With the recent events in North America and abroad, Canada has opened its doors to a wave of immigrants seeking a safer home and opportunity. As newcomers settle in cities like Toronto and Vancouver, they are having a prominent effect on the economy, which in turn, is driving the housing market in their pursuit of the Canadian dream.
How are newcomers reshaping Canada’s housing market?
The Economic and Employment Upturn
For decades, immigration has played a pivotal role in driving Canada’s economy, resulting in increased job creation efforts to satiate the need for work and to alleviate pressure on Government programs.
Per CBC, this past October, Canada added over 35,000 jobs, partly to accommodate the increase in newcomers and citizenship. Some provinces like Saskatchewan saw a decline of jobs but most provinces partook in an employment surge. Construction, information and recreation were the industries to see the largest growth. Manufacturing and agriculture were close behind.
This national employment hike should be followed by renewed health in the housing market, as steady employment and credit could make newcomers more likely to be approved for a mortgage.
The Impact on Canadian Real Estate
To be clear, this isn’t the same issue as foreign buyers driving up prices for Canadian homebuyers. The current scenario is the result of new citizens planting roots in a community, trying to solidify their financial future through homeownership.
The impact can be boiled down to more competition in many developing markets, especially ones where there is a large supply like Thornhill Woods, Richmond Hill and Etobicoke. This does create a tougher job for realtors who must educate their clients on the neighbourhood, amenities and mortgage rules.
Buying a home is daunting for any person or family in Canada, and even more so for immigrants. Often, lenders won’t consider money kept outside Canadian banks as a part of an applicant’s asset holdings. As Canada continues to draw people from all over the world, the Government will need to consider the impact on real estate and how to ensure that homeownership can remain achievable.
Ultimately, immigrants have a tougher road to mortgage approval due to their citizenship status and the requirement for 12-month credit history and proof of employment. Once approved, though, demand for housing spikes, driving the market and diluting the supply.
Legislation from the Federal Government’s has created economic, employment and housing opportunities but also a unique set of challenges. More resources are required to help newcomers settle and start the process of building a life. Helping newcomers become homeowners can create a stronger market in the long term.