affordability, home ownership as a life milestone, their general confidence in the market, and factors that influence their home purchase decisions, such as commute times and nearby amenities.
Given the recent intense scrutiny the market has received from the media, policy-makers and consumers, revealing these sentiments is especially timely says Zoocasa CEO Lauren Haw, as the Ontario government prepares to reveal upcoming affordability measures.
“Recent market fluctuations and policy changes aimed at controlling participation and entry into these markets have caused consumer and media interest to reach a fever pitch,” she says. “This report is a look inside the heads and homes of Canadians, and should be a companion piece for those seeking a more in-depth understanding of our housing market and how it affects Canadians. The sentiments of Canadians become increasingly relevant in Ontario as we await added measures from the Government.”
Affordability Tops Canadian Real Estate Concerns
Not surprising, affordability was cited as the biggest obstacle to homeownership, with over half (54%) of aspiring buyers indicating “rising real estate prices” as the primary obstacle for purchasing a property. What is surprising is that higher-income respondents aren’t immune to this anxiety; those in high household income brackets –$100,000 to $149,000 – were most likely to be concerned about rising prices. The ability to earn income from a property was twice as important to aspiring buyers (23%) compared to those who bought in the past (12%).
Canadians Are Lacking in Housing Market Confidence
Increasing buyer competition, affordability challenges, and heavy commentary and warnings of market ‘bubble’ conditions have Canadians feeling split on their outlook of the housing market: only 34% feel confident in Canada’s real estate market, 29% are not confident, and 37% are not sure.
How Far Would You Go for an Affordable Home?
While the majority of respondents said they’d be willing to add only 30 minutes to their current daily commute to better afford a home, over 20% stated they would delay life milestones, like having children, in order to purchase a property. Commuting time ranked higher in importance for aspiring owners (72%) than current homeowners (64%). For aspiring buyers, the proximity to roads/highways and public transportation was equal in importance (55%), higher than their desire to live near schools or school districts (39% vs. 44% for current owners).
Though affordability is a challenge, Canadians remain unwilling to purchase a stigmatized property to assist with cost: 6% would consider a home where a recent murder occurred, 7% where illegal drugs were produced, and just 15% would consider a home in a less desirable neighbourhood.
Who are Canadian Real Estate Investors?
The topic of speculative investment activity remains a hot button issue for Canadians, especially following the provincial British Columbia’s August 2016 decision to implement a 15% tax on foreign buyers. However, Zoocasa found the majority of investor respondents (67%) own just a single investment property (in addition to their primary residence). One-fifth own two homes for investment purposes, and just 13% reported owning three or more properties. The majority of respondents who are investment property owners are married (69%) and/or have a household income of over $100,000 (59%).
Homeownership Remains an Important Life Milestone
Despite price challenges and a lack of confidence in the market, 83% of respondents said owning a home is an important life achievement, and over 66% feel people should own a property before age 35, with one third saying the 31 to 35 age range is the prime time to buy.
And, while Canadians continue to prioritize home ownership, their savings may be off the mark. Of those respondents who are renters, 43% of respondents have under $5,000 saved for a down payment, and most (63.2%) are only saving $500 or less each month.
House Hunting Can be Stressful
Canadians agree that buying a home is a stressful process – but how does it stack up against other significant life decisions? Forty-eight per cent of Canadians agree that buying a home is more stressful than getting married, and 66% say that buying a home is more stressful than asking your boss for a raise.
Working with a real estate agent is one way to help mitigate home hunting stress. Eighty per cent of homeowners used a real estate agent in the home buying process, and 69% are repeat clients or were referred to a realtor from a family member or friend.