In British Columbia, one of Canada’s most dynamic and expensive real estate markets, investors accounted for 25% of all homebuyers between 2018 and 2020, according to a detailed analysis by Statistics Canada. This significant share of investor activity highlights the critical role investors play in shaping the province’s housing market, particularly in urban centers like Vancouver, Kelowna, and Victoria. The data provides a pre-pandemic snapshot of investor behavior and its implications for housing affordability, competition, and market dynamics.

‍

Investor Activity in British Columbia

From 2018 to 2020, investors consistently represented around one-quarter of all homebuyers in British Columbia. This figure is higher than the 20.3% share of investors in New Brunswick and slightly lower than the 29.2% in Nova Scotia during the same period.

‍

Breaking down the numbers further:

• In 2018, 24.8% of homebuyers in British Columbia were investors.
• In 2019, the share remained steady at 24.8%.
• In 2020, the first year of the COVID-19 pandemic, the share of investor buyers dropped slightly to 24.7%.

This decline in 2020 was primarily driven by a reduction in non-resident investor activity, which fell across most provinces during the pandemic. However, out-of-province investors in British Columbia bucked this trend, maintaining or slightly increasing their activity during this period.

‍

Urban Centers: Hotspots for Investor Activity

Investor activity was particularly concentrated in British Columbia’s urban centers, with the highest rates observed in the census metropolitan areas (CMAs) of Kelowna, Vancouver, and Victoria.

‍

Vancouver CMA

• In 2019, 25% of all homebuyers in Vancouver were investors, making it one of the most investor-heavy markets in the province.
• Among these investors:
  • In-province investors accounted for 17.1% of buyers.
  • Non-resident investors represented 4.9%.
  • Out-of-province investors made up 0.8%.
  • Business entities contributed 2.7%.

Within the Vancouver CMA, certain areas saw even higher rates of non-resident investor activity:

• Richmond: 7.8% of buyers were non-resident investors.
• City of Vancouver: 7.8%.
• West Vancouver: 6.2%.

These affluent neighborhoods are known for their high property values and appeal to international buyers, particularly non-resident investors.

‍

Kelowna CMA

• In Kelowna, 25% of homebuyers were investors in 2019, matching Vancouver’s overall rate.
• The composition of investors in Kelowna differed slightly:
  • In-province investors were the largest group, representing 16.1% of buyers.
  • Out-of-province investors accounted for 4.2%.
  • Non-resident investors made up 3.1%.
  • Business entities contributed 1.6%.

Kelowna’s appeal as a tourist destination and its growing population have made it a hotspot for both local and out-of-province investors.

‍

Victoria CMA

• In Victoria, 24% of homebuyers were investors in 2019, slightly below the rates in Vancouver and Kelowna.
• The breakdown of investor types in Victoria was as follows:
  • In-province investors: 15.0%.
  • Non-resident investors: 3.6%.
  • Out-of-province investors: 2.0%.
  • Business entities: 3.4%.

Victoria’s proximity to Vancouver and its reputation as a desirable place to live and retire have made it a popular market for investors.

‍

Property Types: Investors Prefer Condominiums

Investors in British Columbia showed a clear preference for condominiums over single-detached houses. In 2019:

• 33.4% of condominium buyers were investors, compared to only 18.9% of single-detached house buyers.
• This trend was particularly pronounced in urban centers like Vancouver, where condominiums are more affordable and easier to rent out compared to detached homes.

The higher share of investors in the condominium market reflects the demand for rental properties in urban areas, where many residents cannot afford to buy homes and rely on rental housing.

‍

Median Prices: Investors Pay More in British Columbia

Unlike in Nova Scotia and New Brunswick, where investors often paid less than non-investors for houses, investors in British Columbia tended to pay more. For example, in 2019:

• In the Vancouver CMA, the median price paid by:
  • Non-resident investors for houses was $980,000, compared to $820,000 for non-investors (20% higher).
  • In-province investors paid $892,000, about 10% higher than non-investors.
  • Business entities paid the highest median price of $1.4 million.

For condominiums in Vancouver:

• Non-resident investors paid a median price of $605,000, higher than the $520,000 paid by non-investors.
• In-province investors paid $485,000, slightly less than non-investors.

This willingness to pay a premium, particularly among non-resident investors, reflects the high demand for properties in British Columbia’s most desirable areas.

‍

Demographics of Investors

Investors in British Columbia were more likely to be immigrants compared to their share of the general population. In 2019:

• 67% of in-province investor buyers in Vancouver were immigrants, despite immigrants making up only about 42% of the population.
• This overrepresentation of immigrants among investors was consistent across other urban centers in the province.

The median income of immigrant investor buyers in Vancouver was $60,000, the same as non-investor buyers but significantly lower than the $90,000 median income of Canadian-born investor buyers. This suggests that immigrant investors may rely more on accumulated wealth or family resources to invest in real estate.

‍

Impact of Investor Activity on the Housing Market

The high level of investor activity in British Columbia’s housing market has significant implications:

1. Increased Competition: With one in four buyers being investors, competition for properties is intensified, particularly in urban centers.
2. Rising Prices: Investors, especially non-resident buyers, often pay a premium for properties, contributing to higher prices.
3. Rental Market Growth: Investor purchases of condominiums have helped expand the rental market, but this has not necessarily alleviated affordability concerns.

‍

Policy Responses

To address concerns about housing affordability and the role of investors, British Columbia has implemented several measures in recent years:

• Foreign Buyer Tax: Introduced in 2016, this tax applies to non-resident buyers in certain areas of the province.
• Speculation and Vacancy Tax: Targets properties left vacant by investors, encouraging them to rent out their units.
• Federal Ban on Non-Resident Buyers: Starting in 2023, the federal government banned home purchases by non-Canadians in urban areas, with some exceptions.

‍

Conclusion

The fact that 25% of homebuyers in British Columbia were investors between 2018 and 2020 underscores the significant influence of investors on the province’s housing market. This influence is particularly pronounced in urban centers like Vancouver, Kelowna, and Victoria, where investor activity is concentrated. While investors play a role in expanding the rental market, their presence also raises concerns about housing affordability and accessibility for non-investor buyers. As policymakers continue to address these challenges, understanding the dynamics of investor behavior will be crucial for creating a more balanced housing market.