Why foreigners can’t buy Canadian homes

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

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.