Foreign Buyers, Property Prices, And Toronto Real Estate

Real Estate

With over two decades of experience in Toronto’s ‘real estate trenches’, I have seen first-hand the ebbs and flows of the real estate cycle. I’ve also had the opportunity to witness how various factors influence the movement and state of the market. Recently, I wrote about the role of foreign investment and affordability in shaping our country’s housing market in Foreign Buyers, Inadequate Policy, And Canadian Real Estate. As a follow up, I’d like to share some of my recent experiences operating in the thick of Toronto’s housing market, in particular.

While there are a number of factors that contribute to price appreciation, it’s trajectory is fundamentally molded by supply and demand. When property listings are scarce and demand is strong, prices climb. This is what has occurred in Toronto, albeit not with the vertical trajectory they were on prior to the Provincial Government Unveiling The Ontario Fair Housing Plan in April 2017. In my bi-annual Toronto real estate forecasts – which I’ve been posting since 2010 – the consistent factors for rising prices in the central core have included migration, low interest rates, demographics, the transfer of wealth between generations, changing household structures, accelerated gentrification, urban gridlock. This mirrors Vancouver, which has an even more limited geography in which it can expand. In case you missed it, my blog 7 Reasons Why Toronto Real Estate Prices Have Skyrocketed Over The Past Decade – posted in October 2017 – offers a fairly comprehensive overview of these.




Deep Pockets, Favourable Currency Contribute To High Prices

One of the many factors influencing real estate worth in Canada (particularly in Toronto and Vancouver) is the steady inflow of foreign investment capital. In recent years, it’s become a bit of a media favourite; ‘foreign investment’ is oft-spotlighted and heatedly debated, yet, ironically, it remains difficult to quantify and the statistical documentation is meagre. What data is available indicates the pool of foreign investors is small, but a combination of great wealth and favourable currency conversion bolsters their ability to pay top dollar, which plays a part in driving up prices.

Although the size of the Foreign Buying market could be larger (and is, in Vancouver), I don’t believe when it comes to this particular market segment it truly comes down to quality versus quantity. I think it’s ultimately about the massive flow of global capital into the Canadian real estate market from China (and other destinations) regardless of the status of the Buyers. In this Globe and Mail piece called “Foreign Buyers Are Paying Almost 50% More For Properties In Toronto After Tax“, the government statistics on the citizenship of foreign buyers showed 70.6 per cent were from China. Trailing in second place were Americans, at 4.6%, followed by buyers from India, at 3.6%.

This article “New Immigrants Spending $620,000 More on Vancouver Houses” shows just how deep those pockets run. In Vancouver, immigrants about 5 per cent detached properties. The homes purchased between 2009 and 2016 by immigrants are worth over $800,000 more than homes bought by Canadian born Buyers or immigrants who purchased later than that time window. Although Toronto has a similar situation, the gap is nowhere near as substantial.

In last year’s Winter Forecast, I wrote about the differing schools of thought on how much influence Foreign Buyers ultimately have on Toronto real estate. I really think this bears worth repeating, because data released by CMHC in December 2017 showed that Foreign Buyers was not as big a market as previously thought. They said that Foreign Buyers hold only about 3.4 per cent of residential properties in Toronto. Read: “Looks Like Foreign Buyers Aren’t The Big Problem In Canada’s Housing Market After All”.

Since then there’s been a fair bit of press about the accuracy and meaning of the stats. This Financial Post article called “Statistics Canada Answered A Housing Question, But Not The One That Everyone Was Asking” addressed that this “data breaks down home ownership (not necessarily homebuying) by residency status, irrespective of citizenship”, when Canadians “want to know the share of the residential real estate being purchased by foreigners with no real connection to Canada (i.e., those who are neither Canadian citizens nor permanent residents, pulling inventory off the market for speculative purposes).” This Globe and Mail Opinion article called “How Much Real Estate Do Foreign Investors Really Own? Statscan Got It Wrong” shares the concern that real estate owned by corporations ultimately masks a good portion of global investment because a “foreign investor can pour money into Canadian real estate through a Canadian company they set up either federally, provincially or territorially, using a Canadian as a nominee director/shareholder/beneficiary, without disclosing the true beneficial owner”.

Research is showing Foreign Buyers pursue two dwelling types. There are those purchasing pre-construction condos strictly for investment, and the high end Luxury Market which may be for their own occupancy (even if it’s just occasionally). This piece in Better Dwelling (who do amazing statistical analysis) called “Foreign Buyers Apply Pressure To “Affordable” Housing In Toronto And Vancouver” shows the impact on the entry-level new build condo market, while Reuters reported how “Foreign Money Drives The (Luxury) Housing Markets In Vancouver & Toronto“. Even if it’s the stats being reported or if the numbers are accurate, according to Better Dwelling “Foreign Buyers Own $37.37 Billion Worth of Toronto Real Estate“. By the way, in case you missed it, this Doc Zone documentary called The Condo Game is brilliant in every way, including its revelation of how condominiums are pre-sold – often in entire floors – to foreign investors.

So – how has this actually unfolded in the market? Read on!




What I’ve Seen In Toronto’s Real Estate Trenches

Back in April 2017 I wrote a piece from my Real Estate Trenches blog category that I feel is worth sharing a snippet from it. At that time I sold a detached 4+bed executive home in North Toronto’s Lytton Park Neighbourhood. Listed at $1,995,000 in February 2017, the property garnered 9 offers and spiked in competition to command $2,452,000. Of the nine offers, six of the Buyers were Chinese (and one was Russian). While I did not communicate with all of them, I did have conversations with several of these Buyers who came through the Open House. They shared that they’re predominantly Landed Immigrants – who arrived in Canada over the past decade or less – who already own real estate in the suburbs of Toronto like Markham and Richmond Hill. One made the accurate observation that the prices of detached dwellings in the suburbs had increased at a higher percentage than those in the downtown core, which now presented an ideal opportunity for them to cash out and climb the property ladder to secure a more premium and prestigious dwelling in North Toronto. Why? For one, these Buyers want to secure a property in one of the very best school districts. Second, they really liked that the gracious 1935 Tudor had been thoughtfully renovated into a turn-key residence but it retained many of the original features. They said they liked the property because it was “very Canadian”. In my conversations with these Chinese Buyers many disclosed they were also helping friends and families who were also from overseas, but they didn’t clarify if this meant they were ‘foreign’ versus ‘landed immigrants’. What was clear by my conversations, is that it was apparent they had access to significantly more capital (including a favourable exchange rate) than other Buyers (one had just purchased weeks earlier another North Toronto residence in the $2mil range as an investment).

Interestingly, my experience mirrors the findings of this recent study from Urbanation (which is more specific to condominium purchases). Although there is the perception that much of Toronto’s condominiums are snapped up by speculative, foreign investors, this study shows that the Buyers are predominantly middle-aged landed immigrants, intending to buy and hold for the long term (either for their own retirement or to assist children in getting into the property market down the road).

No question, the Foreign Buyers Tax has certainly quelled the tsunami of capital coming from overseas, but as a realtor active in the central core I can assure you it hasn’t stopped the flow of funds. And why would it? Canada is a stable safe haven with great health care and an amazing education system, so anyone with deep pockets and even the slightest concern over their health, security and well-being in their current place of residency would be wise to have an escape room here. That is why a growing number of affluent Chinese still have Canada on their radar.

Earlier this year in March I was representing the Sellers of a North Toronto semi-detached house near Bayview and Eglinton. Listed at $1,149,000, the property sold for $1,410,000 with 8 offers, four of which were submitted by Chinese buyers. This interest in North Toronto (aka midtown) is attractive to the Chinese, who covet the excellent schools, proximity to the subway, and breadth of amenities, but it’s also because it’s where the ‘Canadian establishment’ live. They’re keen on this ‘AAA’ location because they also believe it’s the optimum environment for their children – who can assimilate at a young age with the ‘bastions of Canadian culture’ – and be afforded better opportunities in the future. Frankly, given many immigrants (including my own parents back in the late 1950s) risked it all to come to a new country to create opportunities and a better life for their children, I tip my hat at their efforts and foresight to integrate. Though I’m not entirely sure what their obsession is with midtown Toronto and the Yonge Street corridor. Even though I trade in around 42 neighbourhoods across the original City of Toronto (from The Beach west to The Kingsway and from Lake Ontario up the Yonge Street corridor in an inverted “T”), I’m not seeing the Chinese pursuing property with the same intensity on the east and west sides.




Toronto, Then & Now

Toronto, renowned as the City Of Neighbourhoods, is built on being a gateway to Canada for immigrants. And its very success is rooted in the fact our doors have long been open for those seeking a better life. And it’s likely there has always been some resistance and xenophobia through the push and pull of change – and competition for shelter – throughout its history, especially if you look at how many cultural villages were concentrated in the central core of Toronto – with Little Italy on College Street, Little Portugal on Dundas West, Chinatown on Spadina, the Eastern Europeans in Roncesvalles, the Irish in Cabbagetown, and the Jewish community in Kensington Market, to name a few.

Just this week I was showing a $2mil fixer-upper in Summerhill that had been owned by the same family for 60 years. In my conversation with the Seller – who immigrated as a child from Germany in the 50s with her family – she shared that her parents were initially denied buying a new build in the suburbs ‘because they were German’, which prompted their search for a resale house. While she was walking down a street with her mother they saw a ‘For Sale By Owner’ sign in front of a house. Her mother knocked on the door and, in halting English, expressed her interest to the owner who told her he was open to selling but only ‘once she returned with a man’. Only when did she return with her husband were they able to negotiate the purchase. Sharing this with my mother, to my surprise she had her own story. When my parents immigrated to Burlington Ontario in the late 1950s, she said many of the Shop Windows had signs that said “Help Wanted: No English Need Apply”!

While I want to say “That was then, and this is now”, xenophobia towards the Chinese and other cultural groups bubbles under the surface of real estate conversations, though I believe it may be less about ethnicity and more about the fact that many new arrivals to Canada have a net worth that exceeds many of us, such that the well-heeled here are being denied the shelter they desire because foreign money is usurping what they consider their ‘right’. Perhaps we’re ok to invite the disadvantaged to our country because we want them to clean our buildings, drive our taxis, and cook in our restaurants. But to have a Landed Immigrant snap up our Luxury Toronto Real Estate, flaunt their wealth, and diminish our status.. it insults us?

I recently posted a piece called Gentrification, Densification, And The History Of Toronto Real Estate, from which I share this snippet “The rebirth and rejuvenation of our urban landscape is an interesting phenomenon that, with careful analysis, can be predicted; there are several clues as to which Toronto neighbourhood will rejuvenate next (you can start by seeing how closely your potential property purchase aligns with these 7 Factors For A Winning Location). However, while gentrification narratives have historically focused on the displacement of the poor, as we’ve moved into a global economy where money has no borders, gentrification is no longer about the middle class displacing the working class; it’s now about new levels of affluence putting down stakes amidst the existing occupants of any location. I explored this phenomenon on my site in an article about Forest Hill, a wealthy midtown neighbourhood which was once predominantly Jewish. Today, houses are being purchased for $4mil and being torn down, only to see monster houses going up in their place and selling for $15mil to foreign residents from Asia and Russia. For a fascinating insight into the culture wars of shelter, A $15 Million Mansion In Toronto’s Tony Forest Hill shares how even the old-monied Toronto elite are having their status usurped by the arrival of massive monster homes; in this twist of events, canyons of grey stucco now overshadow even the largest vintage manses, and render the old-money yards, pools, and cabanas devoid of sunlight. That’s right – even Toronto’s rich are being marginalized in this day and age!

Here’s Part One to this post, if you’d like to read it –> Foreign Buyers, Inadequate Policy, And Canadian Real Estate.



*ADDENDUM* April 2023 – A few weeks ago, Finance Minister Chrystia Freeland tabled a new federal budget that was accompanied by an announcement of amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act.  According to a statement by CREA, they can be broken down as follows:


The announced amendments include:

  • Enable more work permit holders to purchase a home to live in while working in Canada. 
    Amending the exception for temporary workers to enable work permit holders with 183 days or more of validity remaining on their work permit or work authorization to purchase a residential property.
  • Repealing existing provision so the prohibition doesn’t apply to vacant land.
    Repealing the vacant land provision from the definition of residential property so that the prohibition does not apply to the purchase of vacant land zoned for residential and mixed use.
  • Exception for development purposes.
    This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian.
  • Increasing the corporation foreign control threshold from 3% to 10%.
    Increasing the control threshold from 3% to 10% so that any corporation or entity with 10% or more direct or indirect ownership of shares or ownership interests by a non-Canadian is subject to the prohibition.


For a complete look at the full budget in document form  – including new Canadian Housing Measures – follow this link: Budget 2023.




As the years roll on, more and more layers are added to the complexity of the Toronto real estate market. As we begin to see marked change in how homeownership and the property ladder is perceived by both Buyers and Sellers, as well as the continued intervention of all levels of Government, the market will continue to react. What this drives home is how essential it is to be knowledgeable not just about drives the market, but to understand the source and the likely trajectory. Do you or someone you love need assistance buying or selling?

We are here to help!


~ Steven

Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-8000

– we’re here to earn your trust, then your business –


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